Meta Q3 Earnings: Revenue and EPS Exceed Expectations

Meta's Q3 earnings topped estimates, with beats in revenues, EPS, and operating income. The company forecasts Q4 revenues of $47.5-$50.5 billion, exceeding consensus expectations. Dan Ives of Wedbush Securities and Bloomberg Intelligence's Mandeep Singh discuss the strong earnings results.

Meta's third-quarter earnings report has exceeded market expectations, with significant beats in revenues, earnings per share (EPS), and operating income. The company reported Q3 revenue of $47.5 billion to $50.5 billion, surpassing the consensus estimate of $46.14 billion [2]. EPS came in at $7.14, up 38% year-over-year, well above the consensus estimate of $5.92 [2].

The company's strong performance was driven by robust ad growth and AI integration. AI-powered ad recommendation models drove approximately 5% conversion growth on Instagram and 3% on Facebook, while average ad pricing on Facebook rose 9% [2]. Video engagement also surged, with Instagram watch time growing over 20% year-over-year and Facebook video watch time in the U.S. rising over 20% [2].

Meta's forecast for Q4 revenues of $47.5 billion to $50.5 billion also exceeded expectations. The company expects year-over-year growth to slow compared to Q3 due to the high ad spend base created by the 2024 U.S. presidential election [2].

Dan Ives, global head of technology research at Wedbush Securities, praised the earnings results, stating, "There's nothing not to like in Meta's earnings" [3]. Mandeep Singh of Bloomberg Intelligence also highlighted the strong performance, noting that the company's AI and ad growth are driving significant revenue and profit growth [3].

Meta's capital expenditures (Capex) outlook was also revised upward, with the lower bound raised to $66–72 billion for 2025 [2]. The company anticipates that Capex in 2026 may exceed $100 billion, potentially requiring external investment to support large-scale data center expansion [2].

The company's Reality Labs division reported accelerating growth in Ray-Ban Meta smart glasses, with the best-selling models consistently out of stock [2]. Zuckerberg believes that smart glasses will become a basic AI interface device, potentially as essential as smartphones in the future [2].

References:
[1] https://finance.yahoo.com/news/live/earnings-live-microsoft-meta-stocks-surge-with-more-tech-earnings-from-apple-and-reddit-on-deck-164005468.html
[2] https://www.ainvest.com/news/meta-earnings-call-strong-ad-growth-ai-integration-expands-2507/
[3] https://www.marketscreener.com/news/dan-ives-says-there-s-nothing-not-to-like-in-meta-earnings-ce7c5fdcd88ff021
[4] https://finance.yahoo.com/video/dan-ives-says-theres-nothing-204103366.html