Meta ended the third quarter of 2025 with another strong showing in users and revenue, though its profits took a sharp hit from a one-time tax charge and the continuing drag of its metaverse division.
The company’s total audience climbed to 3.54 billion daily users across Facebook, Instagram, WhatsApp, Messenger, and Threads, about 60 million more than the previous quarter. Revenue rose 26 percent year over year to reach $51.24 billion, a figure that marks Meta’s fastest growth rate since early 2024.
Behind the headline numbers, profit told a more complicated story. Net income fell to $2.7 billion, down sharply from $15.7 billion a year earlier, mostly because of a $15.9 billion non-cash tax adjustment related to new U.S. tax rules. Without that accounting hit, Meta’s adjusted earnings would have been closer to $18.6 billion, giving a 14 percent tax rate rather than 87 percent. Even so, the quarter underlined how costly Meta’s push into artificial intelligence and immersive computing has become.
A surge in AI spending and data power
Meta’s capital spending reached $19.4 billion in the quarter and is now expected to total between $70 billion and $72 billion for 2025, higher than earlier projections. Much of this money is flowing into new data centers, servers, and computing hardware needed to train and deploy large-scale AI systems. The company has already begun work on a $1.5 billion facility in El Paso, Texas, which will join its growing network of twenty-nine U.S. data sites.
Executives said they plan to build even greater computing capacity next year, both through Meta’s own infrastructure and contracts with major cloud providers. The spending reflects an aggressive effort to prepare for what the company calls the “superintelligence” phase of AI development. Meta’s leadership argues that overbuilding now will allow it to run ever-larger models for its recommendation engines, business chat tools, and consumer AI products without delay.
Reality Labs still deep in the red
The optimism around AI is not mirrored in Meta’s hardware division. Reality Labs, which makes Quest headsets and AI-enabled smart glasses, posted an operating loss of $4.4 billion in the quarter on $470 million in revenue. It was the unit’s twenty-third consecutive quarterly loss, pushing its cumulative deficit since 2020 beyond $70 billion.
The latest generation of Ray-Ban Display glasses sold briskly after their September launch, helped by new display features and a neural-based wrist controller. However, these early gains were nowhere near enough to offset the heavy research, manufacturing, and marketing costs tied to Meta’s long-term augmented-reality ambitions. The company warned investors that fourth-quarter sales for the division would likely fall below last year’s level because it did not introduce a new headset model in 2025 and retailers had already stocked up earlier for the holidays.
Threads and core apps fuel engagement
The rest of Meta’s portfolio continues to expand. Advertising, still the backbone of its business, brought in $50.1 billion during the quarter (about 97 percent of total revenue) with both ad impressions and average prices rising. The company credited improvements in its AI-based recommendation systems, which helped lift time spent on Facebook by 5 percent and on Threads by 10 percent.
Threads, Meta’s text-focused social app, reached 150 million daily users and is now rolling out ads globally, including new video formats. Instagram and WhatsApp also reported higher activity, aided by ongoing upgrades to content ranking and ad placement models. Collectively, Meta’s Family of Apps division generated $50.8 billion in revenue and $25 billion in operating profit, keeping the core business solidly profitable even as its experimental projects consume cash.
Regulation and the road ahead
Despite the upbeat growth story, the company faces an expensive and uncertain road forward. Meta expects overall expenses for 2025 to end between $116 billion and $118 billion and to rise even faster next year as data-center expansion, cloud contracts, and employee costs climb. The company now employs about 78,400 people, 8 percent more than a year earlier, largely in AI engineering and compliance roles.
Outside its balance sheet, legal and policy challenges continue to build. In Europe, regulators are still examining the company’s Less Personalized Ads model, which could limit ad targeting and dent revenue. In the United States, several youth-safety trials are scheduled for 2026 that may result in financial penalties.
For now, Meta’s main apps remain resilient and its advertising systems are performing strongly. Yet the scale of its AI ambitions means that even with solid cash generation ($10.6 billion in free cash flow this quarter) the company is spending at a pace few others can match. The quarter ended as a portrait of a giant in transition: a business still expanding worldwide, but one betting that enormous investment in artificial intelligence and next-generation hardware will someday justify the billions it continues to burn.
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