Meta Q3 Profit Tumbles 83% Thanks to ‘One Big Beautiful Bill Act’ Tax Charge

Meta’s third-quarter net profit dropped by 83% due to a tax charge implemented as part of President Donald Trump’s One Big Beautiful Bill Act.

The tech giant generated $51 billion in revenue for the quarter, up 26% from last year, but the net profit plummeted to $2.7 billion due to the charge. Excluding the charge, net income would have been $18.64 billion, up 19% from a year ago.

Meta noted in its earnings release that it expects a significant reduction in U.S. federal cash tax payments for the remainder of 2025 and in the future, but this quarter was significantly affected by a “one-time, non-cash income tax charge of $15.93 billion.”

Meta, like many other tech giants, has gone all-in on artificial intelligence, and is pouring billions of dollars into developing AI “superintelligence.” The company believes “superintelligence” represents a “paradigm shift” in how computing works and the kind of relationship it will have with its customers, and executives spent a significant chunk of the earnings conference call to discuss its potential.

“We had a strong quarter for our business and our community,” Mark Zuckerberg, Meta founder and CEO, said in the earnings release. “Meta Superintelligence Labs is off to a great start and we continue to lead the industry in AI glasses. If we deliver even a fraction of the opportunity ahead, then the next few years will be the most exciting period in our history.”

Meta has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 2.4% on average. Last quarter the company had its best second quarter to date with revenue of $47.52 billion, outpacing estimates by 6%.

The company reported growth in their daily active user base with 3.54 billion visiting one of its apps daily. Meta also noted that it employs 78,450 people as of Sept. 30, an increase of 8% year-over-year.

The stock price rose 0.03% to $751.67 in after-hours trading.

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Here are the key results from Meta’s third quarter report:

Revenue: Meta reported $51.24 billion in third quarter sales, up 26% annually, outpacing the $49 billion analysts had projected.

Most of the company’s revenue came from advertising.

Net income: The company reported $2.71 billion in net income, an 83% drop from the third quarter of 2024 because of tax charges. Excluding the charge, it would’ve been $18.64 billion.

Daily active users: Meta’s daily active user base across its apps Facebook, Instagram, WhatsApp and Threads increased 8% year-over-year to 3.54 billion users.

Earnings Per Share: $7.25, which surpassed the $6.71 estimate EPS analysts projected. This figure is adjusted for the tax charge.

Signed into law in July, Trump’s One Big Beautiful Bill Act prompted Meta to recognize a valuation allowance against its U.S. federal deferred tax assets. The company had to pay a one-time $15.9 billion charge. While significant, the bill is expected to lower Meta’s future U.S. federal tax payments.

The company reported an effective tax rate of 87%. Under the assumption nothing changes in the tax landscape, Meta expects the fourth-quarter tax rate to be 12-15%.

Across its family of apps, Meta saw an increase of 14% in ad impressions. On top of that, the average price per ad increased by 10% year-over-year.

The company expects fourth-quarter total revenue to be in the range of $56-59 billion. Meta expects the full-year 2025 total expenses to be in the range of $114-118 billion reflecting a growth rate of 20-24% year-over-year. 

Reality Labs — Meta’s division focused on artificial intelligence, virtual reality and augmented reality technology – lost $4.43 billion in the third quarter. The previous quarter the company lost $4.53 billion on the effort. Meta said the anticipated reduction in Reality Labs revenue is due to the introduction of Quest 3S in the fourth quarter of last year and the Quest headsets hitting the retail market during the third quarter of this year to prepare for the holiday season.

The Meta CEO said Instagram has 3 billion monthly active users, and the company’s text-based platform Threads has 150 million daily actives users.

Both Zuckerberg and CFO Susan Li expressed excitement in Meta’s generative AI video platform Vibes. Li noted that users have generated over 20 billion images using Meta’s products since launching Vibes in September. The company has seen media generation in the app increase more than tenfold. Zuckerberg added that over a billion people use Meta AI on a monthly basis.

Zuckerberg expressed continued interest in superintelligence, a level of AI that would match or surpass human-level understanding. Though the CEO did not have specific details on the lab’s advancement, he said they are “heads down developing our next generation of models and products” in order to be the leading frontier AI Lab.

“Our approach of advancing open source AI means that when Meta innovates, everyone benefits,” he said. “Meta superintelligence Labs is off to a strong start. I think that we’ve already built the lab with the highest talent density in the industry.”

“The company that is the best at each of these capabilities will get a large amount of the potential value for doing that,” Zuckerberg added of Meta’s strategy in forwarding AI implementation. “I’m not sure that any one company is going to be the best at all of them, but what we’re trying to do is to not do some things that others have done. We’re really trying to build novel capabilities, and I’m keeping this high level.”

The CEO was coy about the details of Meta’s AI advancements, only noting that they would eventually bolster its existing platforms and services while unlocking new business opportunities.

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