Meta misses on user growth, warns of 2025 jump in AI spending

Meta reported weaker-than-expected user numbers and warned of a significant acceleration in its infrastructure expenses in 2025 in its third-quarter earnings report on Wednesday.

The company’s stock price was down slightly in after-hours trading.

Here are the results.

• Earnings per share: $6.03 vs. $5.25 expected by LSEG
• Revenue: $40.59 billion vs. $40.29 billion expected by LSEG

Sales in the third quarter jumped 19% year over year while net income grew 35% to $15.7 billion from $11.6 billion a year earlier. That represents Meta’s lowest year-over-year growth for net income since the second quarter of 2023.

The company reported 3.29 billion daily active people for the third quarter. That was up 5% year over year, but it came in below analysts’ expectations of 3.31 billion.

Meta also raised capital expenditures guidance for the 2024 fiscal year to between $38 billion and $40 billion, up from $37 billion to $40 billion previously. Additionally, the company said it expects capital expenditures to continue to grow significantly in 2025.

The company is expecting “a significant acceleration in infrastructure expenses growth next year as we recognize higher growth in depreciation and operating expenses of our expanded infrastructure fleet,” Meta said in a press release.

Meta said it expects total expense for fiscal 2024 to be in the range of $96 billion to $98 billion, which is lower than previous guidance of $96 to $99 billion.

Revenue from Meta’s advertising business came in at $39.9 billion for the quarter, up 18.7% year over year. Advertising accounted for 98.3% of Meta’s total revenue in the third quarter.

Meta said it is expecting fourth-quarter revenue to be between $45 billion and $48 billion. The midpoint of that guidance is higher than the analyst consensus of $46.3 billion.

The company’s Reality Labs hardware unit posted an operating loss of $4.4 billion in the third quarter, which was less than analysts’ expectations of $4.68 billion. Sales in that unit jumped 29% year-over-year to $270 million in the third quarter, trailing analysts’ expectations $310.4 million.

Since 2020, Meta’s Reality Labs unit has recorded an operating loss of more than $58 billion.

The company’s overall headcount grew 9% year-over-year to 72,404 as of Sept. 30.

Meta CEO Mark Zuckerberg has been pointing to the company’s massive investments in artificial intelligence, which includes spending billions of dollars on Nvidia’s popular graphics processing units, as helping improve the company’s core online ad business in the aftermath of Apple’s 2021 iOS privacy update.

The social media company’s results come a day after digital ad companies Alphabet, Reddit and Snap all reported solid quarterly earnings. Microsoft reported third-quarter earnings on Wednesday that beat on the top and bottom lines.

Apple and Amazon report quarterly financials on Thursday.

WATCH: Meta’s revenue has room to run despite all their AI spending.