Shares in Meta Platforms plunged after it announced a large drop in net income for the third quarter of the 2025 financial year (Q3 FY25) and flagged a big increase in investment and expenses in FY26.
The parent company of social media platforms, including Facebook, said net income fell 83% to $2.709 billion in the three months ended 30 September 2025 as the provision for income taxes rose 788% to $18.954 billion due to a one-time charge.
Diluted earnings per share dropped 83% to $1.05.
The tax rate soared to 87% from 12% due to a one-off tax related to a non-cash reduction in deferred tax assets, without which it would have been 14%, Chief Financial Officer Susan Li told the earnings call.
In the absence of the tax charge, net income would have increased to $18.64 billion and diluted EPS would have increased to $7.25, compared to the reported figures of $2.71 billion and $1.05.
Meta said income from operations grew 18% to $20.535 billion (A$31.24 billion) in Q3 on revenue, which climbed 26% to $51.242 billion.
Meta said it expected a significant reduction in its U.S. federal cash tax payments for the rest of 2025 and future years due to the implementation of the One Big Beautiful Bill Act.
"We had a strong quarter for our business and our community," Founder and CEO Mark Zuckerberg said in a press release.
Family daily active people increased 8% to 3.54 billion on average in September, advertising impressions delivered across its Family of Apps increased by 14% year-over-year and average price per advertisement increased by 10% year-over-year.
Meta expected Q4 revenue to be $56-59 billion, FY25 expenses to be $116-$118 billion, up from an earlier outlook of $114-$118 billion, and FY25 capital expenditures to be $70-$72 billion, increased from $66-$72 billion.
Li said Meta expected to aggressively invest to meet its computing needs and achieve new revenue opportunities by building infrastructure and contracting with third-party cloud providers.
The company expected capital expenditure dollar growth to be notably larger in 2026 than in 2025 and total expenses to grow at a significantly faster percentage rate in 2026.
Employee compensation costs would be the second-largest contributor to growth.
Meta shares (NASDAQ: META) closed 23 cents (0.031%) higher at US$751.67, capitalising the company at $1.89 trillion, but they dived in after-market trading by 8.28% to $689.40.
