Actual results may differ materially as a result of various factors, including those set forth in today's earnings press release and in our quarterly report on Form 10-Q filed with the SEC. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The earnings press release and an accompanying investor presentation are available on our website at investor.appmeta.com. We're seeing very high demand for additional compute, both internally and externally.
We have a very strong pipeline of lots of ways to improve these models by incorporating new AI advances and capabilities. More than a billion monthly actives already use Meta AI, and we see usage increase as we improve our underlying models. I'm looking forward to ramping up the growth of Vibes over the coming months. Q3 total family of apps revenue was $50.8 billion, up 26% year-over-year.
Q3 family of apps ad revenue was $50.1 billion, up 26%, or 25% on a constant currency basis. Impression growth was healthy across all regions, driven by engagement and user growth, particularly on video services. The average price per ad increased 10% year-over-year, benefiting from increased advertiser demand, largely driven by improved ad performance. This was partially offset by impression growth, particularly from lower monetizing regions and services.
| Metric | Period | Current guidance |
|---|---|---|
| Reality Labs revenue | Q4 2025 | Expected to be lower than last year, driven by lapping the Q4 2024 Quest 3S launch and Q3 pull-forward of Quest sales; still expecting significant YoY AI-glasses revenue growth (size not quantified) |
| Capital expenditures | FY2026 | Expected to grow versus 2025 across MSL, core AI and non-AI spend, with MSL AI needs growing the most; specific figure not provided (budget still in process) |
| Ads model consolidation | Coming years | Plan to consolidate ~200 more models into a smaller number of highly capable Lattice-based models |
| Data center CapEx treatment (Blue Owl JV) | Going forward | Construction costs no longer recorded in CapEx; Meta contributes 20% of remaining construction costs (its ownership stake) recorded as other investing cash flows |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +26% | $51.2B (+25% constant currency), driven by strong ad performance from AI ranking improvements. |
| Family of Apps ad revenue | +26% | $50.1B (+25% constant currency); impression growth healthy across all regions, particularly video services. |
| Ad impressions | +14% | Driven by engagement and user growth, particularly on video services. |
| Average price per ad | +10% | Increased advertiser demand from improved ad performance, partially offset by impression growth from lower-monetizing regions and services. |
| Family of Apps other revenue | +59% | $690M; WhatsApp paid-messaging revenue growth and Meta Verified subscriptions. |
| Reality Labs revenue | +74% | $470M; retail partners stocking Quest headsets ahead of the holiday season (no comparable benefit in Q3 2024) plus strong AI-glasses revenue. |
| Total expenses | +32% | $30.7B; growth accelerated 20 pts from Q2 on higher legal charges, accelerating AI-talent compensation, and infrastructure costs (operating costs, depreciation on incremental CapEx, third-party cloud). |
| Operating income | $20.5B (40% margin) | Revenue growth partly offset by accelerating expense growth. |
| Net income / EPS | $2.7B / $1.05 | Depressed by a one-time non-cash DTA reduction (87% tax rate); underlying net income $18.6B / $7.25 EPS at a 14% normalized rate. |
| Capital expenditures | $19.4B | Investments in servers, data centers and network infrastructure. |
| Free cash flow | $10.6B | Repurchased $3.2B stock, paid $1.3B dividends; ended with $44.4B cash & securities and $28.8B debt. |
| Headcount | +8% | Over 78,400 employees; hiring in monetization, infrastructure, Reality Labs, Meta Superintelligence Labs, and regulation/compliance. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Compute front-loading strategy | Aggressive CapEx ramp | Zuckerberg framed deliberately front-loading capacity to be ready if superintelligence arrives sooner; worst case is slowing new builds and growing into capacity; company perennially 'compute-starved' in the core business. | — |
| Meta Superintelligence Labs | Just established (Q2) | Off to a strong start with claimed highest talent density in the industry; heads-down on next-gen models and products. | — |
| Unifying AI systems | Three separate transformers (Facebook, Instagram, ads recommendations) | Working to combine into a single unified AI system running the family of apps and ads; end-to-end AI ad tools at a $60B run rate. | — |
| Ads ranking model architecture | Andromeda, Lattice introduced 2023-2024 | Lattice extended to app ads (~3% conversion gain); ~100 models cut since 2023 with ~200 more planned; new runtime model (+2% Instagram conversions); Andromeda improvements (+14% ads quality on Facebook). | — |
| Meta AI and AI content | >1 billion monthly actives | Continued growth; launched Vibes AI content experience with media generation up more than tenfold in-app; over 20 billion images created across products. | — |
| AI glasses / Reality Labs | Ray-Ban Meta momentum | 2025 line announced at Connect; Ray-Ban Display glasses sold out within 48 hours; Blue Owl JV signed for Louisiana data center. | — |
| Data center financing | Exploring partners (Q2) | Announced Blue Owl JV to co-develop data centers with external capital, giving long-term optionality; 20% ownership stake. | — |