Meta Platforms reported Q3 revenue that topped the analyst consensus, and the earnings call focused on its Muse AI agent. CEO Mark Zuckerberg outlined a multi-pronged plan to monetize Muse, while the company raised the low end of its full-year capital expenditure range.
Meta Platforms grew third-quarter revenue 26% year over year to $64.6 billion, more than $1 billion ahead of the LSEG analyst consensus of $63.37 billion. The report was the company's first since the release of its Muse AI agent. Investors liked what they saw, CNBC's Investing Club said.
Earnings per share made the quarter harder to read. Diluted EPS was $3.83, and it would have been $7.40 excluding a $9.89 billion legal settlement charge tied to teen addiction litigation with state attorneys general.
Meta shares rise after hours
Meta stock rose 2% in after-hours trading. Shares closed at a 52-week high of nearly $780 on Sept. 24, after Muse launched on Sept. 8.
The Investing Club reiterated its $800-per-share price target and kept its hold-equivalent 2 rating.
Muse adoption and the monetization plan
Zuckerberg said more than 10 million people in the U.S. and Canada had set up Muse personal agents, and about 25% of them use it on any given day. On retention, he said for the earliest adopters, "the longer that they use Muse, the better that retention seems to get."
Monetization will follow several paths. Zuckerberg expects the free tier to be enough for most users, and Meta is building e-commerce tools to take a cut of each transaction. Paid tiers would target power users, and a business offering would target companies.
On costs, Zuckerberg expects a greater than 10-fold improvement in cost-efficiency over the next year, though Muse is currently very compute-intensive.
Guidance and share structure
Meta projected fourth-quarter revenue of $73 billion to $76 billion, against the $73.88 billion consensus estimate, according to LSEG. Full-year capital expenditures are now expected between $135 billion and $145 billion, with the low end up from $130 billion.
The company also announced a new non-voting Class C common stock, effective January 2027, which will also split the stock two-for-one.
The Investing Club flagged a new court-ordered $25 billion penalty out of New Mexico over the Cambridge Analytica scandal, which Meta vows to appeal.
Source: CNBC
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