Meta adds users and revenue as AI costs climb

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Meta has published its Q3 earnings report, which shows that the company’s ad business remains strong, while its AI expenditure continues to rise.

First, on usage. Meta reported that its family daily active people count, which is the cumulative number of active users across Facebook, Instagram, Messenger, WhatsApp and Threads, rose by 40 million to 3.64 billion overall in the third quarter.

The fact that Meta’s apps are still drawing in users is a testament to its growth strategy, with the company stuill growing its audience in several key markets.

India is now Meta’s biggest single user market, with advancing connectivity in the region providing new opportunities. Meanwhile, Meta continued to build its presence in the Asia Pacific, where its ad impressions have grown by 24% this year, according to Merca 2.0.

Overall ad impressions across Meta’s apps rose by 10% in Q3, per Meta, though that’s a slight decline on its more recent quarterly performance.

Which is a little strange, given that Meta has added more ad placements, with Threads gaining more traction

Meta also reported that Threads has now overtaken X in terms of overall monthly active users, which Meta CEO Mark Zuckerberg claimed in an interview last month. That should provide more ad opportunities, but maybe Threads ads have already reached saturation point, which is why these figures are normalizing.

Regardless, Meta has been able to offset at least some of the slowdown in ad impressions by increasing ad prices, which were up 14%.

Which is probably not the greatest news for marketers, but Meta’s counter would be that its ads are becoming more valuable through its enhanced ad targeting, powered by its evolving AI models.

The end result here saw the company’s third quarter revenue rise 26% year over year to $64.6 billion.

So Meta’s ad business is still comfortably propping up results, even with its massive increase in expenses related to its evolving AI push.

Indeed, Meta reported a 68% increase in year-over-year expenses in Q3, driven primarily by capital expenditures.

While this chart is also starting to look concerning:

Meta previously informed the market that its expenses would continue to rise in line with its AI investment, with the company pledging more than $600 million to AI infrastructure projects.

The above graphs reflects this, showing the massive rate of increase in Meta’s AI spend, and further underlining why the company needs to make more money from its AI tools.

Because right now, it’s not making a lot from these next-level bets.

This listing shows that Meta’s Reality Labs division, which covers its AI glasses and VR headsets, brought in only slightly more revenue in Q3 versus the previous quarter,

It’s impossible to match that against costs, because Meta’s AI glasses are tied to its broader AI spending. But it’s safe to say that the backlash against the misuse of these glasses has caused a slowdown in sales and impacted another avenue for AI monetization.

Which means that Meta will be increasingly reliant on its Muse agents to drive consumer AI adoption. The company is hoping that take-up of Muse will eventually enable it to gain more revenue by taking a percentage of sales activity conducted through the app.

However, Muse is also facing its own challenges, with various reports of data exposures and unintended usage missteps.

Last month, a Muse user said that the AI bot gave out his home address without him knowing, in order to organize a Facebook Marketplace pick-up. Then this week, Ars Technica reported that security firm Claroc was able to obtain reams of information on Muse user queries through simple exploration techniques.

Meta is working to reassure users that Muse is safe, and has been built with data security in mind. But more cases like this will continue to hurt Meta’s reputation, and could make people less likely to adopt its Muse chatbot or use it to its full extent.

Indeed, Morgan Stanley recently reported that Muse use retention declines significantly two weeks after initial download, as per this chart posted by @IntelFabs on X.

That retention rate, however, is slightly better than what other AI chatbots have seen, with ChatGPT, Claude and Grok all experiencing similar usage drop-offs after download.

As such, it’s difficult to say how significant this is in terms of Muse usage trends, and it’s difficult to predict the potential for the chatbot to drive revenue for Meta in future.

But based on its current spending, Meta’s all-in bet on AI is still not close to producing any significant revenue opportunities, and it’s going to really need Muse to be a hit if it wants to turn that around any time soon.

But then again, if its ad revenue continues to climb, Meta can maintain at least some buffer against those losses. That is, until all of its AI spending comes due, and its investors get increasingly worried about the angles of these charts.

One final interesting point from Meta’s Q3 report: “Headcount was 66,775 as of September 30, 2026, a decrease of 15% year-over-year.”

Meta has continued to replace human staff with AI tools, and this figure likely reflects that shift.