Good morning. Enterprise AI is emerging as a major battleground, and Meta believes the market remains up for grabs.
“AI is creating huge amounts of disruption in enterprise today,” CFO Susan Li said during the tech company’s third-quarter earnings call on Wednesday. “We really don’t believe that traditional enterprise companies have this locked down.”
Some leading companies in this space didn’t exist a few years ago, Li said. Those companies made large investments in model development, and Meta has done the same, she added.
“We have increasingly competitive models to bring to bear for the benefit of all of our users, including small businesses and enterprises,” Li said. Meta announced on Sept. 28 plans to launch a Meta Enterprise Platform. The company has hired former MongoDB CEO Chirantan “CJ” Desai to build out the platform.
Meta’s goal is to eventually compete across parts of the enterprise software and AI markets by combining its models with business-facing products, application programming interfaces (APIs) and AI agents integrated into its messaging and social platforms.
“We really believe that AI is going to reshape how businesses operate,” Li said. Businesses could adopt AI agents for software development, productivity, sales, marketing and customer service. “It’s our hope that this will be able to be a new diversified recurring revenue stream for us that will be able to support multiple business models,” Li said.
Meta aims to monetize these offerings through subscriptions, usage-based APIs, messaging and other business models, potentially creating a recurring revenue stream beyond advertising. This is a long-term goal. It will be an opportunity set to “develop over multiple years,” Li said, and the company intends to scale its investment behind “demonstrated customer demand and product market fit in this area.”
Meta is currently expanding its consumer AI offerings, providing another indication of how the company is approaching adoption, usage and product economics.
CEO Mark Zuckerberg said on the call that more than 10 million people in the U.S. and Canada had set up Muse personal agents within six weeks of launch, with about 25% using them on any given day.
Revenue growth funds AI investments
Meta’s advertising business is funding its AI ambitions, with third-quarter revenue rising 26% year over year to $64.6 billion, above analysts’ expectations of $63.3 billion. The global average price per ad increased 14%, reflecting stronger ad performance and more favorable macroeconomic conditions. The company also said it created a Class C stock share class to help it fund the AI buildout, pay employee stock compensation, and fund acquisitions, Fortune reported.
Capital expenditures, including finance lease principal payments, reached $34.9 billion in the third quarter, up from $19.4 billion a year earlier. The company raised the lower end of its full-year capex forecast to $135 billion, from $130 billion, while maintaining the upper end at $145 billion.
Total expenses rose 68% year over year to $51.6 billion, reflecting higher infrastructure spending, third-party AI token costs and a $9.9 billion charge related to an August agreement with multiple state attorneys general.
Meta expects fourth-quarter revenue of $73 billion to $76 billion, compared with analysts’ consensus estimate of $73.75 billion.
Sheryl Estrada [email protected]
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