Meta CFO Says 'Significant Cash Tax Savings Ahead' After $15.9 Billion One-Time Hit Pushes Q3 Tax Rate To 87%

Meta Platforms Inc. (NASDAQ:META) suffered a $15.9 billion hit to profits during its third-quarter results, owing to a one-time tax hit.

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CFO Promises ‘Significant Cash Tax Savings Ahead’

During the company’s earnings call on Wednesday, CFO Susan Li said, “Our tax rate for the quarter was 87%,” which she said was “unfavorably impacted by a one-time noncash reduction in deferred tax assets,” which essentially means that this was just an accounting adjustment, with the company not actually paying this tax.

It nonetheless led to its profits dropping to “$2.7 billion or $1.05 per share,” while excluding this tax adjustment, the company’s net profits would have stood at “$18.6 billion and $7.25 [per] share.”

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Li attributes this one-time impact to the company’s transition “to the new US tax law,” excluding which its effective tax rate would have been 14%.

Despite the near-term earnings hit, management framed the adjustment as a step toward future benefits. “We continue to expect we will recognize significant cash tax savings for the remainder of the current year and future years,” Li said.

Stock Plunges Following Q3 Results

The company released its third-quarter results on Wednesday, reporting $51.24 billion in revenue, up 26.25% year-over-year, compared to $40.58 billion a year ago, and significantly ahead of analyst consensus estimates at $49.38 billion during the quarter.

It reported a profit of $1.05 per share, including the one-time non-cash income tax charge, and thus may not be a good comparison with estimates that stood at $6.68 during the quarter.

Meta shares were down 0.03% on Wednesday, closing at $751.67, before plunging 7.45% pre-market, following its earnings announcement. The stock scores high on Momentum, Growth and Quality in Benzinga’s Edge Stock Rankings, and has a favorable price trend in the long term. Click here for deeper insights into the stock, its peers and competitors.

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