Note the beginning in Q3 our definition of non-gap also excludes the amortization of intangible app sets and historical non-gap measures discussed today have been updated accordingly. You can find our gap and non-gap reconciliations on page 10 of the Q3 press release. Our Q3 gap point expenses were USD 1.3 B, up 45% from last year and non-gap expenses were USD 1.5 B, up 39% from last year. Cost of revenue grew 11% on gap basis and 7% on a non-gap basis. We encoredexpenses in the Q3 of 2013 related to the transition of certain lead data centers. This mediated our cost of revenue growth in Q3 2014 as it is done in the last two quarters. Operating expenses excluding cost of revenue grew up 61% on the gap basis and 72% on a non-gap basis verses last year. Primarily due to increase in head count related cause.
We ended Q3 with 8,384 employees, up with 44% from last year. Of the nearly 1200 people we added sequentially about a quarter were from acquisition. Organic growth was high as the third quarter is our seasonally strongest new hire start period. Overall, we are pleased of our ability to attract and retain talented people who enable us to make strong progress against our mission. Q3 operating income was USD 1.4 B representing 44% operating margin, up from 37% last year and our non-gap operating income was USD 1.8 B representing 57% operating margin up from 51% last year. Interest in other income and expense was a net expense of USD 61 B in quarterversus a net expense of USD 10 M last year. This increase in expense was primarily due to foreign exchange office resulting from the periodic re-measurement of our foreign currency balances and largely resulted from the substantial reduction in the value of the euro relative to the dollar experience from the beginning to the end of the quarter.
Our gap and ungap tax rates for the quarter were 40% and 35% respectively. Gap net income was USD 806 M or 30 cents per share and our non-gap net income was USD 1.5 B or 43 cents per share. In Q3 we spent USD 482 M on capex and generated USD 766 M of free cash flow. We ended Q3 with approximately USD 14.3 B in cash and investments. This does not reflect the approximately USD 4.6 B cash payment that we made in conjunction with the WhatsApp acquisition which closed earlier this month.
Turning outlook. I would like to start by noting that my forward looking statement includes the impact of both Oculus and WhatsApp. In addition as part of WhatsApp deal we agreed to file a registration statement to register for resale the approximately USD 878 M shares issued of the WhatsApp stock holders. Nearly all of those shares will be fully registered and tradable during the open trading windows in Q4 2014 and Q1 2015 under the registration statement we plan to file later this week. In light of our recent acquisitions and our plans to file this registration statement we are providing some additional guidance this quarter including a more specifically outlook on the current quarter revenue and a preliminary view on our 2015 expenses. This is the more detailed outlook that we have historically provided or plan to provide on future earnings calls. Let me start with 2014 expenses.
