Meta Hits $64.6B Revenue as Legal Costs and AI Spending Bite

Meta’s advertising business delivered another strong quarter, but the cost of its next phase came into sharper focus. Third-quarter revenue rose 26% from a year earlier to $64.60 billion, while a nearly $9.9 billion legal charge and heavier investment reduced operating profit and halved the operating margin. The Facebook and Instagram owner also raised the lower end of its 2026 capital spending plan, keeping its AI build-out at the centre of the earnings story.

According to Meta’s official results, costs and expenses reached $51.61 billion, up 68% year on year. Operating income fell 37% to $12.99 billion, and operating margin narrowed to 20% from 40%. The company recorded a $9.89 billion charge connected with a settlement involving 52 US attorneys general over teen mental health and social media. Without separating that exceptional charge from the underlying business, the margin decline would be easy to misread.

Meta said daily active people across its family of apps reached 3.64 billion, up 3% from a year earlier. Ad impressions grew 10%, while the average price per ad climbed 14%. That combination helps explain why revenue continues to rise substantially faster than the audience. CNBC’s earnings coverage put the quarter’s revenue above the roughly $63.37 billion analysts expected.

Net income was $9.86 billion, compared with $2.71 billion a year earlier, and reported diluted earnings per share were $3.83. The apparent surge in net profit needs context: last year’s comparison was depressed by a one-time tax charge, while this year’s result contains the legal settlement charge. Meta said diluted earnings per share would have been $7.40 excluding the latest legal charge. That is a company-provided adjusted comparison, not its reported GAAP figure.

Capital expenditure was $34.91 billion in the quarter. Meta now expects to spend $135 billion to $145 billion on capital projects in 2026, lifting the lower end of its previous $130 billion to $145 billion range. The money reflects the scale of the infrastructure it is building for AI systems and advertising. It generated $32.79 billion in operating cash flow, yet free cash flow was negative $2.12 billion after the quarter’s investment outlays.

The company expects fourth-quarter revenue of $73 billion to $76 billion. It also expects Reality Labs to lose $18 billion to $19 billion for the full year. Meta says AI is already helping recommendations and advertising, but returns on its wider superintelligence programme will take longer to materialise. This extends the question raised in TechBooky’s coverage of its second-quarter earnings: how much of today’s cash generation can be committed to a future AI business before investors demand clearer returns?

Meta also announced a plan for publicly listed, non-voting Class C shares, expected to take effect in January 2027. The proposed one-time dividend would grant one Class C share for each existing Class A or B share, creating the economic effect of a two-for-one split without changing voting rights. The dates are still to be set; no split has happened yet. The proposal adds another layer to Meta’s effort to finance and organise its next chapter while preserving its current control structure.