Meta Platforms, the parent company of Facebook and Instagramreported its earningsfor the third quarter of 2026 on Wednesday, 21 October 2026, stating that the company achieved strong revenue growth of 26% compared to the same period last year. It also highlighted that fourth-quarter revenue prospects exceed analysts' expectations, causing Meta shares to rise 2.5% in after-hours trading.
However, operating profit significantly declined after the company recorded a large expense related to settling lawsuits over the impact of social media on teenagers' mental health in the United States.
At the same time, Meta continues intensive investments in AI, including developing new AI models and personal assistant tools. Additionally, the company announced plans to issue new Class C common stock without voting rights to raise funds for employee compensation and to support future acquisitions.
Meta reported third-quarter revenue of 64.6 billion U.S. dollars, up 26% from 51.2 billion U.S. dollars compared to the same period last year, and exceeding analysts' forecast of 63.37 billion U.S. dollars.
The company recorded a net profit of 9.86 billion U.S. dollars, equivalent to earnings per share (EPS) of 3.83 U.S. dollars, compared to a net profit of 2.71 billion U.S. dollars or 1.05 U.S. dollars per share in the prior year.
Although revenue grew strongly, total expenses rose sharply by 68% year-over-year to 51.61 billion U.S. dollars, resulting in a 37% drop in operating profit to 12.99 billion U.S. dollars, down from about 20.4 billion U.S. dollars the previous year, while operating margin fell to 20% from 40%.
However, excluding expenses related to the lawsuit settlements, Meta's earnings per share would be approximately 7.40 U.S. dollars.
Despite facing legal expenses and technology investments, Meta's core advertising business continues to grow robustly.
Advertising revenue in Q3 reached 63.06 billion U.S. dollars, a 26% increase from the same period last year. The number of ad impressions rose 10%, while the average price per ad increased 14%, indicating both higher ad volume and improved monetization per ad.
Additionally, the average daily active people (DAP) across Meta's apps reached 3.64 billion in September, up 3% from the previous year, confirming that the company's main platforms still reach a vast user base, which is essential for expanding advertising and AI services in the future.
Regarding the Family of Apps business, which includes Meta’s main platforms such as Facebook and Instagram, it generated operating profit of 17.12 billion U.S. dollars, reinforcing the role of apps and advertising as key profit sources supporting Meta’s investments in new ventures.
However, Reality Labs, the division responsible for virtual reality technology and related products, continued to post operating losses this quarter, with Reality Labs reporting an operating loss of 4.13 billion U.S. dollars, down from 4.43 billion U.S. dollars in the same period last year, and revenue of only 443 million U.S. dollars.
A key point in Meta's Q3 financials is the massive investment in AI, with capital expenditures (CapEx) totaling 34.91 billion U.S. dollars.
Although the company generated operating cash flow of 32.79 billion U.S. dollars, after deducting capital expenditures and related items, free cash flow was negative 2.12 billion U.S. dollars.
As of the end of September, Meta held cash and marketable securities totaling 82.45 billion U.S. dollars, while long-term debt was approximately 80.9 billion U.S. dollars. The workforce numbered 66,775 employees, down 15% from the same period last year.
Meta continues to invest heavily to expand infrastructure and develop AI technology, which remains a major strategic focus for the company in the long term.
Meta CEO Mark Zuckerberg stated in the earnings announcement that the company has achieved significant milestones in advancing Personal Superintelligence—an advanced AI designed to meet individual needs for everyone.
One major advancement is the launch of Muse and Muse Wonder, which the company describes as Meta's first cutting-edge AI models.
The early success of Muse, a personal AI assistant launched in September, has also boosted investor confidence, with Meta shares recording their best monthly performance on Wall Street since 2022 during that month.
Although Meta is not the first company to develop AI assistants capable of handling various routine tasks, having large platforms like Facebook and Instagram allows the company to bring AI Agent technology to a wide user base.
Meanwhile, Alexandr Wang, head of AI at Meta, continues to rapidly roll out foundational AI models and updates, with the latest model, Muse Wonder, launched on 12 October.
Another major factor driving up Meta's expenses is a 9.89 billion U.S. dollar reserve set aside for a settlement agreement with attorneys general from 52 U.S. states to resolve lawsuits related to social media's impact on teenagers' mental health.
The settlement could total up to approximately 18.59 billion U.S. dollars if all payment obligations under the agreement are met.
Excluding this lump-sum expense, Meta's operating profit would be about 22.88 billion U.S. dollars, and its effective tax rate would drop to 17% from the reported 24%.
However, the legal challenges over social media's impact on youth are not fully resolved, with executives warning that several related cases are expected to proceed in U.S. courts in the coming months, potentially continuing to pressure the company.
For the fourth quarter, Meta projects revenue between 73 billion and 76 billion U.S. dollars, with a midpoint of 74.5 billion U.S. dollars, exceeding the 73.73 billion U.S. dollars forecast by LSEG analysts.
For the full year 2026, Meta has raised its total expense forecast to 175 billion to 179 billion U.S. dollars to include litigation-related costs, while capital expenditure is expected to be between 135 billion and 145 billion U.S. dollars, narrowing from the previous 130 billion to 145 billion U.S. dollars range.
Reality Labs is expected to post a full-year loss of 18 billion to 19 billion U.S. dollars in 2026, before narrowing to about 15 billion U.S. dollars in 2027.
Although Meta’s financial executives have not provided revenue forecasts for 2027, the company stated it anticipates strong overall revenue growth throughout the year and will continue “intense investment” in both its core business and AI initiatives.
Meta views this direction as advancing AI capabilities alongside maintaining advertising business growth, despite ongoing pressures from technology costs and unresolved legal risks.
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