Meta (META.US) Q3 Revenue Up 26% Year-on-Year to $64.6 billion; Nearly $10 billion Litigation Costs Drag Operating Profit Down by 37%

According to reports from Zhiytong Financial APP, Meta (META.US) released its Q3 2026 financial results after the U.S. stock market closed on Wednesday. Data showed that the company’s revenue for the quarter was $64.601 billion, a year-on-year increase of 26%; net profit was $9.86 billion, soaring 264% year-on-year; diluted earnings per share were $3.83, up by 265% year-on-year. However, operating profit decreased by 37% year-on-year to $12.988 billion, and the operating profit margin fell from 40% in the same period last year to 20%. After-hours trading saw Meta shares rise by more than 7% at one point.

Meta stated that total costs and expenses for the third quarter surged 68% year-on-year to $51.613 billion, which included $9.89 billion in expenses recognized due to settlements with 52 U.S. state attorneys general over lawsuits related to adolescent mental health and social media. Excluding this expense, the company’s operating profit for the quarter would reach $22.877 billion, and diluted earnings per share would rise to $7.40.

It is worth noting that the sharp growth in net profit was mainly due to a low base effect from high income tax expenses in the same period last year. Meta’s Q3 income tax expense was $3.141 billion, much lower than the $18.954 billion in the same period last year, with the effective tax rate falling from 87% to 24%.

By business segment, Meta’s Family of Apps generated $64.158 billion in Q3 revenue, of which advertising revenue was $63.061 billion, up approximately 26% year-on-year. During the quarter, the number of ad impressions increased by 10% year-on-year, and the average ad price rose by 14%. The Reality Labs division brought in $443 million in revenue, below the $470 million from a year earlier, with an operating loss of $4.129 billion.

On the user data side, Meta’s Family of Apps saw an average of 3.64 billion daily active users in September, a year-on-year increase of 3%. In terms of cash flow, Meta’s operating cash flow in the third quarter was $32.786 billion, capital expenditures (including principal repayments of finance leases) were $34.906 billion, and free cash flow was negative $2.12 billion. As of the end of September, the company held $82.449 billion in cash, cash equivalents, and marketable securities.

Looking ahead to the fourth quarter, Meta expects revenue to be between $73 billion and $76 billion. The company raised its full-year 2026 total expense forecast to $175 billion to $179 billion to account for litigation expenses confirmed in Q3; meanwhile, the full-year capital expenditure expectation range has been narrowed from the previous $130 billion–$145 billion to $135 billion–$145 billion.

Meta expects Reality Labs’ full-year loss to be between $18 billion and $19 billion this year, with the potential to narrow to around $15 billion in 2027. The company stated it will continue to actively invest in artificial intelligence infrastructure and new products, and anticipates that improvements in advertising business and opportunities from AI investments will support strong overall revenue growth through 2027.

Additionally, Meta announced that its board of directors has approved the creation of a non-voting, publicly tradable Class C common stock, planned to take effect in January 2027. The company intends to issue a one-time stock dividend to existing Class A and Class B common shareholders, distributing one share of Class C common stock for every existing share held. After the distribution is completed, the market price of Class A shares is expected to reflect a split similar to a 2-for-1 split, but existing shareholders’ voting rights will not change as a result.