Overview
Meta Platforms
META · NASDAQQ3 2026Communication Services · Digital Advertising
Since the Report − 10.4%
Revenue grew 26.1% year over year, EPS missed the estimate by 29.9%; the stock rose 1.8% in its first reaction.
- RevenueQ3
- $64.60B
- Estimate $63.4B · 1.9% Beat
- EPSGAAP
- $3.83
- Estimate $5.46 · 29.9% Below
Verdict
SELLMeta's revenue beat expectations by 1.9%, but a $9.89 billion legal charge pushed GAAP EPS 29.9% below estimates. The stock first rose 6.7% after hours, but gave back most of the gain after the call and was up 1.8% as of 6:33 p.m. ET. The next thing to watch is whether free cash flow turns positive again as capital spending keeps growing.
Close on Report DayOct 21
$697.52▲ 1.8%Report-Day Move
- Market Cap(Today)
- ≈ $1.60 T
- 1Y Return(At Report)
- − 5%
- P/E(At Today's Price · $29.33 · Trailing 12M)
- 21.3
- Net Margin(Trailing 12M)
- 31.2%
Earnings Summary
In 30 Seconds- Revenue of $64.60 billion beat estimates by 1.9%, but the legal charge cut GAAP EPS to $3.83, 29.9% below estimates.
- The fourth-quarter revenue guidance midpoint is $74.5 billion, while capital spending turned free cash flow negative.
- The stock first rose 6.7% after hours, but gave back most of the gain after the call and was up 1.8% as of 6:33 p.m. ET.
The Numbers
Operating Margin
20.1%
Year Ago 40.1% · 20-Point Contraction
Capital Expenditures
$34.91B
▲ 80% YoY · Year Ago $19.37B
Free Cash Flow
−$2.12B
Year Ago $10.63B
Stock Reaction
▲ 1.8%
After Hours 6:33 P.m. ET · Post-Call
Quarterly Revenue ($ Billion)
51.24
Q3 25 · $51.2 B
59.89
Q4 25 · $59.9 B · QoQ + 16.9%
56.31
Q1 26 · $56.3 B · QoQ − 6.0%
60.80
Q2 26 · $60.8 B · QoQ + 8.0%
64.60
Q3 26 · $64.6 B · QoQ + 6.2% · YoY + 26.1%
73–76
Q4 26E · 73–76 · QoQ + 15.3% · YoY + 24.4%
- Q3 25
- Q4 25
- Q1 26
- Q2 26
- Q3 26
- Q4 26E
Q4 2026 Company Guidance
- Q4 Revenue73 – 76 billion73 billion76 billion
Midpoint 74.5 · Market Expectation 73.61.2% Above Estimate ▲
- 2026 Total Expenses175 – 179 billion175 billion179 billion
Prior Range 165–169 · Legal Charge AddedRaised 6.0% ▼
- 2026 Capex135 – 145 billion135 billion145 billion
Prior Range 130–145Midpoint Up 1.8% ▲
- 2026 Reality Labs Loss18 – 19 billion18 billion19 billion
2025 Actual 19.19Loss Down 3.6% ▲
- Q4 Tax Rate15% – 17%15%17%
Q3 Actual 24% · Ex-Charge 17%In Line ✓
How to Read the Chart
The blue band is the company's low-high range; its length shows how much room the company left itself. The black triangle and the line beneath it mark where the market expected, and the notch in the band is the range's midpoint. The triangle appears only where a market expectation is known. When the company gave a single number rather than a range and no market expectation is known, that row gets no band at all: there is no length to measure and no position to compare. Axis is ±7.2% around the midpoint.
Segment and KPI Data
Revenue by Segment
- Advertising$63.1 BShare 97.6%▲ 25.9% YoY
Within Family of Apps
- Other Revenue$1.10 BShare 1.7%▲ 59.0% YoY
Within Family of Apps
- Reality Labs$443 MShare 0.7%▼ 5.7% YoY
Key Metrics
Family Daily Active People
3.64 B people
▲ 3.0% YoYPress Release
Ad Impression Growth
10.0%
Press Release
Price Per Ad Growth
14.0%
Press Release
Operating Cash Flow
$32.8 B
▲ 9.3% YoYPress Release
Headcount
66.8 K employees
▼ 15.0% YoYPress Release
Shares are computed over the segment total: $64.6 B. Source: Press Release.
Metrics come only from the company's own filings; each one names the document it was taken from.
“Our family of apps is now used by 3.64 billion people each day. … We expect to improve its cost efficiency by more than 10x in the next year.”
- Muse Is Scaling Fast
- Compute Is the Main Constraint
- 10x Cost-efficiency Goal
Summary and Review
Summary
Meta reported third-quarter revenue of $64.60 billion. That is up 26.1% year over year. Revenue beat the $63.4 billion market expectation by 1.9%, which leaves the revenue gate in line. GAAP EPS was $3.83, 29.9% below the $5.46 estimate. What closed the profit gate was a $9.89 billion charge for the settlement with state attorneys general. The midpoint of fourth-quarter revenue guidance is $74.5 billion; that is 1.2% above estimates, so the guidance gate is also in line.
The stock closed the day at $697.52. After hours it reached $744.21 at 4:41 p.m. ET. Most of the gain faded after the call; as of 6:33 p.m. ET the price was $710.10, up 1.8% from the close. The market did not read this report as a litigation story but as an advertising story. Advertising revenue grew 25.9% year over year and the average price per ad rose 14%. The company also announced a new non-voting Class C stock and an effective two-for-one split.
The score is 48 and the verdict is sell; the rating weighs the quarter, not the stock. Excluding the legal charge, EPS would have been $7.40, but our comparison set uses the GAAP definition. The main reservation is on the cash side. Capital spending rose to $34.91 billion and free cash flow turned negative at $2.12 billion. The company also raised full-year expense guidance to $175-179 billion. That keeps the score at the top of its band, but not outside it.
Full Review
The ad engine kept its pace.
Advertising revenue was $63.06 billion. That is up 25.9% year over year. Total Family of Apps revenue reached $64.16 billion. This quarter, growth came from price. Ad impressions rose 10% year over year, while the average price per ad increased 14%. The second quarter was the reverse: impressions grew 14% and price 12%. Family daily active people rose to 3.64 billion, up 3% year over year. Other revenue grew 59% to $1.10 billion. Total revenue growth slowed from 28% in the second quarter to 26.1%. Even so, revenue topped the high end of the company's own $61-64 billion range. Constant-currency growth was also 26%, so the currency effect was limited. Nine-month revenue reached $181.71 billion, up 29% year over year. According to the earnings call, partnership ads grew 97% to an annual run rate above $15 billion.
The legal charge halved profit.
Operating income was $12.99 billion. A year earlier it was $20.54 billion, a decline of 37%. Operating margin fell from 40.1% to 20.1%, a contraction of 20 points. Most of that gap comes from a single item. The August settlement with 52 attorneys general provides for payments of up to $18.59 billion in total. The portion booked this quarter was $9.89 billion. Excluding the charge, operating income would have been $22.88 billion and the margin 35.4%. That is still a contraction of 4.7 points from a year ago. The 264% jump in net income is misleading. The year-ago quarter included a one-time tax charge of $15.93 billion. Research and development expense also rose 32% to $20.05 billion. Other youth-related trials are scheduled in the coming months.
Capex consumed free cash flow.
Capital spending, including principal payments on finance leases, was $34.91 billion. A year earlier it was $19.37 billion, an increase of 80%. Operating cash flow grew only 9.3% to $32.79 billion. As a result, free cash flow turned negative at $2.12 billion. A year earlier it was a positive $10.63 billion. Nine-month free cash flow was $11.05 billion, compared with $29.51 billion in the same period last year. The company narrowed its full-year capex range to $135-145 billion; the low end rose by $5 billion. It also said investment will remain aggressive in 2027. On the call, CFO Susan Li gave no 2027 budget figure; details will come on the fourth-quarter call. Zuckerberg said compute capacity is the main constraint. Cash and marketable securities stood at $82.45 billion. In this picture, the direction of free cash flow now matters as much as ad growth.
Reality Labs shrinks, a new share class arrives.
Reality Labs revenue was $443 million, down 5.7% year over year. Its operating loss narrowed to $4.13 billion from $4.43 billion a year earlier. The company expects a 2026 loss of $18-19 billion. That midpoint is 3.6% below the 2025 loss of $19.19 billion. The loss is expected to fall to about $15 billion in 2027. The same release announced a non-voting Class C common stock. Its effective date is January 19, 2027. One Class C share will be distributed as a dividend for each Class A and Class B share. The Class A price is expected to reflect this like a two-for-one split. The company says it may use the new class for capital raising, compensation and acquisitions. On the call, Meta said Muse reached more than 10 million people in the U.S. and Canada in about six weeks. About 25% of them use it on a given day.
Next quarter, watch a single line.
Fourth-quarter revenue guidance is $73-76 billion. The midpoint implies 24.4% growth over the year-ago fourth quarter. The company gave no full-year 2027 revenue outlook, but said strong growth should continue throughout the year. In the next report, look at one line: free cash flow. If revenue growth stays above 24% and free cash flow turns positive again, the ad engine is carrying the investment load. If growth falls below 24% and cash stays negative, this quarter's non-legal problem is spending. The second gauge is the full-year expense range; a move toward the top end would deepen margin pressure. The call gave no 2027 figure, so the first signal will be the January budget. For a general method, see our guide on how to read earnings day.
Looking Ahead
Strengths and Risks
5 Strengths · 6 RisksStrengths
5- Revenue of $64.60 billion beat market expectations by 1.9% and topped the high end of the company's own range.
- The average price per ad rose 14% year over yearAI-driven targeting is supporting pricing.
- The fourth-quarter revenue guidance midpoint of $74.5 billion is 1.2% above estimates.
- The Reality Labs loss narrowed 6.8% year over year and is expected to fall to about $15 billion in 2027.
- Muse reached more than 10 million people in the U.S. and Canada in six weeksAbout 25% use it daily.
Risks
6- Free cash flow turned negative at $2.12 billionCapital spending is growing faster than operating cash flow.
- The attorneys general settlement provides for up to $18.59 billion in payments, and other youth trials are pending.
- Full-year expense guidance rose to $175-179 billionEven excluding the charge, the margin contracted 4.7 points.
- The non-voting Class C stock carries dilution risk through new issuance for capital raising.
- Ad impression growth slowed from 14% in the second quarter to 10%.
- The company gave no 2027 capex or expense figureCompute capacity is limiting Muse's rollout.
What to Watch
4- The Class C stock becomes effective on January 19, 2027; record and payment dates for the dividend will follow.
- Fourth-quarter earnings are expected in late January 2027, when the 2027 capex budget should become clearer.
- Youth-related trials in the U.S. are scheduled over the coming months.
- Muse comes to Meta glasses in November 2026.
Upcoming Earnings
To Understand This