Third-quarter revenue rose 26% to $64.60 billion and the fourth-quarter forecast came in at $73 billion to $76 billion. Free cash flow was negative $2.12 billion, against positive $10.63 billion a year earlier, and the stock reversed an after-hours gain.
Meta Platforms' advertising machine is running faster than Wall Street expected. Its spending on artificial intelligence is running faster still.
Revenue for the third quarter rose 26% to $64.60 billion, above the LSEG consensus of $63.37 billion. Advertising revenue was $63.06 billion. The growth came from both volume and price: ad impressions rose 10% and the average price per ad rose 14%. Daily active people across Meta's apps averaged 3.64 billion in September, up 3%. For the fourth quarter, Meta guided to revenue of $73 billion to $76 billion.
Where the cash went
Operating cash flow was $32.79 billion. Capital spending, including principal payments on finance leases, was $34.91 billion, up from $19.37 billion a year earlier. Spending therefore ran at about 1.06 times the cash the business produced, and free cash flow was negative $2.12 billion. Meta ended the quarter with $82.45 billion of cash and marketable securities.
The company narrowed its 2026 capital spending range to $135 billion to $145 billion, from $130 billion to $145 billion, raising the floor.
The charge and the margin
Reported profit was cut by a $9.89 billion legal charge tied to Meta's August agreement with 52 state attorneys general over teen mental health litigation, which provides for payments of up to about $18.59 billion. Including the charge, operating income fell to $12.99 billion, a 20% margin, from $20.54 billion and 40% a year earlier. Diluted earnings were $3.83 a share. Excluding the charge, by Meta's own adjustment, operating income was $22.88 billion and earnings were $7.40 a share.
The adjusted margin of about 35% is still about five percentage points below last year's 40%, even though Meta's headcount of 66,775 is 15% smaller. Reality Labs lost $4.13 billion in the quarter. Meta expects that unit to lose $18 billion to $19 billion this year and about $15 billion in 2027.
Meta raised its 2026 expense forecast to $175 billion to $179 billion to include the charge, and said that, excluding it, operating income this year should still exceed 2025's. It gave no revenue outlook for 2027 beyond saying it is positioned to sustain strong growth. The release also flagged several youth-related trials scheduled in the coming months.
The reaction
Meta closed Wednesday at $697.52. The stock jumped as much as 7.3% after hours on the results and the announcement of a new non-voting share class, then gave the gain back overnight. It was indicated near $686 at 5:33 a.m. Eastern Thursday, down about 1.6%, as Nasdaq 100 futures fell nearly 2%.
Two readings
The bullish reading is that ad pricing power is funding the build-out: a 14% rise in price per ad suggests AI is already improving targeting and returns for advertisers, and the fourth-quarter forecast implies another large step up in revenue.
The cautious reading is that the business is now spending more than it earns in cash, margins are lower even excluding the charge and legal exposure from youth cases is still building. A revenue beat no longer settles the question when the spending line is growing faster.
What to watch
Fourth-quarter revenue against the $73 billion to $76 billion range; capital spending, which the full-year range implies will be roughly $49 billion to $59 billion in the fourth quarter; how Meta frames 2027 spending; and the outcome of the scheduled youth trials.