Meta (META.US) Q3 revenue increased 26% year over year to US$64.6 billion, and nearly 10 billion litigation costs dragged down operating profit by 37%

The Zhitong Finance App learned that Meta (META.US) announced financial results for the third quarter of 2026 after the US stock market closed on Wednesday. According to the data, the company's revenue for the quarter was US$64.601 billion, up 26% year on year; net profit was US$9.860 billion, up 264% year on year; and diluted earnings per share were 3.83 US dollars, up 265% year on year. However, operating profit declined 37% year over year to US$12.988 billion, and operating margin fell to 20% from 40% in the same period last year. Meta's stock price rose more than 7% after the market.

Meta said total costs and expenses surged 68% year over year to $51,613 billion in the third quarter, including $9.89 billion confirmed as a result of settlements with 52 US state attorneys general regarding youth mental health and social media related lawsuits. Excluding this expenditure, the company's operating profit for the quarter will reach US$22.887 billion, and diluted earnings per share will rise to US$7.40.

It is worth noting that the sharp increase in net profit was mainly affected by the low base formed by high income tax expenses in the same period last year. Meta's income tax expenses for the third quarter were $3.141 billion, far lower than the $18.954 billion in the same period last year, and the actual tax rate fell from 87% to 24%.

By business, Meta's app family's third-quarter revenue was US$64,158 billion, of which advertising revenue was US$63.61 billion, an increase of about 26% over the previous year. The number of ad impressions increased by 10% year-on-year during the quarter, and the average advertising price increased 14%. The Reality Labs division's revenue was US$443 million, down from US$470 million in the same period last year, with an operating loss of US$4.129 billion.

In terms of user data, the average number of daily active users in Meta's app family reached 3.64 billion in September, an increase of 3% over the previous year. In terms of cash flow, Meta's third quarter operating cash flow was US$32.786 billion, capital expenditure (including repayment of financial lease principal) was US$34.906 billion, and free cash flow was negative US$2.120 billion. By the end of September, the company held US$82,449 million 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 the total cost forecast for the full year of 2026 to $175 billion to $179 billion to take into account litigation costs confirmed in the third quarter; at the same time, it narrowed the annual capital expenditure forecast range from the previous 130 billion to 145 billion US dollars to 145 billion US dollars.

Meta predicts that Reality Labs' loss for the full year of this year will be between 18 billion and 19 billion US dollars, and is expected to narrow to about 15 billion US dollars in 2027. The company said it will continue to actively invest in artificial intelligence infrastructure and new products, and expects that advertising business improvements and new product opportunities brought about by AI investment will support strong overall revenue growth in 2027.

Additionally, Meta announced that its board of directors has approved the establishment of non-voting Class C common shares to be publicly listed, which is scheduled to take effect in January 2027. The company plans to distribute a one-time stock dividend to existing Class A and Class B common shareholders at the rate of one Class C common share per share. It is expected that after the distribution is completed, the market price of Class A common stock will reflect a split effect similar to a split in two, but the voting rights of existing shareholders will not change as a result.