Key Notes
- Meta reported $64.6 billion in third-quarter revenue, up 26% and above consensus, as stronger advertising volume and pricing supported the business.
- A $9.89 billion legal charge reduced reported EPS to $3.83, while investment spending exceeded operating cash flow and produced negative free cash flow of $2.12 billion.
- Management forecast $73 billion–$76 billion in fourth-quarter revenue and announced plans for non-voting Class C shares, with dividend dates still to be set.
Meta Platforms Inc. (NASDAQ: META) reported third-quarter revenue of $64.60 billion, beating Wall Street expectations as advertising growth helped finance its expanding artificial-intelligence ambitions. Shares rose in initial after-hours trading.
The Facebook and Instagram parent’s October 21 results show revenue increasing 26% from a year earlier. That exceeded the $63.34 billion consensus displayed by Investing.com and finished above Meta’s own $61 billion–$64 billion forecast.
META traded at $720.64, up 3.31% from its $697.52 regular-session close, in CNBC’s quote at 20:05 UTC. That is an early extended-trading snapshot, rather than a closing reaction to the report.
The revenue beat comes with substantial qualifications: a $9.89 billion litigation charge reduced reported earnings, quarterly free cash flow turned negative, and Meta announced plans for a new non-voting share class intended to support its investment strategy.
Advertising Growth Supports the Revenue Beat
Advertising revenue reached $63.06 billion. Ad impressions increased 10% and average price per ad rose 14%, while daily users across Meta’s family of apps averaged 3.64 billion in September, up 3%.
The figures show growth in both the number of ads delivered and their average pricing. They also underline how heavily the company’s financial engine still depends on advertising, even as its product ambitions extend into agents, developer tools and immersive hardware.
Compared with the previous quarter, revenue increased by about $3.8 billion. The year-over-year growth rate eased from 28% to 26%, but the larger sales total still exceeded the upper end of management’s July guidance.
For shareholders, that distinction matters: Meta delivered more revenue than it had projected, while the pace of annual growth moderated. Neither observation alone explains how efficiently the company is converting those additional sales into profit.
A Legal Charge Distorts the Earnings Comparison
Reported diluted earnings were $3.83 a share, with net income of $9.86 billion. Operating income fell 37% to $12.99 billion, and the reported operating margin narrowed to 20% from 40% a year earlier.
Meta said excluding the litigation charge would raise EPS to $7.40 and operating income to $22.88 billion. Those company-supplied figures help isolate the charge’s effect; they should be identified separately from the reported results.
The charge relates to the August agreement with 52 attorneys general over teen mental health and social media. Meta previously described restrictions including teen time limits, nighttime access blocks and stronger parental controls, with most terms intended to last 10 years, pending judicial approval.
The broader agreement provides for payments of up to approximately $18.59 billion. The $9.89 billion recognized this quarter is an accounting charge, rather than a statement that the entire potential settlement amount left Meta’s bank accounts during these three months.
Infrastructure Spending Pushes Free Cash Flow Below Zero
Meta generated $32.79 billion in operating cash flow, but capital expenditures, including finance-lease principal payments, reached $34.91 billion. Its resulting free cash flow was negative $2.12 billion.
The deterioration follows a second quarter in which free cash flow was only $784 million, despite $31.86 billion in operating cash flow. That earlier result already showed the pressure created by infrastructure spending; the latest quarter moves the measure into negative territory.
Meta now expects annual capital expenditures of $135 billion–$145 billion, raising the lower end from $130 billion while leaving the ceiling unchanged. It also increased its total expense outlook to $175 billion–$179 billion to incorporate the legal charge.
We previously reported how Muse’s cloud-based agent workloads create demand for CPUs as well as AI accelerators. The earnings figures cover Meta’s companywide spending, so they cannot be treated as a cost breakdown for Muse alone.
Fourth-Quarter Guidance Points to Further Growth
Meta forecast fourth-quarter revenue of $73 billion–$76 billion. Management expects AI to keep improving engagement, recommendations and monetization, while newer products create additional revenue opportunities.
The distinction between those opportunities is important. Improving an established advertising system can generate returns through an existing customer base; developing a new model or agent business also requires proving demand, pricing and operating economics.
Meta’s October 12 announcement of Muse Wonder and Muse Wonder Full expands its developer and subscription offerings. The company describes those models as a step toward more capable personal and professional agents, with broader integration into Muse still being rolled out.
The company has not supplied a full-year 2027 revenue forecast or a complete spending budget for next year. Its expectation of sustained growth remains an outlook, rather than a quantified earnings commitment.
New Class C Shares Would Preserve Voting Power
Meta’s board approved a new publicly listed, non-voting Class C share class. The company intends its amended charter to become effective January 19, 2027, followed by a one-time dividend of one Class C share for each outstanding Class A or Class B share.
The record and payment dates have not been set. Meta expects the Class A price to reflect a two-for-one split effect after distribution, while saying the dividend will leave each shareholder’s voting power unchanged.
The proposed structure would give Meta additional equity it could use for financing, employee compensation and potential acquisitions. Investors should distinguish that future flexibility from an immediate capital raise: the announcement does not specify a new share offering or proceeds.
The quarter therefore combines a stronger advertising business with heavier funding demands. The revenue beat supports the operating story, while cash generation after investment and the terms of the new share class will remain central to assessing what that growth means for META shareholders.
