Meta reported on Wednesday, October 21, 2026, that revenue in the third quarter rose 26% from a year earlier to $64.60 billion, beating the roughly $63.3 billion analysts had expected. The quarter's more striking numbers are below that line: a single legal charge of $9.89 billion cut the company's operating margin to 20%, from 40% in the same quarter of 2025, and capital spending of $34.91 billion in three months left the company with negative free cash flow.
"Our investments are paying off, the core business is strong, and we're seeing velocity across the board," said Mark Zuckerberg, Meta's founder and chief executive.
The charge
The $9.89 billion charge is tied to an agreement reached in August 2026 with 52 state attorneys general over litigation on teen mental health and social media. It lands entirely in the third quarter and is the reason two of the headline figures point in opposite directions.
Income from operations fell 37% to $12.99 billion. Net income, by contrast, came to $9.86 billion, against $2.71 billion in the third quarter of 2025, and diluted earnings per share were $3.83, against $1.05. Stripping out the charge and its tax effects, Meta puts adjusted earnings per share at $7.40.
The company raised its estimate of total 2026 expenses to between $175 billion and $179 billion to absorb the settlement. It still expects full-year operating income to come in above 2025's, excluding the charge.
The spending
Capital expenditures, including principal payments on finance leases, were $34.91 billion in the quarter, up about 80% year over year, and $85.8 billion so far this year. Free cash flow was negative $2.1 billion. Guidance for full-year capital spending was narrowed to $135 billion to $145 billion, from a range that started at $130 billion.
Headcount went the other way: 66,775 employees at the end of September, down 15% from a year earlier. Family daily active people averaged 3.64 billion in September, up 3%, with average revenue per person of $17.72. Family of Apps brought in $64.2 billion of revenue and $17.1 billion of operating income; Reality Labs brought in $443 million and lost $4.1 billion. The division's losses are expected to total $18 billion to $19 billion in 2026 and narrow to about $15 billion in 2027.
For the current quarter, Meta guided to revenue of $73 billion to $76 billion.
A third class of stock
The board also approved a publicly listed Class C common stock with no voting rights, under a charter amendment taking effect on January 19, 2027, and declared a one-time stock dividend of one Class C share for every Class A and Class B share outstanding. Record and payment dates have not been set, and the dividend depends on the charter change going through.
Meta expects Class A shares to trade afterwards as though a two-for-one split had occurred. Voting power does not move: the new shares carry none, so the existing balance between Class A and the Class B shares that concentrate control is untouched. The company also entered what it calls a Founder Alignment Agreement with Zuckerberg governing sales of the Class C shares he receives, his continued service and future Class C dividends.
The shares closed the regular session at $697.43, up 0.46%, and rose about 3.8% in after-hours trading, to $723.93.
Reporting from Meta's investor relations materials and Investing.com.
