Meta Revenue Jumps 26% to $64.6 Billion, but a $9.89 Billion Legal Charge Cuts Profit

Meta reported third-quarter revenue of $64.6 billion on October 21, up 26 percent from a year earlier and above analysts' expectations, while a $9.89 billion legal charge cut operating income by 37 percent to $12.99 billion (Meta results release, SEC filing, CNBC). On the same day, a New Mexico judge ordered the company to pay $25 billion in a separate case.

The numbers behind the quarter

Meta Q3	2026	2025	Change
Revenue	$64,601m	$51,242m	+26%
Costs and expenses	$51.6bn	-	+68%
Operating income	$12.99bn	-	-37%
Operating margin	20%	40%	35% excluding the legal charge
Net income	$9.86bn	$2.71bn	-
Diluted EPS	$3.83	$1.05	$7.40 excluding the charge
Capital expenditure	$34.91bn	-	-
Free cash flow	-$2.12bn	-	-

The year-ago net income comparison is distorted: Meta's third quarter of 2025 included a one-time non-cash income tax charge of about $15.9 billion, which is why that quarter's profit was so low.

The legal charge explains most of this quarter's squeeze. Meta reached an agreement in August 2026 with 52 state attorneys general over claims about teen mental health and social media, with payments of up to about $18.59 billion, and booked $9.89 billion of that in the quarter. Excluding it, Meta says operating income would have been $22.88 billion. Those adjusted figures are Meta's own framing, not a standard accounting measure.

What the ad business did

Ad impressions grew 10 percent and the average price per ad rose 14 percent, which together account for most of the revenue gain. Meta's family daily active people averaged 3.64 billion in September, up 3 percent. Chief executive Mark Zuckerberg said "the core business is strong, and we're seeing velocity across the board." Headcount moved the other way: Meta ended the quarter with 66,775 employees, down 15 percent.

An AI build-out that now dominates the budget

Capital expenditure, including finance lease principal, was $34.91 billion in three months, more than the $32.79 billion of operating cash flow, so free cash flow was negative (Fortune). Meta still held $82.45 billion in cash and marketable securities.

Meta guidance	Range
2026 capex	$135bn to $145bn (was $130bn to $145bn)
2026 total expenses	$175bn to $179bn
Q4 2026 revenue	$73bn to $76bn
Reality Labs loss	$18bn to $19bn in 2026; around $15bn in 2027

Raising the bottom of the capex range means the lowest outcome Meta now plans for is higher than before. Spending at this level shows up in orders for chips, memory, networking and power equipment across the industry.

A new share class

Meta also announced a new class of non-voting Class C common stock, effective January 19, 2027. A one-time stock dividend will give holders one Class C share for each Class A or Class B share, which Meta expects to work like a two-for-one split (Stock Titan). Record and payment dates are still to be set, and the release also describes a Founder Alignment Agreement with Zuckerberg. Because Class C shares carry no vote, Meta can issue more equity without diluting existing voting control.

The separate $25 billion order

The earnings release says nothing about New Mexico. On October 21, Judge Francis Mathew of the First Judicial District Court in Santa Fe ordered Meta to pay $25 billion to the state, according to ABC News and Source NM. A jury had found in late September that Meta committed roughly 43 to 44 million violations of New Mexico consumer protection law, siding with the state on 31 of 34 counts. The state had asked for $35 billion to $45 billion, and Source NM reports the award carries 15 percent annual interest until paid. Meta is expected to appeal, and the quarterly release does not say how it would account for the amount.

What to watch next

Whether the fourth-quarter revenue guide holds, how much of the capex range Meta actually spends, the New Mexico appeal, and the board's record date for Class C shares.

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