Revenue rose 26% to $64.60B, yet operating margin fell to 20.1% from 40.1% a year earlier on a $9.89B legal charge and AI infrastructure spending 8-K17. Management guides Q4 revenue to $73-76B 8-K.
Meta Platforms, Inc. · Q3 2026 · Reported 21 Oct 2026 · US
Key figures
Billion USD | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
Revenue | 64.60 | 51.24 | +26.1 % |
Operating income | 12.99 | 20.54 | -36.8 % |
Net income | 9.86 | 2.71 | +264.0 % |
Diluted EPS | 3.83 USD/share | 1.05 USD/share | +264.8 % |
Operating cash flow | 32.78 | 30.00 | +9.3 % |
Operating margin | 20.1 % | 40.1 % | -20.0 pp |
Net margin | 15.3 % | 5.3 % | +10.0 pp |
Figures in USD, as reported. Margins are computed from the reported lines. Operating cash flow for the quarter are derived by subtracting year-to-date periods.
A legal charge and AI infrastructure costs cut operating income 37%
Operating income was $12.99B against $20.54B a year earlier, and operating margin fell to 20.1% from 40.1% 17. Costs and expenses rose 68%, primarily on legal-related costs including the $9.89B charge for the August 2026 agreement with 52 attorneys general, on data-center, technical-infrastructure and cloud expenses, and on third-party AI token costs 8-K. The charge sits in general and administrative expense, which rose 323% to $14.86B 24.
Excluding the charge, the company says operating income would have been $22.88B, above the $20.54B of a year earlier 8-K. That is a company calculation, not a reported figure. It suggests operating income would have risen without the charge, but only if the legal charge is treated as non-recurring. Cost of revenue rose 45% and research and development 32%, both mainly on infrastructure 22. Headcount fell 15%, which points to spending shifting toward infrastructure 8-K.
Revenue growth came from both more ads and higher prices
Advertising revenue rose 26% to $63.06B 19. Ad impressions grew 10% and average price per ad 14% 1. Management attributes the price gain to higher advertiser demand, which it believes is mostly due to better targeting and measurement tools. Online commerce was the largest contributor to the increase 20.
Growth was widest in the United States & Canada (up 33%) and Rest of World (up 34%), while Europe grew 18% and Asia-Pacific 16% 9. Family daily active people rose only 3% to 3.64 billion, so growth in revenue per person (up 23% to $17.72) did most of the work 12. Exchange rates were a $113M headwind to total revenue 21.
The net income jump reflects a year-earlier tax charge, not operations
Net income rose 264% to $9.86B and diluted EPS to $3.83 from $1.05, even though operating income fell 8-K. The year-earlier quarter carried a $18.95B tax provision, an effective rate of 87%, against $3.14B and 24% this quarter 8-K. Net margin rose to 15.3% from 5.3% 8-K. The tax comparison, not an operating improvement, explains the gain. The company says that without the legal charge its effective tax rate would have been 17% and EPS $7.40 8-K.
Operating cash flow was strong, but capital spending outran it
Cash flow from operating activities was $32.79B, 333% of net income against 1107% a year earlier, as the lower ratio reflects the larger net income this quarter 8-K. Capital expenditures including finance lease principal were $34.91B, leaving free cash flow negative $2.12B 8-K. Cash and marketable securities were $82.45B at quarter end 8-K. The report does not give when the attorneys general settlement payments fall due.
What to watch next
Q4 revenue guidance of $73-76B, which assumes a roughly 1% foreign-currency headwind, and full-year total expenses of $175-179B 8-K.
Capex guided to $135-145B for 2026, narrowed from $130-145B, and whether free cash flow stays negative while management says it will keep investing aggressively beyond 2026 8-K.
Youth-related trials scheduled in the coming months in the U.S., and the January 2027 launch of non-voting Class C stock, which the board says is for capital raising, compensation and acquisitions 8-K.
Sources
Produced by Clarifo Research with the Clarifo financial research engine from the company's public filings. AI was used in parts of the analysis and drafting. Figures are checked automatically against the filings they come from. This is not investment advice.