Meta Platforms sent shares jumping 2.5% in extended trade after posting third-quarter revenue of $64.60 billion, a 26% surge from the prior year that comfortably cleared the LSEG consensus of $63.37 billion. The number isn't just about size; it's about trajectory. Net income exploded to $9.86 billion from $2.71 billion a year earlier, though investors should note this figure includes a massive $9.89 billion charge related to a settlement with 52 US state attorneys general over teen mental health litigation. Excluding that legal hit, the underlying operational strength is undeniable.
EPS came in at $3.83, a significant leap from $1.05 in the same quarter last year. The engine behind this? Advertising. Ad revenue climbed 26% to $63.06 billion, driven by a 10% increase in impressions and a 14% rise in average price per ad. CEO Mark Zuckerberg claimed in the release that AI investments are already driving this via better recommendations and user engagement, pointing to the launch of their first frontier model, Muse Wonder.
But the real hook for traders was the forward guidance. Meta projects Q4 revenue between $73 billion and $76 billion, with a midpoint of $74.5 billion sitting above analyst expectations of $73.73 billion. They also expect full-year 2026 expenses to land between $175 billion and $179 billion. This includes a steep capital expenditure forecast of $135 billion to $145 billion, raised from the previous upper bound, signaling they aren't pulling back on infrastructure spending despite the heavy burn.
The cash flow picture tells the story of that spend. Operating cash flow was a healthy $32.79 billion, but free cash flow turned negative at -$2.12 billion due to the $34.91 billion in capex. Reality Labs losses are expected to narrow to around $15 billion in 2027, down from the $18 billion to $19 billion projected for 2026. It’s a long road to profitability for the metaverse arm, but the core business continues to fund it.
Looking ahead, Meta confirmed 2026 operating income will exceed 2025 levels, excluding that one-off legal charge. They also announced plans for a new Class C non-voting stock effective January 2027, a move likely aimed at facilitating easier capital raising and employee compensation without diluting founder control. Daily active users reached 3.64 billion in September, up 3% YoY, providing the massive audience base that keeps the ad machine running.