Meta Beats Q3, Guides Q4 Above Estimates, Adds Class C Stock

Meta Platforms (META) reported third-quarter earnings of $7.40 a share excluding a $9.89 billion legal charge, $0.86 above the $6.54 FactSet consensus, on revenue that rose 26.1% to $64.6 billion against $63.34 billion expected. Including the charge, GAAP EPS was $3.83. Meta guided fourth-quarter revenue to $73 billion to $76 billion, above the $73.65 billion consensus at the midpoint, raised its 2026 expense outlook to cover the charge, narrowed its capital spending range, and approved a new class of publicly traded, non-voting stock. Shares closed at $697.52, up $3.27, per the wire headline. Figures come from Meta's third-quarter release.

Q3 results

Year-ago net income was held down by a tax provision of $18.95 billion, an 87% effective rate, which is why net income and GAAP EPS rose sharply even as operating income fell. Excluding the legal charge, operating income would have been $22.88 billion, a margin of about 35%, by our calculation. Revenue came in above the top of Meta's own $61 billion to $64 billion outlook from the second-quarter release. Bloomberg's pre-earnings consensus was $3.56 of EPS, which compares with the $3.83 GAAP result.

The $9.89 billion legal charge

Meta recorded $9.89 billion in general and administrative expenses tied to an August 2026 agreement with 52 U.S. state attorneys general to resolve litigation over teen mental health and social media. The agreement provides for payments of up to about $18.59 billion, according to the release. Excluding the charge, the effective tax rate was 17% rather than the reported 24%. Total costs and expenses excluding the charge were about $41.7 billion, up about 36% from a year earlier, by our calculation.

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Outlook: Q4 above estimates, higher expenses

The Q4 revenue midpoint of $74.5 billion is about 1.2% above the $73.65 billion consensus, by our calculation. The expense range rose by about $10 billion at the midpoint, by our calculation, which matches the $9.9 billion legal charge; the prior range comes from Meta's second-quarter release. Capital expenditures, including finance lease principal, were $34.91 billion in the quarter, and the full-year range was narrowed by raising the low end by $5 billion. Meta also expects 2026 operating income excluding the legal charge to exceed 2025.

Meta did not give a full-year 2027 revenue outlook. It said the benefits of its AI investments in the core business, along with emerging opportunities from model advances and product launches, position it to sustain strong overall revenue growth throughout 2027. It expects Reality Labs losses to narrow to about $15 billion in 2027 as investment shifts toward AI. CEO Mark Zuckerberg said Meta hit "major milestones" toward personal superintelligence, including the launch of Muse and Muse Wonder, its first frontier model; see our Muse download coverage.

Cash flow and capital return

Operating cash flow was $32.79 billion, but capital spending pushed free cash flow to negative $2.12 billion, against positive $10.63 billion a year earlier. Meta ended the quarter with $82.45 billion of cash, equivalents and marketable securities. It paid $1.36 billion in dividends and dividend equivalents and made no share repurchases, against $3.33 billion of buybacks in Q3 2025.

New Class C non-voting stock

Meta's board approved a publicly listed, non-voting Class C common stock, with the charter amendment effective January 19, 2027. It declared a one-time dividend of one Class C share for each Class A and Class B share, payable after the amendment takes effect, with record and payment dates to be set. Voting power does not change, and Meta expects the Class A price to reflect a two-for-one split after the dividend is paid. Meta intends to list Class C on Nasdaq. The board approved the change on the unanimous recommendation of a special committee of independent directors, and shareholders approved the amended charter by written consent. Meta cited raising capital, employee compensation, acquisitions and keeping Mark Zuckerberg leading the company as purposes, and entered a Founder Alignment Agreement with him covering his sales of Class C shares, his service and conditions for future Class C dividends.

Sources: Meta third-quarter 2026 results release and Meta second-quarter 2026 results release. Consensus figures are FactSet, as shown in the wire headline, and Bloomberg. This is informational, not a recommendation to buy or sell.