Meta Platforms delivered a 26% increase in third-quarter revenue to $64.601 billion, but its accelerating buildout of AI and data-center capacity pushed quarterly free cash flow to a negative $2.12 billion, compared with positive free cash flow of $10.625 billion a year earlier. The figures show how Meta’s advertising engine is funding a far more capital-intensive phase centered on servers, networking equipment and computing facilities.
The company’s cash spending on property and equipment rose to $33.942 billion during the quarter from $18.829 billion in the same period of 2025. Including $964 million in principal payments on finance leases, infrastructure-related outflows reached $34.906 billion, exceeding Meta’s $32.786 billion in operating cash generation.
Chief Financial Officer Susan Li said Meta expects to maintain an aggressive investment pace into 2027, even though the company is still setting next year’s budgets. The third-quarter spending was primarily directed toward servers, data centers and network infrastructure, according to the company.
Meta raised its 2026 capital-expenditure outlook to between $135 billion and $145 billion, compared with a previous range of $130 billion to $145 billion. That scale places Meta among the technology companies committing unprecedented sums to the physical infrastructure needed to train and run advanced AI systems.
Advertising growth remains strong
Advertising revenue reached $63.061 billion in the quarter, rising 26% from $50.082 billion a year earlier, according to Meta’s quarterly filing. The company’s Family of Apps segment, which includes Facebook, Instagram, WhatsApp and Messenger, generated $64.158 billion in total revenue after including $1.097 billion of other revenue.
Daily active people across Meta’s apps rose 3% year over year to 3.64 billion. The company also reported a 10% increase in ad impressions and a 14% rise in average price per ad. Those figures suggest Meta extracted more revenue from its advertising inventory while continuing to expand its user base at a slower rate.
Reality Labs, Meta’s unit for virtual and augmented reality products, recorded $443 million in revenue during the quarter. The division remains a substantial drag on profitability: Meta forecast a full-year 2026 operating loss of $18 billion to $19 billion for Reality Labs, before projecting that loss could narrow to about $15 billion in 2027.
Meta expects fourth-quarter revenue between $73 billion and $76 billion. The $74.5 billion midpoint would represent roughly 15.3% growth from the third-quarter result, extending the company’s rapid top-line expansion into the final months of the year.
Legal charges cut operating profit
The revenue gains did not translate into higher reported operating income. Meta recorded $9.89 billion in costs related to a settlement involving youth mental health litigation, driving consolidated operating income down 37% from the prior-year quarter to $12.988 billion.
Net income was $9.860 billion, while diluted earnings per share came in at $3.83, according to the filing.
Separately, New Mexico state court Judge Francis Mathew ordered Meta to pay up to $25 billion in damages in a case brought by the state, which alleged consumer deception related to data privacy. The ruling was issued on Oct. 21, the same day Meta released its quarterly results.
The combination of litigation costs and infrastructure spending gives Meta a more complicated financial picture than its headline revenue growth suggests. Operating cash flow increased to $32.786 billion from $29.999 billion a year earlier, but the increase was not enough to keep pace with the company’s capital requirements.
For the first nine months of 2026, Meta generated $11.049 billion in cumulative free cash flow, down from $29.508 billion over the comparable period of 2025. Net property and equipment climbed to $253.222 billion at the end of the quarter, up from $176.40 billion at the end of 2025. Long-term debt rose over the same period to $80.922 billion from $58.744 billion.
Muse adds pressure for computing capacity
Chief Executive Officer Mark Zuckerberg said on Meta’s earnings call that the company’s Muse personal AI agent had reached more than 10 million setup users in the United States and Canada after roughly six weeks. About 25% of those users were active daily, he said.
Zuckerberg added that more than one-quarter of Muse activity involved shopping. Users had made purchases averaging more than $200, including travel-related transactions, according to his comments on the call.
Muse has not yet been broadly introduced outside the United States and Canada because of its heavy computing requirements, Zuckerberg said. Meta expects the product’s cost efficiency to improve by more than tenfold next year, while the capacity currently under construction is designed to eventually support more than 1 billion users.
That target helps explain why Meta is willing to tolerate sharply lower free cash flow. The company is building infrastructure ahead of demand for AI products that are only beginning to generate measurable commercial activity, while its advertising business continues to provide the cash base for the expansion.
Class C proposal preserves voting control
Meta also disclosed plans to create a new non-voting Class C common share. Under the proposal, Class A and Class B shareholders would receive one Class C share as a stock dividend for each share they hold.
The new shares could be used for employee equity compensation, acquisitions or other corporate purposes. The stock dividend would not raise new cash, but it would give Meta additional equity instruments for future transactions while leaving its existing voting structure intact.
For traders, the proposal adds a potential new class of Meta shares without changing the control held through the company’s current voting arrangements. The larger immediate financial question remains whether Meta’s AI infrastructure can produce returns quickly enough to justify capital spending that has already overtaken quarterly operating cash flow.
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