MetaQ3 Revenue Rises 26% as Board Approves Non-Voting Class C Shares – Unite.AI

Meta Platforms reported financial results for the third quarter ended September 30, 2026 on October 21, 2026, reporting revenue of $64.6 billion, up 26% from the prior year, and announcing that its Board of Directors has approved a new class of publicly traded, non-voting Class C common stock.

“This quarter we achieved important milestones toward delivering personal superintelligence for everyone, including the launch of Muse and Muse Wonder, our first frontier model,” said Mark Zuckerberg, founder and CEO of Meta, in the company’s Q3 2026 earnings release. Zuckerberg added that the company’s investments are paying off, described the core business as strong and said Meta is seeing speed across the board.

Third quarter results and legal charges

Total costs and expenses were $51.61 billion, up 68% year over year, a figure that includes legal fees recorded in general and administrative expenses. Operating profit was $12.99 billion, down 37%, and operating margin was 20%, compared to 40% in the third quarter of 2025. Net income increased 264% to $9.86 billion, while diluted earnings per share increased 265% to $3.83 from $1.05. The effective tax rate was 24%, compared to 87% a year earlier.

In August 2026, Meta announced a settlement with 52 U.S. state attorneys general to resolve disputes related to adolescent mental health and social media, which provides for payments of up to approximately $18.59 billion. Third-quarter costs include a $9.89 billion charge related to that deal. Meta said that excluding the charge, quarterly profit from operations would have been $22.88 billion, diluted EPS would have been $7.40 and the effective tax rate would have been 17%.

Daily active householders averaged 3.64 billion in September 2026, an increase of 3% year-on-year. Ad impressions served across the company’s family of apps increased 10% and the average price per ad increased 14%.

Capital expenditures, including capital payments on finance leases, totaled $34.91 billion. Cash flow from operating activities was $32.79 billion, while free cash flow was negative $2.12 billion. As of September 30, 2026, cash, cash equivalents and marketable securities totaled $82.45 billion, while dividend and dividend equivalent payments totaled $1.36 billion. Headcount was 66,775, down 15% year over year.

By segment, Family of Apps revenue was $64.16 billion with operating profit of $17.12 billion, and advertising revenue within the segment was $63.06 billion. Reality Labs, which covers the company’s virtual and augmented reality hardware, software and consumer content, reported revenue of $443 million and an operating loss of $4.13 billion.

Meta said it will host a conference call to discuss the results at 1:30 pm Pacific time on Oct. 21, 2026, with a replay and transcripts to be posted on its investor relations website.

Fourth quarter guidance and 2027 plans

Meta said it expects total revenues for fourth quarter 2026 to be between $73 billion and $76 billion, a forecast that assumes foreign currency represents a headwind of about 1% to year-over-year revenue growth at current exchange rates. The company raised its full-year 2026 spending forecast from $175 billion to $179 billion to incorporate legal expenses and said that, excluding expenses, it continues to expect 2026 operating profit to be above the 2025 level.

The company narrowed its capital spending outlook for 2026, including principal payments on finance leases, to $135 billion to $145 billion, from a previous range of $130 billion to $145 billion. Meta said it expects losses for Reality Labs of between $18 billion and $19 billion for 2026, a decline from 2025, and expects those losses to narrow to about $15 billion in 2027 as investments are reallocated toward other priority areas, primarily artificial intelligence. Absent changes to its tax landscape, Meta expects a fourth-quarter 2026 tax rate of between 15% and 17%.

Meta said it continues to monitor active legal and regulatory issues that could significantly affect its business and financial results, noting scrutiny of youth-related matters in several markets and a number of youth-related trials that it said are expected in the coming months in the United States.

Looking beyond 2026, Meta said it is still developing its budget and capacity plans for 2027, but plans to continue investing aggressively to support both its core business and emerging AI initiatives. The company said its investments in AI are already delivering substantial incremental advertising revenue through stronger engagement, better recommendations and more efficient monetization, and that its investments in MSL are creating the technology and infrastructure needed to unlock significant new revenue opportunities.

Meta said it is not providing full-year 2027 revenue forecasts, adding that the benefits its AI investments are delivering to the core business, combined with emerging opportunities from model advancements and product launches, position it to sustain strong overall revenue growth through 2027.

Class C dividends, listing and advisors

The Class C approval followed the unanimous recommendation of a dedicated Committee of disinterested and independent directors, established by the Board to evaluate Meta’s capital structure. The committee and the board have determined that the creation of the new class is advisable, fair and in the best interests of Meta and its shareholders.

Reasons cited by the committee included giving Meta the ability for capital raising, employee compensation, potential acquisitions and other general corporate purposes, citing the significant scale of investments required in the context of the industry’s AI transformation; continuing to maximize long-term value, with the committee noting that Meta’s stock price has increased more than 1,700% since its IPO compared to approximately 495% for the S&P 500 over the same period; and ensure that Zuckerberg continues to lead the company, maintaining what the committee called the founder-led model that has driven Meta’s success since its inception.

Meta intends to file an amended and restated certificate of incorporation in Delaware with an effective date of January 19, 2027, and such certificate has been approved with the written consent of stockholders. The Board has declared a one-time stock dividend equal to one Class C share for each outstanding share of Class A and Class B common stock, contingent upon and payable upon effective date of the certificate, with record and payment dates to be subsequently set by the Board. Meta said it expects the market price of Class A to reflect the effect of a two-for-one stock split after the payment date and that the dividend will not change the voting power of any shareholder.

Meta has also entered into a founder’s alignment agreement with Zuckerberg that sets forth the terms for his sales of Class C shares received in the dividend, his service to the company, and the terms of potential future Class C stock dividends. The Class A shares will continue to trade on Nasdaq, and Meta intends to qualify the Class C shares for a listing on Nasdaq upon issuance. The company said additional information will be available in a Form 8-K and information statement to be filed with the Securities and Exchange Commission. Moelis & Company served as independent financial advisor to the Special Committee and Morgan Stanley served as financial advisor to Meta.