Meta Platforms has announced that its net income for the third quarter of 2026 has more than tripled, climbing 264 per cent year-on-year to reach $9.86 billion. This substantial increase is attributed to a rise in advertising revenue, which has significantly bolstered the company’s financial performance. However, the results were tempered by a $9.89 billion legal charge that adversely impacted operating income.

The operating income saw a decline of 37 per cent, dropping to $12.99 billion from $20.54 billion in the same quarter of the previous year. This decline occurred despite an overall revenue increase of 26 per cent, which amounted to $64.60 billion for the quarter ending September 30, compared to $51.24 billion during the same period last year.

In the previous year, net income was reported at $2.71 billion, while diluted earnings per share rose significantly to $3.83, up from $1.05. Advertising continued to be the primary source of revenue for Meta, contributing $63.06 billion, an increase of 26 per cent year-on-year.

Cost Increases and Legal Charges Impact Operating Income

Despite the impressive revenue growth and net income increase, total costs and expenses surged by 68 per cent to reach $51.61 billion. This rise in costs was largely attributed to the aforementioned legal charge, which relates to a settlement with 52 US state attorneys general over litigation concerning the impact of social media on teen mental health. Meta indicated that without this legal charge, operating income would have been significantly higher at $22.88 billion.

The diluted earnings per share, if excluding the legal charge, would have been projected at $7.40 instead of the reported $3.83. This discrepancy highlights the substantial impact that legal and operational costs can have on financial outcomes.

Meta’s advertising performance also saw positive trends, with the number of ad impressions across its suite of applications increasing by 10 per cent. Additionally, the average price per advertisement rose by 14 per cent year-on-year, further contributing to the revenue growth.

Future Revenue Projections and AI Investments

Looking ahead, Meta has projected its revenue for the fourth quarter to be between $73 billion and $76 billion. The company has also revised its full-year expense outlook for 2026 upwards to a range of Rs 175-179 billion, factoring in the legal charge. Furthermore, the capital expenditure forecast for 2026 has been adjusted to between Rs 135-145 billion, up from the previous estimate of Rs 130-145 billion.

This increase in spending is part of Meta’s ongoing investment in artificial intelligence (AI) infrastructure and other strategic business priorities. The Chief Financial Officer noted that investments in AI are already yielding significant incremental advertising revenue through enhanced engagement and improved monetisation strategies.

While these investments are expected to take longer to generate returns compared to the core business, Meta remains optimistic about their long-term potential. The company believes that advancements in AI models and new product launches will support robust revenue growth through 2027, as it continues to refine its budget and capacity plans for the upcoming year.

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