Mark Zuckerberg's Meta said Wednesday that third-quarter revenue rose to $64.6 billion, above the $63.3 billion expected by analysts, according to Visible Alpha consensus from S&P Global Market Intelligence. Net income came in at $9.9 billion, or $3.83 a share, compared with $2.7 billion a year ago. However, operating income, profit from the company's core business, slumped to $13 billion from $20.5 billion in the same period last year and against the $16.9 billion analysts had forecast. Operating margin sank to 20%, down from 31% in the prior quarter and 40% a year earlier.
The earnings were overshadowed by two major legal developments. Hours before the results were released, a New Mexico judge ordered Meta to pay $25 billion in penalties related to the Cambridge Analytica data privacy scandal. A jury had earlier found more than 43 million violations, meaning the penalty could have reached nearly $220 billion. Meta intends to appeal. Separately, the third-quarter results included a charge from a $10 billion settlement Meta reached with a group of state attorneys general over youth safety. The settlement terms require Meta to pay about $18 billion to the states over the next decade, depending on cooperation from TikTok and Google's YouTube. Without the charge, operating income would have been $22.9 billion and earnings $7.40 a share.
Capital expenditures, closely watched by tech investors, hit $34.9 billion in the quarter, up from $31 billion in the second quarter and $19.4 billion a year ago. Meta slightly narrowed its full-year capex guidance to $135 billion to $145 billion, from the previous $130 billion to $145 billion. Free cash flow turned negative at $2.1 billion, compared with $784 million in the second quarter and a positive $10.6 billion a year earlier. Melissa Otto, global head of Visible Alpha research at S&P Global, noted before the results that consensus capex for 2026 had risen more than $14 billion since April to about $140 billion, almost double 2025. She added that investors continue to seek clarity on how the spending will translate into shareholder returns. Overall tech infrastructure capex is expected to reach $790 billion in 2026, nearly double the $404 billion in 2025, and is projected to rise to $1.2 trillion in 2027, meaning companies will have spent nearly $2 trillion on the AI buildout over two years.