Meta Q3 2026 earnings: revenue up 26% as a teen settlement charge and new Class C shares arrive

Every day, 3.64 billion people open Facebook, Instagram, WhatsApp or Messenger. On 21 October, the company behind those apps showed what serving them now costs. In its Meta Q3 2026 earnings, revenue grew 26%, but a US$9.89 billion legal charge and record AI spending pushed profit and cash flow down.

Meta also confirmed a new kind of share: every shareholder will get one non-voting Class C share for each share they hold. This quarter is about who pays for growth, and who keeps control.

Meta Q3 2026 earnings: ads grew fast, bills grew faster

Meta’s revenue for the three months to 30 September was US$64.60 billion, up 26% from a year earlier. Analysts had expected about US$63.3 billion, according to LSEG figures reported by CNBC. About US$63.1 billion came from ads.

Meta showed 10% more ads, and the average price per ad rose 14%.

Costs rose much faster, up 68% to US$51.6 billion. Operating income fell 37% to about US$13.0 billion, and the operating margin halved from 40% to 20%. Net income was about US$9.9 billion, or US$3.83 per share.

Meta says that without the legal charge, operating income would have grown about 11%. It also spent US$34.9 billion on servers, data centres and networks, so free cash flow (cash left after spending) was about minus US$2.1 billion.

Meta capex for 2026 (spending on this build-out) is now expected at US$135 billion to US$145 billion. It expects fourth-quarter revenue of US$73 billion to US$76 billion.

A US$9.89 billion charge, and claims Meta denies

The charge comes from an agreement reached in August with 52 US attorneys general. Most had sued in 2023, co-led by California Attorney General Rob Bonta. The states alleged that Meta designed features that drove compulsive use by young people and misled the public about the risks.

Meta denies those claims, and the settlement is not an admission of liability. Meta’s release says the deal provides for payments of up to about US$18.59 billion. According to reports, the money will go to states over about 10 years for youth well-being, such as mental-health programmes and digital literacy.

Under the agreement, as reported by BleepingComputer and NPR, under-18s on Facebook and Instagram get a default two-hour daily limit. A parent must approve turning it off. The apps are blocked from midnight to 6 a.m. by default. Reports differ on whether the court has given final approval.

Why Meta is adding shares with no vote

On 19 October, Meta’s board declared a one-time dividend of Class C shares, in effect a two-for-one split. The new shares carry no vote. Entities tied to Mark Zuckerberg and Priscilla Chan approved the change by written consent, so there is no general shareholder vote. The charter change takes effect on 19 January 2027, and the exact payment dates are still to be set.

Meta says it wants Class C shares for staff pay, acquisitions and raising money, including for AI, without diluting Zuckerberg’s control. He holds about 60.6% of the votes but about 13.4% of the economic stake. A Founder Alignment Agreement, signed on 20 October, limits what he can do with his shares. According to Fortune, citing Meta’s filing, he also raised a possible move from California and a proposed state wealth tax with directors.

What changes for families, advertisers and app users

If you are a parent, the new teen limits come from a US legal deal. AFP reports that they cover only teens in the states that signed. Instagram’s existing Teen Accounts and Family Center supervision tools are available now. They are worth setting up today.

If you run a small business, ads on Meta are getting dearer: the average price per ad rose 14% in a year. Test Meta’s AI ad tools carefully.

If you use these apps, expect more AI inside them. Meta highlighted its Muse AI assistant on the call, building on models like Meta’s Muse Spark Open. Meta shares rose in after-hours trading on 21 October.

Our reading: a strong business carrying heavier costs

On balance, the core business looks healthy: advertisers are paying more to reach these apps.

But the costs deserve equal weight. The settlement charge is roughly one-sixth of one quarter’s revenue, so Meta can absorb it. For families, the teen limits may matter more. AI spending at this pace turned free cash flow negative this quarter. The Class C plan gives Meta a new way to fund that spending, while voting power stays where it is.

That is a fair trade for some shareholders and a worry for others. The real test: does the AI spending turn into products people value, and do the teen protections work in daily life?

Watch the Class C payment dates in early 2027, and whether next year’s spending plan grows again.