Meta Profits Skyrocket 264% as Ad Revenue Hits $63 Billion
Meta reports a massive 264% jump in net income and strong ad growth, despite a multi-billion dollar legal charge regarding teen mental health.
Meta Platforms has delivered a powerhouse financial performance for the third quarter ending September 30, 2026, reporting a massive 26 per cent year-on-year surge in revenue. The tech giant's revenue climbed to USD 64.60 billion, up from USD 51.24 billion in the same period last year. Even more striking was the jump in net income, which skyrocketed by 264 per cent to reach USD 9.86 billion, compared to USD 2.71 billion a year ago.
The Advertising Engine
The primary driver behind this growth remains Meta's dominant advertising business. Advertising revenue alone grew by 26 per cent, totaling USD 63.06 billion. This growth was fueled by two key factors: a 10 per cent increase in ad impressions across its suite of applications and a 14 per cent rise in the average price per advertisement.
Consequently, diluted earnings per share saw a significant boost, rising to USD 3.83 from the previous year's USD 1.05.
A Costly Legal Blow
Despite the soaring top-line growth, Meta's operating income took a hit, falling 37 per cent to USD 12.99 billion, down from USD 20.54 billion. This decline was primarily due to a sharp 68 per cent increase in total costs and expenses, which hit USD 51.61 billion.
The culprit for this spike was a massive USD 9.89 billion charge. This expense was linked to a settlement agreement with 52 US state attorneys general to resolve litigation concerning social media and teen mental health. Meta noted that without this specific legal charge, its operating income would have been a much higher USD 22.88 billion, and diluted earnings per share would have reached USD 7.40.
The AI Bet: High Costs, High Hopes
Meta is doubling down on the future, specifically in the realm of Artificial Intelligence. The company has raised its 2026 capital expenditure outlook to a range of USD 135-145 billion to fund AI infrastructure and other strategic priorities.
According to the chief financial officer, these AI investments are already paying off by driving incremental advertising revenue through improved user engagement, better recommendations, and more efficient monetization. While the company admits that AI investments may take longer to generate returns compared to its core business, it remains confident in the long-term potential and internal efficiencies these models will bring.
Looking Ahead to 2027
The company's outlook remains bullish. Meta expects its fourth-quarter revenue to land between USD 73 billion and USD 76 billion. To account for the recent legal charges, the full-year 2026 expense outlook has been revised upward to USD 175-179 billion.
Meta anticipates that the combination of AI advancements, new product launches, and evolving models will sustain strong overall revenue growth through 2027, as the company continues to refine its budget and capacity planning for the coming year.