The key facts
- Meta's revenue grew 26% to $64.6 billion, net income was $9.86 billion ($3.83 per share) versus $2.71 billion a year earlier
- AI agent Muse has gathered more than 10 million users in the US and Canada; average purchase through the agent is about $200
- Free cash flow turned negative for the first time since 2012; 2026 capex is estimated at $135–145 billion
Strong quarter and share growth
Meta shares rose about 5% in after-hours trading on Wednesday, October 22, following the July–September report. Revenue increased 26% to $64.6 billion thanks to AI recommendations, growth in ad impressions and ad prices. Net income was $9.86 billion, or $3.83 per share, versus $2.71 billion ($1.05) a year earlier, when the result was reduced by a one-time tax payment. Daily users of the 'family of apps' (Facebook, Messenger, Instagram, WhatsApp) grew 3% to 3.64 billion on average in September. Revenue guidance for the current quarter is $73–76 billion, with the midpoint above analysts' expectations of $73.65 billion.
The bet on Muse
Investors are assessing the prospects of Muse — a personal AI agent launched in September. Mark Zuckerberg said that Muse could eventually generate more revenue per user than Instagram and Facebook, and that the monetization model will include subscriptions, advertising and e-commerce tools. According to him, more than 10 million people in the US and Canada have created Muse accounts; a significant share of activity is related to shopping and travel, with the average purchase amount about $200. The goal is to scale the service to 1 billion users. Ben Barringer, head of technology research at Quilter Cheviot, called the early signals promising and noted that Meta is seeking to reach profitability faster than usual. Zuckerberg acknowledged high computing costs but promised to improve efficiency more than tenfold within a year.
Spending and negative cash flow
Due to intensive AI investments, Meta's quarterly free cash flow turned negative for the first time since 2012. The company raised the lower end of its 2026 capex guidance to $135–145 billion (previously $130–145 billion) and said it will continue to invest aggressively, though it did not provide guidance for the following year. Zuckerberg said in a statement: 'We have hit major milestones on the path to delivering personal superintelligence to everyone — including the launch of Muse and Muse Wonder, our first frontier model. Our investments are paying off, the core business is strong, and we see momentum across the board.'
Legal costs
The report came out hours after a court decision in New Mexico: a jury had previously found that Meta misled users about data privacy in a case related to the Cambridge Analytica scandal, and the company must pay the state $25 billion. Quarterly profit was also reduced by a settlement of up to $18.59 billion with 48 US states over social media's impact on teenagers' mental health: in August, Meta agreed to keep children under 13 off Instagram and Facebook and to restrict accounts of teens aged 13–17 by age. Without the $9.89 billion charge related to this settlement, earnings per share would have been $7.40. CFO Susan Li said the company is monitoring legal matters that could significantly affect results, and that a number of lawsuits related to minors lie ahead.
New class of shares
The board of directors approved the creation from January of a new publicly traded class of non-voting Class C shares — partly to raise capital for AI infrastructure. According to Zacks Investment Research strategist Andrew Rocco, issuing non-voting shares will make it possible to fund AI investments without diluting Zuckerberg's control; Barringer compared this to Google's practice. The structure is also linked to a wealth tax — the California ballot initiative Proposition 40, on which voters will decide in November: Meta's filing states that Zuckerberg's voting stake 'could fall to roughly 53% or below' if he has to sell a significant portion of his voting shares to pay the tax. Existing shareholders will receive one Class C share for each Class A or B share, which will allow Zuckerberg over time to sell non-voting shares without losing control.
