Meta reports $64.6 billion Q3 revenue, narrows 2026 capex to $135–145 billion and creates non-voting Class C stock for AI funding
Free cash flow turned negative at $2.12 billion as spending hit $34.9 billion in the quarter; a one-for-one Class C dividend takes effect on 19 January 2027.
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Meta reported third-quarter revenue of $64.6 billion on 21 October 2026, and in the same release announced that it will create a new class of non-voting stock to help pay for its artificial intelligence build-out. The shares will go to existing holders as a one-for-one stock dividend, and the company narrowed its 2026 capital-spending forecast to $135 billion to $145 billion. For developers and AI watchers the numbers show how much cash the race for compute now consumes: Meta's free cash flow was negative in the quarter.
Key points
- Meta's Q3 2026 revenue was $64.601 billion, up 26% from a year earlier; costs and expenses rose 68% to $51.613 billion, including a $9.89 billion legal charge.
- Capital expenditure (including finance-lease principal) was $34.91 billion in the quarter, and free cash flow was negative $2.12 billion; the 2026 capex range is now $135 billion to $145 billion, narrowed from $130 billion to $145 billion.
- The board declared a one-time dividend of one non-voting Class C share for every Class A and Class B share; the charter amendment takes effect on 19 January 2027.
- Meta says the stock can be used for raising capital, employee compensation and acquisitions without changing existing shareholders' voting power; Mark Zuckerberg held about 60.6% of the voting power as of 1 October 2026, according to the company's SEC filing.
- Meta guided Q4 revenue to $73 billion to $76 billion.
What happened
Meta published its third-quarter 2026 results on Wednesday 21 October. Revenue grew 26% to $64.601 billion. Costs and expenses grew 68% to $51.613 billion, a figure that includes a $9.89 billion legal charge tied to a youth-safety settlement. Operating income fell 37% to $12.988 billion, an operating margin of 20% against 40% a year earlier. Net income was $9.86 billion, or $3.83 per diluted share; excluding the legal charge, Meta says earnings per share would have been $7.40.
Capital spending is the line that tells the AI story. Meta spent $34.91 billion on capital expenditure in the quarter, counting finance-lease principal. Operating cash flow was $32.786 billion, so after that spending free cash flow came out at negative $2.12 billion. Fortune reports the figure was $784 million in the second quarter and $10.6 billion a year earlier. Meta also said it expects total 2026 expenses of $175 billion to $179 billion, raised to include the legal charge.
The same release announced the new share class. Meta describes it as a publicly listed, non-voting Class C common stock. The board declared a one-time stock dividend of one Class C share for each Class A and Class B share held, payable after an amended company charter takes effect. The charter amendment becomes effective on 19 January 2027, and Meta says it expects the market price of Class A shares to reflect a two-for-one split after the dividend is paid. The record and payment dates are still to be set; Meta's SEC information statement says payment will be no later than the fifth business day after the charter takes effect.
On the earnings call, finance chief Susan Li said the company created the shares "with the purpose of creating a publicly traded non-voting stock usable for capital raising, employee compensation, acquisitions, and other general corporate purposes", while preserving the voting power of existing shareholders. TechCrunch notes that Semafor reported the plan earlier the same day.
Background
Meta has two classes of voting stock. According to the information statement it filed with the US Securities and Exchange Commission, Class B shares carry ten times the voting power of Class A shares, and Class C will have no vote except where the law requires one. Mark Zuckerberg held 1,220,703 Class A and 341,215,148 Class B shares as of 1 October 2026, which the filing says is about 60.6% of the voting power and about 13.4% of the economic interest.
The filing sets rules around his new shares. Of the Class C shares he receives, 20% can be sold freely. The remaining 80% are "stapled": selling them requires selling or converting an equal number of his voting shares within two business days, with automatic conversion of Class B into Class A as the penalty for a violation. The filing also describes a vesting-style release of the stapled shares, 2.5% per quarter while a "continued leadership" condition is met. We have summarised the filing from a reading of its first section only; the full document is more than 450,000 characters long, so the detailed mechanics should be read in the filing itself.
The board gave several reasons in the filing: raising equity capital without diluting voting power, creating a liquid market for non-voting stock, and keeping Zuckerberg's leadership of the company. The filing also cites the proposed California wealth tax on the 3 November 2026 ballot as a factor in how the arrangement was designed, a link Fortune made in its own headline on the filing. We report that as the filing's stated context and take no position on the tax.
Meta's AI spending has risen quickly. The $34.91 billion spent this quarter compares with about $31 billion in the second quarter and $19.4 billion a year ago, according to Fortune.
The numbers
| US$ billion | |
|---|---|
| Q3 2025 | 19.4 |
| Q2 2026 | 31.0 |
| Q3 2026 | 34.9 |
Source: Meta Q3 2026 results; Fortune for the earlier quarters
Fortune gives the Q2 2026 figure only as "$31 billion". Over nine months of 2026, Meta reports revenue of $181.712 billion, net income of $52.481 billion and free cash flow of $11.049 billion. Headcount at the end of the quarter was 66,775, down 15% from a year earlier, and daily active people across the company's apps averaged 3.64 billion in September, up 3%.
Meta's outlook: Q4 revenue of $73 billion to $76 billion with roughly a 1% foreign-currency headwind, a Q4 tax rate of 15% to 17%, and Reality Labs losses for 2026 of $18 billion to $19 billion, lower than 2025. TechCrunch's second article on the call quotes a lower Reality Labs figure ($15 billion for the year, against $19.1 billion in 2025); the company's own release says $18 billion to $19 billion, and we use that.
What it means
For the AI race: the non-voting shares give Meta a way to pay for compute and talent with stock that does not dilute control. The company says it will use them for fundraising, pay and acquisitions. Whether it will sell the shares to raise cash has not been announced, and the release names no amount.
For developers and AI users: the spending funds the Muse family of AI products. Zuckerberg said more than 10 million people in the US and Canada have set up the Muse personal agent, and The Verge's wording is "10 million downloads in the US", so the sources do not define the figure identically. TechCrunch reports he also said Muse is compute-intensive and not yet launched globally, and that Meta expects to improve its cost efficiency by more than 10x in the next year; those are company projections, not results.
For investors and rivals: Meta joins the group of large companies whose AI capital spending outruns free cash flow in a given quarter. The company's capex range for the full year is now narrower and its floor higher and the company has not signalled a slowdown.
What we don't know yet
- Whether and when Meta will sell Class C shares for cash, and in what amounts.
- The record and payment dates of the dividend.
- How the market will price a non-voting share relative to Class A.
- The Muse user figure's exact definition: setups, downloads and active users are different measures.
What to watch next
- Meta's 10-K and any announcements of capital raising after 19 January 2027.
- Fourth-quarter results and the 2027 capex guidance.
- How investors and index providers treat the new non-voting shares.
Sources
- Meta Reports Third Quarter 2026 Results (Meta, primary source)
- Meta Platforms information statement (Schedule 14C) (US SEC)
- Meta's revenue surges to $64.6 billion, but settlements and AI spending turn screws on profit (Fortune)
- Meta wants to pay for its broad AI buildout with a newly created class of stock (TechCrunch)
- Meta says Muse has over 10M users, with shopping a top activity (TechCrunch)
- Meta to create a new class of shares to fund AI push (The Verge)
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