Meta Platforms reported a 26% rise in third-quarter advertising revenue but negative free cash flow, alongside $34.91 billion in capital expenditures and higher costs for the quarter ended Sept. 30.
Total revenue reached $64.60 billion, with advertising contributing $63.06 billion. Ad impressions increased 10% year over year and the average price per ad rose 14%. Meta said AI-powered recommendations and advertising systems helped engagement and monetization, but did not specify how much of the revenue increase came from AI.
Meta also said advertisers using its AI business-assistant recommendations saw nearly 5% more conversions at the same cost per conversion and increased ad spending by 9% compared with similar businesses that did not use them.
Net income rose 264% to $9.86 billion. The year-earlier comparison included a $15.93 billion noncash tax charge related to the One Big Beautiful Bill Act. Costs and expenses increased 68% to $51.61 billion, while operating income fell 37% to $12.99 billion.
This quarter’s expenses included a $9.89 billion charge tied to an August agreement on teen mental health and social media. Meta said the agreement involved 52 attorneys general across states, territories and the District of Columbia, with payments of up to about $18.59 billion.
Free cash flow was negative $2.12 billion, compared with positive $10.625 billion in the same quarter a year earlier. Capital expenditures, including principal payments on finance leases, totaled $34.91 billion. Meta raised the low end of its 2026 capital-expenditure forecast, setting a range of $135 billion to $145 billion, and said high investment levels would continue after 2026 without giving a 2027 spending target.
Meta CEO Mark Zuckerberg said more than 10 million people in the United States and Canada had set up Muse personal agents during its first six weeks. He estimated roughly one-quarter used Muse on a typical day and said shopping was its most common use, with an average purchase above $200. Meta identified commerce fees and subscriptions as possible revenue sources but gave no Muse-specific revenue figure.
Reports differed on the stock’s initial reaction. The Associated Press put Meta shares’ after-hours gain at 2.9%, while Euronews reported about 5%. AP later reported a 5.4% decline during Thursday trading. Meta’s next near-term revenue indicator is its fourth-quarter forecast of $73 billion to $76 billion.
