Meta beat on revenue, unveiled a new class of non-voting shares and lifted the floor on its AI spending plan

Meta Platforms gave investors three things to digest after Wednesday's close: a revenue beat, a higher floor on its artificial intelligence spending, and an unusual change to its share structure. The early verdict in extended trading was positive, with the stock up more than 4%, according to Reuters.

The report was one of the most closely watched of the earnings season. Meta had fallen for five straight sessions into Wednesday as investors questioned how much the Facebook and Instagram parent is pouring into chips and data centers. In regular trading on Wednesday, the shares rose 0.47% to $697.52, according to Yahoo Finance data.

The headline numbers

Revenue for the quarter ended September 30 was $64.60 billion, up 26% from $51.24 billion a year earlier, the company said. Analysts had expected $63.37 billion, according to LSEG data cited by Reuters.

The growth came from both more ads and pricier ads. Ad impressions across Meta's apps rose 10% from a year earlier and the average price per ad rose 14%, according to the release. Family daily active people, Meta's count of users across Facebook, Instagram, WhatsApp and Messenger, averaged 3.64 billion in September, up 3%.

Profit looked very different depending on how it is measured. Net income was $9.86 billion, or $3.83 a share, up from $2.71 billion a year earlier, when Meta booked an unusually large tax charge. This quarter's costs included a $9.89 billion charge tied to Meta's August agreement with 52 state attorneys general over teen mental health litigation, which provides for payments of up to about $18.59 billion. Excluding that charge, Meta said diluted earnings would have been $7.40 a share.

"We hit major milestones this quarter toward delivering personal superintelligence for everyone - including launching Muse and Muse Wonder, our first frontier model," Mark Zuckerberg, Meta's founder and chief executive, said in the release. "Our investments are paying off, the core business is strong, and we're seeing velocity across the board."

The spending question

The number many investors went looking for first was capital expenditures. Meta spent $34.91 billion in the third quarter, including principal payments on finance leases, according to the release. It now expects 2026 capital expenditures of $135 billion to $145 billion, narrowed from its prior range of $130 billion to $145 billion, so the low end rose by $5 billion.

StockTitan calculated that Meta has spent $85.8 billion so far this year based on its quarterly reports, which means even the bottom of the new range implies a fourth quarter bigger than any quarter so far.

That spending is now larger than the cash the business throws off. Operating cash flow was $32.79 billion, but free cash flow was negative $2.12 billion, compared with positive $10.63 billion a year earlier, according to the company and Reuters. Meta ended September with $82.45 billion in cash, cash equivalents and marketable securities.

Meta also raised its full-year expense outlook to $175 billion to $179 billion to include the legal charge, and said that, excluding that charge, it still expects 2026 operating income to come in above 2025's. Headcount was 66,775 at the end of September, down 15% from a year earlier.

A new class of stock

The surprise in the release was structural. Meta said it will establish a new class of non-voting Class C common stock. Reuters reported that the shares will be issued in January 2027, effectively resulting in a two-for-one split, and that the stock is intended to help fund acquisitions and retain talent while preserving Zuckerberg's control of the company.

Non-voting share classes are not new in Silicon Valley, and for existing holders the economic effect of a split is neutral on its own. What it does give Meta is a currency it can issue for deals and employee pay without diluting the voting power that keeps Zuckerberg in charge.

The outlook

Meta expects fourth-quarter revenue of $73 billion to $76 billion, the company said, with foreign exchange a roughly 1% headwind. Analysts had been looking for about $73.73 billion, according to Reuters, so the midpoint of the range sits above consensus.

That is the trade-off the market is weighing: a core advertising business that is still growing by more than 25% a year, against an AI build-out that has turned free cash flow negative for now. The after-hours move suggested that, for Wednesday at least, the revenue side won the argument.

What to watch

Executives typically expand on spending plans for the following year on the post-earnings call, and any early read on 2027 capital expenditures will matter as much as the quarter itself. Thursday's regular session will be the first full test of the after-hours move, alongside reaction to Tesla's results, which also came out after Wednesday's bell.