Meta Platforms — 2026Q3 earnings
reported 2026-07-29
EPS $6.18 vs $7.22 est — miss
next session -8.0% (close 2026-07-29 → 2026-07-30)
Source
8-K filing ↗Summary
A strong top line met a heavy cost quarter: revenue rose 28% to $60.80 billion, but total expenses grew 55% on $2.40 billion of legal-proceedings charges and $1.18 billion of severance, and AI infrastructure spending compressed free cash flow to just $784 million against $31.86 billion of operating cash flow. Guidance points to continued momentum — Q3 revenue of $61-64 billion — with full-year capex narrowed upward to $130-145 billion. The call made the AI payoff case: Zuckerberg cited a 60% jump in daily Meta AI engagement since the Muse Spark rebuild and more than 1 million businesses using Meta Business Agents weekly, Susan Li credited the GEM ads-ranking model with an 8.3% increase in ad clicks and 15.7% uplift in Facebook conversions, and she declined to give a 2027 capex outlook, calling infrastructure planning highly dynamic.
Earnings call
Earnings call webcast ↗Review
From the report
Meta's quarter ended June 30, 2026 (reported July 29, 2026) paired a strong top line — revenue of $60.80 billion, up 28% year-over-year — with a heavy cost quarter: total expenses rose 55% on $2.40 billion of legal-proceedings charges and $1.18 billion of severance, and AI infrastructure spending compressed free cash flow to $784 million despite $31.86 billion of operating cash flow. Management guided next-quarter revenue to $61-64 billion and narrowed full-year 2026 capex to $130-145 billion.
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Top-line growth stayed strong: revenue of $60.80 billion rose 28% year-over-year, or 27% on a constant currency basis. show quote
“Revenue was $60.80 billion, an increase of 28% year-over-year. Revenue on a constant currency basis would have increased by 27% year-over-year.”
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Cost growth far outpaced revenue: total costs and expenses rose 55% to $42.03 billion, inflated by $2.40 billion of legal-proceedings charges and $1.18 billion of severance from the May 2026 headcount reduction. show quote
“Total costs and expenses were $42.03 billion, an increase of 55% year-over-year. This includes $2.40 billion of charges related to legal proceedings and $1.18 billion of severance expenses in connection with the May 2026 headcount reduction.”
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AI infrastructure spending consumed nearly all cash generation: free cash flow was just $784 million against $31.86 billion of cash flow from operating activities. show quote
“Cash flow from operating activities was $31.86 billion, and free cash flow was $784 million.”
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Guidance implies continued momentum: management expects third quarter 2026 revenue of $61-64 billion, assuming an approximately 1% currency headwind. show quote
“We expect third quarter 2026 total revenue to be in the range of $61-64 billion. Our guidance assumes foreign currency is an approximately 1% headwind to year-over-year total revenue growth, based on current exchange rates.”
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The 2026 capex budget tightened upward: full-year capital expenditures, including principal payments on finance leases, are now expected at $130-145 billion, narrowed from the prior $125-145 billion outlook. show quote
“We anticipate 2026 capital expenditures, including principal payments on finance leases, to be in the range of $130-145 billion, narrowed from our prior outlook of $125-145 billion.”
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From the call
On the call, Mark Zuckerberg framed AI as already accelerating the core business — a 60% increase in daily Meta AI engagement since the Muse Spark integration, and more than 1 million businesses using Meta Business Agents every week — while CFO Susan Li credited the new GEM ads-ranking model and user-understanding advances with an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook, and declined to provide a specific 2027 CapEx outlook, calling infrastructure planning highly dynamic.
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Mark Zuckerberg said Meta AI engagement jumped 60% after the assistant was rebuilt around the Muse Spark model, with daily usage still growing week-over-week. show quote
“Since we rebuilt Meta AI and integrated Muse Spark, we've seen a 60% increase in the number of people interacting with the assistant each day and that continues to grow quickly week-over-week.”
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Zuckerberg said Meta Business Agents went global on WhatsApp and Messenger this quarter, with more than 1 million businesses already using them weekly. show quote
“We made Meta Business Agents available globally this quarter on WhatsApp and Messenger, and there are already more than 1 million businesses using them to talk to their customers or complete sales every week.”
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CFO Susan Li quantified the AI-ads payoff: the GEM ads-ranking model combined with upgraded user-understanding models drove an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook. show quote
“Combined with our GEM model for ads ranking and sequence learning, these advancements generated an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook.”
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Asked about 2027 CapEx in Q&A, Li declined to give a specific outlook, stressing that infrastructure planning remains highly dynamic even within this year's range of outcomes. show quote
“Brian, on your second question, we aren’t providing a specific outlook for 2027 CapEx at this time. Infrastructure planning remains highly dynamic and even this year, there are a range of outcomes embedded in our outlook.”
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as of 2026-08-10