Meta Platforms files 10-Q: quarterly report (10-Q)
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we present revenue on a constant currency basis, which is a non-GAAP financial measure. Revenue on a constant currency basis is presented in the section entitled "—Revenue—Foreign Exchange Impact on Revenue." To calculate revenue on a constant currency basis, we translated revenue for the three and nine months ended September 30, 2026 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar.
This non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. This measure may be different from non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of revenue on a constant currency basis is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on our operating results. We believe this non-GAAP financial measure provides investors with useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in operating our business.
Executive Overview of Third Quarter Results
Our mission is to build the future of human connection and the technology that makes it possible.
Our financial results and key Family metrics for the third quarter of 2026 are set forth below. Total revenue for the third quarter of 2026 was $64.60 billion, an increase of 26% compared to the third quarter of 2025, due to an increase in advertising revenue. Ad impressions delivered across our Family of Apps in the third quarter of 2026 increased 10% year-over-year, and our average price per ad in the third quarter of 2026 increased 14% year-over-year.
Income from operations for the third quarter of 2026 was $12.99 billion, a decrease of $7.55 billion, or 37%, compared to the third quarter of 2025, driven by higher costs and expenses. The increase in costs and expenses was primarily due to increases in legal-related costs, including the $9.89 billion charge related to the August 2026 multistate attorneys general agreement; infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services; and third-party AI token costs.
Consolidated and Segment Results
• Net income was $9.86 billion, with diluted earnings per share (EPS) of $3.83 for the three months ended September 30, 2026.
• Capital expenditures, including principal payments on finance leases, were $34.91 billion for the three months ended September 30, 2026.
• Costs and expenses were $51.61 billion, including the $9.89 billion charge related to the August 2026 multistate attorneys general agreement.
• Dividend and dividend equivalent payments were $1.36 billion for the three months ended September 30, 2026.
• Cash, cash equivalents, and marketable securities were $82.45 billion as of September 30, 2026.
• Effective tax rate was 24% for the three months ended September 30, 2026.
• Headcount was 66,775 as of September 30, 2026, a decrease of 15% year-over-year.
Family of Apps Metrics
• Family daily active people (DAP) was 3.64 billion on average for September 2026, an increase of 3% year-over-year.
• Ad impressions delivered across our Family of Apps in the third quarter of 2026 increased by 10% year-over-year.
• Average price per ad in the third quarter of 2026 increased by 14% year-over-year.
Developments in Advertising
Substantially all of our revenue is currently generated from advertising on Facebook and Instagram. We rely on targeting and measurement tools that incorporate data signals from user activity on websites and services that we do not control, as well as signals generated within our products, in order to deliver relevant and effective ads to our users. Our advertising revenue has been, and we expect will continue to be, adversely affected by reduced marketer spending as a result of limitations on our ad targeting and measurement tools arising from changes to the regulatory environment and third-party mobile operating systems and browsers.
In particular, legislative and regulatory developments such as the General Data Protection Regulation, including its evolving interpretation through decisions of the Court of Justice of the European Union, ePrivacy Directive, European Digital Services Act, Digital Markets Act, and U.S. state privacy laws have impacted our ability to use data signals in our ad products, and an increasing number of laws have been introduced limiting or prohibiting the provision of our services to younger users. We expect these and other developments will have further impact in the future. As a result, we have implemented, and we will continue to implement, whether voluntarily or otherwise, changes to our products and user data practices, which reduce our ability to effectively target and measure ads and may negatively impact our advertising revenue and user engagement.
For example, in response to regulatory developments in Europe, we announced our plans to change the legal basis for behavioral advertising on Facebook and Instagram in the European Union, European Economic Area, and Switzerland from "legitimate interests" to "consent," and began offering users in the region a "subscription for no ads" alternative. We subsequently began offering users in the region who elect to continue using our services free-of-charge, supported by ads, an option to see less personalized ads, which are less relevant and effective than our premium ad offerings.
We are engaging with regulators on our consent model. In addition, mobile operating system and browser providers, such as Apple and Google, have implemented product changes and/or announced plans to limit the ability of websites and application developers to collect and use these signals to target and measure advertising. For example, in 2021, Apple made certain changes to its products and data use policies in connection with changes to its iOS operating system that reduce our and other iOS developers' ability to target and measure advertising, which has negatively impacted, and we expect will continue to negatively impact, the size of the budgets marketers are willing to commit to us and other advertising platforms.