Overnight, Meta reported a 26 per cent increase in third-quarter revenue to US$64.6 billion (AU$98 billion), up 26 per cent year on year, with its advertising business and AI investments continuing to drive growth and engagement.
It also been ordered by a judge in New Mexico to pay a US$25 billion fine (AU$35 billion) following a two-week trial this year that found it had lied to the public about how it handled Facebook user data.
“The lies extend beyond Facebook’s data practices as well,” the judge said, adding that the lies went to “the heart of Facebook’s core business practices”.
Meta’s head lawyer CJ Mahoney said the ruling made it “all but impossible to do business in the state of New Mexico”. Meta intends to appeal the decision, a move which Mahoney said will be successful.
It’s the largest fine Meta has ever received. Earlier this year, it settled another lawsuit in California for $18 billion in over child safety.
Meta’s financial results, announced in an earnings call this morning, saw the company deliver double-digit growth in both ad impressions and average ad prices, while its family of apps reached 3.64 billion daily users.
Meta CEO Mark Zuckerberg described engagement across the company’s platforms as being at an “all-time high”, with Facebook and Instagram continuing to benefit from growth in video and improved content recommendations.
Threads has also overtaken X in monthly active users, according to Zuckerberg, while WhatsApp is reaching record levels of messaging activity.
Zuckerberg also acknowledged “several major milestones” towards delivering personal superintelligence to everyone.
“We had one of our most successful launches ever with the Muse personal agent. We shipped Muse Wonder as our first frontier model, and we shipped several new glasses and gadgets with Muse integration, including coming soon to our new audio glasses,” he said.
Earlier this year, Meta shut down its Muse Image AI tool just days after launching following criticism from politicians and legal experts.
Advertising revenue climbs 26%
Advertising accounted for US$63.1 billion of the total revenue, also increasing 26 per cent on both a reported and constant currency basis.
The number of ad impressions served across Meta’s services rose 10 per cent, supported by increased engagement and user growth, alongside ad load optimisation.
Meanwhile, the average price per ad increased 14 per cent, which Meta attributed to improvements in ad performance and more favourable macroeconomic conditions compared with the same period last year.
Meta also reported further gains from its AI-powered recommendation systems, which help determine the content and ads users see across its platforms.
On Instagram Reels, recommendation improvements launched during the quarter increased time spent by more than 4 per cent. Meta said the gains were partly driven by an upgraded model that ranks sequences of Reels rather than assessing each video independently.
And on Facebook Feed and Reels, a new generative retrieval architecture helped increase Reels watch time by 1 per cent.
Just last week, Meta announced a suite of new advertising tools designed to give brands greater visibility across Facebook and Instagram.
Advertisers turning their heads to Meta’s AI tools
Meta is also expanding AI capabilities designed to help advertisers manage campaigns, develop creative and identify opportunities to improve performance.
“In Q3, nearly 10 million advertisers used at least one of these tools,” CFO Susan Li said on the call.
Its Meta AI Business Assistant is also becoming more proactive, with the company introducing additional capabilities including creative insights, stronger business context and more agentic actions.
The planned features will allow marketers to plan, create and optimise campaigns, as well as schedule tasks and alerts through a conversational interface. Meta said approvals and previews will help keep advertisers in control of the actions taken.
The company estimates advertisers adopting recommendations from Meta AI Business Assistant generated almost 5 per cent more conversions at the same cost per conversion, while increasing their advertising investment by 9 per cent compared with similar non-adopters.
Creator advertising is another area of growth. Meta’s partnership ads product, which allows brands to run ads featuring creators and other businesses, grew more than 97 per cent year on year and surpassed US$15 billion in annual revenue run rate.
The company also completed the global rollout of its Creator Marketing Hub to advertisers, bringing creator discovery, content organisation and partnership ad activation into one place. More than 10 million creators are now discoverable through the hub, with Meta AI Business Assistant being integrated to help advertisers find creators and identify content for partnership ads.
An uptick in expenses & drop in staff headcount
Despite the revenue growth, Meta’s expenses increased sharply during the quarter, rising 68 per cent year on year to US$51.6 billion.
The total included a US$9.9 billion charge related to the August 2026 Multistate Attorneys General Agreement. Meta said higher legal costs, infrastructure spending and third-party AI token costs were the primary drivers of expense growth.
The company also ended the quarter with more than 66,000 employees, down 12 per cent from the previous quarter following its May 2026 headcount reduction.
In March this year, B&T reported local cuts to Meta’s Australia team, trimming the size of its ad sales team as part of a global restructure.
Meanwhile, third-quarter operating income fell 37 per cent year on year to US$13 billion, representing an operating margin of 20 per cent. Meta said operating income would have increased 11 per cent year on year excluding the legal charge.
Net income was US$9.9 billion, or US$3.83 per share, while capital expenditure, including principal payments on finance leases, reached US$34.9 billion as the company continued investing in servers, data centres and network infrastructure.
Meta expects fourth-quarter revenue of between US$73 billion and US$76 billion. It also raised its full-year 2026 expense outlook to between US$175 billion and US$179 billion.
