The quarter against our forecast
Q3 2026 line by line, as the income statement shows it
| Line | Outlook | Our forecast | Reported | Against our forecast |
|---|---|---|---|---|
| Revenue | $61.0B–$64.0B | $63.1B | $64.6B | +2.3%beat |
| Family of Apps | — | $62.6B | $64.2B | +2.4%beat |
| Reality Labs | — | $493M | $443M | −10.2%miss |
| Total costs and expenses | — | $52.8B | $51.6B | −2.2%beat |
| Income (loss) from operations | — | $10.4B | $13.0B | +25.1%beat |
| Operating margin | — | 16.4% | 20.1% | +3.7 ptbeat |
| Interest and other income (expense), net | — | $16.7M | $13.0M | −22.0%miss |
| Income before income taxes | — | $10.4B | $13.0B | +25.0%beat |
| Provision (benefit) for income taxes | — | $2.24B | $3.14B | +39.9%miss |
| Tax rate | — | 21.6% | 24.2% | +2.6 ptmiss |
| Net income | — | $8.16B | $9.86B | +20.9%beat |
| Diluted (in shares) | — | 2.57B | 2.57B | +0.01Bmiss |
| Adjusted EPS | — | $6.86 | $7.40 | +54¢beat |
Our forecast was frozen before the release: the average of 6 models as of 2026-10-21 07:41:37 ET. Each reported number is quoted from the release; the 10-Q's tagged facts confirm the statement's lines when it is filed. Read before our lock: the SEC lists the release in its index that night, and the next check confirms its bytes. A cost above our forecast is a miss.
Why adjusted EPS differs: $7.40 against our $6.86
Like for like: each line as reported against ours, with each of the company's adjustments on the line it adjusts and ours on ours. The last bar is what remains: the tax on the adjustments, the share count and rounding.
Why the quarter differed from our forecast
Provision (benefit) for income taxes−14¢
What we assumedForecasts set tax near $2.2B, about 22% of reported profit, some assuming the legal charge cut tax.a 15 percent book minimum tax reduction on the third quarter legal accrual
gemini
What the company printedMeta printed a $3.1B tax provision for the quarter, on higher profit than forecast.Provision for income taxes 3,141 18,954 1,028 22,888
Known before our cutoff?No: The August settlement call says nothing on the charge's tax treatment; a search for tax there found nothing.
Diluted (in shares)−1¢
What we assumedForecasts held diluted shares flat near the first-half level, with no buybacks.I therefore hold the diluted share count flat at 2.56 billion in both forecast quarters
glm
What the company printedMeta printed diluted shares of 2,573 million for the quarter.Diluted 2,573 2,572 2,568 2,578
Known before our cutoff?Yes: The second-quarter earnings release showed a nearly identical diluted share count.Diluted 2,566 2,570 2,565 2,580
Interest and other income (expense), net−0¢
What we assumedForecasts put other income near zero, while flagging equity-stake swings as a risk.unrealized gains and losses on about $30 billion of non-marketable equity stakes can swing other income by $1 billion or more in a quarter
opus
What the company printedMeta printed other income close to zero for the quarter.Interest and other income (expense), net 13 1,128 (1,126) 2,047
Known before our cutoff?Yes: The second-quarter earnings release showed other income near zero.Interest and other income (expense), net (19) 93 (1,139) 919
The company's new outlook
We expect fourth quarter 2026 total revenue to be in the range of $73-76 billion. Our guidance assumes foreign currency is an approximately 1% headwind to year-over-year total revenue growth, based on current exchange rates.
We expect fourth quarter 2026 total revenue to be in the range of $73-76 billion. Our guidance assumes foreign currency is an approximately 1% headwind to year-over-year total revenue growth, based on current exchange rates.
Absent any changes to our tax landscape, we expect our fourth quarter 2026 tax rate to be between 15-17%.
We are raising our expense outlook to incorporate the $9.9 billion charge related to legal proceedings recognized in the third quarter. We now expect full year 2026 total expenses to be in the range of $175-179 billion.
At a segment level, we now expect Reality Labs losses to decline compared to 2025 to a range of $18-19 billion.
We anticipate 2026 capital expenditures, including principal payments on finance leases, to be in the range of $135-145 billion, narrowed from our prior outlook of $130-145 billion.
Separately, we remain focused on improving Reality Labs profitability and expect losses to narrow next year to around $15 billion as we reallocate investment toward other priority areas, primarily AI.
Each item as the release prints it. Our forecast stands beside an item only when the item is one of our two numbers, for our quarter or year, in our unit.
The company's reasons, from the release
- Costs and expenses up 68% include litigation charge “•Costs and expenses – Total costs and expenses were $51.61 billion, an increase of 68% year-over-year. This includes the litigation charge as discussed above.”
- G&A expense increase from attorneys general charge “(1) The third quarter 2026 general and administrative expenses include a $9.89 billion charge related to the August 2026 agreement with U.S. State Attorneys General to resolve litigation related to teen mental health and social media.”
- Operating income and EPS reduced by charge “Third quarter 2026 costs and expenses includes a $9.89 billion charge related to this agreement. Excluding this charge, the third quarter 2026:”