Meta posts negative $2.12 billion free cash flow in third quarter
Key Facts
Meta's free cash flow turned negative at $2.12 billion in the third quarter of 2026, after posting positive $10.625 billion in the same period a year earlier, according to the company's filing with the U.S. Securities and Exchange Commission. The shift came as capital expenditures, including finance lease principal payments, rose to $34.91 billion during the quarter. Net cash from operating activities was $32.786 billion, compared with $29.999 billion a year earlier. This was the first quarterly negative free cash flow since 2012, according to a report by The Motley Fool, and is not in itself an indication that cash is running out. The figures put the company's infrastructure spending at the center of the quarter's results, as capital expenditures exceeded the cash generated from operations.
By contrast, revenue continued to grow, rising 26% to $64.60 billion in the third quarter from $51.24 billion in the same period a year earlier, according to The Associated Press. Revenue topped the Wall Street analysts' estimate of $63.34 billion. Net income was $9.86 billion, compared with $2.71 billion a year earlier, the agency reported. The company disclosed an average of 3.64 billion daily active users across its family of apps in September, up 3% year over year. In the third quarter, ad impressions rose 10%, while the average price per ad increased 14%, according to the company's filing with the U.S. Securities and Exchange Commission.
The advertising results reflect growth in the core business alongside expanded spending on artificial intelligence and infrastructure. Meta said in its filing that "our AI investments are already driving significant incremental advertising revenue." It added that these investments "will take longer to generate returns compared with our investments in our core business." The company raised the low end of its 2026 capital expenditure forecast to $135 billion, keeping the high end at $145 billion, after previously forecasting a range of $130 billion to $145 billion. The forecast includes finance lease principal payments, according to the earnings filing.
Despite negative free cash flow, the company said it has sufficient cash resources to cover its needs and obligations. Cash, cash equivalents and marketable securities totaled $82.45 billion on September 30, 2026. Meta said those resources, together with operating and financing cash flows, would be sufficient to meet its cash requirements for the next twelve months and beyond for the foreseeable future. A decline in free cash flow for one quarter therefore differs from a declaration of a general shortfall or exhaustion of liquidity. The company also disclosed that it had repurchased no Class A shares during the nine months ended September 30, while $25.03 billion remained authorized and available for repurchases.
Meta did not announce a new suspension of its share repurchase program, and disclosure that no purchases were made during the nine months does not mean the available amount was canceled. The company said its repurchase program may be suspended, accelerated or discontinued at any time, according to its filing with the U.S. Securities and Exchange Commission. The stock's move after the results varied by trading session: shares closed up 0.5% in regular trading on Wednesday, October 21, then rose 2.9% in after-hours trading after the results were released, according to The Associated Press. On October 27, Meta shares closed at $620.19, according to EL7 data. Axios reported that the stock fell about 7% on Thursday, October 22, amid concerns that rising data center spending would weigh on future returns.
Meta forecast revenue of $73 billion to $76 billion in the fourth quarter of 2026. For 2027, the company did not provide an annual revenue forecast, but said it expected to continue its strong growth during the year. In its filing, it said it "is still developing our budget and capacity plans for next year," and that it expected to continue investing aggressively to support its core business and emerging AI initiatives. This means the current capital expenditure forecast covers 2026, while budget and capacity plans for the following year remain under development. The ability of investments to generate revenue, alongside the spending trajectory, will remain among the key factors to watch in the company's upcoming results.