# Meta beats revenue targets but profit halves under legal costs

> Meta's third-quarter revenue hit $64.6 billion, but a $10 billion settlement and massive AI spending crushed operating income and free cash flow.
- Title: Meta beats revenue targets but profit halves under legal costs
- Summary: Meta's third-quarter revenue hit $64.6 billion, but a $10 billion settlement and massive AI spending crushed operating income and free cash flow. Meta beat…
- Keywords: meta platforms, mark zuckerberg, q3 earnings, revenue growth, ai spending, muse ai agent, youth safety settlement, free cash flow, Meta, beats, revenue, targets
- Source: Fortune — https://fortune.com/2026/10/21/meta-q3-earnings-mark-zuckerberg-capex-muse
- Author: Amanda Gerut
- Read time: 2 min
- Topics: meta platforms, mark zuckerberg, q3 earnings, revenue growth, ai spending, muse ai agent, youth safety settlement, free cash flow
## Meta beats revenue forecast
Meta Platforms reported third-quarter revenue of sixty four point six billion dollars, above the sixty three point three billion dollars analysts expected.The company forecast fourth-quarter revenue between seventy three billion and seventy six billion dollars.
## Settlement cuts operating income in half
Meta's operating income fell thirty seven percent to thirteen billion dollars from twenty point five billion dollars in the second quarter.
## Settlement terms span a decade
Meta will pay about eighteen billion dollars to states over the next decade under the youth safety settlement, depending on cooperation from TikTok and Google's YouTube.
## Another legal threat emerges
Hours before Meta announced Q three results, a New Mexico judge ordered the company to pay twenty five billion dollars in penalties related to the Cambridge Analytica data privacy scandal. Meta plans to appeal.
## AI spending crushes free cash flow
Meta's capital expenditures reached thirty four point nine billion dollars, up from thirty one billion dollars in Q two and nineteen point four billion dollars a year ago.
## Full-year capex guidance raised
Meta slightly raised its full-year capital expenditure guidance to one hundred thirty five billion to one hundred forty five billion dollars from one hundred thirty billion to one hundred forty five billion dollars.
## Muse adoption and monetization plans
More than ten million people in the U.S.and Canada set up Muse assistant since its release.Zuckerberg said Meta would monetize Muse sooner than its traditional playbook, citing high compute costs and retail transaction potential.

> My guess is, I think that we are going to work on monetization somewhat sooner on this than our normal playbook.
## Zuckerberg sees higher revenue potential
Zuckerberg said average revenue per American user for Meta's Family of Apps is several hundreds of dollars annually, and expects Muse will reach an even higher level over time due to commerce already taking place…

> The average revenue per American user for our existing Family of Apps users is several hundreds of dollars annually, and we expect Muse will reach an even higher level over time due to the amount of commerce that we already see taking place.
## Key takeaway

Meta beat revenue forecasts at sixty four point six billion dollars but operating income fell thirty seven percent due to a ten billion dollar youth safety settlement, while AI investments pushed free cash flow negative.