Business 3 min read By Mason Emerson
Meta's Nearly $10 Billion Legal Costs Weigh on Q3 Earnings as Revenue Climbs
Meta reported a 26% rise in quarterly revenue to $64.6 billion, but nearly $10 billion in additional costs tied to an $18 billion settlement with state attorneys general dragged down per-share earnings, missing Wall Street expectations.
Meta absorbed nearly $10 billion in additional costs during its third quarter of 2026, driven by an $18 billion nationwide settlement with state attorneys general, the company reported Wednesday. The charge weighed heavily on per-share earnings, which fell short of Wall Street expectations even as revenue rose sharply.
Revenue for the quarter reached $64.6 billion, up 26% from the same period a year earlier. The top-line growth underscored the continued strength of Meta's advertising business, but the legal settlement cast a long shadow over the bottom line. Net income and earnings per share were both affected by the one-time charge, which the company attributed to the resolution of claims brought by state attorneys general across the country.
The settlement, which totals $18 billion, resolves a broad set of allegations against the social media giant. The nearly $10 billion in additional costs booked during the quarter represents the portion of the settlement that hit the company's financial statements in the July-to-September period. Despite the earnings miss, investors appeared largely unfazed, with Wall Street shrugging off the charge as a known and finite expense rather than a sign of underlying weakness.
Meta's revenue performance beat analyst consensus, according to separate reports on the quarter. The company also announced a stock split that will create a new class of Class C shares, a move that could broaden its investor base. The split, alongside the revenue beat, helped offset concerns about the legal charge.
The settlement stems from litigation filed on behalf of teenage social media users, adding to the growing list of legal and regulatory challenges facing major technology platforms over their impact on younger audiences. For Meta, the $18 billion agreement represents one of the largest settlements in its history and a significant financial milestone in its efforts to move past a wave of lawsuits.
Even with the charge, Meta's core business remains robust. The 26% revenue growth signals that demand for digital advertising continues to climb, and the company's investments in artificial intelligence and other products are expected to shape its performance in the quarters ahead. The earnings report offers a snapshot of a company managing extraordinary legal costs while still expanding its top line at a healthy pace.
Wall Street's muted reaction suggests that analysts and investors had largely anticipated the settlement's impact. The focus now shifts to how Meta navigates the remainder of the year, with the stock split and continued revenue momentum likely to dominate the conversation among shareholders and industry observers alike.
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