A RAAK.work project
Capex WatchIn July this page said Meta’s advertising business paid for its building almost to the last dollar. Three months later it did not: Meta spent $33.9 billion of cash on building in the quarter and its business brought in $32.8 billion. Revenue again beat Meta’s own range. What changed is how Meta plans to pay. It has created a class of shares it says it expects to sell.
| Line | Expected | Delivered |
|---|---|---|
| Revenue | $63.3B (analysts); own guidance $61–64B | $64.6B (+26% on a year earlier), above its own range |
| Operating profit | — | $13.0B, −37%, after a $9.9B legal charge; $22.9B without it |
| Operating margin | — | 20%, from 40% a year earlier; 35% without the charge |
| Capital spending in the quarter | — | $34.9B including finance leases (second quarter: $31.1B) |
| Operating cash flow | — | $32.8B (second quarter: $31.9B) |
| Free cash flow | — | −$2.1B (second quarter: $0.8B; a year earlier: $10.6B) |
| 2026 capital spending, own guidance | $130–145B | $135–145B; bottom raised again |
| 2026 costs, own guidance | $165–169B | $175–179B, including the $9.9B charge |
| Fourth-quarter revenue, own guidance | $73.6–73.7B (analysts) | $73–76B |
| Staff | — | 66,775, down 15% on a year earlier |
| Commitments it cannot cancel | — | $454.5B at 30 September, mostly rented computing, servers and network equipment |
Operating cash flow is the cash the business brings in from its normal operations; free cash flow is what is left after capital spending (money spent on things that last for years, such as chips, buildings and power). Meta counts the repayment of finance leases, equipment it rents on long contracts, as capital spending. The strain chart on the tracking page counts only cash spent on property and equipment, $33.9B in this quarter. Analysts’ expectations and the share moves are press-reported: shares closed at $697.43 on 21 October and traded between $723.93 and $725.88 after hours, up 3.5–3.8%, then fell 6–7% during trading on 22 October.
The front page works out what the five builders must receive each year for their spending to pay off: the floor, which comes due a little more each year until the end of 2030. The red dashed line is Meta’s share of it, in proportion to its 2026 spending plan. The two Meta lines are its revenue growth since 2023, read two ways. The solid line counts all of it, which is too generous, because much of that growth has nothing to do with AI. The dashed line counts only the growth above Meta’s own pace before the AI spending began, which is too strict. The true AI figure lies between them.
How this was built: the same figures as the gap chart on the tracking page, where all five are stacked together. Revenue growth is Meta’s revenue over the latest twelve months minus its revenue in 2023, from its reported results. Its share of the floor is its 2026 spending plan divided by the five’s together. This chart is redrawn with each set of results, so it can be newer than the text above, which is written as of Meta’s print. The ledger has the arithmetic.
The building cost more than the business made. In the second quarter Meta’s business brought in $31.9 billion and it spent about $31 billion of that on building, leaving $0.8 billion. In the third it brought in $32.8 billion and spent $34.9 billion, counting the equipment it rents on long contracts. Free cash flow was minus $2.1 billion, against $10.6 billion a year earlier. On the strain chart, which divides a year’s capital spending by a year’s operating cash flow, Meta moved from 69% to 78%, and this was the first quarter in its record there in which it spent more on building than its business made.
So it will borrow and sell shares. Meta sold $24.9 billion of bonds in May. Now it has created a third class of shares, with no votes, to start on 19 January 2027. Every shareholder gets one for each share they hold, which works like a two-for-one split. In its quarterly filing Meta says it expects to use these shares “to conduct equity offerings from time to time”: to sell new shares for cash. Because the new shares carry no votes, selling them would not reduce Mark Zuckerberg’s control, which the release says the new class is meant to keep. Oracle sold $20 billion of new shares in September for the same reason. Two of the five now plan to pay for part of the building with investors’ money rather than customers’. That is the financing the front page’s §5 is about: when lenders and shareholders pay for the building, a disappointment in revenue reaches the money that paid for it as well as the profit.
The demand side held. Revenue rose 26%, above the top of Meta’s own range, with 10% more adverts shown at prices 14% higher. As in July, this is AI earning its money through the advertising auction rather than through any AI invoice. And the jobs side moved in the direction the front page’s §4 describes: Meta had 66,775 staff at the end of September, 15% fewer than a year earlier, while its revenue grew by a quarter.
The plan narrowed upward. The bottom of the 2026 range moved from $130 billion to $135 billion, the second rise in two quarters. The midpoint, $140 billion, is what this site uses. It moves the five’s 2026 plans from $840 billion to $842.5 billion, which changes the tracking page’s counter, the split of the required revenue between the five, the past-booms page and one setting on the buyers’ bill: Meta’s share of the five’s spending is now 17%, which lowers the bill from $1.83T to $1.82T a year. The ledger has the arithmetic.
Whether the shares will be sold. Creating a class of shares is not selling them, and Meta gave no amount or date. It also had $82.5 billion of cash and marketable securities at the end of September, so one quarter of spending more than it earns is not a shortage. What the results show is the direction: the plan for paying for the building now includes outside money.
Whether the charge is a one-off. The $9.9 billion is part of a settlement with 52 attorneys general that provides for payments of up to about $18.6 billion, and Meta says it faces more youth-related trials in the coming months. Set the charge aside and operating profit rose to $22.9 billion. Either way, the cash spent on building is unaffected by it.
How much of the revenue AI earned. Meta still reports no AI revenue, so the advert prices and volumes are the only reading, and they cannot separate better AI targeting from a strong advertising market.
Microsoft and Alphabet report on 28 October, Amazon on 29 October and Apple on 2 November. Meta’s next results, expected in late January, should bring its first spending plan for 2027; the finance chief said the company expects “to continue investing aggressively”. The new shares start on 19 January 2027. The first sale of them would be the clearest sign yet that the building is being paid for by investors rather than customers.