Meta had the best quarter in its history and somehow still took a loss where it hurts: $64.6 billion in revenue, up 26% year over year, according to StockStory — and nearly $10 billion of that got rerouted straight to lawyers and state attorneys general.

The legal charge covers Meta's August settlement with multiple U.S. state AGs over claims its apps were designed to addict children. It turned what would have been a $7.40-per-share adjusted profit into a $3.83 GAAP result, and cut the operating margin from 40% a year ago to 20%. That's the steepest margin compression of any quarter in the company's recent memory — and it came on the same day a New Mexico judge ordered Meta to pay $25 billion in a separate privacy case.

But strip out the courtroom bill, and this was a monster quarter. Daily users hit 3.64 billion, engagement on Facebook and Instagram hit all-time highs, and Threads has now passed X in monthly active users, per Markets Daily. The Muse personal agent — Meta's answer to the AI companion race — picked up over 10 million U.S. and Canadian users in six weeks, and a quarter of the people who set it up use it daily, mostly to shop: average purchases exceed $200 a pop. Zuckerberg called Muse and Muse Wonder "our first frontier model" on the call and declared Meta on its way to "personal superintelligence for everyone."

Reality Labs, the division that has burned roughly $100 billion since the metaverse pivot, even showed signs of discipline: its $4.13 billion quarterly loss narrowed year over year, and Meta expects the bleeding to shrink further in 2027 as hardware investment shifts toward AI-first products like Meta Glasses.

There's one more thing hiding in the filing: Meta announced a new non-voting Class C stock, per Stock Analysis — the classic Zuckerberg control-preservation maneuver, dressed up as capital structure housekeeping.

The real question isn't whether Meta can grow through its legal bills — it obviously can, with Q4 guided to $74.5 billion. It's whether the meter is ever going to stop running. Between the AG settlement, the New Mexico verdict, and whatever states are next in line, Meta is now budgeting for litigation the way it used to budget for servers. That's a strange kind of recurring cost — and the only growth story in tech that comes with a subpoena attached.

— via StockStory