Meta bought an analytics startup in the same quarter its free cash flow turned negative. It still guides 2026 capital spending to $135 billion to $145 billion.
Meta spent more cash than it earned in the third quarter. It still guides capital spending for 2026 to $135 billion to $145 billion.
Against that, Sundial is a small purchase. Meta has not disclosed the price, and the startup raised only $23 million as an independent company. The deal adds analytics tools while Meta’s spending grows faster than its cash generation.
The cash flow squeeze
Meta's own reconciliation of free cash flow shows the squeeze. Free cash flow is operating cash flow minus capital spending. Over the nine months to 30 September, operating cash flow rose 22% while capital spending rose 71%.
Capital spending took 89% of operating cash flow, against 63% a year earlier. Operating cash flow reached $96.9 billion and capital spending reached $85.8 billion. Capital spending here includes principal paid on finance leases, which Meta counts because it also buys equipment that way.
Free cash flow stayed positive over the nine months but fell 63%. It was $11.0 billion, against $29.5 billion a year earlier.
The third quarter alone went negative. Capital spending of $34.9 billion exceeded operating cash flow of $32.8 billion. Free cash flow came out at negative $2.1 billion, against a positive $10.6 billion a year before.
Meta's operating cash flow rose from 79.6 billion dollars to 96.9 billion in the first nine months of 2026, while capital spending including finance leases rose from 50.1 billion to 85.8 billion, cutting free cash flow from 29.5 billion to 11.0 billion.
View data
| Period | Operating cash flow | Capital spending incl. finance leases |
|---|---|---|
| Nine months to September 2025 | 79.586 | 50.078 |
| Nine months to September 2026 | 96.873 | 85.824 |
Meta's release claims the spending is already paying off. It says its AI investments "are already delivering substantial incremental advertising revenue through stronger engagement, better recommendations, and more efficient monetization".
Meta also says the newer investments built on that progress "will take longer to generate returns than those in our core business". Meta incurs the costs before those returns can be demonstrated.
Costs rose far faster than revenue in the quarter. Revenue grew 26% to $64.6 billion, but costs and expenses grew 68%.
One charge explains most of the halving in operating margin. Operating margin fell to 20% from 40%. Without a $9.89 billion charge for the agreement with 52 state attorneys general, it would have been about 35%.
Meta is reducing headcount while increasing spending. Headcount fell 15% to 66,775, yet full year expenses are guided to $175 billion to $179 billion.
Where the cash went
The 10-Q filing explains why the cash pile barely moved. Cash and securities ended September at $82.45 billion, up only $857 million since December.
Money came in from two sources. Operations brought in $96.87 billion and the notes Meta sold in May brought in $24.91 billion.
Money also went out in four ways, the filing says. Capital spending took $85.82 billion, taxes on employee share awards took $12.77 billion, dividends took $4.06 billion and other financing took $2.63 billion.
The filing adds a fifth item. A further $10.80 billion of money market funds was reclassified as restricted. The money sits in escrow under multi year infrastructure purchase agreements and is to be released between 2028 and 2030.
Spending on buildings and equipment dominates the outflow. Property and equipment purchases took $83.06 billion in the nine months, the same filing says. Meta expects $135 billion to $145 billion of capital spending in 2026 for its AI efforts and core business.
What Meta gets from Sundial
Sundial's funding is small beside that. The startup raised $23 million in total by July 2025, which is 0.017% of the low end of the guide. Ten times that funding would still be 0.17%.
Axios reported on Friday that Sundial joins Meta's new data organisation, and a Meta spokesperson confirmed the deal. The report says that organisation runs descriptive analysis, experiments and monitoring of critical AI systems.
Sundial's cofounder Julie Zhuo announced on X that Sundial "has been acquired by Meta". She and cofounder Chandra Narayanan are joining with other members of the team. No closing date was given.
Zhuo says Sundial "automated away many of the obstacles" to analysis, such as cleaning data, building semantic layers and writing SQL. She adds that the company started before the AI wave and "rebuilt ourselves to be AI-native". She calls Meta "one of the most analytically rigorous places on the planet".
Sundial will sit under Alex Schultz, Meta's first chief data officer, named in July. The report says Narayanan will lead analytics tooling and agents work.
Schultz wrote on LinkedIn, as the report quoted: "AI has created effectively unlimited demand for insights, and we want to define the future of AI analytics". The report frames the deal as more investment in Meta's data and analytics team, driven by AI demand for insights.
Sundial’s product lets users inspect how it reaches an answer. Sundial's archived product page describes agentic analytics, meaning a chatbot plugin that turns plain questions into answers drawn from company data. The tool promises to "tell you its confidence, so you know when something is guaranteed or directional".
The same page says teams can "audit every question and analysis, and see the lineage of every number". A reader can trace a figure back to its source. The report adds that teams can analyze data themselves without waiting on a central data unit.
External customers will lose the product. Sundial will stop serving them when the deal closes, the report says. The archived page named OpenAI, Gamma, Character and Mighty Networks as customers. It quoted OpenAI's VP of Analytics and Insights, who said Sundial "automated work that would have taken our team months to build internally".
The acquisition brings Meta Sundial’s team and methods, while external sales will end. Zhuo is a former Meta vice president of product design. The report describes Narayanan as analytics chief at Sequoia Capital and Instagram, and director of analytics at Facebook.
The next spending test
The fourth quarter will test the squeeze harder than the third did. Meta's guide leaves $49 billion to $59 billion of capital spending for the quarter, after $85.8 billion in the first nine months. That is $14 billion to $24 billion more than the third quarter.
Operating cash flow was $32.8 billion in the third quarter. If it repeated, free cash flow would fall to between negative $16 billion and negative $26 billion. The fourth quarter results will show how far operating cash flow closes that gap.