Learn the stock market › Read an earnings report › Lesson 2 of 7

The income statement

Short answerThe income statement shows what a company sold in a period and what was left once all costs and tax were taken out. You read it from the top down, from revenue to net income. Meta had revenue of $64.6 billion in the quarter that ended in September 2026, +26% from a year earlier, and net income of $9.9 billion.

A real income statement

What each line means is covered in the lesson on revenue, costs and profit, over a full year. Here we read it the way it appears in a quarterly report: the quarter next to the same quarter a year before. The table shows Meta's quarter that ended in September 2026.

$ million	Sep 2026	Sep 2025	Change
Revenue	64,601	51,242	+26%
Cost of revenue	−13,369	−9,206
Gross profit	51,232	42,036	+22%
Other operating costs	−38,244	−21,501
Operating income	12,988	20,535	−37%
Interest and other	13	1,128
Income before tax	13,001	21,663
Tax	−3,141	−18,954
Net income	9,860	2,709	+264%

Meta.

Read it from the top. Each bold line is a subtotal: what is left once the lines above it are taken out. Gross profit was 79% of revenue.

Three things to look for

Which lines grow fastest. When costs grow faster than revenue, the margin shrinks even while sales rise.

Tax. Tax took 24% of income before tax, against 87% a year earlier.

A gap that large in the tax rate rarely comes from ordinary business. A note in the report almost always explains it, and it is worth reading before comparing profit between the years.

Other owners. When a company owns a subsidiary together with others, part of the profit belongs to them; US reports call it noncontrolling interests. The last line is the profit that belongs to the company's own shareholders, and that is what is divided by the number of shares in earnings per share.

Trailing twelve months

A single quarter can be unusually strong or weak, so many investors add up the last four quarters, the trailing twelve months. From the quarter that ended in December 2025 through the one that ended in September 2026, Meta had revenue of $242 billion and net income of $75.2 billion. Revenue was 3.7 times the latest quarter's.

Trailing twelve months is also what the P/E ratio and most other ratios are usually based on.

Test yourself

A company has revenue of 100, operating income of 12, interest expense of 2 and tax of 2. What is its net income?

Meta's latest figures are on its stock page.