Meta Platforms (NASDAQ:META) reported strong Q2 top line growth, beating revenue expectations with $60.8 billion in sales up 28% year over year, but missed EPS consensus estimates of $7.18. The EPS drag was driven by $3.58 billion in one-time legal and severance charges. Excluding these hits, tax-adjusted EPS would have been $7.35, topping expectations.
Core engagement and advertising trends remained healthy. Family Daily Active People reached 3.6 billion across Meta’s platforms, supported by a 14% increase in ad impressions and a 12% increase in average price per ad. Operating margin declined to 31%, though it would have been approximately 36.7% excluding the one-time charges. Quarterly capital expenditures surged to $31.1 billion, reducing free cash flow to just $784 million. This is the first time it has been under $1 billion in over a decade.
The long-term AI investment thesis remains intact, but direct monetization is still murky. Management highlighted continued success from AI-powered advertising tools such as Advantage+, which are improving advertiser performance and conversion rates. However, it is unclear whether these gains alone justify the unprecedented increase in AI infrastructure spending, especially given that Meta’s advertising platform was already delivering strong results prior to the current CapEx expansion.
For more details, key highlights, and commentary, check out the high-level earnings summary.
