Meta Platforms saw its stock price fall more than 6% in extended trading following the release of second-quarter earnings results and forward guidance that fell short of market expectations. The company provided third-quarter revenue guidance of between $61 billion and $64 billion, with a midpoint of $62.5 billion, compared with analyst expectations of $63.15 billion according to LSEG. The company attributed approximately 1% of the expected shortfall to unfavorable foreign currency headwinds based on current exchange rates.
The company reported daily active people across its family of applications at 3.6 billion, slightly below the 3.61 billion estimate from StreetAccount. More significantly, Meta’s free cash flow contracted sharply to $784 million for the quarter, down from $8.55 billion in the same period a year earlier. This decline reflected the company’s substantial capital expenditure program focused on artificial intelligence infrastructure. Meta adjusted its full-year capital expenditure guidance upward to a range of $130 billion to $145 billion from the previous range of $125 billion to $145 billion.
Total costs and expenses for the second quarter reached $42.03 billion, representing a 55% increase from the prior year. This figure included $2.4 billion in charges related to legal proceedings and $1.18 billion in severance expenses associated with workforce reductions that commenced in May. Excluding these special charges, operating income would have increased 9% on a year-over-year basis, according to Finance Chief Susan Li. Net income for the period decreased to $15.85 billion, or $7.14 per share, compared with $18.34 billion in the same quarter the previous year.
Meta’s Reality Labs unit, which develops virtual reality and artificial intelligence-powered wearable devices, recorded an operating loss of $4.6 billion on sales of $431 million. This result exceeded analyst expectations for a loss of $5.07 billion on revenue of $423.4 million. The company has been aggressively pursuing artificial intelligence development following the June 2025 hiring of AI chief Alexandr Wang, which included a $14.3 billion investment in Scale AI. CEO Mark Zuckerberg indicated on the earnings call that Meta intends to monetize excess computing capacity by leasing it to third parties at prices exceeding the company’s acquisition costs.
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