Meta shares fell in extended trading after the company provided a disappointing revenue outlook and reported a substantial decline in free cash flow. The technology firm projected quarterly revenue between $61 billion and $64 billion, with a midpoint of $62.5 billion, falling short of analyst expectations for $63.15 billion according to LSEG. The guidance acknowledged an approximate 1% currency headwind to year-over-year revenue growth based on current exchange rates.
Daily active people across Meta’s family of applications reached 3.6 billion, slightly trailing Wall Street estimates of 3.61 billion according to StreetAccount. The company raised its capital expenditure guidance for the year to a range of $130 billion to $145 billion from a prior range of $125 billion to $145 billion. This elevated spending reflects Meta’s substantial investment in artificial intelligence infrastructure. The impact on profitability was marked, with free cash flow declining sharply to $784 million in the quarter compared with $8.55 billion in the corresponding period the previous year.
Meta shares had declined 11% year to date as of Wednesday’s close, while the Nasdaq index rose approximately 5% over the same period. Chief Executive Mark Zuckerberg indicated that a significant portion of computing resources would be directed toward model training, core business growth, and developing personal agents and new products. The company also stated it expected to develop a substantial business serving large customers, with Zuckerberg noting that Meta was receiving substantial offers to lease excess computing capacity at a premium to acquisition costs.
The company’s total costs and expenses for the second quarter reached $42.03 billion, representing a 55% increase year over year. This total included $2.4 billion in legal charges and $1.18 billion in severance expenses from layoffs initiated earlier in the year. Excluding these items, finance chief Susan Li stated that operating income would have increased 9% year over year. Net income for the period declined to $15.85 billion from $18.34 billion in the prior-year quarter, translating to $7.14 per share. Meta’s Reality Labs division, focused on virtual reality and artificial intelligence-powered wearable devices, generated operating losses of $4.6 billion while recording $431 million in sales, surpassing Wall Street’s anticipated loss of $5.07 billion on projected revenue of $423.4 million.
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