Meta Platforms reported revenue of $60.8 billion for the quarter, a 28 percent year-over-year increase and slightly above the prior consensus of $60.2 billion. Despite the revenue beat, earnings per share (EPS) were $6.18, below the expected $7.22, and net income fell to $15.8 billion, a 14 percent decline compared with the same quarter a year earlier.
Operating margin contracted sharply, dropping from 43 percent a year earlier to 31 percent. Part of the profit decline reflected one-time items: the company recorded $2.4 billion of legal-related charges during the quarter, and severance costs tied to the May layoffs also weighed on results.
AI investments and rising capital spending
A more persistent pressure on profitability came from investments in artificial intelligence. Capital expenditures in the quarter totaled $31 billion, which materially reduced free cash flow to $784 million. For the full year, Meta now expects capital spending of $130–145 billion, up slightly from the prior guidance range of $125–145 billion issued in the first quarter.
Reality Labs posted a large operating loss
Reality Labs, Meta’s virtual and augmented reality division, generated an operating loss of $4.62 billion in the quarter, further detracting from consolidated results.
Guidance and market reaction
Meta guided third-quarter revenue to $61–64 billion, below the market consensus of $63.15 billion. In reaction to the weaker profit, narrowing margins and elevated investment levels, the stock declined about 7 percent in after-hours trading following the earnings release.
Why this matters
The report underscores a split picture: strong top-line growth paired with significant near-term pressure on profitability driven by large-scale AI and other investments. For investors, the central questions are whether these investments will deliver returns over the medium term and how the performance of Reality Labs evolves in coming quarters.
This article does not constitute investment advice or a recommendation.
