Meta Platforms Inc. delivered second-quarter earnings that significantly exceeded Wall Street projections, propelling its stock price over 11% higher in after-hours trading.
The company reported adjusted earnings per share of $7.14 prior to share-based compensation, with revenue surging 22% year-over-year to $47.52 billion. These figures surpass the market's $5.92 per share and $44.8 billion revenue expectations.
Advertising revenue drove this growth, accounting for nearly all of Meta's income at $46.56 billion - outperforming the projected $43.97 billion. Net income reached $18.33 billion compared to $13.46 billion in the same period last year.
CFO Susan Li emphasized AI advancements during the earnings call, stating these technologies have enhanced "the efficiency and monetization of our ad systems." The social media giant also raised its third-quarter revenue guidance to $47.5-50.5 billion, well above the estimated $46.14 billion target.
Daily active users across Meta's platforms (Facebook, Instagram, WhatsApp, and Threads) increased to 3.48 billion, exceeding both the previous quarter's 3.43 billion and the street's 3.45 billion forecast.
The Reality Labs division remained a financial drag, reporting $4.53 billion in operational losses despite generating $370 million in revenue. This unit focuses on VR/AR technologies that CEO Mark Zuckerberg once positioned as core growth drivers.
Total operating expenses rose 12% year-over-year to $27.08 billion. Capital expenditure projections for FY2025 were revised upward to $66-72 billion, with recruitment-related costs now identified as the second-largest expense after data center infrastructure investments.
Meta has intensified its AI talent acquisition through high-profile acquisitions, including the $1.43 billion investment in Scale AI in June. The deal brought Alex Wang, now co-leading Meta's Superintelligence Lab as Chief AI Officer, who is spearheading work on artificial general intelligence (AGI).
The recruitment strategy continued with the hiring of former GitHub CEO Nat Friedman, instrumental in creating Copilot, and Safe Superintelligence CEO Daniel Gross. Both will join Wang at the new Superintelligence Lab.
Zuckerberg cited lukewarm developer reception to Llama 4 as a catalyst for this AI talent drive. In a pre-earnings letter, he outlined a vision for "personal superintelligence" focused on empowerment rather than productivity gains.
The CEO elaborated during the earnings call, stating AI could "amplify human creativity and cultural development while deepening personal connections." He acknowledged slow but undeniable progress toward developing AGI - systems surpassing human capabilities in all domains.
Analyst Holger Mueller of Constellation Research noted investors appear unfazed by the billion-dollar AI ambitions, given Meta's strong cash flow position. "While past metaverse investments had defensive motives, current AI strategies are more aggressive," Mueller said, adding AI is "clearly not harming the bottom line."
Regarding data center spending, CFO Li mentioned exploring joint ventures with financial partners to fund infrastructure projects. This follows recent reports of Meta seeking $29 billion to support its data center expansion efforts.
"We don't have final deals to announce, but we expect external financing models will help fund large-scale data center projects leveraging our world-class infrastructure capabilities," Li explained.
