Meta's Q2 Earnings Surpass Expectations, Stock Rises 10%

Meta Platforms stock rose 10% after the company reported a blowout second-quarter earnings report, exceeding expectations on both revenue and earnings. The tech firm has been increasing spending in various areas, including research and development.

Meta Platforms, Inc. (Nasdaq: META) reported robust financial results for the second quarter of 2025, with its stock rising by 10% following the announcement. The company's earnings report exceeded market expectations, driven by strong revenue growth and increased spending in various areas, including research and development.

Financial Highlights

Meta reported revenue of $47.52 billion for the second quarter of 2025, an increase of 22% year-over-year. This growth was primarily driven by a 22% increase in revenue on a reported and constant currency basis. Costs and expenses totaled $27.07 billion, a 12% increase from the same period last year. Operating income reached $20.44 billion, up 38% year-over-year, while net income stood at $18.33 billion, a 36% increase. The company's diluted earnings per share (EPS) also rose to $7.14, up 38% from the same period last year.

Operational and Other Financial Highlights

The company reported an average of 3.48 billion daily active people (DAP) for June 2025, a 6% increase year-over-year. Ad impressions across its Family of Apps increased by 11% year-over-year, while the average price per ad rose by 9%. Capital expenditures for the period were $17.01 billion, with share repurchases totaling $9.76 billion and dividend payments reaching $1.33 billion. Cash, cash equivalents, and marketable securities stood at $47.07 billion as of June 30, 2025.

Outlook

Meta expects third-quarter 2025 total revenue to be in the range of $47.5-50.5 billion, with foreign currency providing a 1% tailwind to year-over-year total revenue growth. The company anticipates year-over-year growth in the fourth quarter of 2025 to be slower than the third quarter, as it laps a period of stronger growth in the fourth quarter of 2024. For full year 2025, Meta expects total expenses to be in the range of $114-118 billion, reflecting a growth rate of 20-24% year-over-year.

Challenges Ahead

Despite the positive earnings report, Meta faces several challenges. The company is engaged in discussions with the European Commission (EC) on its Less Personalized Ads offering (LPA), which could lead to modifications that negatively impact European revenue. Additionally, the new U.S. tax law may result in a reduction in U.S. federal cash tax, but the magnitude of this reduction is yet to be quantified.

References

[1] https://investor.atmeta.com/investor-news/press-release-details/2025/Meta-Reports-Second-Quarter-2025-Results/default.aspx