Meta released its financial results for the second quarter of fiscal year 2026 on July 29 local time. The company reported a 28% year-over-year increase in quarterly revenue, reaching $60.8 billion. However, net profit for the period fell 14% to $15.85 billion, translating to a diluted earnings per share of $6.18, weighed down by elevated operating costs and legal expenses.
In terms of core operational metrics, the daily active users across its family of apps, which includes Facebook, Instagram, and WhatsApp, grew to 3.6 billion. Ad impressions rose 14% year over year, while the average price per ad increased by 12%. Meanwhile, the Reality Labs segment, which handles virtual reality and metaverse initiatives, continued to face significant losses, posting an operating loss of $4.62 billion for the quarter.
The company attributed the decline in quarterly net profit to a sharp surge in costs and expenses. Total costs and expenses for the second quarter hit $42.03 billion, a 55% jump compared to the same period last year. This figure includes $2.4 billion in legal costs and $1.18 billion in severance payments related to a workforce reduction in May. Additionally, driven by increased investment in artificial intelligence infrastructure, capital expenditures for the quarter reached $31.08 billion, causing free cash flow to shrink dramatically to just $784 million.
Founder and CEO Mark Zuckerberg noted that artificial intelligence is accelerating the growth of the company's core business, powering next-generation products, and opening up new opportunities for enterprise services. He emphasized that the strategic focus is already showing initial results in the financial performance, and the company remains optimistic about its future growth potential.
Looking ahead to the third quarter, Meta forecasts revenue to be between $61 billion and $64 billion. To support ongoing investments in areas like AI, the company has raised the lower end of its full-year 2026 capital expenditure guidance, now expecting total capex to range from $130 billion to $145 billion. Furthermore, Meta warned in its earnings report that it is currently facing stringent regulatory scrutiny in several countries regarding youth protection issues. The company cautioned that potential adverse outcomes from multiple lawsuits in the U.S. this year could materially impact its future business and financial condition.