Meta Platforms Inc. released its financial results for the second quarter of fiscal 2026 on July 29, local time. The company's stock experienced a notable decline in after-hours trading, driven by a sharp reduction in free cash flow due to soaring capital expenditures in artificial intelligence, coupled with a revenue forecast for the upcoming quarter that fell short of market expectations.
The earnings report showed that Meta generated revenue of $60.80 billion in the second quarter. Net income dropped to $15.85 billion, down from $18.34 billion in the same period last year. Earnings per share came in at $6.18, missing the consensus estimate of $7.22. Due to heavy investment in AI infrastructure, the company's free cash flow for the quarter plummeted to $784 million, a dramatic decline from $8.55 billion in the year-ago quarter.
Total costs and expenses for the quarter reached $42.03 billion, a 55% surge year-over-year. This figure includes $2.4 billion in legal settlement costs and $1.18 billion in expenses related to layoffs and restructuring. Meta Chief Financial Officer Susan Li noted that excluding these one-time charges, operating profit grew 9% compared to the prior year.
To support its AI strategy, Meta is continuously expanding its computing infrastructure. The company has raised its full-year 2026 capital expenditure forecast range to between $130 billion and $145 billion. Meta has recently accelerated several large-scale infrastructure projects, including a partnership with BlackRock to build a $14 billion data center in El Paso, Texas; a planned investment of over $50 billion for the Hyperion data center in Louisiana; and a $9 billion data center project in Alberta, Canada.
Meta CEO Mark Zuckerberg stated that the company's computing resources will be primarily allocated to training large language models, expanding core business operations, and developing personal AI agents. The company also plans to open a new revenue stream by leasing computing capacity to large enterprise clients.
On the business and user metrics front, the daily active user count for Meta's family of apps was 3.6 billion, slightly below the market consensus of 3.61 billion. The division responsible for virtual reality and AI hardware reported revenue of $431 million for the quarter, with an operating loss of $4.60 billion.
For its guidance, Meta projects third-quarter revenue to be between $61.0 billion and $64.0 billion. The midpoint of this range, $62.5 billion, is below the average analyst estimate of $63.15 billion. The company noted that currency fluctuations are expected to have a negative impact of approximately one percentage point on the year-over-year growth rate of total revenue in the upcoming quarter.