Meta Platforms, Inc. (META) reported a robust second quarter for 2025, underscoring the strength of its core advertising business and continued momentum across its Family of Apps. Revenue surged 22% year-over-year to $47.52 billion, driven by advertising revenue of $46.56 billion, which grew 21% YoY. The company’s bottom line expanded even faster, with net income climbing 36% to $18.34 billion and diluted EPS jumping 38% to $7.14, reflecting strong operating leverage. Operating margin improved to 43%, up from 38% in the prior year, while free cash flow reached $8.55 billion.

Meta’s Family of Apps (FoA) continued to be the primary engine of growth, generating $47.15 billion in revenue, up 22% YoY, with operating income rising 29% to $24.97 billion. Meanwhile, the Reality Labs (RL) segment remained a drag, with revenue of $370 million (up 5%) but an operating loss widening slightly to $4.53 billion. The company reiterated its commitment to long-term investment in AR/VR and AI wearables, such as its Ray-Ban Meta AI glasses.

Across regions, revenue grew strongly, with Europe and Rest of World leading at +24% YoY, followed by US & Canada (+21%) and Asia-Pacific (+19%). Meta noted that ad impression growth is concentrated in lower-monetizing regions like Asia-Pacific, while monetization per user remains highest in the US & Canada and Europe.

On the engagement front, Family Daily Active People (DAP) rose 6% YoY to 3.48 billion, while ad volume and pricing were both strong, with ad impressions up 11% and average price per ad up 9%.

Despite the revenue gains, costs continued to rise. Total costs and expenses increased 12% YoY to $27.08 billion, driven by infrastructure and headcount growth. Notably, R&D expenses jumped 23% to $12.94 billion, reflecting Meta’s heavy investment in AI, infrastructure, and Reality Labs. However, G&A costs declined 27%, helped by lower legal-related expenses.

Meta continues to ramp up capital spending, with Q2 CapEx totaling $17.01 billion, and full-year guidance raised to $66–72 billion, an increase of roughly $30 billion YoY at the midpoint, focused on AI infrastructure. Shareholder returns also remained a priority, with $9.76 billion in share repurchases and $1.33 billion in dividends paid during the quarter. The dividend per share increased to $0.525, up 5% from the prior year.

Looking ahead, Meta expects Q3 2025 revenue between $47.5 billion and $50.5 billion, benefiting from a modest 1% FX tailwind. Full-year expense guidance remains elevated at $114–118 billion, and the company flagged that 2026 expense growth will likely outpace 2025, primarily due to infrastructure and compensation investments.

Management emphasized its strategic pivot to AI, noting ongoing development of Llama models and Meta AI integrations across its apps. Business messaging and AI agents are emerging as potential future revenue streams, while monetization of Threads has begun, though it is not expected to materially contribute in 2025.

A key concern remains regulatory risk, especially in Europe. The company flagged potential impacts from the Digital Markets Act, which could materially reduce ad effectiveness under Less Personalized Ads and affect European revenue as early as Q3.

Overall, Meta’s Q2 2025 results reflect strong financial execution, expanding margins, and strategic investment in AI and infrastructure, even as Reality Labs losses and regulatory pressures pose challenges for the coming quarters.