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Tencent News "First Line" Ji Zhenyu sent from Silicon Valley on July 31

Social giant Meta's performance in the second quarter of 2024 remained strong, with steady growth in major financial indicators such as revenue and profit, as well as operating indicators such as daily active users and average advertising prices. Boosted by the favorable financial report, Meta's stock price rose by more than 7% after the financial report was released that day.

Meta released its second quarter financial report on July 31, US time, showing that both revenue and profit for the quarter exceeded market expectations. Revenue reached US$39.07 billion, a year-on-year increase of 22%, and earnings per share were US$5.16, a year-on-year increase of 73%.

In terms of business performance, the average daily active users of Meta's apps reached 3.27 billion in the quarter, a year-on-year increase of 7%. Average advertising revenue increased by 10% year-on-year. At the same time, Meta's profitability continued to improve, with operating profit reaching US$14.847 billion in the quarter, a year-on-year increase of 58%, and operating profit margin increased from 29% a year ago to 38%.

Like other tech giants, Meta is also actively participating in the "arms race" related to generative AI, with capital expenditures reaching $8.472 billion in the quarter, a year-on-year increase of 33%. So far this year, Meta's cumulative capital expenditures have reached $15.187 billion. The company also slightly raised its total capital expenditure for the whole year from $35 billion to $40 billion to between $37 billion and $40 billion.

Although capital expenditure increased significantly, the increase was almost in line with the operating growth rate, and therefore did not drag down Meta's free cash flow level in the quarter. Meta's free cash flow in the quarter was US$10.898 billion, the same level as the same period last year, without major fluctuations.

Compared with the previously announced financial reportMicrosoftCompared with the two giants, Intel, AT&T and Google, the capital expenditures of the former two in the second quarter increased by nearly 100% year-on-year, while Meta appeared to be relatively more conservative and cautious in terms of capital expenditures, which also reflects that Meta is currently paying more attention to the healthy and stable growth of financial performance. In terms of investment in the AI ​​"arms race", it has adopted a strategy of following and keeping up with the times.

This may be the lesson that Meta founder Zuckerberg has learned from his previous experience of investing heavily in the Metaverse but with poor results. In the third quarter of 2022, Meta's capital expenditure was as high as US$9.355 billion, the highest in recent years, which also caused the free cash flow of the quarter to drop to less than US$200 million. Subsequently, the new CFO took office and adjusted the financial strategy, lowering the previous ambitious capital expenditure plan, reducing the capital expenditure plan for the whole year of 2023 from 35-40 billion to less than 30 billion US dollars. In the end, the capital expenditure for the whole year of 2023 was US$28 billion. In the following 2023 and the first half of this year, Meta's financial condition has continued to remain strong.

This adjustment of Meta has been highly recognized by Wall Street investors. After Meta's stock price hit the bottom below $100 per share in October 2022, it continued to rise. In less than two years, the stock price has nearly tripled.

Despite this, Meta said that capital expenditures for the full year 2025 may still increase. Meta Chief Financial Officer Susan Li said in the earnings call that as Meta continues to invest in supporting AI research and product development, capital expenditures are currently expected to see "significant growth" in 2025.