Meta Posts Strong Q2 Amid Heavy AI Spending

Meta Platforms has pleased Wall Street after its heavy investment in AI continues to be assisted by its core advertising business.

For the second quarter Meta posted a stunning rise in profits and revenues, with CEO Mark Zuckerberg touting that “Meta AI is on track to be the most used AI assistant in the world by the end of the year.”

It has been a busy time for Meta. Earlier this week, Meta reached a $1.4bn settlement in a 2022 Texas privacy lawsuit that alleged the company was taking users’ biometric data without their consent.

Meta Q2 financials

The social networking giant also faces another major lawsuit in New Mexico, where the state attorney general sued Meta over allegations that it failed to protect young users from child sexual exploitation.

But it was Meta’s financial financial performance in the second quarter that captured the attention of Wall Street and investors.

For the second quarter ending 30 June, Meta’s net profit rose an impressive 73 percent to $13.5bn from $7.8bn in the same year-ago quarter. Analysts had been expecting a profit of $12.3bn.

Meanwhile Q2 revenues rose 22 percent to $39bn from $32bn a year earlier. The market had been expecting revenues of around $38.3bn.

“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” said Mark Zuckerberg, Meta founder and CEO. “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”

Meta also revealed that family daily active people (DAP) was 3.27 billion on average for June 2024, an increase of 7 percent year-over-year.

Ad impressions increased by 10 percent year-over-year across the range of Meta’s product family; while the average price per ad increased by 10 percent year-over-year.

Meta is still heavily spending, after confirming its total costs and expenses were $24.22 billion, an increase of 7 percent year-over-year.

Matters have been helped by Meta’s cost cutting, with total headcount at 70,799 as of 30 June 2024, a decrease of 1 percent year-over-year.

Meta’s share price has risen more than 35 percent this year, and the latest financial results, coupled with the firm’s positive outlook for Q3, further pleased Wall Street, and Meta’s share price consequentially rose nearly 10 percent on Thursday to $520.35.

Texas settlement

Earlier this week Meta reached settlement concerning a Texas privacy lawsuit that alleged the company was taking users’ biometric data without their consent.

Texas Republican attorney general Ken Paxton had sued Facebook in 2022, alleging it captured and used biometric data of millions of Texans without their consent.

Facebook had in November 2021 closed down the use of facial recognition on its platform, and deleted individual facial-recognition templates for more than 1 billion people.

According to the Associated Press report on Meta’s $1.4 billion settlement with Texas, Attorney General Ken Paxton said the settlement is the largest secured by a single state.

“This historic settlement demonstrates our commitment to standing up to the world’s biggest technology companies and holding them accountable for breaking the law and violating Texans’ privacy rights,” Paxton, a Republican, was quoted as saying in a statement.

Meta said in a statement: “We are pleased to resolve this matter, and look forward to exploring future opportunities to deepen our business investments in Texas, including potentially developing data centres.”