Bloomberg Surveillance · Wednesday, July 29, 2026
Meta reported strong revenue growth of 28% and revenues ahead of expectations, but its operating margins dropped significantly from 43% to 31% year-over-year, with costs up 55%. The company also disclosed a $2.4 billion legal charge and $1.2 billion in severance costs, contributing to a near disappearance of free cash flow.
“It's so hard? I mean, revenues up twenty eight percent ahead of expectations, right, ad impressions have improved, Pricing has improved. Meta's core business. It's bread and butter is still advertising. The story was how has AI made that better? More monetizable?”
“the operating margins didn't just come in significantly below a consensus by about four percentage points, but costs are up fifty five percent, So the operating margin has fallen from forty three to thirty one. Costs are higher, and free cash flow has basically disappeared.”
“Maybe they're disclosing that there was a one time legal charge of two point four billion dollars and then severance costs super interesting one point two billion dollar charges. We knew about the story right about the waves of Meta layoffs, so that could excluding those, the underlying operating performance was kind of much nearest expectations.”