META's capex is 39% of revenue; GAAP margins have held so far
Capex takes 39% of revenue at META and 30% of revenue at GOOGL, against 19% and 13% in Q2 2024. GAAP operating margins moved -1 pts to 38% at META and +3 pts to 33% at GOOGL; free cash flow after stock pay is 7% and 6% of revenue.
Capex as a share of revenue
TTM capital expenditure ÷ TTM revenue, %
GAAP operating margin
TTM operating income ÷ revenue, %; GAAP figures already deduct stock-based compensation
Free cash flow margin, before and after SBC
TTM (operating cash flow − capex) ÷ revenue; solid = after deducting SBC
What it means · inference
- The build-out has not yet dented reported margins
- Cash bears the cost first; depreciation lags spending
- META's stock pay, 11% of revenue, is a real cost
For investors · general, not personal financial advice
- Judge the spending on returns, not revenue alone
- Rising depreciation can weigh on future GAAP margins
- Compare free cash flow after stock pay, not before
What would change it
- Margins falling while revenue growth holds
- Capex guidance cut with revenue growth unchanged
Method
- What is measured: Capital expenditure and GAAP operating income as a share of revenue, trailing twelve months, for META and GOOGL, quarterly from Q1 2016 to Q2 2026; free cash flow shown before and after stock-based compensation.
- TTM sums of quarterly statement lines. GAAP operating income already deducts stock-based compensation; SBC is deducted again from free cash flow because it is a real cost that the cash-flow statement adds back.
- Quarterly flows are summed to trailing twelve months (TTM). Each fiscal year whose four quarters do not sum to the annual figure within 5% is dropped for that item (vendor quarterly data sometimes carries year-to-date values); quarters after the last annual filing cannot be checked and are used as reported.
- Statements are as restated by the vendor, not point-in-time: a figure shown for an old quarter may differ from what was known then.
- Only names in the reader-safe universe are shown; the other share class of Alphabet is a dual-class duplicate and is not used.
Sources
- MCH research warehouse, quarterly and annual statements (Alpha Vantage, as restated).
Universe
| Names in the published feed | 886 |
| Excluded: held, suspended, withdrawn, deferred, deal-pending or pending review | 54 |
| Reader-safe universe | 832 |
| Used in this exhibit | 2 |
Names whose rating is held, suspended, withdrawn, deferred or under a pending deal are excluded from every exhibit, so no held output appears here.
General and impersonal investment research. Not personal financial advice. Forecasts, valuations and model outputs are estimates and may be wrong. See Investment Disclaimer.
MCH Analysis is a general investment-research publication of MCH Advisory (Pty) Ltd. It is not personal financial advice and does not take your circumstances into account. MCH is not a licensed financial services provider or a registered investment adviser. Past performance, whether actual or simulated, does not predict future results. Subscriber Agreement | Privacy and Cookie Notice | Research Governance Policies