Full Transcript: Meta Platforms Q2 2026 Earnings Call

Meta Platforms (NASDAQ: META ) reported second-quarter financial results on Wednesday. The transcript from the company's second-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

8 billion, a 28% year-over-year increase, driven by strong ad revenue and engagement growth across its platforms. Strategic initiatives include significant investments in AI, with developments in personal and business agents, and a new 1 gigawatt data center project in collaboration with BlackRock. The company launched MetaOne, a subscription service for AI tools, and continues to expand its AI-powered creative tools, which are now used by 9 million small businesses. Meta is focusing on AI to enhance content recommendations and ad relevance, with promising results from new AI models such as Muse Image and Muse Video.

CEO Mark Zuckerberg highlighted the potential of personal superintelligence and business agents, emphasizing Meta's strength in scaling consumer products and infrastructure. CFO Susan Lee noted a rise in expenses due to legal charges and severance costs but maintained an optimistic outlook for operating income growth in 2026. Meta is planning substantial infrastructure investments, with capital expenditures for 2026 expected between $130 to $145 billion, and is exploring various capital sources, including partnerships and debt.

Management remains optimistic about future growth, focusing on AI-driven innovations and monetizing new products and services, while acknowledging ongoing regulatory challenges. Full Transcript Krista, Conference Operator Good afternoon. My name is Krista, and I will be your conference operator today. At this time I would like to welcome everyone to Meta Platforms' second quarter 2026 earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question, please press star, then the number one on your telephone keypad. To withdraw your question, again press star one.

We ask that you limit yourself to one question, and this call will be recorded. Thank you very much. Chad Heaton, Meta's Vice President of Finance, you may begin. Thank you.

Good afternoon and welcome to Meta Platforms' second quarter 2026 earnings conference call. Joining me today to discuss our results are Mark Zuckerberg, CEO, and Susan Lee, CFO. Our remarks today will include forward-looking statements which are based on assumptions. As of today, actual results may differ materially as a result of various factors, including those set forth in today's earnings press release and in our quarterly report on Form 10-Q filed with the SEC.

We undertake no obligation to update any forward-looking statement. During this call, we will present both GAAP and certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. com.

And now I'd like to turn the call over to Mark. Mark Zuckerberg, CEO All right. Hey everyone, thanks for joining. 6 billion people using at least one of our apps each day.

We reached several milestones. Instagram reached 2 billion daily actives. Threads crossed 500 million monthly actives, making it the fastest growing conversation app ever. Facebook has reached more than 2 billion daily actives for a while now.

WhatsApp just hit an all-time messaging record, peaking at 30 million messages sent per second during the World Cup final. And also Kunal Shah just joined as our new head of WhatsApp. He built one of India's most important payment companies and will be a great addition to the team. We also shipped some strong new models from Meta Superintelligence Labs and released new glasses.

Overall, the scale and reach of our community across our apps is pretty remarkable, and it gives us a strong platform for delivering new innovations to billions of people. The opportunity in front of us is massive. First, we are now at a point where our investments in AI are accelerating every major part of our core business. They're improving the experience for people using our apps, driving better performance for advertisers, and helping our teams build new experiences and ship faster.

Second, we are developing new personal agents that will be the foundation for our next wave of products, products and revenue lines in the months and years ahead. And third, we see a large enterprise opportunity to sell to businesses, including APIs, business agents, potentially selling compute directly, and other services that we're building for large customers. And I want to spend some time today laying out exactly how our investments are delivering results today and the opportunities that we see over time for accelerating our core business. We are seeing strong and promising results in several areas.

In Instagram and Facebook, I'm very optimistic about our work to integrate large language models into our recommendation systems. LLMs add a first-principles understanding of what the content is about and why it is compelling, as well as a deeper understanding of what people are interested in and what their goals are when they're using our apps. So this means that we can show more relevant and engaging content that better reflects people's goals and interests. Our new Muse Image and Muse Video models will also dramatically expand the universe of content that people can discover across our platforms.

There are already two large sets of content to draw from: first, from your friends and the people you follow, and second, from creators that you don't follow. But now there's going to be a whole new and nearly infinite universe of personalized content. Now this is going to make our services a lot more useful and engaging for people. For ads, we are using LLMs to improve how our systems predict and rank the ads that we show.

We've expanded the context that we can take into account around a person's organic and ads activity to determine an ad's relevance, driving significant increases in relevance and conversions on both Facebook and Instagram. And on a dollar basis, our ads business is reporting faster year-over-year revenue growth than any other company's reported ad business. So these AI investments are paying off. We are also seeing a lot of demand for our new AI-powered creative tools.

Nine million small businesses on our platforms are now using at least one of our AI ad creative tools, and we're rolling out new end-to-end creative solutions that help advertisers translate performance data into their creative decisions. Muse Image is going to supercharge this. The model can analyze images, improve its own work, and produce better ad variations based on advertiser input. We're getting great feedback on this so far.

We also just launched MetaOne, a new subscription offering that provides more tools and AI features across our apps. As demand grows, we're going to offer a variety of different tiers and pricing options there as well, and I'm also excited about how AI is helping our teams speed up product development. Earlier this year we shipped Instagram Instance. We also just launched Forum, a standalone groups app, and Seller, a standalone marketplace app, and I expect it to become a lot easier to ship new apps.

So we are planning to build out more ideas and use our recommendation systems to scale them to the people who will find them interesting, as we've done with Threads. It's been a little more than a year since we launched Meta Superintelligence Labs and our trajectory is strong. 1 and Muse Image. Since we rebuilt Meta AI and integrated MuseSpark, we have seen a 60% increase in the number of people interacting with the assistant each day, and that continues to grow quickly week over week.

1 is a strong agentic encoding model that is very efficient and excels at computer use, tool use, and multimodal understanding. It's available through our new public API and we are ramping up distribution through partner channels and more coding agents over the coming weeks. We are also building out features to make it easier for enterprises to adopt MuseSpark, and that is an area that we expect to continue focusing on. One reason that we are so focused on making MuseSpark great at agentic capabilities is that we think that there's a very big opportunity to ship a few types of agents that are aligned with our mission and business.

The first is personal agents. Soon we will have agents that can work 24/7 on your behalf to help you achieve your goals and improve your life, your health, your relationships, your finances, whatever you want. The first domain that agents have really taken off in is coding, but engineers are more technical and willing to spend time making those agents work. So to build great personal agents, this needs to be a great consumer product that just works out of the box and is easy enough for billions of people to adopt and use.

I'm very excited about this, and we're going to have more to share soon. As we move towards a future where we're all interacting with multiple agents, I think that WhatsApp and our other messaging surfaces are going to become increasingly important. WhatsApp is already the leading surface where people engage with Meta AI, and as we build out a platform for more agents across our messaging apps, we're going to innovate on how to deliver a private and secure AI experience. We launched Incognito mode this quarter on WhatsApp and the Meta AI app, allowing people to have private conversations with their assistant that even Meta can't see.

We are planning to make strong privacy and security a fundamental part of the agents that we're building as well. I'm also very excited about our progress with business agents. We made Meta business agents available globally this quarter on WhatsApp and Messenger, and there are already more than 1 million businesses using them to talk to their customers or complete sales every week. We're rolling business agents out on Instagram now too.

One interesting thing about having an agent talk to your customers every day is that it learns over time and can bring all of those insights back to you. So we're building more agentic capabilities to summarize all these conversations, digest what happened overnight, and surface what customers are asking for. And soon it'll go further, including suggesting ways to grow your business, giving you competitive intelligence, and real-time insights into what's working and what's not. And over time we'd like to build this into a business-in-a-box service that can help you start and run a whole business using Meta's platforms.

In terms of how we will monetize these, we have a mix of subscriptions, volume-based pricing, and I expect that we're going to continue to evolve more of these products to be like our ad systems where businesses only pay us when we achieve results for them. Over time that will let us run an efficient auction over our compute, similar to how we do that for advertisers today. As AI usage in our products and businesses continues to ramp, we continue to invest aggressively in infrastructure to meet the demand. Yesterday, as part of our Meta Compute effort, we announced a new strategic venture with BlackRock to develop a new 1 gigawatt data center in El Paso, Texas.

Overall, we expect that a significant portion of our compute is going to go towards training our models, growing our core business, and delivering personal agents and new products. But we also expect to grow a large business serving large customers as well. We've built our API, we're rolling out business agents, we're getting a lot of offers for compute at a significant premium over what we paid for it, and we have more coding and productivity tools on our roadmap as well, and we'll have more to share on all of this soon. As we get closer to personal superintelligence, we are also going to need hardware that allows you to seamlessly interact with it.

Glasses are the ideal form factor since they can be with you throughout the day and they can assist you without pulling you away from the moment. Our glasses remain one of the fastest-growing consumer electronics of all time and we continue adding to the lineup. We just released our own line of Meta glasses in collaboration with EssilorLuxottica, including a style that we designed with Kylie Jenner. They're the first glasses to ship with MuseSpark out of the box so that they can understand what you're seeing and give even more helpful answers.

Early sales have been strong, exceeding our expectations, and we're going to have more to share on our glasses lineup at this year's Connect conference on September 23rd, so I encourage you to tune in then. Before I wrap, I want to mention that I just published an op-ed about why I'm so optimistic that we are building a positive future for everyone. At Meta, we have always built technology to put power in people's hands so they can connect with the people they care about and shape the world in the ways that they want. It's why we've always focused on making our products affordable and accessible for everyone.

And it's a strategy that has served both our community and our business well. As we enter this next chapter, that same philosophy is guiding how we approach developing AI. We're the only major company building AI with the primary goal of putting superintelligence directly into people's hands. Rather than centralizing superintelligence, we are focused on distributing it widely and giving everyone the ability to direct it towards what matters to them.

That's the way that society has always made progress. I think that these are the right values for building a positive AI future. And if we help build this, then I think that we will continue to build a very strong business as well. So that's everything I wanted to cover up front today.

AI is improving our core business. It's making our apps more relevant and delivering better results for businesses. We're starting to deliver more novel products and we'll have a lot more there soon as well. And we are investing aggressively because the potential is huge and we know that there are many ways to deliver value here.

As always, I'm grateful to all of you for being on this journey with us. And now here's Susan. Susan Li, CFO Thanks, Mark. And good afternoon everyone.

Let's begin with our segment results. All comparisons are on a year over year basis unless otherwise noted. 4 billion, up 28% year over year. 4 billion, up 27% or 26% on a constant currency basis.

In Q2, the total number of ad impressions served across our services increased 14%. Impression growth was healthy across all regions, driven by growth in engagement and users as well as ad load optimizations. The global average price per ad increased 12% year over year, driven by ad performance gains, improvements in macro conditions relative to Q2 of last year and currency tailwinds. This was partially offset by strong impression growth, particularly from lower monetizing surfaces and regions.

For the first time, quarterly Family of Apps other revenue reached $1 billion and grew 73% year over year, driven primarily by WhatsApp paid messaging and subscriptions revenue. Within our Reality Labs segment, Q2 revenue was $431 million, up 16% year over year due to strong growth in AI glasses revenue, partially offset by lower Quest headset sales. 8 billion, up 28% or 27% on a constant currency basis. 2 billion in severance expenses in connection with the May 2026 headcount reduction.

Year over year growth was primarily driven by increases in employee compensation, infrastructure costs, legal related costs and third party AI token costs, excluding the previously mentioned severance expense. Growth in employee compensation was driven by technical hires we've added over the past year, particularly AI talent. The growth in infrastructure costs was driven by higher depreciation, data center operating costs and third party cloud spend. We ended Q2 with over 75,000 employees, down 3% from Q1.

This total includes approximately 8,000 employees impacted by the May 2026 headcount reduction. We expect the majority of impacted employees will no longer be captured in our headcount by the end of Q3 2026. 8 billion, representing an 8% decline year over year and a 31% operating margin. Excluding the Q2 legal charges and severance expenses, our second quarter operating income would have increased 9% year over year.

Our tax rate for the quarter was 16%. 18 per share. 1 billion, driven by investments in servers, data centers and network infrastructure. Free cash flow was $784 million.

7 billion in debt. Turning now to the business performance. There are two primary factors that drive our revenue performance, our ability to deliver engaging experiences for our community and our effectiveness at monetizing that engagement over time. On the first, we continue to see significant gains from our content recommendation initiatives on Instagram.