Meta Platforms Q2 Earnings Call Highlights

Key Points

• Revenue rose 28% year over year to $60.8 billion, driven primarily by a 27% increase in advertising revenue, higher ad impressions and stronger pricing. User engagement also increased, with Instagram reaching 2 billion daily active users.
• Meta said its AI investments are improving content recommendations, ad performance and product development. Advantage+ advertising products surpassed a $75 billion annual revenue run rate, while AI business agents and consumer assistants continued to expand.
• AI infrastructure spending is accelerating: second-quarter capital expenditures reached $31.1 billion, and Meta raised its 2026 expense outlook while narrowing its capital-expenditure forecast to $130 billion–$145 billion. The company expects third-quarter revenue of $61 billion–$64 billion.

Meta Platforms NASDAQ: META reported second-quarter 2026 revenue growth of 28% as the company said artificial intelligence initiatives improved content recommendations, advertising performance and product development, while it continued to accelerate spending on data centers and other AI infrastructure.

Chief Executive Officer Mark Zuckerberg said 3.6 billion people used at least one Meta app daily during the quarter. Instagram reached 2 billion daily active users, while Threads surpassed 500 million monthly active users, according to Zuckerberg. WhatsApp reached a record of 30 million messages per second during the World Cup final.

Revenue growth driven by ads and engagement

Chief Financial Officer Susan Li said total revenue rose 28% year over year to $60.8 billion, or 27% on a constant-currency basis. Family of Apps revenue increased 28% to $60.4 billion, including $59.4 billion in advertising revenue, up 27%.

Ad impressions across Meta’s services increased 14%, supported by engagement and user growth as well as ad-load optimization. Average price per ad rose 12%, which Li attributed to gains in ad performance, improved macroeconomic conditions compared with the prior-year quarter and currency tailwinds.

Family of Apps other revenue reached $1 billion for the first time, rising 73% from a year earlier, primarily because of WhatsApp paid messaging and subscriptions. Reality Labs revenue increased 16% to $431 million, as growth in AI glasses revenue more than offset lower Quest headset sales.

Meta said recommendation improvements contributed to stronger engagement. Global time spent on Instagram grew at a double-digit rate, while Facebook video time spent rose 9% globally and more than 10% in the U.S. and Canada. Li said the company is increasingly using large language models to understand content, improve ranking systems and generate better training data.

Meta processed every public Reels and Feed post on Instagram through an LLM earlier this year, Li said. Its largest Reels ranking release to date generated a 15-basis-point increase in Instagram sessions, with strength in reshares and time spent. The company is extending the approach to Feed, where early results appear comparable, she said.

AI tools support advertising and new businesses

Zuckerberg said AI investments are improving ad relevance and conversions on Facebook and Instagram. Meta has also expanded adoption of AI creative tools, with 9 million small businesses now using at least one such tool.

Li said Meta’s AI-powered Advantage+ end-to-end advertising offerings reached an annual revenue run rate of more than $75 billion during the quarter. The company also introduced Meta Generative Recommender, which uses LLMs to assess ad content and user preferences together rather than scoring possible ads individually.

Early pilots using LLMs to better understand user preferences produced a 1% increase in app-event conversions on Instagram, Li said. Other ad-ranking advances contributed to an 8.3% increase in ad clicks and a 15.7% increase in conversions on Facebook.

Beyond advertising, Meta is building consumer, business and enterprise AI offerings. Zuckerberg said Meta Business Agent became available globally on WhatsApp and Messenger during the quarter and now serves more than 1 million businesses each week for customer conversations or sales. The company has begun rolling business agents out on Instagram.

Meta also released Muse Spark 1.1 and Muse Image through its Meta Superintelligence Labs. Since rebuilding Meta AI and integrating Muse Spark, the number of people interacting daily with the assistant has increased 60%, Zuckerberg said. Muse Spark 1.1 is available through a public API, with broader distribution channels and enterprise features planned.

Zuckerberg said Meta views personal AI agents, business agents, APIs, productivity tools and potential direct compute sales as major future opportunities. He said the company has received offers to buy compute capacity at a “meaningful premium” to what Meta paid, but believes selling intelligence built on top of compute could carry higher margins.

Expenses and infrastructure investment rise

Second-quarter expenses increased 55% year over year to $42 billion. The total included $2.4 billion in legal-proceeding charges and $1.2 billion in severance costs related to Meta’s May 2026 headcount reduction.

Operating income declined 8% to $18.8 billion, producing a 31% operating margin. Excluding the legal and severance charges, operating income would have increased 9% from a year earlier, Li said. Net income was $15.8 billion, or $6.18 per share.

Capital expenditures, including principal payments on finance leases, totaled $31.1 billion, driven by spending on servers, data centers and network infrastructure. Free cash flow was $784 million. Meta ended the quarter with $90.3 billion in cash and marketable securities and $83.7 billion in debt.

The company had more than 75,000 employees at quarter-end, down 3% from the first quarter. That figure included about 8,000 employees affected by the May workforce reduction, most of whom are expected to no longer be included in headcount by the end of the third quarter.

Meta announced a strategic venture with BlackRock to develop a 1-gigawatt data center in El Paso, Texas. Li said the company’s capacity planning is focused on maximizing available capacity in 2026 and 2027, while retaining flexibility for server investment decisions in 2028 and beyond.

Outlook

Meta forecast third-quarter total revenue of $61 billion to $64 billion. The company expects foreign exchange to be an approximately 1% headwind to year-over-year revenue growth based on current exchange rates.

For 2026, Meta raised the lower end of its total expense outlook and now expects expenses of $165 billion to $169 billion, including the legal charge recognized in the second quarter. It maintained its expectation that full-year operating income will exceed 2025 operating income.

Meta narrowed its 2026 capital-expenditure outlook to $130 billion to $145 billion, from a previous range of $125 billion to $145 billion. The company expects its tax rate for the remaining quarters of 2026 to be between 15% and 17%.

About Meta Platforms (NASDAQ:META)

Meta Platforms, Inc NASDAQ: META, formerly Facebook, Inc, is a global technology company best known for building social networking services and immersive computing platforms. Founded in 2004 and headquartered in Menlo Park, California, the company operates a family of consumer-facing products and services that connect users, creators and businesses. In October 2021 the company rebranded as Meta to reflect an expanded strategic focus on augmented and virtual reality technologies alongside its social media businesses.

Meta's core consumer products include Facebook, Instagram, WhatsApp and Messenger, which enable social networking, messaging, content sharing and community building across mobile and desktop devices.

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