Meta Platforms, Inc. Q2 2026 earnings call

Meta delivered a strong top-line second quarter of 2026, with total revenue up 28% year-over-year to $60.8 billion (27% in constant currency) driven by Family of Apps ad revenue up 27% to $59.4 billion on 14% impression growth and a 12% higher average price per ad. AI is now visibly accelerating the core business: the new Meta Generative Recommender and user-understanding models lifted Facebook ad clicks 8.3% and conversions 15.7%, Advantage+ AI ad solutions reached a $75 billion annual revenue run rate, and Family of Apps 'other' revenue crossed $1 billion for the first time (up 73%) on WhatsApp paid messaging and subscriptions. Engagement set records (3.6 billion daily actives, Instagram at 2 billion, Threads past 500 million, Meta AI daily interactions up 60%), and Meta Business Agent scaled to over 1 million businesses weekly. Profitability, however, stepped down: GAAP operating income fell 8% to $18.8 billion and operating margin dropped to 31% from 43% as total expenses jumped 55% to $42 billion, including $2.4 billion of legal charges and $1.2 billion of severance tied to a ~8,000-person May 2026 headcount reduction (operating income would have risen 9% excluding those). Net income was $15.8 billion, or $6.18 per diluted share, while capital expenditures surged to $31.1 billion and free cash flow was just $784 million, underscoring the scale of the AI infrastructure build-out (a new BlackRock venture for a 1 GW El Paso data center, full-year capex guided to $130-$145 billion). Management raised its full-year expense outlook to $165-$169 billion and tax-rate outlook to 15%-17%, guided Q3 revenue to $61-$64 billion, and reiterated that operating income will exceed 2025's. Strategically, Meta is investing aggressively behind personal agents, business agents, enterprise/API and compute monetization, and full-stack frontier models (with a return to some open-source releases expected), while flagging youth-related legal risk that could result in a material loss.

• Total revenue grew 28% year-over-year to $60.8 billion (27% in constant currency), with Family of Apps ad revenue up 27% to $59.4 billion on 14% ad-impression growth and a 12% higher average price per ad.
• AI investments meaningfully improved the ad system, the new Meta Generative Recommender (GEM) and user-understanding models drove an 8.3% increase in ad clicks and a 15.7% uplift in conversions on Facebook.
• Family of Apps 'other' revenue crossed $1 billion for the first time, up 73%, driven by WhatsApp paid messaging and subscriptions, and Advantage+ AI ad solutions reached a $75 billion annual revenue run rate.
• Engagement hit new milestones: 3.6 billion daily actives across apps, Instagram reached 2 billion daily actives, Threads crossed 500 million monthly actives, and Meta AI daily interactions rose 60% after the Muse Spark integration.
• Meta Business Agent went global on WhatsApp and Messenger with 1 million+ businesses using it weekly, glasses sales exceeded expectations, and the company shipped strong new models (Muse Spark 1.1, Muse Image) plus a public model API.
• Excluding the quarter's legal and severance charges, operating income would have grown 9% year-over-year, and Instagram time spent grew double digits while Facebook video time rose 9% globally.

• GAAP operating income declined 8% year-over-year to $18.8 billion, and operating margin fell to 31% from 43% as total expenses jumped 55% to $42 billion.
• Expenses included $2.4 billion in legal-proceedings charges and $1.2 billion of severance tied to a May 2026 headcount reduction affecting ~8,000 employees.
• Free cash flow was only $784 million as capital expenditures (including finance leases) surged to $31.1 billion on AI infrastructure investment.
• Management raised the full-year expense outlook (to $165-$169 billion) and the tax-rate outlook (to 15%-17% from 13%-16%), and full-year capex guidance of $130-$145 billion keeps ROIC questions front of mind.
• Meta flagged ongoing youth-related legal and regulatory scrutiny with several U.S. trials scheduled this year that may ultimately result in a material loss, and declined to provide a 2027 capex outlook amid a highly dynamic infrastructure-planning environment.