This ranking evaluates how Fortune 500 companies are deploying AI, and how technology leaders value those investments relative to industry peers.

Fortune AIQ 75

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

AI is a major force shaping this year’s list—but it’s far from the only story.

World's Most Admired Companies

Fortune AIQ 50

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Meta Platforms leaped eight spots to No.&nbsp;22 as its revenue rose 22% year over year, powered by advertising on Facebook and Instagram. Profits topped $62&nbsp;billion, even as Meta spent prodigiously on AI development.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

These 50 companies exemplify the innovation, progress, and potential of AI.

AI Innovators 2025-Meta

Fortune 50 AI Innovators

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are computers, internet services, IT services, semiconductors, and software companies.

Fortune Sector Leaders: Technology

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

F500 2023-Meta

The social media giant and metaverse pioneer formerly named Facebook posted a 1% decline in revenues in 2022, the first such decline in its history as a public company; it still brought in nearly $117 billion. 
<ul> 
 	<li>With a round of layoffs announced in late 2022 and another in spring 2023, Meta cut about 21,000 jobs, or roughly a quarter of its workforce. CEO Mark Zuckerberg described 2023 as a “year of efficiency” in which a leaner Meta can execute its highest priorities more quickly.</li> 
 	<li>Meta pivoted some of its attention and resources from the metaverse to generative A.I. In February 2023, the company announced an A.I. language model called LLaMA that it would use in its chatbots to compete with Google and Microsoft.</li> 
 	<li>In May 2023, the U.S. Federal Trade Commission accused Meta’s core Facebook platform of violating an earlier agreement in which the company had pledged to protect the data of users of its Messenger Kids app. The FTC proposed modifying the agreement to forbid Meta from monetizing minors’ data in any way. The company strongly objected to the proposal, calling it a “political stunt.”</li> 
 	<li>Later in May, the European Union ordered Meta to stop sending Europeans’ personal data to the U.S., and imposed a $1.3 billion fine on the company for its past data transfers, which it said violated European privacy laws.</li> 
</ul>

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

This year’s Fortune 500 marks the 68th running of the list.

F500 2022 Meta

The company formerly known as Facebook climbed seven spots on this year’s Fortune 500; its revenue grew 37.2% in 2021, to $118 billion, and it generated nearly $40 billion in profit. But the name change to Meta Platforms, announced by CEO Mark Zuckerberg in October 2021, is a sign of some of the challenges the company now faces. Meta Platforms’ core social media product, Facebook itself, saw its number of daily active users decline for the first time over the last three months of 2021. Meta also acknowledged that recent changes in privacy settings on Apple’s iOS apps were hurting Facebook’s ad-sales revenue. That changing landscape adds momentum to Meta’s new commitment to the metaverse, the digital and virtual world that Citi predicts will be worth $13 trillion in 2030. In December, Meta disclosed that it had already spent $10 billion on metaverse-related projects. The company admits those will take a long time to pay off, however, and Wall Street is concerned: The company’s share price fell almost 40% over the first four months of 2022.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-086-Facebook

Facebook, it appears, can’t be hurt—not by major ad buyers boycotting its service, not by state and federal investigations, and not even by a pandemic. Despite the impact of COVID-19 on its ad sales, Facebook impressed Wall Street all year by beating expectations. The company ended 2020 with almost $86 billion in revenues, up 22% year over year, and with $29 billion in profits, up nearly 58%. But Facebook faced major backlash for lax handling of hate on its service, including from former President Donald Trump, whom the service eventually barred after the U.S. Capitol riot. And this year, Facebook risks a big financial hit owing to Apple’s new privacy controls that let users limit tracking of their data.

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-34-Facebook

Collectively, the ranked companies produced a three-year average shareholder return of 33%, vs. 19% for the S&P 500.

FGC-2021-Facebook

100 Fastest-Growing Companies

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-144-Facebook

Facebook was the focus of increased government scrutiny in 2019. Regulators at the state, federal, and international level reviewed the ways the company has handled user data and permitted the dissemination of misinformation—investigations that sometimes led to hefty fines or other penalties. Despite the mounting heat, Facebook continued to rake in revenue in 2019. The company, led by CEO Mark Zuckerberg, had $70.7 billion in sales, up nearly 27% from the previous year. But 2020 will be a particularly challenging one for Facebook as it tries to proactively remove misinformation about the coronavirus pandemic while policing bad actors on its platform during the upcoming U.S. presidential election.

Explore this year's ranking of the 50 companies with the best long-term growth potential.

Future-50-2020-Facebook

Last but not least, the social media player’s underlying business remains strong. And new business opportunities continue to emerge: A global e-commerce strategy (including WhatsApp Pay) shows signs of promise, for example. Analysts project 17% to 20% future, long-term growth. At the same time, reputational risk is high—as is the very real threat of regulatory crackdowns across different regions, including the United States. Perhaps even more ominous, the Facebook core product is seeing declining engagement levels with younger demographics. In short: There is a reason the social network is on this list, but also a reason it comes in at No. 50.

The Future 50

This year's Fortune 500 marks the 66th running of the list.

F500-2020-046-Facebook

Facebook was the focus of increased government scrutiny in 2019. Regulators at the state, federal, and international level reviewed the ways the company has handled user data and permitted the dissemination of misinformation—investigations that sometimes led to hefty fines or other penalties. But despite the mounting heat, Facebook continued to rake in revenue in 2019. The company, led by CEO Mark Zuckerberg, had $70.7 billion in sales, up nearly 27% from the previous year, which helped it rise nearly a dozen ranks in the Fortune 500. But 2020 will be particularly challenging one for Facebook as it tries to proactively remove misinformation about the coronavirus pandemic while policing bad actors on its platform during the upcoming U.S. presidential election.

Collectively, the ranked companies produced a three-year average shareholder return of 19%, vs. 11% for the S&P 500.

Fastest Growing Companies 2020-52-Facebook

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

Fortune's proprietary methodology allows us to zero in on the 50 global firms that are best poised to deliver—and continue delivering—above average gains.

This year's Fortune 500 marks the 65th running of the list.

Everybody loves an up-and-comer: 2019's top three-year performers in revenues, profits, and stock returns.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

Welcome to the inaugural Fortune Future 50, our new ranking of companies best positioned for breakout growth.

This year's Fortune 500 marks the 64th running of the list.

Everybody loves an up-and-comer: 2018's top three-year performers in revenues, profits, and stock returns.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Everybody loves an up-and-comer: 2017's top three-year performers in revenues, profits, and stock returns.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 62nd running of the list.

Too fast to be stopped: 2016's top three-year performers in revenue, profits, and stock returns.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Nike, Cisco, MasterCard, SABMiller, Vodafone, Google—and 45 other companies that are doing well by doing good.

Change the World

This year's Fastest-Growing Companies marks the 19th running of the list. In our annual list of public companies with the most stellar three-year profit, revenue, and stock growth, Facebook makes its first appearance.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Founded in 2004 as Facebook, Meta operates the world’s largest social media platforms and has heavily influenced the development of the internet over the past two decades through its pioneering use of personal data collection and targeted advertising. Meta’s products include Facebook, image-sharing app Instagram, and messaging platforms Messenger and WhatsApp; together, they enable users to keep in touch, share images and videos, and buy and sell goods. Meta’s Reality Labs segment develops virtual-reality-related consumer hardware and software, while Meta AI develops artificial intelligence tools including language-processing models. Facebook renamed itself Meta in 2021.

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Meta Platforms (META): Company Profile, Stock Price, News, Rankings

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Meta Platforms

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Good afternoon. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Meta Second Quarter 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.

Session. And this call will be recorded. Thank you very much. Kenneth Dorrell, Meta's Director of Investor Relations, you may begin.

Thank you. Good afternoon, and welcome to Meta's second quarter twenty twenty five earnings conference call. Joining me today 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. The earnings press release and an accompanying investor presentation are available on our website at investor.atmeta.com. And now I'd like to turn the call over to Mark.

Alright. Thanks, Ken. Thanks, everyone, for joining today. We had another strong quarter with more than 3,400,000,000 people using at least one of our apps each day and strong engagement across the board. Our business continues to perform very well, which enables us to invest heavily in our AI efforts.

Over the last few months, we've begun to see glimpses of our AI systems improving themselves, and the improvement is slow for now but undeniable. And developing superintelligence, which we define as AI that surpasses human intelligence in every way, we think is now in sight. Meta's vision is to bring personal superintelligence to everyone so that people can direct it towards what they value in their own lives. And we believe that this has the potential to begin an exciting new era of individual empowerment. A lot has been written about all the economic and scientific advances that superintelligence can bring, and I'm extremely optimistic about this.

But I think that if history is a guide, then an even more important role will be how superintelligence empowers people to be more creative, develop culture and communities, connect with each other, and lead more fulfilling lives. To build this future, we've established Meta Superintelligence Labs, which includes our foundations, product, and fair teams as well as a new lab that is focused on developing the next generation of our models. We're making good progress towards LAMA four point one and four point two. And in parallel, we are also working on our next generation of models that will push the frontier in the next year or so. We're building an elite talent dense team.

Alexander Wang is leading the overall team. Nat Friedman is leading our AI products and applied research, and Xingjia Zhao is chief scientist for the new effort. They are all incredibly talented leaders, and I'm excited to work closely with them and the world class group of AI researchers and infrastructure and data engineers that we're assembling. I spent a lot of time building this team this quarter, and the reason that so many people are excited to join is because Meta has all of the ingredients that are required to build leading models and deliver them to billions of people. The people who are joining us are gonna have access to unparalleled compute as we build out several multi gigawatt clusters.

Our Prometheus cluster is coming online next year, and we think it's going to be the world's first gigawatt plus cluster. We're also building out Hyperion, which will be able to scale up to five gigawatts over several years, and we have multiple more Titan clusters in development as well. We are making all these investments because we have conviction that superintelligence is going to improve every aspect of what we do. From a business perspective, I mentioned last quarter that there are five basic opportunities that we are pursuing, improved advertising, more engaging experiences, business messaging, Meta AI, and AI devices. So I can go into a bit of detail on each.

On advertising, the strong performance this quarter is largely thanks to AI unlocking greater efficiency and and gains across our ad system. This quarter, we expanded our new AI powered recommendation model for ads to new surfaces and improved its performance by using more signals and longer context. It's it's driven roughly 5% more ad conversions on Instagram and 3% on Facebook. We're also seeing good progress with AI for ad creative, with a meaningful percent of our ad revenue now coming from campaigns using one of our generative AI features. This is gonna be especially valuable for smaller advertisers with limited budgets, while agencies will continue, the important work to help larger brands apply these tools strategically.

The second opportunity is more engaging experiences. AI is significantly improving our ability to show people content that they're gonna find interesting and useful. Advancements in our recommendation systems have improved quality so much that it has led to a 5% increase in time spent on Facebook and 6% on Instagram just this quarter. There is a lot of potential for content itself to get better too. We're seeing early progress with the launch of our AI video editing tools across Meta AI and our new edits app, and there's a lot more to do here.

The third opportunity is business messaging. I've talked before about how I believe every business will soon have a business AI just like they have an email address, social media account, and website. We're starting to see some product market fit in a number of countries where we're testing these agents, and we're integrating these business AIs into ads on Facebook and Instagram as well as directly into ecommerce websites. The fourth opportunity is Meta AI. Its reach is already quite impressive with more than a billion monthly actives.

Our focus is now deepening the experience and making Meta AI the leading personal AI. As we continue improving our models, we see engagement grow, so our next generation of models is gonna continue to really help here. And the fifth opportunity is AI devices. We continue to see strong momentum with our Ray Ban Meta Glasses with sales accelerating. We are also launching new performance AI glasses with the Oakley Meta Houstons.

They have longer battery life, higher resolution camera, and are designed for sports. The percent of people using Meta AI is growing, and we're seeing new users' AI retention increase too, which is a good sign, for that continued use. I think that AI glasses are gonna be the main way that we integrate superintelligence into our day to day lives, so it's important to have all of these different styles and products that appeal to different people in different settings. Finally, we're seeing people continue to spend more time with our Quest ecosystem, and the community continues to grow steadily. We launched the Meta Quest three s Xbox edition last month, and we're seeing record interest in cloud gaming.

And beyond gaming, we continue to see a broader set of use cases with media and web browsing contributing a significant portion of engagement. We're gonna have more to share on all of this, especially the Reality Labs work at Connect on September 17. So I encourage you all to tune into that. Overall, this has been a busy quarter. Strong business performance and and real momentum in assembling both the talent and the compute that we need to build personal superintelligence for everyone.

I am very grateful to our teams who are working hard to deliver all of this, and thanks to all of you for being on this journey with us. And now here's Susan.

Thanks, Mark, and good afternoon, everyone. Let's begin with our consolidated results. All comparisons are on a year over year basis unless otherwise noted. Q2 total revenue was $47,500,000,000 up 22% on both a reported and constant currency basis. Q two total expenses were $27,100,000,000 up 12% compared to last year.

In terms of the specific line items, cost of revenue increased 16% driven mostly by higher infrastructure costs and payments to partners, partially offset by a benefit from the previously announced extension of several useful lives. R and D increased 23% mostly due to higher employee compensation and infrastructure costs. Marketing and sales increased 9% primarily due to an increase in professional services related to our ongoing platform integrity efforts as well as marketing costs partially offset by lower employee compensation. G and A decreased 27% driven mostly by lower legal related costs. We ended Q2 with over 75,900 employees down 1% quarter over quarter as the vast majority of the employees impacted by performance related reductions earlier this year were no longer captured in our headcount.

This was partially offset by continued hiring in priority areas of monetization, infrastructure, Reality Labs, AI, as well as regulation and compliance. Second quarter operating income was $20,400,000,000 representing a 43% operating margin. Our tax rate for the quarter was 11% which reflects excess tax benefits from share based compensation due to the increase in our share price versus prior periods. Net income was $18,300,000,000 or $7.14 per share. Capital expenditures including principal payments on finance leases were $17,000,000,000 driven by investments in servers, data centers, and network infrastructure.

Free cash flow was $8,500,000,000 We repurchased $9,800,000,000 of our Class A common stock and paid 1,300,000,000 in dividends to shareholders. We also made $15,100,000,000 in non marketable equity investments in the second quarter which includes our minority investment in Scale AI along with other investment activities. We ended the quarter with $47,100,000,000 in cash and marketable securities and $28,800,000,000 in debt. Moving now to our segment results. I'll begin with our Family of Apps segment.

Our community across the Family of Apps continues to grow and we estimate more than 3,400,000,000 people used at least one of our Family of Apps on a daily basis in June. Q two total family of apps revenue was $47,100,000,000 up 22% year over year. Q two family of apps ad revenue was $46,600,000,000 up 21 or 22% on a constant currency basis. Within ad revenue, the online commerce vertical was the largest contributor to year over year growth. On a user geography basis, ad revenue growth was strongest in Europe and rest of world at 2423% respectively.

North America and Asia Pacific grew 2118%. In q two, the total number of ad impressions served across our services increased 11% with growth mainly driven by Asia Pacific. Impression growth accelerated across all regions due primarily to engagement tailwinds on both Facebook and Instagram and to a lesser extent ad load optimizations on Facebook. The average price per ad increased 9% benefiting from increased advertiser demand largely driven by improved ad performance. Pricing growth slowed modestly from the first quarter due to the accelerated impression growth in Q2.

Family of Apps other revenue was $583,000,000 up 50% driven by WhatsApp paid messaging revenue growth as well as Meta Verified subscriptions. We continue to direct majority of our investments toward the development and operation of our family of apps. In q two, family of apps expenses were $22,200,000,000 representing 82% of our overall expenses. Family of expenses were up 14% mainly due to growth in employee compensation and infrastructure costs partially offset by lower legal related costs. Family of Apps operating income was $25,000,000,000 representing a 53% operating margin.

Within our Reality Labs segment, q two revenue was $370,000,000 up 5% year over year due to increased sales of AI glasses partially offset by lower Quest sales. Reality Labs expenses were $4,900,000,000 up 1% year over year driven by higher non headcount related technology development costs. Reality Labs operating loss was $4,500,000,000 Turning now to the business outlook. 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, daily actives continue to grow across Facebook, Instagram, and WhatsApp as we make additional improvements to our recommendation systems and product experiences. We continue to see momentum with video engagement in particular. In q two, Instagram video time was up more than 20% year over year globally. We're seeing strong traction on Facebook as well, particularly in The US where video time spent similarly expanded more than 20% year over year. These gains have been enabled by ongoing optimizations to our ranking systems to better identify the most relevant content to show.

We expect to deliver additional improvements throughout the year as we further scale up our models and make recommendations more adaptive to a person's interest within their session. Another emphasis of our recommendations work is promoting original content. On Instagram, over two thirds of recommended content in The US now comes from original posts. In the second half, we'll be focused on further increasing the freshness of original posts so the right audiences can discover original content from creators soon after it is posted. We are also making good progress on our longer term ranking innovations that we expect will provide the next leg of improvements over the coming years.

Our research efforts to develop cross surface foundation recommendation models continue to progress. We are also seeing promising results from using LLMs in threads recommendation systems. The incorporation of LLMs are now driving a meaningful share of the ranking related time spent gains on threats. We're now exploring how to extend the use of LLMs in recommendation systems to our other apps. We're leveraging LAMA and several other back end processes as well including actioning bug reports so we can identify and resolve recurring issues more quickly and efficiently.

This has resulted in top line bug reports in The U. S. And Canada in Facebook feed and notifications dropping by roughly 30% over the past ten months. The primary way we're using LaMa in our apps today is to power Meta AI which is now available in over 200 countries and territories. WhatsApp continues to be the largest driver of queries as people message Meta AI directly for tasks such as information gathering, homework assistance, and generating images.

Outside of WhatsApp, we're seeing Meta AI become an increasingly valuable complement to our content discovery engines. Meta AI usage on Facebook is expanding as people use it to ask about posts they see in feed and find content across our platform and search. Another way we expect Meta AI will help with content discovery is through the automatic translation and dubbing of foreign language content into the audience's local language. We'll have more to share on our efforts there later this year. Moving to Reality Labs.

The growth of Ray Ban Meta sales accelerated in q two with demand still outstripping supply for the most popular SKUs despite increases to our production earlier this year. We're working to ramp supply to better meet consumer demand later this year. Now to the second driver of our revenue performance, increasing monetization efficiency. The first part of this work is optimizing the level of ads within organic engagement. We continue to optimize ad supply across each surface to better deliver ads at the time and place they are most relevant to people.

In q two, we also began introducing ads within feed on threads and the updates tab of WhatsApp, which is a separate space away from people's chats. As of May, advertisers globally can now run video and image ads to Threads users in most countries including The United States. While ad supply remains low and Threads is not expected to be a meaningful contributor to overall impression growth in the near term, we are optimistic about the longer term opportunity with threads as the community and engagement grow and monetization scales. On WhatsApp, we are rolling out ads and status and channels along with channel subscriptions in the updates tab to help businesses reach the more than 1,500,000,000 daily actives who visit that part of the app. We expect the introduction of ads and status will be gradual over the course of this year and next with low levels of expected ad supply initially.

We also expect WhatsApp Ads and Status to earn a lower average price than Facebook or Instagram ads for the foreseeable future due in part towards WhatsApp's skew toward lower monetizing markets and more limited information that can be used for targeting. Given this, we do not expect ads and status to be a meaningful contributor to total impressions or revenue growth for the next few years. The second part of increasing monetization efficiency is improving marketing performance. There are three areas of this work that I'll focus on today. Improving our ad systems, advancing our ads products including by building tools that assist in ads creation, and evolving our ads platform to drive results that are optimized for each business's objectives.

First is our ad systems where we're innovating in both the ads retrieval and ranking stages to serve more relevant ads to people. A lot of this work involves us continuing to advance the modeling innovations we've introduced previously while expanding their adoption across our platform. The Andromeda model architecture we began introducing in the 2024 powers the ads retrieval stage of our ad system, where we select the few thousand most relevant ads from tens of millions of potential candidates. In q two, we made enhancements to Andromeda that enabled it to select more relevant and more personalized ads candidates while also expanding coverage to Facebook reels. These improvements have driven nearly 4% higher conversions on Facebook mobile feed and reels.

Our new generative ads recommendation system or GEM powers the ranking stage of our ad system which is the part of the process after ads retrieval where we determine which ads to show someone from candidates suggested by our retrieval engine. In q two, we improved the performance of GEM by further scaling our training capacity and adding organic and ads engagement data on Instagram. We also incorporated new advanced sequence modeling techniques that helped us double the length of event sequences we use enabling our systems to consider a longer history of the content or ads that a person has engaged with in order to provide better ad selections. The combination of these improvements increased ad conversions by approximately 5% on Instagram and 3% on Facebook feed and reels in q two. Finally, we expanded coverage of our Lattice model architecture in q two.

We first began deploying Lattice in 2023 with our later stage ads ranking efforts allowing us to run significantly larger models that generalize learnings across objectives and surfaces in place of numerous smaller ads models that have historically been optimized for individual objectives and surfaces. In April, we began deploying Lattice to earlier stage ads ranking models as well. This is leading not only to greater capacity and engineering efficiency, but also improved performance. With the recent Lattice deployments driving a nearly 4% increase in ad conversions across Facebook feed and reels in q two. Next, ad products.

Here, we're seeing strong momentum with our advantage plus suite of AI powered solutions. In q two, we completed the rollout of our streamlined campaign creation flow for advantage plus sales and app campaigns, which makes it easier for advertisers to realize the performance benefits from Advantage Plus by having it turned on at the beginning. We've seen lifts in advertiser adoption of sales and app campaigns since we've expanded availability and are working to complete the rollout for leads campaigns in the coming months. Within our advantage plus creative suite, adoption of GenAI ad creative tools continues to broaden. Nearly 2,000,000 advertisers are now using our video generation features, image animation, and video expansion, and we're seeing strong results with our text generation tools as we continue to add new features.

In q two, we started testing AI powered translations so that advertisers can automatically translate the caption of their ads to 10 different languages. While it's early, we've seen promising performance lifts in our prelaunch tests. We're also continuing to see strong adoption of image expansion among small and medium sized advertisers, which speaks to how these tools help businesses who have fewer resources to develop creative. With larger advertisers, we expect agencies will continue to be valuable partners in helping apply these new tools to drive performance. Outside of Advantage Plus, we're seeing good momentum in business messaging, particularly in The US where click to message revenue grew more than 40% year over year in q two.

The strong US growth is benefiting from a ramp in adoption of our website to message ads, which drive people to a business's website for more information before choosing to launch a chat with the business in one of our messaging apps. Finally, we continue to evolve our ads platform to drive results that are optimized for each business's objectives and the way they measure results. In q two, we completed the global rollout of our incremental attribution feature, which is the only product on the market that optimizes for and reports on incremental conversions, which are conversions that would not have happened without a person seeing the ad. We also launched omnichannel ads globally in q two, which enable advertisers to optimize for incremental sales both in store and online with just one campaign. In tests, advertisers using omnichannel ads have seen a median 15% reduction in total cost per purchase compared to website only optimization.

Next, I would like to discuss our approach to capital allocation. Our primary focus remains investing capital back into the business with infrastructure and talent being our top priorities. I'll start with hiring. Our approach to adding headcount continues to be targeted at the company's highest priority areas. We expect talent additions across all of our priority areas will continue to drive overall headcount growth through this year in 2026, while headcount growth in our other functions remains constrained.

Within AI, we've had a particular emphasis on recruiting leading talent within the industry as we build out Meta Superintelligence Labs to accelerate our AI model development and product initiatives. Next, infrastructure. We expect having sufficient compute capacity will be central to realizing many of the largest opportunities in front of us over the coming years. We continue to see very compelling returns from our AI capacity investments in our core ads and organic engagement initiatives and expect to continue investing significantly there in 2026. We also expect that developing leading AI infrastructure will be a core advantage in developing the best AI models and product experiences.

So we expect to ramp our investments significantly in 2026 to support that work. Moving to our financial outlook. We expect third quarter twenty twenty five total revenue to be in the range of $47,500,000,000 to $50,500,000,000 Our guidance assumes foreign currency is an approximately 1% tailwind to year over year total revenue growth based on current exchange rates. While we are not providing an outlook for fourth quarter revenue, we would expect our year over year growth rate in the 2025 to be slower than the third quarter as we lap a period of stronger growth in the 2024. Turning now to the expense outlook.

We expect full year 2025 total expenses to be in the range of 114,000,000,000 to $118,000,000,000 narrowed from our prior outlook of $113,000,000,000 to $118,000,000,000 and reflecting a growth rate of 20 to 24% year over year. While we're still very early in planning for next year, there are a few factors we expect will provide meaningful upward pressure on our 2026 total expense growth rate. The largest single driver of growth will be infrastructure costs driven by a sharp acceleration in depreciation expense growth and higher operating costs as we continue to scale up our infrastructure fleet. Aside from infrastructure, we expect the second largest driver of growth to be employee compensation as we add technical talent in priority areas and recognize a full year of compensation expenses for employees hired throughout 2025. We expect these factors will result in a 2026 year over year expense growth rate that is above the 2025 expense growth rate.

Turning now to the CapEx outlook. We currently expect twenty twenty five capital expenditures including principal payments on finance leases to be in the range of 66,000,000,000 to $72,000,000,000 narrowed from our prior outlook of $64,000,000,000 to $72,000,000,000 and up approximately $30,000,000,000 year over year at the midpoint. While the infrastructure planning process remains highly dynamic, we currently expect another year of similarly significant CapEx dollar growth in 2026 as we continue aggressively pursuing opportunities to bring additional capacity online to meet the needs of our AI efforts and business operations. Onto tax. With the enactment of the new US tax law, we anticipate a reduction in our US federal cash tax for the remainder of the current year and future years.

There are several alternative ways of implementing the provisions of the act which we are currently evaluating. While we estimate that the 2025 tax rate will be higher than our q two tax rate, we cannot quantify the magnitude at this time. In addition, we continue to monitor an active regulatory landscape including the increasing legal and regulatory headwinds in The EU that could significantly impact our business and our financial results. For example, we continue to engage with the European Commission on our less personalized ads offering or LPA, which we introduced in November 2024 based on feedback from the European Commission in connection with the DMA. As the commission provides further feedback on LPA, we cannot rule out that it may seek to impose further modifications to it that would result in a materially worse user and advertiser experience.

This could have a significant negative impact on our European revenue as early as later this quarter. We have appealed the European Commission's DMA decision, but any modifications to our model may be imposed during the appeal process. In closing, this was another strong quarter for our business as our investments in infrastructure and technical talent continue to improve core ads performance and engagement on our platforms. We expect the significant investments we're making now will allow us to continue leveraging advances in AI to extend those gains and unlock a new set of opportunities in the years to come. With that, Krista, let's open up the call for questions.

Thank you. We will now open the lines for a question and answer session. You. And your first question comes from the line of Eric Sheridan with Goldman Sachs. Please go ahead.

Thanks so much for taking the questions. Mark, when you think about where the AI parts of your business have been evolving over the last three to six months, wanted to know what your key learnings were as you went deep into that strategy that informed some of the shifts in both talent acquisition and compute, coupled with some of the blogs you put out recently in terms of how that strategy might have evolved based on those key learnings. And Susan, building on Mark's comments on scaling talent and compute, I wonder if you go a little bit deeper in how we should be thinking about those two components driving some of the commentary you've given around the OpEx and CapEx over the next twelve to eighteen months. Thanks so much.

Yeah. Sure. I can start. At at a high level, I think that there are all these questions that people have about what are gonna be the timelines to get to really strong AI or superintelligence or, you know, whatever whatever you wanna call it. And I guess at each step along the way so far, we've observed the more kind of aggressive assumptions or the fastest assumptions have been the ones that have most accurately predicted what would happen.

And and I think that that just continued to happen over the course of this year too. And someone have given a number of those anecdotes on these earnings calls in the past. And I think, certainly, some of the work that we're seeing with teams internally being able to adapt Llama four to build autonomous AI agents that can help improve the Facebook algorithm to increase quality and engagement are, like I mean, that's, like, a fairly profound thing if you think about it. I mean, it's it's it's happening in low volume right now, so I'm not sure that that result by itself was a major contributor to this quarter's earnings or anything like that. But but I think the trajectory on this stuff is very optimistic.

And I I think it's one of the interesting challenges in in running a business like this now is there's just a very high chance it seems like the world is gonna look pretty different in a few years from now. And on the one hand, there are all these things that we can do. There are improvements to our core products that exist. And then I think we have this principle that that that we believe in across the company, which we tell people, take superintelligence seriously. And the the basic principle is this idea that that we think that this is going to really shape all of our systems sooner rather than later, not necessarily on the on the trajectory of a quarter or two, but on the trajectory of a few years.

And, and I think that that's just gonna change a lot of the assumptions around how different things work across the company. So, anyway, I I think it's basically just we're we're continually observing how how this works, what the trajectory or the pace of of of AI progress has been. I think it continues to be on the faster end, and that, I think, informs a lot of the decisions from everything from the importance and value of having the absolute best and most elite talent teams team at the company to making sure that we have a leading compute fleet so that the people here can do, obviously, the researchers here have more compute per person to be able to lead their research and then roll it out to billions of people across our products, making sure that we build and drive these products through all of the different things that we do, which I think is one of the things that our company is the best in the world at, is basically, you know, when we take a technology, we're good at driving that through all of our apps and our ad systems and all that stuff.

It's not just gonna kinda sit on the vine. I I I think that there's no other company, I think, that is as good as us at kinda taking something and and kind of getting it in front of billions of people. So, yeah, I mean, we're we're just gonna push very aggressively on all of that. But but at some level, yeah, this is this is there's sort of a bet in the trajectory that we're seeing, and those are the signals that we're seeing. But, we're just trying to read it.

Eric, for the second part of your question, you know, we, we haven't, in fact, kicked off our budgeting process for 2026. So the thinking about next year, there are clearly many, many moving pieces in a very dynamic operating environment. But there are certain aspects that we have some visibility into today, including the rough shape of our 2026 infrastructure plans, you know, and that flows through into our expense expectations next year. And we also have some visibility into the compensation expense growth that we'll recognize from the AI talent that we're hiring this year. And so those, you know, those two things are part of why we gave a little bit of an early preview into the expectations for growth for 2026, total expenses, as well as for 2026, for 2026 CapEx.

So on the total expenses side, you know, as I mentioned, we expect infrastructure will be the single largest accelerate, contributor to 2026 expense growth. That's driven primarily by a sharp acceleration in depreciation expense growth in 2026, largely driven by recognizing incremental depreciation from assets that we purchased in place and service in '26 as well as from infrastructure deployed through 2025 that will recognize a full year of depreciation next year. We also expect a greater mix of our CapEx to be in shorter lived assets in 2025 and 2026 than it has been in prior years. And then the other component of infra cost growth next year would come from higher operating expenses, including energy costs, leases, maintenance, and operational expenses that are associated with maintaining that fleet. And we also expect some increased spend on cloud services in '26 to meet our capacity needs as well as growth in network related costs.

So a lot going on on the infrastructure side as it contributes to the 2026 total expense number. After that, employee compensation is the next largest driver of expense growth in '26, again, primarily in the investments that we're making in technical talent, including recognizing a full year of compensation expense for the AI talent we hire this year. I realize this answer is getting a little long, so I'll try to wrap up quickly. On the CapEx side, you know, the big driver of our increased CapEx in '26 will be scaling GenAI capacity as we build out training capacity. That's gonna drive higher spend across, you know, servers, networking, data centers next year.

We also expect that we're gonna continue investing significantly in CoreAI in 2026. And, again, this is a pretty, you know, very dynamic area of planning, but we wanted to share kind of our our early thoughts as things are shaping up.

Your next question comes from the line of Brian Nowak with Morgan Stanley. Please go ahead.

Thanks for taking my question. I've I've two that the first one, Mark, just to kinda go back to the intelligence lab and serve the the vision for super intelligence. As you sort of sit here now versus twelve months ago, can you just sort of walk us through any any changes of technological constraints or technological gating factors that you are most focused on overcoming in the next twenty four months that may have been different than they were in the past just to make sure you can really lead in the idea of superintelligence over the next ten years? And then the second one, to Susan or Mark, one on the core. You've made so many improvements to the core to drive higher engagement recommendations, etcetera.

Can you just walk us through a couple of the factors you're still most excited about to come in the next eighteen months that you think could drive further lift to engagement on the on the core platform? Thanks.

Sure. I mean, in terms of, you know, the research agenda and a bunch of the areas that we're very focused on, I I do think focusing on self improvement is a very important area of research. And and there's obviously different scaling paradigms, and and I I don't wanna get too much into the detail of of research that we're doing on on on this. But I I think that for developing superintelligence, at some level, you're not just gonna be learning from people because you're trying to build something that is fundamentally smarter than people. So it's going to need to learn how to, or you're gonna need to develop a way for it to be able to improve itself.

So that, I think, is a is a very fundamental thing that, is going to have very broad implications for how we build products, how we run the company, new things that we can invent, new discoveries that can be made, society more broadly. I I think that that's that's a good just a very fundamental part of this. In in terms of the shape of the effort overall, I guess I've just gotten a little bit more convinced around the the ability for small talent dense teams to be the optimal configuration for driving frontier research. And it's a it's a bit of a different setup than we have on our other world class machine learning systems. So if you look at, like, what we do in Instagram or Facebook or our ad system, we can very productively have many hundreds or thousands of people basically working on improving those systems.

And we have very well developed systems for kind of individuals to run tests and be able to test a bunch of different things. You don't need every researcher there to have the whole system in their head. But I think for this, for the leading research on superintelligence, you really want the smallest group that can hold the whole thing in their head, which, you know, drives, I think, some of the physics around the team size and and and and how and the dynamics around how that works. But I'll I'll I'll hand it over to Susan to talk about more of the practical stuff.

Brian, on the, on the sort of forward looking road map for, the core recommendation engine, you know, there are a handful of shorter term things that we're focused on in the near term. One is we're focused on making recommendations even more adaptive to what a person is engaging with during their session so that the recommendations we surface are the most relevant to what they're interested in at that moment. And we're making optimizations to help the best content from smaller creators break out by matching it to the right audiences sooner after it gets posted. We're also working on improving the ability for our systems to discover more diversified and niche interests for each person through interest exploration and learning explicit user preferences. We're also planning to scale up our models further and incorporate more advanced techniques that should improve the overall quality of, of recommendations.

Meta Platforms (META) Q2 2025 Earnings Call Transcript

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