Meta 2026 Q2 Review

Meta reported earnings this past week and I don’t want to restate the headline numbers that everyone is talking about. I want to go deeper on the business and the investments they are making. While I don’t think quarterly earnings reports are overly important, they are interesting to look at and provide value for investors. I enjoy reading the earnings call transcript and here are some of my takeaways from Meta’s latest earnings.

Key Milestones

Instagram reached 2 billion daily actives. Threads crossed 500 million monthly actives, making it the fastest growing conversation app ever. WhatsApp just hit an all-time messaging record, peaking at 30 million messages sent per second during the World Cup final. Also, Kunal Shah just joined as the Head of WhatsApp. He built one of India’s most important payment companies.

Agents

I think Meta is in a great spot to have success in the personal agents space. With their massive user base they can bundle this in easily with a subscription and make it used by a lot of people. But I think business agents will be where they shine even more.

As we start interacting with multiple agents WhatsApp and our other messaging surfaces are going to become even more important. WhatsApp is already the leading place where people engage with Meta AI.

Meta Business Agent became available globally this quarter on WhatsApp and Messenger. There are already more than 1 million businesses using them to talk to their customers or complete sales every week. Business agents are rolling out on Instagram now as well. When an agent talks to your customers every day it learns over time and can bring all of those insights back to you.

These business agents will keep expanding, including suggesting ways to grow your business and giving you competitive insights. This is so powerful for Meta and they view this as a service that can help you start and run a whole business using Meta’s platforms. They plan on monetizing with a mix of subscriptions and volume based pricing. Meta wants to evolve more of these products to be like their ad systems, where businesses only pay Meta when they achieve results for them.

Movida, one of Brazil’s largest rental car companies, deployed a business agent on WhatsApp to handle the entire booking flow, from vehicle selection and pricing to payment, in a single conversation. Returning customers could complete a reservation in as few as three messages. In a one month period, Movida reported a 44% YoY increase in daily bookings through WhatsApp, 85% of conversations in the channel were resolved by the AI agent without human assistance.

I think for the small and medium business world Meta is going to dominate the business agent market because of their massive user base and deep integration with these businesses already. I think this should be one of their main focus points of their investments.

Value for Advertisers

Meta is seeing a lot of demand for their AI-powered creative tools. 9 million small businesses on the platforms are now using at least one of their AI ad creative tools. The model can analyze images, improve its own work, and produce better ad variations based on advertiser input.

Meta is using AI to help businesses manage their campaigns, develop ads, and engage with their customers. One example of how Meta is making performance marketing easier and more effective for businesses is Underneat, an online apparel brand in India, which has been setting up each campaign manually across Facebook and Instagram. After adopting AI, they saw a 13% increase in purchases and a 16% increase in cart conversions.

The Proof

If you take Zuckerberg for his word the AI investments are paying off.

“On a dollar basis, our ads business is reporting faster year-over-year revenue growth than any other company’s reported ad business. These AI investments are paying off.”

This is a word for word quote by Zuck in the earnings call. Even if the internal investments are not paying off Meta is getting a lot of offers for compute at a significant premium over what they paid for it. These investments are showing up in the business. Reality Labs Q2 revenue was $431 million, up 16% YoY due to strong growth in AI glasses revenue, offset by lower Quest headset sales. I actually believe that the AI glasses are incredible and if they can find a way to build them profitably they will be wildly successful. Meta even said “Our glasses remain one of the fastest growing consumer electronics of all time.”

Meta is seeing gains from their content recommendation initiatives. On Instagram, global time spent this quarter grew double digits YoY, driven by improvements to Feed and Reels recommendations. On Facebook, video time spent increased 9% globally YoY and over 10% within the U.S. and Canada, driven by ranking improvements.

Meta also advanced their models to analyze ads and activity, to improve both user experience and advertiser performance. These advancements generated an 8.3% increase in ad clicks and a 15.7% increase in conversions on Facebook.

Verdict

Overall I thought Meta had a strong quarter and the business is going in the right direction. I think the investments are paying off and they have a lot of optionality within their business and expanding into other businesses. I think Meta can get a good ROI on their investments because their products have a massive user base behind them and selling these products will be a lot easier for Meta than almost any other company in the world.