Meta Platforms, Inc.

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 speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like 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. Kenneth Durrell, Meta's Director of Investor Relations. You may begin.

Thank you. Good afternoon, and welcome to Meta's second quarter 2025 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.

All right. Thanks, Ken. Thanks, everyone, for joining today. We had another strong quarter with more than 3.4 billion 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 developing 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 4.1 and 4.2, 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 Shengjia 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 super intelligence 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 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 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 going to 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 e-commerce 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 going to 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 Houston's. 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 going to be the main way that we integrate super intelligence 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 MetaQuest 3S 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 going to have more to share on all of this, especially the Reality Labs work at Connect on September 17th. So I encourage you all to tune into that. Overall, this has been a busy quarter. Strong business performance 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.