Meta Platforms, Inc. Class A Common Stock 2026 Q3 Earnings Call

Thank you. Good afternoon, and welcome to Meta Platforms third quarter 2026 earnings conference call. Joining me today to discuss our results are Mark Zuckerberg, CEO, and Susan Li, 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. I would like to turn the call over to Mark.

All right. Hey, everyone. Thanks for joining today. This has been a busy and exciting few months. Our family of apps is now used by 3.64 billion people each day, and we are seeing all-time highs in engagement on both Facebook and Instagram, driven by strong growth in video. Threads has now overtaken X in monthly actives and continues to grow quickly. WhatsApp is hitting all-time highs in messaging and is becoming an increasingly important platform for agents as well. In the last few months, we have had several major milestones towards our goal of delivering personal superintelligence to everyone. We had one of our most successful launches ever with the Muse personal agent. We shipped Muse Wonder as our first frontier model, and we shipped several new glasses and gadgets with Muse integration, including coming soon to our new audio glasses.

We have been discussing our vision for personal superintelligence for more than a year now. We want to help every person have an extremely capable personal agent that understands their goals and can help you achieve them and improve your life in whatever ways you want, whether that is improving your relationships, helping you save time, save money, build a business, create new things, or anything else that you can dream of. Muse is the product form of this vision. Now, we have the foundational technology in place to deliver this. There is still a lot of work ahead, but our initial position is very strong. In just a month and a half, more than 10 million people in the U.S. and Canada have set up Muse personal agents. Growth continues to be strong, and we have been number one in the App Store almost every day.

Engagement and retention are also off to a strong start. About 25% of people who have set up Muse use it on any given day. For our earliest adopters, the longer that they use Muse, the better the retention seems to get. To put this in perspective, this is more than twice the level that Threads started at, or where we believe that other AI apps started at as well. The most common use case for Muse is shopping, with more than a quarter of people who are using Muse engaging in this with an average purchase size of over $200. Plaid told us that they hadn't seen activity like they're seeing with their connector on any other service before. In the first week, we had to work with Stripe to raise credit limits since the volumes were above what any of us expected.

Beyond shopping, the most common connectors are for personal productivity and connecting Muse to your other services like email and calendar. This shows the importance of the Muse secure VM that we've built to provide state-of-the-art privacy and security, and we are looking forward to following up soon with a Muse confidential VM, which will make it so that even Meta cannot see your content. We've also seen that Muse Wonder improves quality, engagement, and retention further, which suggests that as we continue to improve intelligence, Muse will perform better and better over time. Now that Muse has clear product market fit, we are entering a new phase and a more operational phase that is focused on scaling it. The goals for this next phase play to many of Meta's strengths. We need to do three things: scale the product, grow revenue, and optimize compute costs.

We expect to grow Muse to serve billions of people. This is both our mission and our strategy. It's our mission in that we believe in putting the power of personal superintelligence in everyone's hands. We believe that that is the path to ensuring a positive future for everyone with individual empowerment as the source of prosperity and balance of power as the foundation for safety. On a values level, we believe that delivering this capability widely is the best thing that we can be doing. This is also our strategy because we think that billions of Muses in a network at scale will be able to get more done for people and businesses by working together. We'd like to create a large-scale Muse network as quickly as possible.

From a business perspective, the average revenue per American user for our existing Muse users, sorry, for our existing family of apps users, is several hundreds of dollars annually, and we expect that Muse will reach an even higher level over time due to the amount of commerce that we already see taking place. This will take some time, but we're starting to work on this now. Our business model will have a few components. For most people, the product should be free, and we will build commerce tools so we get paid a fee based on the transactions that we help facilitate. We expect this will be paid for by businesses. For people who want the most advanced models or to use extra tokens, they subscribe directly and pay.

For business owners who want additional features to use Muse to grow their businesses or for companies that want people to use Muse for work, they will be able to subscribe directly and pay as well. For those who want Muse to help improve the personalization and quality of their content and ads across Meta, they will be able to connect to those experiences as well. Just to clarify, the average revenue that I was talking about before is the family of apps revenue for our existing Muse users. On the compute side, we are building out the capacity to serve more than 1 billion people over the next few years.

In the near term, Muse is very compute-intensive to run, but we expect to improve its cost efficiency by more than 10x in the next year, which will enable it to be profitable once the revenue lines are at scale. If compute efficiency continues improving quickly for another few years, which we think is highly likely, then Muse will be highly profitable over multiple years. In the near term, the strength of our core business enables us to scale the Muse network before then, and we believe that we are the best-positioned company to pursue this strategy. One other note on compute economics is that since training is a large fixed cost, now that we have leading models, we want to serve as much high-margin inference demand as possible. That is why we are building the Meta Enterprise platform led by CJ Desai.

Muse Wonder and even more advanced models that we're training can serve additional high-margin services beyond the Muse network, including our API, Muse Code, and other enterprise services. A fundamental feature of our business is that we have many good uses for this compute. It is difficult to forecast the exact growth rates for the Muse network, for our Enterprise platform, and for how Muse Wonder and beyond will accelerate our core business. But through building up multiple ways to deploy these advanced models, we increase the chances that one or more of them significantly outperforms our expectations. Beyond serving other businesses, we have not yet found the limit of how effectively we can apply compute to accelerating our own core business. We have implemented an eval with Muse Wonder to improve how effectively it can autonomously improve our recommendations and ad systems.

As our upcoming models get even more advanced, I expect that we're going to see an increasing rate of improvement in these systems. All right. Let's talk about the models now. Muse Wonder is state-of-the-art across many dimensions that matter for personal superintelligence. This validates the importance of training models ourselves to deliver the best experience. In addition to Muse, we have also seen that engagement per person in Meta AI has more than doubled since April when we started rolling out our new models. While Muse Wonder has been our most important release, I've been very pleased with our pace of execution here. In the last few months, we've shipped Muse Spark 1.2 and 1.3, Muse Code, two open weights models with Muse Glimmer and Muse Spark Open, and also Muse Voice.

Going forward, with the field advancing quickly, we plan to focus on both pushing the frontier of intelligence and distilling those models into much smaller and more efficient product models that will be optimized for personal agents. My view is that we will be able to build superintelligence through scaling, so we are methodically working our way up the ladder there. We are already working on larger models after Muse Wonder, and they are going to be very impressive and capable. We are also working on new smaller models that are coming out soon that will deliver Muse Wonder-level intelligence more efficiently. Moving on, our work on personal superintelligence is now also the focus of Reality Labs. Muse is coming to Meta Glasses starting next month, and that will be an important step towards this.

People already love many features of the glasses already, music, calling, capturing moments, hearing assistance, and more. But over time, we expect Muse and having your personal superintelligence with you throughout the day will be the most important part of the experience. Muse is also central to the business model for the glasses. Again, our mission and strategy are to serve everyone here. We believe in putting the power of this technology in everyone's hands. So we have priced our devices not to make a large profit on the hardware, but to build a large software and superintelligence business on top of them over time. Glasses sales continue to grow rapidly, and now with Muse, we expect that paid subscriptions will increase and that this business will begin improving meaningfully from here.