You should read the following discussion of our financial condition and results of operations in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission. In addition to our historical condensed consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q, particularly in Part II, Item 1A, "Risk Factors." For a discussion of limitations in the measurement of our Family metrics, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we present revenue on a constant currency basis, which is a non-GAAP financial measure. Revenue on a constant currency basis is presented in the section entitled "—Revenue—Foreign Exchange Impact on Revenue." To calculate revenue on a constant currency basis, we translated revenue for the three and six months ended June 30, 2026 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar. This non-GAAP financial measure is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. This measure may be different from non-GAAP financial measures used by other companies, limiting its usefulness for comparison purposes. Moreover, presentation of revenue on a constant currency basis is provided for year-over-year comparison purposes, and investors should be cautioned that the effect of changing foreign currency exchange rates has an actual effect on our operating results. We believe this non-GAAP financial measure provides investors with useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in operating our business. Executive Overview of Second Quarter Results Our mission is to build the future of human connection and the technology that makes it possible. Our financial results and key Family metrics for the second quarter of 2026 are set forth below. Total revenue for the second quarter of 2026 was $60.80 billion, an increase of 28% compared to the second quarter of 2025, due to an increase in advertising revenue. Revenue on a constant currency basis would have increased 27% compared to the second quarter of 2025. Ad impressions delivered across our Family of Apps in the second quarter of 2026 increased 14% year-over-year, and our average price per ad in the second quarter of 2026 increased 12% year-over-year. Income from operations for the second quarter of 2026 was $18.78 billion, a decrease of $1.67 billion, or 8%, compared to the second quarter of 2025, driven by higher costs and expenses. The increase in costs and expenses was primarily due to increases in employee compensation, including severance expenses; infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services; legal-related costs; and third-party AI token costs. 31 Table of Contents Consolidated and Segment Results We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes our virtual and augmented reality related consumer hardware, software, and content. Family of Apps Reality Labs Total Three Months Ended June 30, % change Three Months Ended June 30, % change Three Months Ended June 30, % change 2026 2025 2026 2025 2026 2025 (in millions, except percentages) Revenue $ 60,370 $ 47,146 28% $ 431 $ 370 16% $ 60,801 $ 47,516 28% Costs and expenses 36,976 22,175 67% 5,050 4,900 3% 42,026 27,075 55% Income (loss) from operations $ 23,394 $ 24,971 (6)% $ (4,619) $ (4,530) (2)% $ 18,775 $ 20,441 (8)% Operating margin 39 % 53 % (1,072) % (1,224) % 31 % 43 % •Net income was $15.85 billion, with diluted earnings per share (EPS) of $6.18 for the three months ended June 30, 2026. •Capital expenditures, including principal payments on finance leases, were $31.08 billion for the three months ended June 30, 2026. •Dividend and dividend equivalent payments were $1.35 billion for the three months ended June 30, 2026. •Cash, cash equivalents, and marketable securities were $90.26 billion as of June 30, 2026. •Long-term debt was $83.66 billion as of June 30, 2026. •Effective tax rate was 16% for the three months ended June 30, 2026. •Headcount was 75,472 as of June 30, 2026, a decrease of 1% year-over-year. Our reported headcount includes approximately 8,000 employees impacted by the May 2026 headcount reduction, the majority of whom will no longer be reflected in our headcount by the end of the third quarter of 2026. Family of Apps Metrics •Family daily active people (DAP) was 3.60 billion on average for June 2026, an increase of 3% year-over-year. •Ad impressions delivered across our Family of Apps in the second quarter of 2026 increased by 14% year-over-year. •Average price per ad in the second quarter of 2026 increased by 12% year-over-year. Developments in Advertising Substantially all of our revenue is currently generated from advertising on Facebook and Instagram. We rely on targeting and measurement tools that incorporate data signals from user activity on websites and services that we do not control, as well as signals generated within our products, in order to deliver relevant and effective ads to our users. Our advertising revenue has been, and we expect will continue to be, adversely affected by reduced marketer spending as a result of limitations on our ad targeting and measurement tools arising from changes to the regulatory environment and third-party mobile operating systems and browsers. In particular, legislative and regulatory developments such as the General Data Protection Regulation, including its evolving interpretation through decisions of the Court of Justice of the European Union, ePrivacy Directive, European Digital Services Act, Digital Markets Act, and U.S. state privacy laws have impacted our ability to use data signals in our ad products, and an increasing number of laws have been introduced limiting or prohibiting the provision of our services to younger users. We expect these and other developments will have further impact in the future. As a result, we have implemented, and we will continue to implement, whether voluntarily or otherwise, changes to our products and user data practices, which reduce our ability to effectively target and measure ads and may negatively impact our advertising revenue and user engagement. For example, in response to regulatory developments in Europe, we announced our plans to change the legal basis for behavioral advertising on Facebook and Instagram in the European Union, European Economic Area, and Switzerland from "legitimate interests" to "consent," and began offering users in the region a "subscription for no ads" alternative. We subsequently began offering users in the region who elect to continue using our services free-of-charge, 32 Table of Contents supported by ads, an option to see less personalized ads, which are less relevant and effective than our premium ad offerings. We are engaging with regulators on our consent model. In addition, mobile operating system and browser providers, such as Apple and Google, have implemented product changes and/or announced plans to limit the ability of websites and application developers to collect and use these signals to target and measure advertising. For example, in 2021, Apple made certain changes to its products and data use policies in connection with changes to its iOS operating system that reduce our and other iOS developers' ability to target and measure advertising, which has negatively impacted, and we expect will continue to negatively impact, the size of the budgets marketers are willing to commit to us and other advertising platforms. To mitigate these developments, we are continually working to evolve our advertising systems to improve the performance of our ad products. We are developing privacy enhancing technologies to deliver relevant ads and measurement capabilities while reducing the amount of personal information we process, including by relying more on anonymized or aggregated third-party data. In addition, we are developing tools that enable marketers to share their data into our systems, as well as ad products that generate more valuable signals within our apps. More broadly, we also continue to innovate our advertising tools to help marketers prepare campaigns and connect with consumers, including developing growing formats such as Reels ads and our business messaging ad products. Across all of these efforts, we are making significant investments in artificial intelligence (AI), including generative AI, to improve our delivery, targeting, and measurement capabilities. Further, we are focused on driving onsite conversions in our business messaging ad products by developing new features and scaling existing features. We are also engaging with others across our industry to explore the possibility of new open standards for the private and secure processing of data for advertising purposes. We believe our ongoing improvements to ad targeting and measurement are continuing to drive improved results for advertisers. However, we expect that some of these efforts will be long-term initiatives, and that the legislative, regulatory and platform developments described above will continue to adversely impact our advertising revenue for the foreseeable future. In addition, we maintain advertising policies to protect the security and integrity of our platform and comply with global content, security, and integrity obligations. Our ongoing efforts to enhance enforcement against ads and marketers which violate our advertising policies adversely affect our revenue, and we expect that the continued enhancement of such efforts will have an impact on our revenue in the future, which may be material. Other Business and Macroeconomic Conditions Other global and regional business, macroeconomic, and geopolitical conditions also have had, and we believe will continue to have, an impact on our user growth and engagement and advertising revenue. In particular, we believe advertising budgets have been pressured from time to time by factors such as inflation, economic policies and international trade, high interest rates, and related market uncertainty, which has led to reduced marketer spending. We are currently subject to increased business, macroeconomic, and geopolitical uncertainty, including as a result of the conflict in the Middle East and volatility around international trade, which has impacted and could continue to impact our financial results. In addition, competitive products and services have reduced some users' engagement with our products and services. We are investing in Reels and in AI initiatives across our products, including our AI-powered discovery engine to recommend relevant content, which we have already seen results in improved user engagement and monetization of our products. However, we continue to face competition from other products and services within certain demographics, in particular younger users. In addition, while Reels is growing in usage, it monetizes at a lower rate than our Feed and Stories products and we expect it will continue to monetize at a lower rate for the foreseeable future. We also have seen fluctuations and declines in the size of our active user base in one or more regions from time to time due to geopolitical conditions, which have adversely affected our user growth and engagement. These trends have adversely affected our advertising revenue and we expect will continue to adversely affect our advertising revenue in the foreseeable future. Although we regularly evaluate a variety of sources to understand trends in our advertising revenue, we do not have perfect visibility into the factors driving advertiser spending decisions and our assessments involve complex judgments about what is driving advertising decisions across a large and diversified advertiser base across the globe. Trends impacting advertising spend are also dynamic and interrelated. As a result, it is difficult to identify with precision which advertiser spending decisions are attributable to which trends, and we are unable to quantify the exact impact that each trend had on our advertising revenue during the periods presented. 33 Table of Contents Investment Philosophy We remain focused on operating efficiently while investing in significant opportunities. In the six months ended June 30, 2026, 87% of our total costs and expenses were recognized in FoA and 13% were recognized in RL. Our FoA investments include expenses relating to headcount, data centers, and technical infrastructure as part of our efforts to develop our apps and our advertising services. These efforts include significant investments in AI initiatives, including generative AI and superintelligence, to, among other things, recommend relevant content across our products, enhance our advertising tools, develop new products, and develop new features for existing products. In particular, we have significantly increased our infrastructure investments in connection with our AI initiatives, including third-party cloud capacity arrangements and investments in servers, data centers, and network infrastructure, and expect our investments to continue to increase. Further, as we continue to make significant investments, we also continue to evaluate our workforce and other needs across our business to optimize for our business and strategic priorities. We are also making significant investments in our RL efforts, including developing virtual and augmented reality devices, software for social platforms, neural interfaces, and other foundational technologies. Our RL investments include expenses relating to technology development across these efforts. Many of our RL investments are directed toward long-term, cutting-edge research and development for products that may only be fully realized in the next decade. During the six months ended June 30, 2026, our RL segment reduced our overall operating profit by approximately $8.65 billion, and we expect our full-year 2026 RL operating losses to remain similar to 2025. 34 Table of Contents Trends in Our Revenue by User Geography We calculate our revenue by user geography based on our estimate of the geography in which ad impressions are delivered, virtual and digital goods are purchased, or consumer hardware products are shipped. The geography of our users affects our revenue and financial results. Our revenue in regions such as United States & Canada and Europe is relatively higher primarily due to the size and maturity of those online and mobile advertising markets, and ad impression growth is primarily in geographies that monetize at lower rates, such as Asia-Pacific. In the second quarter of 2026, revenue increased by 32% in United States & Canada, 24% in Europe, 19% in Asia-Pacific, and 36% in Rest of World, in each case relative to the same period in 2025. - Ad Revenue Non-Ad Revenue Note: Non-advertising revenue includes RL revenue generated from the delivery of consumer hardware products and FoA Other revenue, which consists of revenue from paid messaging from WhatsApp, subscriptions, and revenue from various other sources. Our revenue by user geography in the charts above is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenue-generating activity. This allocation differs from our revenue disaggregated by geography disclosure in Note 2 — Revenue in our condensed consolidated financial statements included in Part I, Item 1, "Financial Statements" where revenue is geographically apportioned based on the addresses of our customers. 35 Table of Contents Trends in Our Family Metrics The numbers for our key Family metrics, our DAP and average revenue per person (ARPP), do not include users on our other products unless they would otherwise qualify as DAP based on their other activities on our Family products. Trends in the number of people in our community affect our revenue and financial results by influencing the number of ads we are able to show, the value of our ads to marketers, as well as our expenses and capital expenditures. Substantially all of our daily active people (as defined below) access our Family products on mobile devices. •Daily Active People (DAP). We define a daily active person as a registered and logged-in user of Facebook, Instagram, Messenger, and/or WhatsApp (collectively, our "Family" of products) who visited at least one of these Family products through a mobile device application or using a web or mobile browser on a given day. We do not require people to use a common identifier or link their accounts to use multiple products in our Family, and therefore must seek to attribute multiple user accounts within and across products to individual people. Our calculations of DAP rely upon complex techniques, algorithms, and machine learning models that seek to estimate the underlying number of unique people using one or more of these products, including by matching user accounts within an individual product and across multiple products when we believe they are attributable to a single person, and counting such group of accounts as one person. As these techniques and models require significant judgment, are developed based on internal reviews of limited samples of user accounts, and are calibrated against user survey data, there is necessarily some margin of error in our estimates. We view DAP as a measure of engagement across our products. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. Note: We report the numbers of DAP as specific amounts, but these numbers are estimates of the numbers of unique people using our products and are subject to statistical variances and errors. While we expect the error margin for these estimates to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide DAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. The slight decline in DAP in the first quarter of 2026 was driven by internet disruptions in Iran (which were largely restored in the second quarter of 2026), as well as a restriction on access to WhatsApp in Russia. Worldwide DAP increased 3% to 3.60 billion on average during June 2026 from 3.48 billion during June 2025. 36 Table of Contents •Average Revenue Per Person (ARPP). Our Family of Apps (FoA) revenue represents the substantial majority of our total revenue. We define ARPP as our FoA revenue during a given quarter, divided by the average of the number of DAP at the beginning and end of the quarter. ARPP: $11.89 $12.29 $14.25 $12.36 $13.65 $14.46 $16.56 $15.66 $16.86 During the second quarter of 2026, worldwide ARPP was $16.86, an increase of 24% from the second quarter of 2025. 37 Table of Contents Trends in Our Ad Impressions and Average Price Per Ad •Ad Impressions. Our advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party mobile applications. Impressions are considered delivered when an ad is displayed to a user. _ _ Note: Our ad impressions growth by user geography in the charts above is geographically apportioned based on our estimation of the geographic location of our users when an ad impression is delivered. 38 Table of Contents •Average Price Per Ad. We calculate average price per ad as total advertising revenue divided by the number of ads delivered. _ _ Note: Our average price per ad growth by user geography in the charts above is geographically apportioned based on our estimation of the geographic location of our users when an ad impression is delivered. 39 Table of Contents Components of Results of Operations Revenue Family of Apps (FoA) Advertising. We generate substantially all of our revenue from advertising. Our advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party mobile applications. Marketers pay for ad products either directly or through their relationships with advertising agencies or resellers, based on the number of impressions delivered or the number of actions, such as clicks, taken by users. We recognize revenue from the display of impression-based ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed to a user. We recognize revenue from the delivery of action-based ads in the period in which a user takes the action the marketer contracted for. The number of ads we show is subject to methodological changes as we continue to evolve our ads business and the structure of our ads products. In particular, the ads we show may vary by product (for example, our video and Reels products are not currently monetized at the same rate as our Feed or Stories products), and from time to time we increase or decrease the number or frequency of ads we show as part of our product and monetization strategies. We calculate average price per ad as total advertising revenue divided by the number of ads delivered, representing the average price paid per ad by a marketer regardless of their desired objective such as impression or action. For advertising revenue arrangements where we are not the principal, we recognize revenue on a net basis. Other revenue. Other revenue consists of revenue from paid messaging from WhatsApp, subscriptions, and revenue from various other sources. Reality Labs (RL) RL revenue is generated from the delivery of consumer hardware products, such as Meta Quest and AI glasses, and related software and content. Cost of Revenue and Operating Expenses Cost of revenue. Our cost of revenue consists of expenses associated with the delivery and distribution of our products. These mainly include infrastructure expenses related to the operation of our data centers and technical infrastructure, such as depreciation expense from servers, network infrastructure and buildings, employee compensation which includes payroll, share-based compensation and benefits for employees on our operations teams, energy and bandwidth costs, as well as third-party cloud costs. Cost of revenue also consists of processing fees and traffic acquisition costs, which include credit card and other fees related to processing customer transactions; RL inventory costs, which consist of cost of products sold and estimated losses on non-cancelable contractual commitments; and content and creator costs, which include payments to content creators from whom we license content for distribution, as well as incentive payments made to creators based on engagement. Research and development. Research and development expenses consist mostly of employee compensation, which includes payroll, share-based compensation and benefits for our employees on our engineering and technical teams who are responsible for developing new technologies and products. Research and development expenses also include infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services; RL technology development costs; and facilities-related costs. Marketing and sales. Marketing and sales expenses consist mostly of employee compensation which includes payroll, share-based compensation and benefits for our employees engaged in sales, sales support, marketing, business development, and customer service functions; professional services to support our community and product operations; and marketing and promotional expenses. General and administrative. General and administrative expenses consist primarily of employee compensation which includes payroll, share-based compensation and benefits for certain of our executives as well as our legal, finance, human resources, corporate communications and policy, and other administrative employees; legal-related costs, which include 40 Table of Contents estimated fines, settlements, or other losses in connection with legal and related matters, as well as other legal fees; other taxes, such as digital services taxes and other non-income-based tax levies; and professional services. Results of Operations The following table sets forth our condensed consolidated statements of income data (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue $ 60,801 $ 47,516 $ 117,111 $ 89,830 Costs and expenses: Cost of revenue 11,330 8,491 21,549 16,063 Research and development 21,656 12,942 39,354 25,092 Marketing and sales 3,431 2,979 6,339 5,735 General and administrative 5,609 2,663 8,222 4,943 Total costs and expenses 42,026 27,075 75,464 51,833 Income from operations 18,775 20,441 41,647 37,997 Interest and other income (expense), net (19) 93 (1,139) 919 Income before income taxes 18,756 20,534 40,508 38,916 Provision (benefit) for income taxes 2,908 2,197 (2,113) 3,935 Net income $ 15,848 $ 18,337 $ 42,621 $ 34,981 The following table sets forth our condensed consolidated statements of income data (as a percentage of revenue)(1): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenue 100 % 100 % 100 % 100 % Costs and expenses: Cost of revenue 19 18 18 18 Research and development 36 27 34 28 Marketing and sales 6 6 5 6 General and administrative 9 6 7 6 Total costs and expenses 69 57 64 58 Income from operations 31 43 36 42 Interest and other income (expense), net — — (1) 1 Income before income taxes 31 43 35 43 Provision (benefit) for income taxes 5 5 (2) 4 Net income 26 % 39 % 36 % 39 % ____________________________________ (1)Percentages have been rounded for presentation purposes and may differ from unrounded results. 41 Table of Contents Revenue The following table sets forth our revenue by source and by segment: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Advertising $ 59,363 $ 46,563 27 % $ 114,387 $ 87,955 30 % Other revenue 1,007 583 73 % 1,891 1,093 73 % Family of Apps 60,370 47,146 28 % 116,278 89,048 31 % Reality Labs 431 370 16 % 833 782 7 % Total revenue $ 60,801 $ 47,516 28 % $ 117,111 $ 89,830 30 % Family of Apps FoA revenue in the three and six months ended June 30, 2026 increased $13.22 billion, or 28%, and $27.23 billion, or 31%, respectively, compared to the same periods in 2025. The increases were almost entirely driven by advertising revenue. Advertising Advertising revenue in the three and six months ended June 30, 2026 increased $12.80 billion, or 27%, and $26.43 billion, or 30%, respectively, compared to the same periods in 2025, due to increases in ad impressions delivered and average price per ad. During the three and six months ended June 30, 2026, ad impressions delivered increased by 14% and 16%, respectively, year-over-year, as compared with increases of 11% and 8%, respectively, in the same periods in 2025. Ad impressions delivered during the three and six months ended June 30, 2026 grew in all regions, especially in Asia-Pacific, which was driven by increases in users and their engagement as well as the frequency of ads shown on our products. During the three and six months ended June 30, 2026, the average price per ad increased by 12% in both periods, year-over-year, as compared with increases of 9% and 10%, respectively, in the same periods in 2025. The increases in average price per ad in the three and six months ended June 30, 2026 were driven by an increase in advertising demand, which we believe is mostly due to ongoing improvements to our ad performance from our ad targeting and measurement tools, and a favorable foreign currency exchange impact. These increases were partially offset by a higher number of ad impressions delivered, especially in geographies and in products, such as Reels, that monetize at lower rates. Other factors are discussed in the section entitled "—Executive Overview of Second Quarter Results." In addition, the online commerce vertical was the largest contributor to the increase in advertising revenue in the three and six months ended June 30, 2026 compared to the same periods in 2025. We anticipate that future advertising revenue will be driven by a combination of price and ad impressions delivered. Other revenue FoA other revenue in the three and six months ended June 30, 2026 increased $424 million, or 73%, and $798 million, or 73%, respectively, compared to the same periods in 2025. The increases were primarily driven by paid messaging from WhatsApp and subscriptions. Reality Labs RL revenue in the three and six months ended June 30, 2026 increased $61 million, or 16%, and $51 million, or 7%, respectively, compared to the same periods in 2025. The increases were driven by higher sales of AI glasses, partially offset by lower Meta Quest sales. Foreign Exchange Impact on Revenue Changes in foreign exchange rates had a favorable impact on our revenue in the three and six months ended June 30, 2026 compared to the same periods in 2025. To calculate revenue on a constant currency basis, we translated revenue using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar. Using these constant rates, for the three months ended June 30, 2026, our total revenue and advertising revenue would have been 42 Table of Contents $60.12 billion and $58.67 billion, which were $685 million and $693 million lower than actual total revenue and advertising revenue, respectively. Using these constant rates, for the six months ended June 30, 2026, our total revenue and advertising revenue would have been $114.68 billion and $111.96 billion, each $2.43 billion lower than actual total revenue and advertising revenue, respectively. Cost of revenue Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Cost of revenue $ 11,330 $ 8,491 33 % $ 21,549 $ 16,063 34 % Percentage of revenue 19 % 18 % 18 % 18 % Cost of revenue in the three and six months ended June 30, 2026 increased $2.84 billion, or 33%, and $5.49 billion, or 34%, respectively, compared to the same periods in 2025. The increases were primarily due to higher infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services. Research and development Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Research and development $ 21,656 $ 12,942 67 % $ 39,354 $ 25,092 57 % Percentage of revenue 36 % 27 % 34 % 28 % Research and development expenses in the three and six months ended June 30, 2026 increased $8.71 billion, or 67%, and $14.26 billion, or 57%, respectively, compared to the same periods in 2025. The increases were primarily due to higher employee compensation, infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services, and third-party AI token costs. The higher employee compensation was mainly from increases in share-based compensation expense and severance expenses during the three and six months ended June 30, 2026. Marketing and sales Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Marketing and sales $ 3,431 $ 2,979 15 % $ 6,339 $ 5,735 11 % Percentage of revenue 6 % 6 % 5 % 6 % Marketing and sales expenses in the three and six months ended June 30, 2026 increased $452 million, or 15%, and $604 million, or 11%, respectively, compared to the same periods in 2025. The increases were primarily due to higher third-party AI token costs and severance expenses. 43 Table of Contents General and administrative Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) General and administrative $ 5,609 $ 2,663 111 % $ 8,222 $ 4,943 66 % Percentage of revenue 9 % 6 % 7 % 6 % General and administrative expenses in the three and six months ended June 30, 2026 increased $2.95 billion, or 111%, and $3.28 billion, or 66%, respectively, compared to the same periods in 2025. The increases were primarily due to $2.40 billion of charges related to legal proceedings in the three months ended June 30, 2026. See Note 9 — Commitments and Contingencies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information regarding legal-related costs. Segment profitability The following table sets forth income (loss) from operations by segment: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Family of Apps $ 23,394 $ 24,971 (6) % $ 50,294 $ 46,736 8 % Reality Labs (4,619) (4,530) (2) % (8,647) (8,739) 1 % Total income from operations $ 18,775 $ 20,441 (8) % $ 41,647 $ 37,997 10 % Family of Apps FoA income from operations in the three months ended June 30, 2026 decreased $1.58 billion, or 6%, compared to the same period in 2025, driven by higher FoA costs and expenses partially offset by an increase in revenue. The increase in costs and expenses was primarily due to increases in employee compensation, including severance expenses; infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services; legal-related costs; and third-party AI token costs. FoA income from operations in the six months ended June 30, 2026 increased $3.56 billion, or 8%, compared to the same period in 2025. The increase in FoA income from operations was driven by higher advertising revenue which was offset by an increase in costs and expenses. The increase in costs and expenses was primarily due to increases in employee compensation, including severance expenses; infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services; legal-related costs; and third-party AI token costs. Reality Labs RL loss from operations in the three months ended June 30, 2026 increased $89 million, or 2%, compared to the same period in 2025, driven by higher RL costs and expenses partially offset by an increase in revenue. RL loss from operations in the six months ended June 30, 2026 decreased $92 million, or 1%, compared to the same period in 2025, driven by an increase in revenue and lower RL costs and expenses. See Note 12 — Segment Information in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information regarding segment employee compensation. 44 Table of Contents Interest and other income (expense), net Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Interest income $ 859 $ 481 79 % $ 1,603 $ 1,139 41 % Interest expense (783) (241) (225) % (1,345) (481) (180) % Foreign currency exchange gain (loss), net (123) 196 (163) % (349) 427 (182) % Gain (loss) on equity investments and other, net 28 (343) 108 % (1,048) (166) NM Interest and other income (expense), net $ (19) $ 93 (120) % $ (1,139) $ 919 (224) % ____________________________________ NM — not meaningful •Interest expense in the three and six months ended June 30, 2026, increased $542 million, or 225%, and $864 million, or 180%, respectively, compared to the same periods in 2025, due to higher long-term debt balances. •Loss on equity investments, net recognized in the six months ended June 30, 2026 was driven by unrealized losses on our marketable equity investments, partially offset by unrealized gains on our non-marketable equity investments. See Note 4 — Financial Instruments and Note 5 — Non-Marketable Equity Investments in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information regarding unrealized losses on our marketable equity securities and unrealized gains on our non-marketable equity investments, respectively. Provision for income taxes Three Months Ended June 30, Six Months Ended June 30, 2026 2025 % change 2026 2025 % change (in millions, except percentages) Provision (benefit) for income taxes $ 2,908 $ 2,197 32 % $ (2,113) $ 3,935 (154) % Effective tax rate 16 % 11 % (5) % 10 % Our provision for income taxes in the three months ended June 30, 2026 increased $711 million, or 32%, compared to the same period in 2025, primarily due to an increase in the effective tax rate. Our effective tax rate increased in the three months ended June 30, 2026 compared to the same period in 2025, primarily due to certain tax benefits such as U.S. tax benefits from foreign-derived deduction eligible income and excess tax benefits from share-based compensation being limited by the Corporate Alternative Minimum Tax (CAMT) regime in 2026. Our provision for income taxes in the six months ended June 30, 2026 decreased $6.05 billion, or 154%, compared to the same period in 2025, primarily due to the income tax benefit from U.S. Treasury Notice 2026-7, which provided relief from the CAMT related to the expensing of previously capitalized U.S. research and development costs. Effective Tax Rate Items. Our effective tax rate in the future will depend upon the proportion between the following items and income before provision for income taxes: the effects of changes in tax law, changes in valuation allowance due to the effects of CAMT, U.S. tax benefits from foreign-derived deduction eligible income, tax effects from share-based compensation, research tax credit, tax effects from capital losses not expected to be utilized, settlement of tax contingency items, and tax effects of changes in our business. A number of countries have enacted legislation to implement the Organization for Economic Cooperation and Development’s (OECD) 15% global minimum tax regime. In January 2026, the OECD introduced new guidance, including a "Side-by-Side Safe Harbor," allowing U.S. headquartered companies to remain subject to only U.S. global minimum taxes (specifically, CAMT) while exempting them from Pillar Two. We do not expect these changes to have a material impact on our consolidated financial statements for 2026. We continue to evaluate the impacts of proposed and enacted legislation with 45 Table of Contents respect to the global minimum tax regime in the jurisdictions in which we operate. As additional jurisdictions enact legislation, transitional relief expires, and other provisions of the global minimum tax legislation become effective, our effective tax rate and cash tax payments could increase in future years. Absent any changes to our tax landscape, we expect our effective tax rate for the remaining quarters of 2026 to be between 15-17%. See Note 11 — Income Taxes in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information regarding income tax contingencies. Liquidity and Capital Resources Our principal sources of liquidity are our cash, cash equivalents, marketable securities, and cash generated from operations. Cash, cash equivalents, and marketable securities are comprised of cash on deposit with banks, time deposits, money market funds, U.S. government and agency securities, investment grade corporate debt securities, and marketable equity securities. As part of our cash management strategy, we concentrate cash deposits with large financial institutions and our investment holdings are in diversified highly rated securities. Cash, cash equivalents, and marketable securities were $90.26 billion as of June 30, 2026, an increase of $8.67 billion from December 31, 2025. The increase was due to $64.09 billion of cash generated from operations and $24.91 billion of net proceeds from the issuance of fixed-rate senior unsecured notes (the Notes) in May 2026. These increases were partially offset by $50.92 billion of capital expenditures, which includes purchases of property and equipment and principal payments on finance leases; $8.70 billion of taxes paid related to net share settlement of employee restricted stock unit (RSU) awards; $2.70 billion of payments of dividends and dividend equivalents; and $2.29 billion of cash used in other financing activities. In addition, during the six months ended June 30, 2026, $10.80 billion of unrestricted money market funds was reclassified as restricted cash equivalents in connection with escrow requirements under certain multi-year infrastructure purchase agreements. These funds are restricted from general corporate use and are expected to be released between 2028 and 2030 upon satisfying the underlying purchase obligations. See Note 4 — Financial Instruments in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information. The following table presents our cash flows (in millions): Six Months Ended June 30, 2026 2025 Net cash provided by operating activities $ 64,088 $ 49,587 Net cash used in investing activities $ (83,331) $ (45,968) Net cash provided by (used in) financing activities $ 9,414 $ (35,472) Cash Provided by Operating Activities Cash provided by operating activities during the six months ended June 30, 2026 mostly consisted of $42.62 billion net income adjusted for certain non-cash items, such as $13.69 billion of share-based compensation expense and $12.35 billion of depreciation and amortization expense. The increase in cash flows from operating activities during the six months ended June 30, 2026, compared to the same period in 2025, was due primarily to an increase in cash collections from our customers driven by higher revenue, and a decrease in cash tax payments, partially offset by higher operational spending. Cash Used in Investing Activities Cash used in investing activities during the six months ended June 30, 2026 mostly consisted of $49.11 billion of purchases of property and equipment as we continued to invest in servers, data centers, and network infrastructure, and $31.56 billion of net purchases of marketable securities. The increase in cash used in investing activities during the six months ended June 30, 2026, compared to the same period in 2025, was mostly due to increases in net purchases of marketable securities and property and equipment, partially offset by a decrease in non-marketable equity investments. 46 Table of Contents We anticipate making capital expenditures of approximately $130 billion to $145 billion in 2026 to support our AI efforts and core business. Cash Provided by Financing Activities Cash provided by financing activities during the six months ended June 30, 2026 mainly consisted of $24.91 billion net proceeds from the issuance of the Notes in May 2026, partially offset by $8.70 billion of taxes paid related to net share settlement of RSUs, and $2.70 billion of payments of dividends and dividend equivalents. The increase in cash provided by financing activities during the six months ended June 30, 2026, compared to the same period in 2025, was mostly due to net proceeds from the May 2026 Notes and the absence of share repurchases in the current period. Material Cash Requirements We currently anticipate that our available funds and cash flow from operations and financing activities will be sufficient to meet our operational cash needs and fund our cash commitments for investing and financing activities, including investments in infrastructure and AI initiatives, as well as any return of capital to stockholders over the next 12 months and thereafter for the foreseeable future. We have increased investments in infrastructure and AI initiatives and expect to continue to do so. From time to time we may also seek to raise additional capital through debt, equity, or other financing arrangements. We continuously evaluate our liquidity and capital resources, including our access to external capital, to ensure we can finance our future capital requirements. Leases and Contractual Commitments In addition to the lease liabilities included in our condensed consolidated balance sheets, we have operating and finance leases that have not yet commenced as of June 30, 2026. These lease obligations were approximately $278.99 billion, consisting of data centers, colocations, and certain network infrastructure, which will commence during the remainder of 2026 through 2036 with lease terms ranging from greater than one year to 30 years. In July 2026, we entered into additional data center leases with lease obligations of approximately $68 billion, which are expected to commence in 2027 and 2028, with lease terms of 18 to 20 years. As of June 30, 2026, we had $349.31 billion of non-cancelable contractual commitments, comprising both short-term and long-term arrangements. These commitments mostly relate to third-party cloud capacity arrangements and investments in servers and network infrastructure, data centers, and consumer hardware products in Reality Labs, with approximately $53.52 billion and $81.65 billion due in 2026 and 2027, respectively. In addition, as of June 30, 2026, we have contingent obligations to purchase up to $14.72 billion of cloud capacity over a five-year period, which may be reduced if the cloud service provider is able to sell such capacity to other customers. For agreements with variable terms, we do not estimate the total obligation beyond minimum quantities and/or pricing, as of the reporting date. In connection with escrow requirements under certain multi-year infrastructure purchase agreements, $10.80 billion of money market funds was reclassified as restricted cash equivalents as of June 30, 2026. These funds are restricted from general corporate use and are expected to be released between 2028 and 2030 upon satisfying the underlying purchase obligations. Long-term Debt As of June 30, 2026, we had $84.00 billion aggregate principal amount of Notes outstanding, which mature from 2027 through 2066. Short-term and long-term future interest payments obligations as of June 30, 2026 were $4.40 billion and $84.98 billion, respectively. 47 Table of Contents Capital Return Program Share Repurchase Our board of directors has authorized a share repurchase program of our Class A common stock, which commenced in January 2017 and does not have an expiration date. We did not repurchase any shares of Class A common stock during the six months ended June 30, 2026. As of June 30, 2026, $25.03 billion remained available and authorized for repurchases. Our share repurchase program may be suspended, delayed, discontinued, or accelerated at any time. Dividend Total dividends and dividend equivalents paid were $2.70 billion during the six months ended June 30, 2026. Subject to legally available funds and future declaration by our board of directors, we currently intend to continue to pay a quarterly cash dividend and dividend equivalents on our outstanding common stock. Taxes Cash paid for income taxes was $2.00 billion during the six months ended June 30, 2026. Our long-term income tax liabilities include $11.19 billion related to deferred tax liabilities and $7.14 billion related to uncertain tax positions as of June 30, 2026. Due to the uncertainty in the timing of the resolution of our uncertain tax positions, we are unable to make a reasonably reliable estimate of the timing of payments. Loss Contingencies We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations. Significant judgment is required to determine both probability and the estimated amount of loss. Such matters are inherently unpredictable and subject to significant uncertainties, some of which are beyond our control. Should any of these estimates and assumptions change or prove to be incorrect, it could have a material impact on our results of operations, financial position, and cash flows. See Note 4 — Financial Instruments, Note 5 — Non-Marketable Equity Investments, Note 8 — Long-term Debt, Note 9 — Commitments and Contingencies, Note 10 — Stockholders' Equity, and Note 11 — Income Taxes in the notes to the condensed consolidated financial statements included in Part I, Item 1, and "Legal Proceedings" contained in Part II, Item 1, of this Quarterly Report on Form 10-Q for additional information. Critical Accounting Estimates Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our accounting estimates based on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The actual impact on our financial performance could differ from these estimates under different assumptions or conditions. Refer to "Critical Accounting Estimates" contained in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025 for a complete discussion of our critical accounting estimates. There have been no material changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended December 31, 2025. 48 Table of Contents