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Meta Platforms, Inc. (META)

CIK: 0001326801. SIC: 7370 Services-Computer Programming, Data Processing, Etc.. Latest 10-K as of: 2026-01-29.

SIC breadcrumb: Services > Business Services > SIC 7370 Services-Computer Programming, Data Processing, Etc.

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1326801. Latest filing source: 0001628280-26-003942.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue200,966,000,000USD20252026-01-29
Net income60,458,000,000USD20252026-01-29
Assets366,021,000,000USD20252026-01-29

Macro Cross-References

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-01-29. Report date: 2025-12-31.

Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K. In addition to our historical 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 Annual Report on Form 10-K, particularly in Part I, 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 Annual Report on Form 10-K.

To supplement our 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 and free cash flow, which are non-GAAP financial measures. 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 full year 2025 using 2024 monthly exchange rates for our settlement or billing currencies other than the U.S. dollar. For a full description of our free cash flow non-GAAP measure, see the section entitled "—Liquidity and Capital Resources—Free Cash Flow."

These non-GAAP financial measures are not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. These measures may be different from non‑GAAP financial measures used by other companies, limiting their 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 these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

Executive Overview of Full Year 2025 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 2025 are set forth below. Total revenue for 2025 was $200.97 billion, an increase of 22% compared to 2024, due to an increase in advertising revenue. Ad impressions delivered across our Family of Apps in 2025 increased 12% year-over-year, and our average price per ad increased 9% year-over-year.

Income from operations for 2025 was $83.28 billion, an increase of $13.90 billion, or 20%, compared to 2024, driven by an increase in advertising revenue, partially offset by an increase in costs and expenses. The increase in costs and expenses was mainly due to increases in employee compensation and infrastructure costs.

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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

Year Ended

December 31,

Year Ended

December 31,

Year Ended

December 31,

2025

2024

% change

2025

2024

% change

2025

2024

% change

(in millions, except percentages)

Revenue

$

198,759

$

162,355

22%

$

2,207

$

2,146

3%

$

200,966

$

164,501

22%

Costs and expenses

96,290

75,246

28%

21,400

19,875

8%

117,690

95,121

24%

Income (loss) from operations

$

102,469

$

87,109

18%

$

(19,193)

$

(17,729)

(8)%

$

83,276

$

69,380

20%

Operating margin

52 

%

54 

%

(870)

%

(826)

%

41 

%

42 

%

•Net income was $60.46 billion, with diluted earnings per share (EPS) of $23.49 for the year ended December 31, 2025.

•Capital expenditures, including principal payments on finance leases, were $72.22 billion for the year ended December 31, 2025.

•Share repurchases of our Class A common stock were $26.26 billion and total dividend and dividend equivalent payments were $5.32 billion for the year ended December 31, 2025.

•Cash, cash equivalents, and marketable securities were $81.59 billion as of December 31, 2025.

•Long-term debt was $58.74 billion as of December 31, 2025.

•Effective tax rate was 30% for the year ended December 31, 2025. This includes the effects of the implementation of the One Big Beautiful Bill Act during the third quarter of 2025. Absent the valuation allowance charge as of the enactment date, our 2025 effective tax rate would have decreased by 17 percentage points to 13%.

•Headcount was 78,865 as of December 31, 2025, an increase of 6% year-over-year.

Family of Apps Metrics

•Family daily active people (DAP) was 3.58 billion on average for December 2025, an increase of 7% year-over-year.

•Ad impressions delivered across our Family of Apps increased by 12% year-over-year in 2025.

•Average price per ad increased by 9% year-over-year in 2025.

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

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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, 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 volatility around international trade, which could impact our financial results in future periods.

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.

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Investment Philosophy

We remain focused on operating efficiently while investing in significant opportunities. In 2025, 82% of our total costs and expenses were recognized in FoA and 18% 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 expect our AI initiatives will require significantly increased investment in infrastructure.

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. In 2025, our RL segment reduced our overall operating profit by approximately $19.19 billion, and we expect our 2026 RL operating losses to remain similar to 2025. We expect this will be a complex, evolving, and long-term initiative, and our ability to support our RL efforts is dependent on generating sufficient profits from other areas of our business. We are investing now because we believe this will become the next computing platform and will unlock monetization opportunities for businesses, developers, and creators, including around advertising, hardware, and digital goods.

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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 2025, revenue increased by 21% in United States & Canada, 24% in Europe, 20% in Asia-Pacific, and 27% in Rest of World, in each case relative to 2024.

-

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, Meta Verified subscriptions, net fees we receive from developers using our Payments infrastructure, 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 consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplemental Data" where revenue is geographically apportioned based on the addresses of our customers.

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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 Annual Report on Form 10-K.

------

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 Annual Report on Form 10-K.

Worldwide DAP increased 7% to 3.58 billion on average during December 2025 from 3.35 billion during December 2024.

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•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:

$12.33

$11.20

$11.89

$12.29

$14.25

$12.36

$13.65

$14.46

$16.56

Note: We updated our definition of ARPP beginning in the first quarter of 2024 and have recast ARPP in prior periods for comparative purposes.

Our annual worldwide ARPP in 2025, which represents the sum of quarterly ARPP during such period, was $57.03, an increase of 15% from 2024.

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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.

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•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.

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Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these 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.

An accounting estimate is considered critical if both (i) the nature of the estimates or assumptions is material due to the levels of subjectivity and judgment involved, and (ii) the impact within a reasonable range of outcomes of the estimates and assumptions is material to our consolidated financial statements. We believe that the estimates and assumptions associated with loss contingencies, income taxes, and valuation of non-marketable equity investments, when applicable, have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting estimates. For further information on all of our significant accounting policies, see Note 1 — Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Loss Contingencies

We are involved in legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. Additionally, we are required to comply with various legal and regulatory obligations around the world, and we regularly become subject to new laws and regulations in the jurisdictions in which we operate. The requirements for complying with these obligations may be uncertain and subject to interpretation and enforcement by regulatory and other authorities, and any failure or perceived failure to comply with such obligations could eventually lead to asserted legal or regulatory action. With respect to these matters, asserted and unasserted, we evaluate the associated developments on a regular basis and accrue a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated.

We review the developments in our contingencies that could affect the amount of the estimated liability that has been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to our estimated liability and changes to our disclosures accordingly to reflect the merits of our defenses and the impact of negotiations, settlements, regulatory proceedings, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine the likelihood of loss and the estimated amount of loss, including when and if the probability and estimate has changed for asserted and unasserted matters. Certain factors, in particular, have resulted in significant changes to these estimates and judgments in prior quarters based on updated information available. For example, in certain jurisdictions where we operate, fines and penalties may be the result of new laws and preliminary interpretations regarding the basis of assessing damages, which may make it difficult to estimate what such fines and penalties would amount to if successfully asserted against us. As a result of these and other factors, we reasonably expect that our estimates and judgments with respect to our contingencies may continue to be revised in the future.

The ultimate outcome of these matters, such as whether the likelihood of loss is remote, reasonably possible, or probable or if and when the possible range of loss is reasonably estimable, is inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts that materially differ from management's estimates of losses, it could have a favorable or unfavorable impact on our results of operations and financial condition. See Note 11 — Commitments and Contingencies and Note 14 — Income Taxes of the accompanying notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" and Part I, Item 3, "Legal Proceedings" of this Annual Report on Form 10-K for additional information regarding these contingencies.

Income Taxes

We are subject to income taxes in the United States and numerous foreign jurisdictions. Significant judgment is required in determining our provision for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws. Our actual and forecasted income (loss) before provision is subject to change due to economic, political and other conditions and significant judgment is required in determining our ability to recognize our net deferred tax assets.

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As a result of certain U.S. income tax provisions of the One Big Beautiful Bill Act enacted in July 2025, we expect to incur Corporate Alternative Minimum Tax (CAMT) beginning in 2025. In assessing the realizability of our deferred tax assets and determining the need for a valuation allowance, our accounting policy incorporates the expected impact of future years' CAMT.

We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. These uncertain tax positions include our estimates related to uncertainties with our research and development tax credits that are based on an assessment of whether our available documentation corroborating the nature of our activities supporting the tax credits will be sufficient. Similarly, our estimates for transfer pricing have been developed based upon analyses of appropriate arms-length prices. Although we believe that we have adequately reserved for our uncertain tax positions (including net interest and penalties), we can provide no assurance that the final tax outcome of these matters will not be materially different, as significant judgment is required in evaluating and estimating our provision for income taxes. We make adjustments to these reserves in accordance with the income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made, and could have a material impact on our financial condition and operating results. For additional information, see Note 14 — Income Taxes of the accompanying notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Valuation of Non-marketable Equity Investments

Impairment testing for non-marketable equity investments, including equity investments without readily determinable fair values accounted for using either the measurement alternative or the equity method, is performed at each reporting date to determine whether there are triggering events for impairment. Such qualitative assessment considers factors such as, but not limited to, the investee's financial condition and business outlook; industry and sector performance; regulatory, economic or technological environment; operational and financing cash flows; and other relevant events and factors affecting the investee. When indicators of impairment exist, we estimate the fair value of our non-marketable equity investments using the market approach and/or the income approach and recognize impairment loss in our consolidated statements of income if the estimated fair value is less than the carrying value. For equity method investments, an impairment loss is recognized when the impairment is considered other-than-temporary.

In addition, under the measurement alternative, determining whether another non-marketable equity investment of the same issuer is similar to the non-marketable equity investment we hold may require judgment in (a) assessment of differences in rights and obligations associated with the instruments such as voting rights, distribution rights and preferences, and conversion features, and (b) adjustments to the observable price for differences such as, but not limited to, rights and obligations, control premium, liquidity, or principal or most advantageous markets. The identification of observable transactions will depend on the timely reporting of these transactions from our investee companies, which may occur in a period subsequent to when the transactions take place. Therefore, our fair value adjustment for these observable transactions may occur in a period subsequent to when the transaction actually occurred. For additional information, see Note 5 — Non-Marketable Equity Investments of the accompanying notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

Change in Accounting Estimate

In January 2025, we completed an assessment of the useful lives of property and equipment, which resulted in an increase in the estimated useful lives of most servers and network assets to 5.5 years, effective January 1, 2025. For additional information regarding the change in useful lives of our servers and network assets, see Note 1 — Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.

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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, Meta Verified subscriptions, net fees we receive from developers using our Payments infrastructure, 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 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, and energy and bandwidth costs. Cost of revenue also consists of costs associated with partner arrangements, including traffic acquisition costs and 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 costs.

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; infrastructure costs; 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 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.

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Results of Operations

In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. For a discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023, please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2024.

The following table sets forth our consolidated statements of income data (in millions):

Year Ended December 31,

2025

2024

2023

Revenue

$

200,966 

$

164,501 

$

134,902 

Costs and expenses:

Cost of revenue

36,175 

30,161 

25,959 

Research and development

57,372 

43,873 

38,483 

Marketing and sales

11,991 

11,347 

12,301 

General and administrative

12,152 

9,740 

11,408 

Total costs and expenses

117,690 

95,121 

88,151 

Income from operations

83,276 

69,380 

46,751 

Interest and other income, net

2,656 

1,283 

677 

Income before provision for income taxes

85,932 

70,663 

47,428 

Provision for income taxes

25,474 

8,303 

8,330 

Net income

$

60,458 

$

62,360 

$

39,098 

The following table sets forth our consolidated statements of income data (as a percentage of revenue)(1):

Year Ended December 31,

2025

2024

2023

Revenue

100 

%

100 

%

100 

%

Costs and expenses:

Cost of revenue

18 

18 

19 

Research and development

29 

27 

29 

Marketing and sales

6 

7 

9 

General and administrative

6 

6 

8 

Total costs and expenses

59 

58 

65 

Income from operations

41 

42 

35 

Interest and other income, net

1 

1 

1 

Income before provision for income taxes

43 

43 

35 

Provision for income taxes

13 

5 

6 

Net income

30 

%

38 

%

29 

%

_________________________

(1)Percentages have been rounded for presentation purposes and may differ from unrounded results.

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Revenue

The following table sets forth our revenue by source and by segment:

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Advertising

$

196,175 

$

160,633 

$

131,948 

22 

%

22 

%

Other revenue

2,584 

1,722 

1,058 

50 

%

63 

%

Family of Apps

198,759 

162,355 

133,006 

22 

%

22 

%

Reality Labs

2,207 

2,146 

1,896 

3 

%

13 

%

Total revenue

$

200,966 

$

164,501 

$

134,902 

22 

%

22 

%

Family of Apps

FoA revenue in 2025 increased $36.40 billion, or 22%, compared to 2024. The increase was almost entirely driven by advertising revenue.

Advertising

Advertising revenue in 2025 increased $35.54 billion, or 22%, compared to 2024 due to increases in ad impressions delivered and average price per ad. In 2025, ad impressions delivered increased by 12%, as compared with an increase of 11% in 2024, year-over-year. Ad impressions delivered during 2025 grew in all regions, especially in Asia-Pacific, which was driven by increases in users and their engagement on our products. In 2025, the average price per ad increased by 9%, as compared with an increase of 10% in 2024, year-over-year. The increase in average price per ad in 2025 was 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. This increase was 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 Full Year 2025 Results." In addition, the online commerce vertical was the largest contributor to the increase in advertising revenue in 2025 compared to 2024. We anticipate that future advertising revenue will be driven by a combination of price and ad impressions delivered.

Other revenue

FoA other revenue in 2025 increased $862 million, or 50%, compared to 2024. The increase was mostly driven by paid messaging from WhatsApp and Meta Verified subscriptions.

Reality Labs

RL revenue in 2025 increased $61 million, or 3%, compared to 2024. The increase was driven by an increase in sales of AI glasses, partially offset by a decrease in Meta Quest sales.

Revenue Seasonality

Revenue is traditionally seasonally strong in the fourth quarter of each year due in part to seasonal holiday demand. We believe that this seasonality in both advertising revenue and RL consumer hardware sales affects our quarterly results, which generally reflect significant growth in revenue between the third and fourth quarters and a decline between the fourth and subsequent first quarters. For instance, our total revenue increased 17%, 19%, and 17% between the third and fourth quarters of 2025, 2024, and 2023, respectively, while total revenue for the first quarters of 2025, 2024, and 2023 declined 13%, 9%, and 11% compared to the fourth quarters of 2024, 2023, and 2022, respectively.

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Foreign Exchange Impact on Revenue

Changes in foreign exchange rates had an unfavorable impact on our revenue in the full year 2025 compared to the same period in 2024. 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 full year 2025, our total revenue and advertising revenue would have been $201.38 billion and $196.60 billion, which were $418 million and $420 million higher than actual total revenue and advertising revenue, respectively.

Cost of revenue

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Cost of revenue

$

36,175 

$

30,161 

$

25,959 

20 

%

16 

%

Percentage of revenue

18 

%

18 

%

19 

%

Cost of revenue in 2025 increased $6.01 billion, or 20%, compared to 2024. The increase was mainly due to higher operational expenses related to our data centers and technical infrastructure, which included decreases in the depreciation growth rate due to an extension in the useful lives of servers and network assets, effective January 1, 2025. To a lesser extent, higher costs associated with partner arrangements also contributed to the increase.

See Note 1 — Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding changes in the estimated useful life of our servers and network assets.

Research and development

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Research and development

$

57,372 

$

43,873 

$

38,483 

31 

%

14 

%

Percentage of revenue

29 

%

27 

%

29 

%

Research and development expenses in 2025 increased $13.50 billion, or 31%, compared to 2024. The increase was mostly due to higher employee compensation and infrastructure costs related to research and development, including our AI initiatives.

The higher employee compensation was primarily from an 8% growth in employee headcount from 2024 to 2025 in engineering and other technical functions and an increase in share-based compensation expense.

Marketing and sales

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Marketing and sales

$

11,991 

$

11,347 

$

12,301 

6 

%

(8)

%

Percentage of revenue

6 

%

7 

%

9 

%

Marketing and sales expenses in 2025 increased $644 million, or 6%, compared to 2024. The increase was mainly due to higher professional services related to our ongoing platform integrity efforts.

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General and administrative

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

General and administrative

$

12,152 

$

9,740 

$

11,408 

25 

%

(15)

%

Percentage of revenue

6 

%

6 

%

8 

%

General and administrative expenses in 2025 increased $2.41 billion, or 25%, compared to 2024. The increase was mainly due to higher legal-related costs, which included lapping of a $1.55 billion decrease in accrued losses for certain legal proceedings that benefited the prior year.

See Note 11 — Commitments and Contingencies in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information regarding legal-related costs.

Segment profitability

The following table sets forth income (loss) from operations by segment:

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Family of Apps

$

102,469 

$

87,109 

$

62,871 

18 

%

39 

%

Reality Labs

(19,193)

(17,729)

(16,120)

(8)

%

(10)

%

Total income from operations

$

83,276 

$

69,380 

$

46,751 

20 

%

48 

%

Family of Apps

FoA income from operations in 2025 increased $15.36 billion, or 18%, compared to 2024. The increase in FoA income from operations was driven by higher advertising revenue which was partially offset by an increase in costs and expenses. The increase in costs and expenses was primarily due to increases in employee compensation, infrastructure costs, costs associated with partner arrangements, and legal-related costs.

Reality Labs

RL loss from operations in 2025 increased $1.46 billion, or 8%, compared to 2024, driven by higher RL costs and expenses. RL costs and expenses increased primarily due to increases in employee compensation and other personnel related expenses, estimated losses on non-cancelable purchase commitments for RL inventory, and technology development costs.

See Note 15 — Segment and Geographical Information in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K for additional information.

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Interest and other income, net

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Interest income

$

2,123 

$

2,517 

$

1,639 

(16)

%

54 

%

Interest expense

(1,165)

(715)

(446)

(63)

%

(60)

%

Foreign currency exchange gains (losses), net

352 

(690)

(366)

151 

%

(89)

%

Other income (expense), net

1,346 

171 

(150)

NM

214 

%

Total interest and other income, net

$

2,656 

$

1,283 

$

677 

107 

%

90 

%

____________________________________

NM    - not meaningful

Interest and other income, net in 2025 increased $1.37 billion, or 107% compared to 2024, due to an increase in other income (expense), net, related to the unrealized gains on our marketable and non-marketable equity investments. Foreign currency exchange gains, net from foreign currency transactions and remeasurement also contributed to the increase.

Provision for income taxes

Year Ended December 31,

2025

2024

2023

2025 vs 2024 % change

2024 vs 2023 % change

(in millions, except percentages)

Provision for income taxes

$

25,474 

$

8,303 

$

8,330 

207 

%

— 

%

Effective tax rate

30 

%

12 

%

18 

%

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was enacted, introducing several significant U.S. income tax provisions that reduced our U.S. federal cash tax payments for the remainder of 2025 and future years. The provisions include the immediate expensing of domestic research and development costs and certain capital expenditures beginning in 2025, as well as an enhanced deduction for foreign-derived intangible income effective in 2026. The benefits from these provisions are limited by the 15% Corporate Alternative Minimum Tax (CAMT). As a result, we recorded a $15.93 billion charge in the third quarter of 2025, of which $14.03 billion was a valuation allowance against our U.S. federal deferred tax assets as of the enactment date of OBBBA, and the remaining was mostly related to the reduction of the benefit of the foreign-derived intangible income deduction. In determining the valuation allowance, our accounting policy incorporates the expected impact of future years’ CAMT in assessing the realizability of our deferred tax assets.

Our provision for income taxes in 2025 increased $17.17 billion or 207% compared to 2024, primarily due to an increase in the effective tax rate. Our effective tax rate in 2025 increased compared to 2024, mostly due to the effects of OBBBA.

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 intangible 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 15% global minimum tax regime. These changes did not have a material impact on our consolidated financial statements for 2025. We continue to evaluate the impacts of proposed and enacted legislation with 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.

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Absent any changes to our tax landscape, we expect our effective tax rate for the full year 2026 to be in the range of 13-16%.

Unrecognized Tax Benefits. As of December 31, 2025, we had net uncertain tax positions of $11.23 billion which was included in long-term income taxes on our consolidated balance sheets. These unrecognized tax benefits were predominantly accrued for uncertainties with our research tax credits and transfer pricing with our foreign subsidiaries, which include licensing of intellectual property, providing services and other transactions. The ultimate settlement of the liabilities will depend upon resolution of tax audits, litigation, or events that would otherwise change the assessment of such items.

See Note 14 — Income Taxes in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K 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 $81.59 billion as of December 31, 2025, an increase of $3.78 billion from December 31, 2024. The increase was due to $115.80 billion of cash generated from operations and $29.91 billion of net proceeds from the issuance of fixed-rate senior unsecured notes (the Notes) in November 2025. These increases were partially offset by $72.22 billion of capital expenditures, which includes purchases of property and equipment and principal payments on finance leases; $31.57 billion of capital returns for repurchases of our Class A common stock and payments of dividends and dividend equivalents; $18.40 billion of taxes paid related to net share settlement of employee restricted stock unit (RSU) awards; and $18.33 billion of purchases of non-marketable equity investments.

The following table presents our cash flows (in millions):

Year Ended December 31,

2025

2024

2023

Net cash provided by operating activities

$

115,800 

$

91,328 

$

71,113 

Net cash used in investing activities

$

(102,003)

$

(47,150)

$

(24,495)

Net cash used in financing activities

$

(20,370)

$

(40,781)

$

(19,500)

Cash Provided by Operating Activities

Cash provided by operating activities during 2025 mostly consisted of $60.46 billion net income adjusted for certain non-cash items, such as $20.43 billion of share-based compensation expense, $18.74 billion of deferred income taxes, and $18.62 billion of depreciation and amortization expense. The increase in cash flows from operating activities during 2025 compared to 2024, was primarily due to an increase in cash collections from our customers driven by the increase in revenue and lower cash paid for income taxes, partially offset by higher operational spending.

Cash Used in Investing Activities

Cash used in investing activities during 2025 mostly consisted of $69.69 billion of purchases of property and equipment as we continued to invest in servers, data centers, and network infrastructure, and $18.33 billion of purchases of non-marketable equity investments, and $10.05 billion of net purchases of marketable securities. The increase in cash used in investing activities during 2025 compared to 2024 was mostly due to increases in purchases of property and equipment and non-marketable equity investments.

We anticipate making capital expenditures of approximately $115 billion to $135 billion in 2026 to support our AI efforts and core business.

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Cash Used in Financing Activities

Cash used in financing activities during 2025 mostly consisted of $26.25 billion for repurchases of our Class A common stock, $18.40 billion of taxes paid related to net share settlement of RSUs, and $5.32 billion of payments of dividends and dividend equivalents, partially offset by $29.91 billion net proceeds from the issuance of the Notes in November 2025. The decrease in cash used in financing activities during 2025 compared to 2024, was mostly due to an increase in net proceeds from the Notes.

Free Cash Flow

In addition to other financial measures presented in accordance with U.S. GAAP, we monitor free cash flow (FCF) as a non-GAAP measure to manage our business, make planning decisions, evaluate our performance, and allocate resources. We define FCF as net cash provided by operating activities reduced by purchases of property and equipment and principal payments on finance leases.

We believe that FCF is one of the key financial indicators of our business performance over the long term and provides useful information regarding how cash provided by operating activities compares to the property and equipment investments required to maintain and grow our business.

We have chosen our definition for FCF because we believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. We use FCF in discussions with our senior management and board of directors.

FCF has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities. FCF is not intended to represent our residual cash flow available for discretionary expenses. Some of the limitations of FCF are:

•FCF does not reflect our future contractual commitments; and

•other companies in our industry present similarly titled measures differently than we do, limiting their usefulness as comparative measures.

Management compensates for the inherent limitations associated with using the FCF measure through disclosure of such limitations, presentation of our financial statements in accordance with GAAP, and reconciliation of FCF to the most directly comparable GAAP measure, net cash provided by operating activities, as presented below.

The following is a reconciliation of FCF to the most comparable GAAP measure, net cash provided by operating activities (in millions):

Year Ended December 31,

2025

2024

2023

Net cash provided by operating activities

$

115,800 

$

91,328 

$

71,113 

Purchases of property and equipment

(69,691)

(37,256)

(27,045)

Principal payments on finance leases

(2,524)

(1,969)

(1,058)

Free cash flow

$

43,585 

$

52,103 

$

43,010 

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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

Our operating and finance leases include data centers, offices, and certain network infrastructure. In addition to lease liabilities included in our consolidated balance sheets, we have leases that have not yet commenced, with total lease obligations of approximately $103.77 billion, mostly for data centers, colocations, and network infrastructure, as of December 31, 2025. These operating and finance leases will commence between 2026 and 2030 with lease terms of greater than one year to 30 years.

We also have $131.05 billion of contractual commitments as of December 31, 2025, mostly related to third-party cloud capacity arrangements and our continued investments in servers and network infrastructure, data centers, and consumer hardware products in Reality Labs with $30.63 billion due in 2026.

Long-term Debt

As of December 31, 2025, we had outstanding long-term debt in the form of senior unsecured notes for an aggregate principal amount of $59.0 billion, which mature from 2027 through 2064. Short-term and long-term future interest payments obligations as of December 31, 2025 were $2.98 billion and $56.74 billion, respectively.

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. In 2025, we repurchased and subsequently retired 40 million shares of our Class A common stock for an aggregate amount of $26.26 billion. As of December 31, 2025, $25.03 billion remained available and authorized for repurchases.

The timing and actual number of shares repurchased under the repurchase program depend on a variety of factors, including price, general business and market conditions, and other investment opportunities. Shares may be repurchased through open market purchases or privately negotiated transactions, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. Our share repurchase program may be suspended, delayed, discontinued, or accelerated at any time.

Dividend

Beginning in the first quarter of 2025, we increased our quarterly cash dividends from $0.50 to $0.525 per share of Class A and Class B common stock. Total dividends and dividend equivalents paid were $5.32 billion for the year ended December 31, 2025. 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 $7.58 billion for the year ended December 31, 2025. Our long-term income tax liabilities include $11.23 billion related to the uncertain tax positions and $9.78 billion related to deferred tax liabilities as of December 31, 2025. 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.

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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 5 — Non-Marketable Equity Investments, Note 7 — Leases, Note 10 — Long-term Debt, Note 11 — Commitments and Contingencies, Note 12 — Stockholders' Equity, and Note 14 — Income Taxes in the notes to the consolidated financial statements included in Part II, Item 8, and "Legal Proceedings" contained in Part I, Item 3 of this Annual Report on Form 10-K for additional information.

Recently Issued Accounting Pronouncements

For information on recently issued accounting pronouncements, see Note 1 — Summary of Significant Accounting Policies in the accompanying notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.