Meta Platforms : Q4 2025 Earnings Call Prepared Remarks

Meta Platforms, Inc. (META)

Fourth Quarter 2025 Results Conference Call - Prepared Remarks January 28th, 2026

Kenneth Dorell, Director, Investor Relations

Thank you. Good afternoon and welcome to Meta's fourth quarter and full year 2025 earnings conference call. Joining me today to discuss our results are Mark Zuckerberg, CEO and Susan Li, CFO.

Our remarks today will include forward-looking statements, which are based on assumptions as of today. Actual results may differ materially as a result of various factors including those set forth in today's earnings press release, and in our quarterly report on Form 10-Q filed with the SEC. We undertake no obligation to update any forward-looking statement.

During this call we will present both GAAP and certain non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release. The earnings press release and an accompanying investor presentation are available on our website at investor.atmeta.com.

And now, I'd like to turn the call over to Mark.

Mark Zuckerberg, CEO

Hey everyone. Thanks for joining us.

We ended 2025 strong with more than 3.5 billion people now using at least one of our apps every day. That includes more than 2 billion daily actives each on Facebook and WhatsApp -- and just shy of that on Instagram. Our business also performed very well thanks to record-breaking holiday demand and AI-driven performance gains.

We are now seeing a major AI acceleration. I expect 2026 to be a year where this wave accelerates even further on several fronts. We're starting to see agents really work. This will unlock the ability to build completely new products and transform how we work.

In '25 we rebuilt the foundations of our AI program. Over the coming months we're going to start shipping our new models and products. I expect our first models will be good but, more importantly, will show the rapid trajectory that we're on. And then I expect us to steadily push the frontier over the course of the year as we continue to release new models.

I'm very excited about the products that we're building. Our vision is building personal superintelligence. We're starting to see the promise of AI that understands our personal context -including our history, our interests, our content, and our relationships. A lot of what makes agents valuable is the unique context that they can see, and we believe that Meta will be able to provide a uniquely personal experience.

We're also working on merging LLMs with the recommendation systems that power Facebook, Instagram, Threads, and our ads system. Our world class recommendation systems are already driving meaningful growth across our apps and ads business, but we think that the current systems are primitive compared to what will be possible soon. Today our systems help people stay

in touch with friends, understand the world, and find interesting and entertaining content. But soon, we'll be able to understand people's unique personal goals, and tailor feeds to show each person content that helps them improve their lives in the ways that they want.

This also has implications for commerce. Our ads today help businesses find just the right very specific people who are interested in their products. New agentic shopping tools will allow people to find just the right very specific set of products from the businesses in our catalogue. We're focused on making these experiences work across both our feeds and across business messaging

-- significantly increasing the capabilities of WhatsApp over time.

New kinds of content will soon be possible as well. People want to express themselves and experience the world in the most immersive and interactive ways possible. We started with text, and then moved to photos when we got phones with cameras, and then moved to video when mobile networks got fast enough. Soon we'll see an explosion of new media formats that are more immersive and interactive, and only possible because of advances in AI.

Our feeds will become more interactive overall. Today our apps feel like algorithms that recommend content. Soon, you'll open our apps and you'll have an AI that understands you, and also happens to be able to show you great content or even generate great personalized content for you.

Glasses are the ultimate incarnation of this vision. They're going to be able to see what you see, hear what you hear, talk to you and help you as you go about your day, and even show you information or generate custom UI right there in your vision. Sales of our glasses more than tripled last year, and we think that they're some of the fastest growing consumer electronics in history.

Billions of people wear glasses or contacts for vision correction. I think we're at a moment similar to when smartphones arrived, and it was clearly only a matter of time until all those flip phones became smartphones. It's hard to imagine a world in several years where most glasses that people wear aren't AI glasses.

For Reality Labs, we're directing most of our investment towards glasses and wearables going forward, while focusing on making Horizon a massive success on mobile and making VR a profitable ecosystem over the coming years. I expect Reality Labs losses this year to be similar to last year, and this will likely be the peak as we start to gradually reduce our losses going forward while continuing to execute on our vision.

As we plan for the future, we will continue to invest very significantly in infrastructure to train leading models and deliver personal superintelligence to billions of people and businesses around the world.

I recently announced Meta Compute with the belief that being the most efficient at how we engineer, invest, and partner to build our infrastructure will become a strategic advantage. Dina Powell McCormick also joined us as President and Vice Chairman, and she will lead our efforts to partner with governments, sovereigns, and strategic capital partners to expand our long-term capacity, including ensuring positive economic impact in the communities that we operate in around the world.

An important part of Meta Compute will be making long term investments in silicon and energy. We will continue working with key partners while advancing our own silicon program. We're architecting our systems so that we can be flexible in the systems that we use, and we expect the

cost per gigawatt to decrease significantly over time through optimizing both our technology and supply chain.

The last thing that I want to mention is that I think that 2026 is going to be the year that AI starts to dramatically change the way we work. As we navigate this, our north star is building the best place for individuals to make a massive impact. So to do this, we're investing in AI-native tooling so individuals at Meta can get more done, we're elevating individual contributors, and flattening teams. We're starting to see projects that used to require big teams now be accomplished by a single very talented person. I want to make sure that as many of those very talented people as possible choose Meta as the place that they can make the greatest impact -- to deliver personalized products to billions of people around the world. And if we do this, then I think that we're going to get a lot more done and I think it'll be a lot more fun.

Alright, that's everything I wanted to cover. This is going to be a big year for delivering personal superintelligence, accelerating our business, building infrastructure for the future, and shaping how our company will work going forward. As always, I'm grateful for all of the hard work of our teams and to all of you for being on this journey with us. Now, here's Susan.

Susan Li, CFO

Thanks Mark and good afternoon everyone.

Let's begin with our segment results. All comparisons are on a year-over-year basis unless otherwise noted.

Our community across the Family of Apps continues to grow, and we estimate more than 3.5 billion people used at least one of our Family of Apps on a daily basis in December.

Q4 Total Family of Apps revenue was $58.9 billion, up 25% year over year.

Q4 Family of Apps ad revenue was $58.1 billion, up 24% or 23% on a constant currency basis.

In Q4, the total number of ad impressions served across our services increased 18%. Impression growth was healthy across all regions, driven primarily by engagement and user growth and to a lesser degree, ad load optimizations. The average price per ad increased 6% year-over-year, benefiting from increased advertiser demand, largely driven by improved ad performance.

Family of Apps other revenue was $801 million, up 54%, driven by WhatsApp paid messaging revenue growth as well as Meta Verified subscriptions.

Within our Reality Labs segment, Q4 revenue was $955 million, down 12% year-over-year. As we noted on the last call, the year-over-year decline in Reality Labs revenue is due to us lapping the introduction of Quest 3S in Q4 of 2024 as well as retail partners procuring Quest headsets during the third quarter of 2025 to prepare for the holiday season, which was recorded as revenue in Q3.

Moving now to our consolidated results.

Q4 total revenue was $59.9 billion, up 24% or 23% on a constant currency basis. Q4 total expenses were $35.1 billion, up 40% compared to last year.

Year-over-year growth was driven primarily by employee compensation expenses, legal expenses, and infrastructure costs.

Growth in employee compensation expenses reflects the technical hires we've added this year, particularly AI talent.

Legal expense growth was due to both lapping legal accrual reversals in Q4'24 and charges recorded in Q4'25.

Infrastructure expense growth was driven by higher depreciation, cloud spend, and other operating expenses.

We ended Q4 with over 78,800 employees, up 6% year-over-year, driven by hiring in priority areas of monetization, infrastructure, Meta Superintelligence Labs, as well as regulation and compliance.

Fourth quarter operating income was $24.7 billion, representing a 41% operating margin.

Q4 interest and other income was $609 million, driven primarily by unrealized gains on our equity investments.

Our tax rate for the quarter was 10%, slightly lower than our outlook of 12-15% due to the settlement of matters with tax authorities.

Net income was $22.8 billion or $8.88 per share.

Capital expenditures, including principal payments on finance leases, were $22.1 billion, driven by investments in data centers, servers, and network infrastructure.

Free cash flow was $14.1 billion. We ended the quarter with $81.6 billion in cash and marketable securities and $58.7 billion in debt.

Turning now to the business performance. There are two primary factors that drive our revenue performance: our ability to deliver engaging experiences for our community, and our effectiveness at monetizing that engagement over time.

On the first, we're continuing to drive incremental engagement from ranking and product

improvements.

Instagram Reels had another strong quarter, with watch time up more than 30% year-over-year in the US. Engagement is benefiting from several optimizations we made to improve the quality of recommendations, including simplifying our ranking architecture to enable more efficient model scaling. This unlocked the ability for our systems to consider longer interaction histories to better identify a person's interests.

On Facebook, video time continued to grow double-digits year-over-year in the US, and we're seeing strong results from our ranking and product efforts on both Feed and video surfaces. The optimizations we made in Q4 drove a 7% lift in views of organic Feed and video posts on

Facebook, resulting in the largest quarterly revenue impact from Facebook product launches in the past two years.

We're continuing to increase the freshness and originality of content recommendations as well. On Facebook, our systems are surfacing over 25% more Reels published that day than the prior quarter. On Instagram, we grew the prevalence of original content in the US by 10 percentage points in Q4, with 75% of recommendations now coming from original posts.

Threads is also seeing strong momentum, again benefiting from recommendation improvements. The optimizations we made in Q4 drove a 20% lift in Threads time spent.

Turning to 2026, we see a lot of opportunity to drive additional gains.

This includes scaling the complexity and amount of training data we use in our models while continuing to make our systems more responsive to people's real-time interests. We're also focused on incorporating LLMs to understand content more deeply across our platform, which will enable more personalized recommendations.

Another big area of investment this year is developing the next generation of our recommendation systems. We have several big bets on this front, including building new model architectures from the ground up that will work on top of LLMs, leveraging the world knowledge and reasoning capabilities of an LLM to better infer people's interests.

Beyond improvements to our recommendation systems, we expect to use the models developed by Meta Superintelligence Labs to deliver compelling and differentiated AI products.

One area we're already seeing promise is with AI dubbing of videos into local languages. We are now supporting nine different languages, with hundreds of millions of people watching AI translated videos every day. This is already driving incremental time spent on Instagram and we plan to launch support for more languages over the course of this year.

We are also seeing strong traction with our media creation tools. Nearly 10% of the Reels people view each day are now created in our Edits app, almost tripling from last quarter. Within Meta AI, the number of daily actives generating media tripled year-over-year in Q4. This year, we expect to advance the capabilities of our underlying media generation models and ship new features to further enhance the product experience.

Another area we're focused on for Meta AI is personalization. We're seeing in our early testing that personalized responses drive higher levels of engagement, and we expect to significantly advance the personalization of Meta AI this year. This dovetails with our investments in content understanding, which will enable our systems to develop a deeper understanding of each person's interests and preferences while also identifying the most relevant content across our platform to pull into responses.

Turning to the second driver of our revenue performance: increasing monetization efficiency. The first part of this work is optimizing the level of ads within organic engagement.

Here, our focus remains on tuning our systems to identify the right time and place to deliver ads. In some cases, this enables us to grow the overall level of ad load while preserving the user