Meta is focusing on building personal superintelligence to provide a more engaging, tailored experience for users while refining its long-term monetisation strategy. By continuously improving ranking and recommendation systems, the company aims to identify the precise timing and placement for advertisements, allowing for increased ad load without compromising the user experience. This AI-driven approach is designed to drive higher incremental conversions, ensuring that increased engagement translates into measurable value for advertisers.
Over 3.5 billion people used at least one of Meta’s Family of Apps daily in December 2025. The number of daily active users on Facebook, WhatsApp, and Instagram was approximately 2 billion each.
The company experienced a strong fourth quarter with robust holiday demand and performance gains driven by AI. The adoption of AI across the business has accelerated. Advertising remains the primary growth driver of overall revenue growth, with strong Q4 performance across online commerce, professional services, and technology verticals. The only exception was the politics vertical, which faced a difficult year-on-year comparison following the 2024 US presidential election cycle. Meta incurred higher operating expenses primarily across employee compensation (AI talent) as well as infrastructure and legal costs in Q4 2025.
Family of Apps other revenue increased 54.3% year-on-year to US$801 million, driven by WhatsApp paid messaging and Meta Verified subscriptions. Reality Labs faced a difficult year-on-year comparison in Q4 2025, as results lapped the launch of the Quest 3S headset in Q4 2024. Operating loss of the Reality Labs segment will likely maintain in 2026 (around US$6.0 billion) and slowly narrow, due to maturing supply chains and operational efficiency.
Capital expenditures (CapEx) amounted to US$22.1 billion, driven by investments in data centres, servers, and network infrastructure. Meta was in a net cash position of US$22.8 billion during the quarter. CapEx in 2026 is expected to range between US$115 billion and US$135 billion, driven by investments across Meta Superintelligence Labs and core business. The range is wider than usual to take volatility in account. Meta expects substantial cash tax savings in 2026 under new U.S. tax laws due to heavy investments in research and development as well as infrastructure.
Management expects revenue in the upcoming quarter is forecasted to hover between US$53.5 billion and US$56.5 billion, driven by a 4% foreign currency tailwind. The rollout of a less personalised ads offering in the European Union, starting in late Q1, is expected to create incremental revenue headwinds throughout 2026. Legal appeals against these requirements remain ongoing. CFO Susan expects operating income to be higher year-on-year but hinted at potentially lower operating income margin.
In Q4 2025, Meta realised measurable gains by scaling its technical infrastructure and model architectures. The company doubled the GPU capacity for its GEM ads ranking model and transitioned to a sequence learning architecture capable of processing deeper user behaviour. These upgrades, alongside the launch of a new run-time GEM model, delivered a 3.5% lift in Facebook ad clicks and a 3% increase in Instagram conversion rates. Additionally, consolidating several surface models into a unified Facebook model, supported by the Lattice framework, improved overall ads quality by 12%. In Q4, GEM was extended to Facebook Reels and now covers all major surfaces across Facebook and Instagram.
Revenue from AI-driven creative tools showed strong momentum, with video generation tools reaching a US$10 billion annual run-rate and growing nearly 3x faster than overall ad revenue. Performance attribution also improved, with the latest measurement models driving a 24% increase in incremental conversions. Meanwhile, ad impressions increased 18% year-on-year and average price per ad rose 6%, fuelled by healthy advertiser demand and improved campaign performance. Conversions grew faster than impressions, indicating an increase in overall ad effectiveness.
Operational efficiency remains a core focus through the Meta Compute initiative and internal AI adoption. Meta successfully optimised its Andromeda retrieval engine to run across Nvidia, AMD, and custom MTIA silicon, tripling compute efficiency. Furthermore, agentic coding tools have improved average engineer output by 30% in 2025, while users of these AI tools saw output increases of 80%.
Facebook and Instagram
Total video time on Facebook grew by double digits year-on-year in the U.S. This growth was supported by a 7% lift in organic views across Feed and video, driven by improved ranking algorithms and a product focus on surfacing fresher Reels. Meta prioritised efficiency over density by redistributing ads across users and sessions relevantly rather than simply increasing the number of ads. This delivered a revenue impact nearly 4x larger than that of traditional ad load increases.
Watch time on Instagram Reels increased over 30% year-on-year in the US, driven by simplified ranking architectures and a stronger emphasis on original content. The platform expanded its footprint by launching IGTV on television. Additionally, nearly 10% of daily Reels views now consist of content created via Meta’s Edits app—a nearly threefold increase compared to Q3 2025.
WhatsApp and Messenger
Ads were rolled out in WhatsAppStatus throughout 2025. Meta wants to optimise ad formats and performance before ramping up the level of ads (following its usual playbook). WhatsApp paid messaging exceeds an annual revenue run rate US$2 billion in Q4.
Click-to-message revenue growth accelerated in Q4, led by a 50% year-on-year increase in the US due to strong adoption of website-to-message ad formats. Business AIs on WhatsApp and Messenger are growing in Mexico and the Philippines.
Threads and Meta AI
The amount of time users spend on Threads grew 20% in Q4, driven by recommendation improvements. Ads on the platform will be rolled out to the remaining countries including the UK, European Union, and Brazil in January 2026.
Meta AI is now available in over 200 markets and is positioned as a personalised assistant with a focus on media generation. Adoption is currently led by active WhatsApp users in India and Indonesia, while Facebook serves as the primary engagement platform for the assistant in the US.
Sales of smart glasses more than tripled year-on-year, leading Meta to prioritise segmental investment in glasses and wearables. The company is refocusing Horizon for success on mobile platforms while noting that consumer adoption of VR has followed a slower growth trajectory compared to wearables.
Meta continues to face infrastructure capacity constraints as demand for AI outstrips supply. The company is ramping up infrastructure through a hybrid approach, utilising public cloud deals to bring significantly more capacity online in 2026 while continuing to build owned data centres for long-term efficiency and customisation. To maximise existing resources, Meta is optimising workloads, diversifying its chip supply through the MTIA custom silicon program, and focusing on performance-per-watt to lower the total cost of ownership.
While Meta is expanding into new revenue streams, such as high-value AI subscriptions and the Manus acquisition, these are not expected to be financially significant relative to the core ads business in the immediate term.
Management views video as a current standard rather than the final content format. The next phase of user engagement will shift toward interactive and immersive media integrated directly into social feeds.
Meta’s recommendation systems are driving measurable growth across its apps and advertising business. While aggressive infrastructure spending may cause near-term margin pressure and revenue volatility, management views these investments as essential for developing transformative technologies. The shift toward agentic AI and immersive, real-time media is expected to secure future business opportunities and enhance long-term operational efficiency.
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