Earnings Call Insights: Meta Platforms, Inc. (META) Q4 2025
Management View
- Mark Zuckerberg, Founder, Chairman & CEO, highlighted that Meta ended 2025 with more than 3.5 billion daily active users across its apps, noting “record-breaking holiday demand and AI-driven performance gains.” Zuckerberg expects 2026 to bring a “major AI acceleration” and emphasized, “We’re starting to see agents really work. This will unlock the ability to build completely new products and transform how we work.”
- Zuckerberg described Meta’s vision for “personal super intelligence,” with AI that understands personal context, merging LLMs with Meta’s recommendation systems across Facebook, Instagram, Threads, and ad platforms. He signaled future advances in commerce and content: “New Agentic shopping tools will allow people to find just the right very specific set of products from the businesses in our catalog.”
- Zuckerberg announced a strategic shift for Reality Labs, “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.”
- Dina Powell McCormick was named President and Vice Chairman, tasked with leading strategic partnerships and capacity expansions globally.
- Susan Li, Chief Financial Officer, reported, “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.”
- Li stated, “Reality Labs segment, Q4 revenue was $955 million, down 12% year-over-year.”
Outlook
- Meta projects Q1 2026 total revenue to be in the range of $53.5 billion to $56.5 billion, with a foreign currency tailwind of approximately 4% to year-over-year revenue growth.
- Full year 2026 total expenses are expected to be $162 billion to $169 billion, driven by infrastructure and technical talent investments, particularly in AI. Capital expenditures for 2026 are guided between $115 billion and $135 billion, with operating income expected to be above 2025 levels. Li stated, “We expect full year 2026 total expenses to be in the range of $162 billion to $169 billion.”
- Meta anticipates Reality Labs’ operating losses in 2026 to be similar to 2025, with a gradual reduction in losses thereafter. The company will begin rolling out changes to its less personalized ads offering in the EU this quarter.
Financial Results
- Q4 total revenue was $59.9 billion, up 24% year-over-year. Total expenses reached $35.1 billion, reflecting a 40% increase, primarily due to employee compensation, legal, and infrastructure costs.
- Operating income for Q4 was $24.7 billion, with a 41% operating margin. Net income stood at $22.8 billion, or $8.88 per share. Free cash flow for the quarter was $14.1 billion. Meta ended the quarter with $81.6 billion in cash and marketable securities, and $58.7 billion in debt.
- Instagram Reels watch time increased over 30% year-over-year in the U.S.; Facebook video time also grew double digits. Threads saw a 20% lift in time spent due to recommendation improvements.
- Meta’s video generation tools hit a $10 billion revenue run rate in Q4, and WhatsApp paid messaging crossed $2 billion annual run rate.
Q&A
- Brian Nowak, Morgan Stanley, asked about long-term revenue and ROIC opportunities from the Meta Compute and personal intelligence investments. Zuckerberg replied, “We’re going to see the generation of media improve the quality of content, which, coupled with improvements in the recommendation systems, we expect to generally accelerate the quality and effectiveness of the core business.”
- Nowak also queried about drivers of revenue inflection in 2026. Li answered, “Advertisers are responding to ad performance improvements that we made. They’re driving strong conversion growth.”
- Eric Sheridan, Goldman Sachs, asked about compute constraints and monetization. Li responded, “We do continue to be capacity constrained…we expect over the course of 2026 to have significantly more capacity this year as we add cloud. But we’ll likely still be constrained through much of 2026 until additional capacity from our own facilities comes online.”
- Mark Shmulik, Bernstein, probed on product adoption timelines. Zuckerberg noted, “I would expect that we’ll roll these out over the course of the year and that sometimes it takes a few iterations for things to really hit…I would expect that we’ll see some successes by the end of the year.”
- Justin Post, BofA Securities, asked about expanding beyond ads. Zuckerberg stated, “For the next couple of years, ads are going to be, by far, the most important driver of growth in our business.”
- Ron Josey, Citi, inquired about ranking recommendation model changes. Li explained, “In Q4, we extended GEM to cover Facebook reels. Now it covers all major surfaces across Facebook and Instagram…there’s a lot more headroom, I think, across many, many components of the stack.”
Sentiment Analysis
- Analysts pressed on visibility, capacity constraints, and timing for new product impact, reflecting a slightly positive to neutral tone as they sought clarity on investment returns and adoption rates.
- Management’s tone remained confident in prepared remarks but was more cautious and measured in Q&A, with Zuckerberg stating, “I think my answers…may be somewhat unfulfilling because we’re in this interesting period where we’ve been rebuilding our AI effort.”
- Compared to the previous quarter, both analysts and management showed increased focus on infrastructure capacity and monetization, with management maintaining a constructive but slightly more reserved tone regarding near-term specifics.
Quarter-over-Quarter Comparison
- Revenue growth accelerated from Q3 to Q4, with Q4 revenue at $59.9 billion versus Q3’s $51.2 billion. Family of Apps revenue and ad revenue growth rates remained strong but slightly moderated compared to Q3. Reality Labs segment revenue decreased in Q4 after a significant increase in Q3.
- The outlook for expense and CapEx growth in 2026 is notably higher versus guidance provided in Q3, reflecting a shift toward more aggressive infrastructure and AI investment. Operational priorities have shifted from scaling infrastructure to deploying new AI-driven products and integrating advanced recommendation systems.
- Management’s confidence in long-term AI strategies remains, but near-term specifics on new product adoption and ROI were less emphasized than in the prior quarter. Analysts maintained a cautious optimism, with increased attention on the pace of AI monetization and infrastructure scalability.
Risks and Concerns
- Management highlighted ongoing legal and regulatory risks in the EU and U.S., with potential for material loss from youth-related legal proceedings and further regulatory scrutiny. “We continue to monitor legal and regulatory headwinds in the EU and the U.S. that could significantly impact our business and financial results,” Li stated.
- Compute capacity constraints persist, with Meta expecting to remain constrained until later in 2026. The company is mitigating this through efficiency improvements and strategic partnerships.
Final Takeaway
Meta Platforms enters 2026 with strong revenue momentum and an ambitious roadmap centered on AI-driven product innovation and infrastructure expansion. Management expects to deliver higher operating income despite significant increases in expenses and capital expenditures, underscoring confidence in AI and personalized experiences as growth drivers. The company remains vigilant regarding regulatory risks and compute constraints but is positioning itself to capture new opportunities in commerce, content, and business messaging while maintaining ads as the primary revenue engine in the near term.