Meta Platforms, Inc. 10-K

Item 8. Financial Statements and Supplementary Data META PLATFORMS, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Reports of Independent Registered Public Accounting Firm (PCAOB ID No. 42 ) 82 Consolidated Financial Statements: Consolidated Balance Sheets 86 Consolidated Statements of Income 87 Consolidated Statements of Comprehensive Income 88 Consolidated Statements of Stockholders' Equity 89 Consolidated Statements of Cash Flows 90 Notes to Consolidated Financial Statements 92 81 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Meta Platforms, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Meta Platforms, Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated January 29, 2025 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the Audit & Risk Oversight Committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 82 Table of Contents Loss Contingencies Description of the Matter As described in Note 12 to the consolidated financial statements, the Company is party to various legal proceedings, claims, and regulatory or government inquiries and investigations. The Company accrues a liability when it believes a loss is probable and the amount can be reasonably estimated. In addition, the Company believes it is reasonably possible that it will incur a loss in some of these cases, actions or inquiries described above. When applicable, the Company discloses an estimate of the amount of loss or range of possible loss that may be incurred. However, for certain other matters, the Company discloses that the amount of such losses or a range of possible losses cannot be reasonably estimated at this time. Auditing the Company's accounting for, and disclosure of these loss contingencies was especially challenging due to the significant judgment required to evaluate management's assessments of the likelihood of a loss, and their estimate of the potential amount or range of such losses. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the identification and evaluation of these matters, including controls relating to the Company's assessment of the likelihood that a loss will be realized and their ability to reasonably estimate the potential range of possible losses. Our audit procedures included reading the minutes or a summary of the meetings of the committees of the board of directors, reading the proceedings, claims, and regulatory or government inquiries and investigations, or summaries as we deemed appropriate, requesting and receiving internal and external legal counsel confirmation letters, meeting with internal and external legal counsel to discuss the nature of the various matters, and obtaining representations from management. We also evaluated the appropriateness of the related disclosures included in Note 12 to the consolidated financial statements. 83 Table of Contents Uncertain Tax Positions Description of the Matter As discussed in Note 15 to the consolidated financial statements, the Company has received certain notices from the Internal Revenue Service (IRS) related to transfer pricing agreements with the Company's foreign subsidiaries for certain periods examined. The IRS has stated that it will also apply its position to tax years subsequent to those examined. If the IRS prevails in its position, it could result in an additional federal tax liability, plus interest and any penalties asserted. The Company uses judgment to (1) determine whether a tax position's technical merits are more-likely-than-not to be sustained and (2) measure the amount of tax benefit that qualifies for recognition. Auditing the Company's accounting for, and disclosure of, these uncertain tax positions was especially challenging due to the significant judgment required to assess management's evaluation of technical merits and the measurement of the tax position based on interpretations of tax laws and legal rulings. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company's process to assess the technical merits of tax positions related to these transfer pricing agreements and to measure the benefit of those tax positions. As part of our audit procedures over the Company's accounting for these positions, we involved our tax professionals to assist with our assessment of the technical merits of the Company's tax positions. This included assessing the Company's correspondence with the relevant tax authorities, evaluating income tax opinions or other third-party advice obtained by the Company, and requesting and receiving confirmation letters from third-party advisors. We also used our knowledge of, and experience with, the application of international and local income tax laws by the relevant income tax authorities to evaluate the Company's accounting for those tax positions. We analyzed the Company's assumptions and data used to determine the amount of the federal tax liability recognized and tested the mathematical accuracy of the underlying data and calculations. We also evaluated the appropriateness of the related disclosures included in Note 15 to the consolidated financial statements in relation to these matters. /s/ Ernst & Young LLP We have served as the Company's auditor since 2007. San Jose, California January 29, 2025 84 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Meta Platforms, Inc. Opinion on Internal Control Over Financial Reporting We have audited Meta Platforms, Inc.'s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Meta Platforms, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated January 29, 2025 expressed an unqualified opinion thereon. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP San Jose, California January 29, 2025 85 Table of Contents META PLATFORMS, INC. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares and par value) December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 43,889 $ 41,862 Marketable securities 33,926 23,541 Accounts receivable, net 16,994 16,169 Prepaid expenses and other current assets 5,236 3,793 Total current assets 100,045 85,365 Non-marketable equity securities 6,070 6,141 Property and equipment, net 121,346 96,587 Operating lease right-of-use assets 14,922 13,294 Goodwill 20,654 20,654 Other assets 13,017 7,582 Total assets $ 276,054 $ 229,623 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 7,687 $ 4,849 Operating lease liabilities, current 1,942 1,623 Accrued expenses and other current liabilities 23,967 25,488 Total current liabilities 33,596 31,960 Operating lease liabilities, non-current 18,292 17,226 Long-term debt 28,826 18,385 Long-term income taxes 9,987 7,514 Other liabilities 2,716 1,370 Total liabilities 93,417 76,455 Commitments and contingencies Stockholders' equity: Common stock, $ 0.000006 par value; 5,000 million Class A shares authorized, 2,190 million and 2,211 million shares issued and outstanding, as of December 31, 2024 and 2023, respectively; 4,141 million Class B shares authorized, 344 million and 350 million shares issued and outstanding, as of December 31, 2024 and 2023, respectively — — Additional paid-in capital 83,228 73,253 Accumulated other comprehensive loss ( 3,097 ) ( 2,155 ) Retained earnings 102,506 82,070 Total stockholders' equity 182,637 153,168 Total liabilities and stockholders' equity $ 276,054 $ 229,623 See Accompanying Notes to Consolidated Financial Statements. 86 Table of Contents META PLATFORMS, INC. CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) Year Ended December 31, 2024 2023 2022 Revenue $ 164,501 $ 134,902 $ 116,609 Costs and expenses: Cost of revenue 30,161 25,959 25,249 Research and development 43,873 38,483 35,338 Marketing and sales 11,347 12,301 15,262 General and administrative 9,740 11,408 11,816 Total costs and expenses 95,121 88,151 87,665 Income from operations 69,380 46,751 28,944 Interest and other income (expense), net 1,283 677 ( 125 ) Income before provision for income taxes 70,663 47,428 28,819 Provision for income taxes 8,303 8,330 5,619 Net income $ 62,360 $ 39,098 $ 23,200 Earnings per share: Basic $ 24.61 $ 15.19 $ 8.63 Diluted $ 23.86 $ 14.87 $ 8.59 Weighted-average shares used to compute earnings per share: Basic 2,534 2,574 2,687 Diluted 2,614 2,629 2,702 See Accompanying Notes to Consolidated Financial Statements. 87 Table of Contents META PLATFORMS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31, 2024 2023 2022 Net income $ 62,360 $ 39,098 $ 23,200 Other comprehensive income (loss): Change in foreign currency translation adjustment, net of tax ( 1,413 ) 618 ( 1,184 ) Change in unrealized gain (loss) on available-for-sale investments and other, net of tax 471 757 ( 1,653 ) Comprehensive income $ 61,418 $ 40,473 $ 20,363 See Accompanying Notes to Consolidated Financial Statements. 88 Table of Contents META PLATFORMS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In millions, except per share amounts) Class A and Class B Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total Stockholders' Equity Shares Par Value Balances at December 31, 2021 2,741 $ — $ 55,811 $ ( 693 ) $ 69,761 $ 124,879 Issuance of common stock 54 — — — — — Shares withheld related to net share settlement ( 20 ) — ( 3,359 ) — ( 236 ) ( 3,595 ) Share-based compensation — — 11,992 — — 11,992 Share repurchases ( 161 ) — — — ( 27,926 ) ( 27,926 ) Other comprehensive loss — — — ( 2,837 ) — ( 2,837 ) Net income — — — — 23,200 23,200 Balances at December 31, 2022 2,614 — 64,444 ( 3,530 ) 64,799 125,713 Issuance of common stock 65 — — — — — Shares withheld related to net share settlement ( 26 ) — ( 5,218 ) — ( 1,794 ) ( 7,012 ) Share-based compensation — — 14,027 — — 14,027 Share repurchases ( 92 ) — — — ( 20,033 ) ( 20,033 ) Other comprehensive income — — — 1,375 — 1,375 Net income — — — — 39,098 39,098 Balances at December 31, 2023 2,561 — 73,253 ( 2,155 ) 82,070 153,168 Issuance of common stock 65 — — — — — Shares withheld related to net share settlement ( 27 ) — ( 6,721 ) — ( 7,049 ) ( 13,770 ) Share-based compensation — — 16,690 — — 16,690 Share repurchases ( 65 ) — — — ( 29,754 ) ( 29,754 ) Dividends and dividend equivalents declared ($ 2.00 per share) (1) — — — — ( 5,121 ) ( 5,121 ) Other — — 6 — — 6 Other comprehensive loss — — — ( 942 ) — ( 942 ) Net income — — — — 62,360 62,360 Balances at December 31, 2024 2,534 $ — $ 83,228 $ ( 3,097 ) $ 102,506 $ 182,637 _______________________ (1) Our dividend program began in the first quarter of 2024. See Accompanying Notes to Consolidated Financial Statements. 89 Table of Contents META PLATFORMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended December 31, 2024 2023 2022 Cash flows from operating activities Net income $ 62,360 $ 39,098 $ 23,200 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,498 11,178 8,686 Share-based compensation 16,690 14,027 11,992 Deferred income taxes ( 4,738 ) 131 ( 3,286 ) Impairment charges for facilities consolidation 383 2,432 2,218 Data center assets abandonment — ( 224 ) 1,341 Other 87 635 641 Changes in assets and liabilities: Accounts receivable ( 1,485 ) ( 2,399 ) 231 Prepaid expenses and other current assets ( 698 ) 559 162 Other assets ( 270 ) ( 80 ) ( 106 ) Accounts payable 373 51 210 Accrued expenses and other current liabilities 323 5,081 4,300 Other liabilities 2,805 624 886 Net cash provided by operating activities 91,328 71,113 50,475 Cash flows from investing activities Purchases of property and equipment ( 37,256 ) ( 27,045 ) ( 31,186 ) Purchases of marketable securities ( 25,542 ) ( 2,982 ) ( 9,626 ) Sales and maturities of marketable securities 15,789 6,184 13,158 Acquisitions of businesses and intangible assets ( 270 ) ( 629 ) ( 1,312 ) Other investing activities 129 ( 23 ) ( 4 ) Net cash used in investing activities ( 47,150 ) ( 24,495 ) ( 28,970 ) Cash flows from financing activities Taxes paid related to net share settlement of equity awards ( 13,770 ) ( 7,012 ) ( 3,595 ) Repurchases of Class A common stock ( 30,125 ) ( 19,774 ) ( 27,956 ) Payments for dividends and dividend equivalents ( 5,072 ) — — Proceeds from issuance of long-term debt, net 10,432 8,455 9,921 Principal payments on finance leases ( 1,969 ) ( 1,058 ) ( 850 ) Other financing activities ( 277 ) ( 111 ) 344 Net cash used in financing activities ( 40,781 ) ( 19,500 ) ( 22,136 ) Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 786 ) 113 ( 638 ) Net increase (decrease) in cash, cash equivalents, and restricted cash 2,611 27,231 ( 1,269 ) Cash, cash equivalents, and restricted cash at beginning of the period 42,827 15,596 16,865 Cash, cash equivalents, and restricted cash at end of the period $ 45,438 $ 42,827 $ 15,596 Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets Cash and cash equivalents $ 43,889 $ 41,862 $ 14,681 Restricted cash, included in prepaid expenses and other current assets 353 99 294 Restricted cash, included in other assets 1,196 866 621 Total cash, cash equivalents, and restricted cash $ 45,438 $ 42,827 $ 15,596 See Accompanying Notes to Consolidated Financial Statements. 90 Table of Contents META PLATFORMS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Year Ended December 31, 2024 2023 2022 Supplemental cash flow data Cash paid for income taxes, net $ 10,554 $ 6,607 $ 6,407 Cash paid for interest, net of amounts capitalized $ 486 $ 448 $ — Non-cash investing and financing activities: Property and equipment in accounts payable and accrued expenses and other current liabilities $ 7,127 $ 4,105 $ 3,319 Acquisition of businesses and intangible assets in accrued expenses and other current liabilities and other liabilities $ 172 $ 119 $ 291 Repurchases of Class A common stock in accrued expenses and other current liabilities $ — $ 474 $ 310 See Accompanying Notes to Consolidated Financial Statements. 91 Table of Contents META PLATFORMS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Summary of Significant Accounting Policies Organization and Description of Business We were incorporated in Delaware in July 2004. Our mission is to build the future of human connection and the technology that makes it possible. We report our financial results based on two reportable segments: Family of Apps (FoA) and Reality Labs (RL). The segment information aligns with how the chief operating decision maker (CODM), who is our chief executive officer (CEO), reviews and manages the business. We generate substantially all of our revenue from advertising. Basis of Presentation We prepared the consolidated financial statements in accordance with U.S. generally accepted accounting principles (GAAP). The consolidated financial statements include the accounts of Meta Platforms, Inc., its subsidiaries where we have controlling financial interests, and any variable interest entities for which we are deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated. Balance Sheets Reclassifications Certain prior period amounts on the consolidated balance sheets have been reclassified to conform to current period presentation. • Intangible assets, net was reclassified into other assets • Partners payable was reclassified into accrued expenses and other current liabilities • Long-term income taxes was reclassified out of other liabilities These reclassifications had no impact on our previously reported total assets, total liabilities, revenue, income from operations, net income or cash flows. Use of Estimates Preparation of consolidated financial statements in conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to loss contingencies, income taxes, valuation of long-lived assets and their associated estimated useful lives, valuation of non-marketable equity securities, revenue recognition, valuation of goodwill, credit losses of available-for-sale (AFS) debt securities and accounts receivable, and fair value of financial instruments and leases. These estimates are based on management's knowledge about current events, interpretation of regulations, and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates. In January 2025, we completed an assessment of the useful lives of certain servers and network assets, and determined we should extend the estimated useful lives to 5.5 years. This change in accounting estimate will be effective beginning fiscal year 2025. 92 Table of Contents Revenue Recognition We recognize revenue under Accounting Standards Codification (ASC) 606 Revenue from Contracts with Customers . Revenue is recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Sales commissions we pay in connection with contracts are expensed when incurred because the amortization period is one year or less. These costs are recorded within marketing and sales on our consolidated statements of income. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. Revenue includes sales and usage‑based taxes, except for cases where we are acting as a pass‑through agent. Advertising Revenue 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 our 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 users. We recognize revenue from the delivery of action-based ads in the period in which a user takes the action the marketer contracted for. In general, we report advertising revenue on a gross basis, since we control the advertising inventory before it is transferred to our customers. Our control is evidenced by our sole ability to monetize the advertising inventory before it is transferred to our customers. For revenue generated from arrangements that involve third-parties, we evaluate whether we are the principal, and report revenue on a gross basis, or the agent, and report revenue on a net basis. In this assessment, we consider if we obtain control of the specified goods or services before they are transferred to the customer, as well as other indicators such as the party primarily responsible for fulfillment, inventory risk, and discretion in establishing price. We may accept lower consideration than the amount promised per the contract for certain revenue transactions and certain customers may receive cash-based incentives, credits, or refunds, which are accounted for as variable consideration when estimating the amount of revenue to recognize. We estimate these amounts and reduce revenue based on the amounts expected to be provided to customers. We believe that there will not be significant changes to our estimates of variable consideration for the reported periods. Reality Labs Revenue RL revenue is generated from the delivery of consumer hardware products, such as Meta Quest and Ray-Ban Meta AI glasses, and related software and content. Revenue is recognized at the time control of the products is transferred to customers, which is generally at the time of delivery, in an amount that reflects the consideration RL expects to be entitled to in exchange for the products. Other Revenue FoA other revenue consists of revenue from WhatsApp Business Platform, Meta Verified subscriptions, net fees we receive from developers using our Payments infrastructure, and revenue from various other sources. 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. 93 Table of Contents Content Costs Our content costs are mostly related to payments to content providers from whom we license video and music to increase engagement on the platform. We pay fees to these content providers based on revenue generated, a flat fee, or both. For licensed video, we expense the cost per title when the title is accepted and available for viewing if the capitalization criteria are not met. Video content costs that meet the criteria for capitalization were not material to date. For licensed music, we expense the license fees over the contractual license period. We pay fees to music partners based on revenue generated, minimum guaranteed fees, flat fees, or a combination thereof. Expensed content costs are included in cost of revenue on our consolidated statements of income. Software Development Costs Software development costs, including costs to develop software products or the software component of products to be marketed or sold to external users, are expensed before the software or technology reach technological feasibility, which is typically reached shortly before the release of such products. Software development costs also include costs to develop software to be used solely to meet internal needs and applications used to deliver our services. These software development costs meet the criteria for capitalization once the preliminary project stage is complete, and it is probable that the project will be completed and the software will be used to perform the function intended. Software development costs that meet the criteria for capitalization were not material to date. Share-based Compensation Share-based compensation expense consists of the company's restricted stock units (RSUs) expense. RSUs granted to employees are measured based on the grant-date fair value. In general, our RSUs vest over a service period of four years . Share-based compensation expense is generally recognized on the straight-line basis over the requisite service period and forfeitures are accounted for as they occur. 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. We record a provision for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, we recognize deferred income tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. We recognize the deferred income tax effects of a change in tax rates in the period of the enactment. We record a valuation allowance to reduce our deferred tax assets to the net amount that we believe is more likely than not to be realized. We consider all available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing tax planning strategies in assessing the need for a valuation allowance. 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. We recognize interest and penalties related to uncertain tax positions as a component of the provision for income taxes. Advertising Expense Advertising costs are expensed when incurred and are included in marketing and sales expenses on our consolidated statements of income. We incurred advertising expenses of $ 2.06 billion, $ 2.02 billion, and $ 2.65 billion for the years ended December 31, 2024, 2023, and 2022, respectively. 94 Table of Contents Cash and Cash Equivalents, Marketable Securities, and Restricted Cash Cash and cash equivalents consist of cash on deposit with financial institutions globally and highly liquid investments with maturities of 90 days or less from the date of purchase. We classify amounts in transit from customer credit cards and payment service providers as cash on our consolidated balance sheets. We hold investments in marketable debt securities, consisting of U.S. government securities, U.S. government agency securities, and investment grade corporate debt securities. We classify our marketable debt securities as available-for-sale (AFS) investments in our current assets because they represent investments of cash available for current operations. Our AFS investments are carried at estimated fair value with any unrealized gains and losses, net of taxes, included in accumulated other comprehensive income (loss) in stockholders' equity. AFS debt securities with an amortized cost basis in excess of estimated fair value are assessed to determine what amount of that difference, if any, is caused by expected credit losses. Allowance for credit losses on AFS debt securities are recognized as a charge in interest and other income (expense), net on our consolidated statements of income, and any remaining unrealized losses, net of taxes, are included in accumulated other comprehensive income (loss) in stockholders' equity. We determine realized gains or losses on sale of marketable securities on a specific identification method and include such gains or losses in interest and other income (expense), net on our consolidated statements of income. We also hold investments in marketable equity securities that are publicly traded stocks. We classify these equity securities as marketable securities within current assets on our consolidated balance sheets because they are available to be converted into cash to fund current operations without any restriction. These marketable equity securities are measured at fair value at each reporting date with the resulted unrealized gains and losses recognized in interest and other income (expense), net on our consolidated statements of income. We classify certain restricted cash balances, consisting mostly of cash related to insurance policies, cash reserves designated for a specific purpose, as well as retention and indemnification holdback for our acquisitions, within prepaid expenses and other current assets and other assets on our consolidated balance sheets, based upon the expected duration of the restrictions. Non-marketable Equity Securities Our non-marketable equity securities are investments in privately-held companies without readily determinable fair values. We elected to account for substantially all of our non-marketable equity securities using the measurement alternative, which is cost, less any impairment, adjusted for changes in fair value resulting from observable transactions for identical or similar investments of the same issuer as of the respective transaction dates. We periodically review our non-marketable equity securities for impairment. When indicators exist and the estimated fair value of an investment is below its carrying amount, we write down the investment to fair value. The change in carrying value, resulted from the remeasurements, is recognized in interest and other income (expense), net on our consolidated statements of income. For additional information, see Note 6 — Non-marketable Equity Securities. In addition, we also held other non-marketable equity securities accounted for under the equity method which were not material as of December 31, 2024 and 2023. Fair Value Measurements We apply fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. We define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, we consider the principal or most advantageous market in which we would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. 95 Table of Contents Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management's estimate of assumptions that market participants would use in pricing the asset or liability. Our cash equivalents, marketable securities, and restricted cash equivalents are classified within Level 1 or Level 2 of the fair value hierarchy because their fair values are derived from quoted market prices or alternative pricing sources and models utilizing observable market inputs. Certain other assets are classified within Level 3 because factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. Our non-marketable equity securities accounted for using the measurement alternative are recorded at fair value on a non-recurring basis. When indicators of impairment exist or observable price changes of qualified transactions occur, the respective non-marketable equity security would be classified within Level 3 of the fair value hierarchy because the valuation methods include a combination of the observable transaction price at the transaction date and other unobservable inputs including volatility, rights, and obligations of the securities we hold. Accounts Receivable and Allowances Accounts receivable are recorded and carried at the original invoiced amount less an allowance for any potential uncollectible amounts. We make estimates of expected credit and collectibility trends for the allowance for credit losses and allowance for unbilled receivables based upon our assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers. Expected credit losses are recorded as general and administrative expenses on our consolidated statements of income. As of December 31, 2024 and 2023, the allowance for credit losses on accounts receivable were not material. Property and Equipment Property and equipment, including finance leases, are depreciated and stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets or the remaining lease term, whichever is shorter. The estimated useful lives of property and equipment and amortization periods of finance lease right-of-use (ROU) assets as of December 31, 2024 are described below: Property and Equipment Useful Life/ Amortization period Servers and network assets Four to Five years (1) Buildings 25 to 30 years Equipment and other One to 25 years Finance lease right-of-use assets Five to 20 years Leasehold improvements Lesser of estimated useful life or remaining lease term _______________________ (1) Effective January 2025, the useful lives of certain servers and network assets are extended to 5.5 years. We evaluate at least annually the recoverability of property and equipment for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. If such review indicates that the carrying amount of property and equipment assets is not recoverable, and the asset's fair value is less than the carrying amount, an impairment charge is recognized. The useful lives of our property and equipment are management's estimates when the assets are initially recognized and are routinely reviewed for the remaining estimated useful lives. Our estimate of useful lives represents the best estimate of the useful lives based on current facts and circumstances, but may differ from the actual useful lives due to changes to our business operations, changes in the planned use of assets, and technological advancements. When we change the estimated 96 Table of Contents useful life assumption for any asset, the remaining carrying amount of the asset is accounted for prospectively and depreciated or amortized over the revised estimated useful life. Servers and network assets include equipment mostly in our data centers, which is used to support production traffic. Land and assets held within construction in progress (CIP) are not depreciated. CIP assets are related to the construction or development of property and equipment that have not yet been placed in service for their intended use. We also capitalize interest on our debt related to certain eligible CIP assets and depreciate over the useful life of the related assets. The cost of maintenance and repairs is expensed as incurred. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from their respective accounts, and gain or loss on such sale or disposal is reflected in income from operations. Lease Obligations Our operating leases mostly comprise of certain data centers, offices, and colocations. We also have finance leases for certain network infrastructure. We determine if an arrangement is a lease at inception and most of our leases contain lease and non-lease components. Non-lease components include fixed payments for maintenance, utilities, real estate taxes, and management fees. We combine fixed lease and non-lease components and account for them as a single lease component. Our lease agreements may contain variable costs such as contingent rent escalations, common area maintenance, insurance, real estate taxes, or other costs. These amounts are affected by the Consumer Price Index, payments contingent on energy production for renewable energy purchase arrangements, and maintenance and utilities. Such variable lease costs are expensed as incurred on our consolidated statements of income. For certain colocation and equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and lease liabilities. For leases with a lease term greater than 12 months, ROU assets and lease liabilities are recognized on our consolidated balance sheets at the commencement date based on the present value of the remaining fixed lease payments and includes only payments that are fixed and determinable at the time of commencement. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. When determining the probability of exercising such options, we consider contract-based, asset-based, entity-based, and market-based factors. We do not assume renewals in our determination of the lease term unless the renewals are deemed to be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictive covenants. As most of our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Our incremental borrowing rate is based on our understanding of what our credit rating would be in a similar economic environment. Operating leases are included in operating lease ROU assets, operating lease liabilities, current, and operating lease liabilities, non-current on our consolidated balance sheets. Finance leases are included in property and equipment, net, accrued expenses and other current liabilities, and other liabilities on our consolidated balance sheets. Operating lease costs are recognized on a straight-line basis over the lease terms. Finance lease assets are amortized on a straight-line basis over the shorter of the estimated useful lives of the assets or the lease terms. During the year ended December 31, 2024, 2023 and 2022 , we recorded net impairment losses of $ 383 million, $ 2.43 billion, and $ 2.22 billion, respectively, in aggregate for operating lease ROU assets and leasehold improvements under ASC Topic 360 as a part of our facilities consolidation restructuring efforts. The fair values of the impaired assets were estimated using discounted cash flow models (income approach) based on market participant assumptions with Level 3 inputs. The assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods, and discount rates that reflect the level of risk associated with receiving future cash flows. For additional information regarding our restructuring efforts, see Note 3 — Restructuring. 97 Table of Contents 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 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 record such losses as general and administrative expenses on our consolidated statements of income. If we determine that a loss is probable or reasonably possible and the loss or range of loss can be reasonably estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements to the extent material. Business Combinations We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination. Allocation of purchase consideration to identifiable assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized. During the measurement period, which is not to exceed one year from the acquisition date, we record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. Goodwill and Intangibles Assets We allocate goodwill to reporting units based on the expected benefit from business combinations. We evaluate our reporting units annually, as well as when changes in our operating segments occur. For changes in reporting units, we reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level annually or more frequently if events or changes in circumstances would more likely than not reduce the fair value of a reporting unit below its carrying value. We have two reporting units, Family of Apps (FoA) and Reality Labs (RL), subject to goodwill impairment testing. As of December 31, 2024, no impairment of goodwill has been identified. We evaluate the recoverability of finite-lived intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. The evaluation of these intangible assets are performed at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the assets are expected to generate from the use and eventual disposition. If such review indicates that the carrying amount of a finite-lived intangible asset is not recoverable and the asset's fair value is less than the carrying amount, an impairment charge is recognized. The impairment charges of finite-lived intangible assets were not material during the reporting periods presented. Our finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. Indefinite-lived intangible assets are not amortized. If an indefinite-lived intangible asset is subsequently determined to have a finite useful life, the asset will be tested for impairment and accounted for as a finite-lived intangible asset prospectively over its estimated remaining useful life. We routinely review the remaining estimated useful lives of finite-lived intangible assets. If we change the estimated useful life assumption for any asset, the remaining unamortized balance is amortized over the revised estimated useful life. Intangible assets are included within other assets on our consolidated balance sheet. Foreign Currency Generally, the functional currency of our international subsidiaries is the local currency. We translate the financial statements of these subsidiaries to U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue, costs, and expenses. Translation gains and losses are recorded in accumulated other comprehensive 98 Table of Contents income (loss) as a component of stockholders' equity. As of December 31, 2024 and 2023, we had cumulative translation losses, net of tax, of $ 2.66 billion and $ 1.24 billion, respectively. Foreign currency transaction gains and losses from transactions denominated in a currency other than the functional currency of the subsidiary involved are recorded within interest and other income (expense), net on our consolidated statements of income. Net losses resulting from foreign currency transactions were $ 690 million, $ 366 million, and $ 81 million for the years ended December 31, 2024, 2023, and 2022, respectively. Credit Risk and Concentration Our financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, marketable debt securities, and accounts receivable. Cash equivalents consists mostly of money market funds, that primarily invest in U.S. government and agency securities. Marketable debt securities consist of investments in U.S. government securities, U.S. government agency securities, and investment grade corporate debt securities. As part of our cash management strategy, we concentrate cash deposits with large financial institutions and our marketable debt securities are held in diversified highly rated securities. Our investment portfolio in corporate debt securities is highly liquid and diversified among individual issuers. The amount of credit losses recorded for the year ended December 31, 2024 was not material. Accounts receivable are typically unsecured and are derived from revenue earned from customers across different industries and countries. We generated 36 %, 37 %, and 40 % of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively, from marketers and developers based in the United States, with a majority of the revenue outside of the United States in 2024 coming from customers located in western Europe, China, Brazil, Australia, India and Canada. We perform ongoing credit evaluations of our customers and generally do not require collateral. We maintain an allowance for estimated credit losses, and bad debt expense on these losses was not material during the years ended December 31, 2024, 2023, and 2022. In the event that accounts receivable collection cycles deteriorate, our operating results and financial position could be adversely affected. No customer represented 10% or more of total revenue during the years ended December 31, 2024, 2023, and 2022. Recently Adopted Accounting Pronouncements Beginning in 2024 annual reporting, we adopted Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07) that was issued by the Financial Accounting Standards Board (FASB). This new standard requires an enhanced disclosure of significant segment expenses on an annual and interim basis. Upon adoption, the guidance was applied retrospectively to all prior periods presented in the financial statements, which resulted in the disclosure of employee compensation costs for each reportable segment. For additional information, see Note 16 — Segment and Geographical Information. Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This new standard will be effective for the annual periods beginning the year ended December 31, 2025. The new standard permits early adoption and can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). The new guidance requires disaggregated information about certain income statement expense line items on an annual and interim basis. This guidance will be effective for annual periods beginning the year ended December 31, 2027 and for interim periods thereafter. The new standard permits early adoption and can be applied prospectively or retrospectively. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures. 99 Table of Contents Note 2. Revenue Revenue disaggregated by revenue source and by segment consists of the following (in millions): Year Ended December 31, 2024 2023 2022 Advertising $ 160,633 $ 131,948 $ 113,642 Other revenue 1,722 1,058 808 Family of Apps 162,355 133,006 114,450 Reality Labs 2,146 1,896 2,159 Total revenue $ 164,501 $ 134,902 $ 116,609 Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions): Year Ended December 31, 2024 2023 2022 United States and Canada (1) $ 63,207 $ 52,888 $ 50,150 Europe (3) 38,361 31,210 26,681 Asia-Pacific (2) 45,009 36,154 27,760 Rest of World (3) 17,924 14,650 12,018 Total revenue $ 164,501 $ 134,902 $ 116,609 _________________________ (1) United States revenue was $ 59.73 billion, $ 49.78 billion, and $ 47.20 billion for the years ended December 31, 2024, 2023, and 2022, respectively. (2) China revenue was $ 18.35 billion, $ 13.69 billion, and $ 7.40 billion for the years ended December 31, 2024, 2023, and 2022, respectively. (3) Europe includes Russia and Turkey, and Rest of World includes Africa, Latin America, and the Middle East. Total deferred revenue was $ 772 million and $ 675 million as of December 31, 2024 and 2023, respectively. As of December 31, 2024, we expect $ 721 million of our deferred revenue to be realized in less than a year. 100 Table of Contents Note 3. Restructuring 2022 Restructuring In 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities. These measures included a facilities consolidation strategy to sublease, early terminate, or abandon several office buildings under operating leases, a layoff of approximately 11,000 employees across the Family of Apps (FoA) and Reality Labs (RL) segments, and a pivot towards a next generation data center design, including cancellation of multiple data center projects (the 2022 Restructuring). As of December 31, 2024, we have completed the 2022 restructuring initiatives. A summary of our 2022 Restructuring pre-tax charges for the years ended December 31, 2024, 2023, and 2022, including subsequent adjustments, is as follows (in millions): Year Ended December 31, 2024 (1) 2023 2022 Cost of revenue $ 31 $ ( 47 ) $ 1,495 Research and development 254 1,572 1,719 Marketing and sales 54 395 638 General and administrative 50 335 759 Total $ 389 $ 2,255 $ 4,611 ________________________ (1) The 2024 charges are all related to facilities consolidation. Plan to Date Facilities Consolidation Severance and Other Personnel Costs Data Center Assets Total Cost of revenue $ 362 $ — $ 1,116 $ 1,478 Research and development 3,146 399 — 3,545 Marketing and sales 854 233 — 1,087 General and administrative 828 316 — 1,144 Total $ 5,190 $ 948 $ 1,116 $ 7,254 Total restructuring charges recorded under our FoA segment were $ 305 million, $ 1.74 billion, and $ 4.10 billion, and RL segment were $ 84 million, $ 516 million and $ 515 million for the years ended December 31, 2024, 2023, and 2022, respectively. 2023 Restructuring The 2023 Restructuring charges for severance and related personnel costs were $ 1.20 billion for the year ended December 31, 2023. We completed the 2023 restructuring as of December 31, 2023. 101 Table of Contents Note 4. Earnings per Share The holders of our Class A and Class B common stock (together, "common stock") have identical liquidation and dividend rights but different voting rights. Accordingly, we present the earnings per share (EPS) for Class A and Class B common stock together. Basic EPS is computed by dividing net income by the weighted-average number of shares of our common stock outstanding. Diluted EPS is computed by dividing net income by the weighted-average number of fully diluted common stock outstanding and assumes the conversion of our Class B common stock to Class A common stock. Class A common stock equivalent of restricted stock units (RSUs) with anti-dilutive effect were not material for the year ended December 31, 2024. For the years ended December 31, 2023, and 2022, approximately 16 million and 95 million shares of RSUs were excluded from the diluted EPS calculation, respectively, as including them would have an anti-dilutive effect. The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts): Year Ended December 31, 2024 2023 (2) 2022 (2) Basic EPS: Numerator Distributed earnings $ 5,072 $ — $ — Undistributed earnings 57,288 39,098 23,200 Net income $ 62,360 $ 39,098 $ 23,200 Denominator Shares used in computation of basic EPS (1) 2,534 2,574 2,687 Basic EPS $ 24.61 $ 15.19 $ 8.63 Diluted EPS: Numerator Net income for diluted EPS $ 62,360 $ 39,098 $ 23,200 Denominator Shares used in computation of basic EPS (1) 2,534 2,574 2,687 Effect of dilutive RSUs 80 55 15 Shares used in computation of diluted EPS 2,614 2,629 2,702 Diluted EPS $ 23.86 $ 14.87 $ 8.59 ____________________________________ (1) Includes 2,189 million, 2,220 million, and 2,285 million shares of Class A common stock and 345 million, 354 million, and 402 million shares of Class B common stock, for the years ended December 31, 2024, 2023, and 2022, respectively. (2) The prior period EPS for Class A and Class B common stock has been presented together to conform with current period presentation, which had no impact on our previously reported basic or diluted EPS. We declared and paid four quarterly cash dividends, including dividend equivalents, totaling $ 2.00 for each share of common stock during the year ended December 31, 2024. Total dividends and dividend equivalents paid for Class A and Class B common stock were $ 4.38 billion and $ 691 million, respectively, during the year ended December 31, 2024. EPS for Class B common stock is not presented separately as under the two-class method Class A and Class B EPS is not meaningfully different. 102 Table of Contents Note 5. Financial Instruments Fair Value Measurements Our cash equivalents, marketable securities, and restricted cash equivalents are classified within Level 1 or Level 2 of the fair value hierarchy because their fair values are derived from quoted market prices or alternative pricing sources and models utilizing market observable inputs. Certain other assets are classified within Level 3 because factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. The following tables summarize our assets measured at fair value on a recurring basis and the classification by level of input within the fair value hierarchy (in millions): Fair Value Measurement at Reporting Date Using Description December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents: Money market funds $ 36,165 $ 36,165 $ — $ — U.S. government and agency securities 23 23 — — Time deposits 369 — 369 — Corporate debt securities 114 — 114 — Total cash equivalents 36,671 36,188 483 — Marketable securities: U.S. government securities 14,889 14,889 — — U.S. government agency securities 3,053 3,053 — — Corporate debt securities 14,758 — 14,758 — Marketable equity securities 1,226 1,226 — — Total marketable securities 33,926 19,168 14,758 — Restricted cash equivalents 1,193 1,193 — — Other assets 101 — — 101 Total $ 71,891 $ 56,549 $ 15,241 $ 101 103 Table of Contents Fair Value Measurement at Reporting Date Using Description December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Cash equivalents: Money market funds $ 32,910 $ 32,910 $ — $ — U.S. government and agency securities 2,206 2,206 — — Time deposits 261 — 261 — Corporate debt securities 220 — 220 — Total cash equivalents 35,597 35,116 481 — Marketable securities: U.S. government securities 8,439 8,439 — — U.S. government agency securities 3,498 3,498 — — Corporate debt securities 11,604 — 11,604 — Total marketable securities 23,541 11,937 11,604 — Restricted cash equivalents 857 857 — — Other assets 101 — — 101 Total $ 60,096 $ 47,910 $ 12,085 $ 101 Unrealized Losses The following tables summarize our available-for-sale marketable debt securities and cash equivalents with unrealized losses as of December 31, 2024 and 2023, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in millions): December 31, 2024 Less than 12 months 12 months or greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. government securities $ 6,860 $ ( 71 ) $ 4,330 $ ( 146 ) $ 11,190 $ ( 217 ) U.S. government agency securities 435 ( 2 ) 2,083 ( 44 ) 2,518 ( 46 ) Corporate debt securities 2,989 ( 26 ) 6,373 ( 192 ) 9,362 ( 218 ) Total $ 10,284 $ ( 99 ) $ 12,786 $ ( 382 ) $ 23,070 $ ( 481 ) December 31, 2023 Less than 12 months 12 months or greater Total Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses U.S. government securities $ 336 $ ( 1 ) $ 7,041 $ ( 275 ) $ 7,377 $ ( 276 ) U.S. government agency securities 71 — 3,225 ( 164 ) 3,296 ( 164 ) Corporate debt securities 647 ( 3 ) 10,125 ( 491 ) 10,772 ( 494 ) Total $ 1,054 $ ( 4 ) $ 20,391 $ ( 930 ) $ 21,445 $ ( 934 ) The gross unrealized gains on our marketable debt securities were not material as of December 31, 2024 and 2023. 104 Table of Contents Contractual Maturities The following table classifies our marketable debt securities by contractual maturities (in millions): December 31, 2024 Due within one year $ 7,847 Due after one year to five years 24,853 Total $ 32,700 Instruments Measured at Fair Value on Non-recurring Basis Our non-marketable equity securities accounted for using the measurement alternative are measured at fair value on a non-recurring basis and are classified within Level 3 of the fair value hierarchy because we use significant unobservable inputs to estimate their fair value. For the years ended December 31, 2024 and 2023, changes in the fair value recorded for these non-marketable equity securities were not material. For additional information, see Note 6 — Non-marketable Equity Securities. Note 6. Non-marketable Equity Securities Our non-marketable equity securities are investments in privately-held companies without readily determinable fair values. The following table summarizes our non-marketable equity securities that were measured using measurement alternative and equity method (in millions): December 31, 2024 2023 Non-marketable equity securities under measurement alternative: Initial cost $ 6,342 $ 6,389 Cumulative upward adjustments 300 293 Cumulative impairment/downward adjustments ( 624 ) ( 599 ) Carrying value 6,018 6,083 Non-marketable equity securities under equity method 52 58 Total non-marketable equity securities $ 6,070 $ 6,141 During the years ended December 31, 2024, 2023 and 2022, impairment and downward adjustments recorded for our non-marketable equity securities that were measured using measurement alternative was $ 42 million, $ 101 million, and $ 447 million, respectively. 105 Table of Contents Note 7. Property and Equipment Property and equipment, net consists of the following (in millions): December 31, 2024 2023 Land $ 2,561 $ 2,080 Servers and network assets 68,397 46,838 Buildings 47,076 37,961 Leasehold improvements 7,293 6,972 Equipment and other 7,150 7,416 Finance lease right-of-use assets 5,384 4,185 Construction in progress 26,802 24,269 Property and equipment, gross 164,663 129,721 Less: Accumulated depreciation ( 43,317 ) ( 33,134 ) Property and equipment, net $ 121,346 $ 96,587 Construction in progress includes costs mostly related to construction of data centers, network infrastructure and servers. Depreciation expense on property and equipment was $ 15.29 billion, $ 11.02 billion, and $ 8.50 billion for the years ended December 31, 2024, 2023, and 2022, respectively. Within property and equipment, our servers and network assets depreciation expenses were $ 11.34 billion, $ 7.32 billion, and $ 5.29 billion for the years ended December 31, 2024, 2023, and 2022, respectively. During the year ended December 31, 2024 and 2023, we capitalized $ 384 million and $ 283 million of interest expense related to certain eligible construction in progress assets, respectively. During the year ended December 31, 2024, 2023, and 2022, total impairment losses, including restructuring charges, for property and equipment were $ 288 million, $ 738 million and $ 2.01 billion, respectively. For additional information, see Note 3 — Restructuring. Note 8. Leases We have entered into various non-cancelable operating lease agreements mostly for our data centers, offices and colocations. We have also entered into various non-cancelable finance lease agreements for certain network infrastructure. Our leases have original lease periods expiring between 2025 and 2093. Many leases include one or more options to renew. The components of lease costs are as follows (in millions): Year Ended December 31, 2024 2023 2022 Finance lease cost: Amortization of right-of-use assets $ 387 $ 349 $ 380 Interest 23 20 16 Operating lease cost 2,359 2,091 1,857 Variable lease cost and other 844 580 363 Total $ 3,613 $ 3,040 $ 2,616 We also recorded $ 385 million, $ 1.76 billion, and $ 1.71 billion net impairment losses for operating lease right-of-use assets as a part of our facilities consolidation restructuring efforts for the years ended December 31, 2024, 2023, and 2022, respectively. For additional information, see Note 3 — Restructuring. 106 Table of Contents Supplemental balance sheet information related to lease liabilities is as follows: December 31, 2024 2023 Weighted-average remaining lease term: Finance leases 13.7 years 14.0 years Operating leases 11.5 years 11.6 years Weighted-average discount rate: Finance leases 3.6 % 3.4 % Operating leases 3.9 % 3.7 % The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2024 (in millions): Operating Leases Finance Leases 2025 $ 2,657 $ 96 2026 2,625 68 2027 2,575 68 2028 2,459 68 2029 2,391 64 Thereafter 13,022 528 Total undiscounted cash flows 25,729 892 Less: Imputed interest ( 5,495 ) ( 183 ) Present value of lease liabilities (1) $ 20,234 $ 709 Lease liabilities, current $ 1,942 $ 76 Lease liabilities, non-current 18,292 633 Present value of lease liabilities (1) $ 20,234 $ 709 _________________ (1) Lease liabilities include operating leases under restructuring as a part of our facilities consolidation efforts. For additional information, see Note 3 — Restructuring . The table above does not include lease payments that were not fixed at commencement or lease modification. As of December 31, 2024, we have additional operating and finance leases, that have not yet commenced, with total lease obligations of approximately $ 34.12 billion, mostly for data centers, network infrastructure, and colocations. These operating and finance leases will commence between 2025 and 2030 with lease terms of greater than one year to 30 years. Supplemental cash flow information related to leases is as follows (in millions): Year Ended December 31, 2024 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for operating leases (1) $ 2,830 $ 2,233 $ 1,654 Operating cash flows for finance leases $ 23 $ 20 $ 16 Financing cash flows for finance leases $ 1,969 $ 1,058 $ 850 Lease liabilities arising from obtaining right-of-use assets: Operating leases $ 3,784 $ 4,370 $ 4,366 Finance leases $ 181 $ 588 $ 223 _________________ (1) Cash flows for operating leases during the year ended December 31, 2024 and 2023 include cash paid for terminations of certain operating leases . 107 Table of Contents Note 9. Goodwill and Intangible Assets Goodwill generated from our business acquisitions was primarily attributable to expected synergies and potential monetization opportunities. Changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2024 and 2023 are as follows (in millions): Family of Apps Reality Labs Total December 31, 2022 $ 19,250 $ 1,056 $ 20,306 Acquisitions — 357 357 Adjustments ( 4 ) ( 5 ) ( 9 ) December 31, 2023 19,246 1,408 20,654 Acquisitions — — — December 31, 2024 $ 19,246 $ 1,408 $ 20,654 The following table sets forth the major categories of the intangible assets and their weighted-average remaining useful lives (in millions): December 31, 2024 December 31, 2023 Weighted-Average Remaining Useful Lives (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Acquired technology 4.6 $ 442 $ ( 247 ) $ 195 $ 478 $ ( 182 ) $ 296 Acquired patents 3.7 252 ( 165 ) 87 287 ( 233 ) 54 Acquired software 2.7 250 ( 58 ) 192 — — — Other 2.0 24 ( 8 ) 16 28 ( 15 ) 13 Total finite-lived assets 968 ( 478 ) 490 793 ( 430 ) 363 Total indefinite-lived assets N/A 425 — 425 425 — 425 Total $ 1,393 $ ( 478 ) $ 915 $ 1,218 $ ( 430 ) $ 788 Amortization expense of intangible assets for the years ended December 31, 2024, 2023, and 2022 was $ 211 million, $ 161 million, and $ 185 million, respectively. As of December 31, 2024, expected amortization expense for the unamortized finite-lived intangible assets for the next five years and thereafter is as follows (in millions): 2025 $ 205 2026 125 2027 64 2028 38 2029 23 Thereafter 35 Total $ 490 108 Table of Contents Note 10. Long-term Debt As of December 31, 2024 and 2023, we had $ 29.0 billion and $ 18.50 billion of fixed-rate senior unsecured notes (the Notes), respectively, including $ 10.50 billion of Notes issued in August 2024. The following table summarizes the Notes and the carrying amount of our long-term debt (in millions, except percentages): Maturity Stated Interest Rate Effective Interest Rate December 31, 2024 December 31, 2023 August 2022 Notes: 2027 - 2062 3.50 % - 4.65 % 3.63 % - 4.71 % $ 10,000 $ 10,000 May 2023 Notes: 2028 - 2063 4.60 % - 5.75 % 4.68 % - 5.79 % 8,500 8,500 August 2024 Notes: 2029 - 2064 4.30 % - 5.55 % 4.42 % - 5.60 % 10,500 — Total face amount of long-term debt 29,000 18,500 Unamortized discount and issuance costs, net ( 174 ) ( 115 ) Long-term debt $ 28,826 $ 18,385 Each series of the Notes in the table above rank equally with each other. Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time, in whole or in part, at specified redemption prices. We are not subject to any financial covenants under the Notes. Interest expense, net of capitalized interest, recognized on the Notes was $ 683 million, $ 420 million, and $ 160 million for the years ended December 31, 2024, 2023, and 2022, respectively. The total estimated fair value of our outstanding Notes was $ 27.83 billion and $ 18.48 billion as of December 31, 2024 and 2023, respectively. The fair value is determined based on the quoted prices at the end of the reporting periods and categorized as Level 2 in the fair value hierarchy. As of December 31, 2024, future principal payments for the Notes, by year, are as follows (in millions): 2025 through 2026 $ — 2027 2,750 2028 1,500 2029 1,000 Thereafter 23,750 Total $ 29,000 Note 11. Accrued Expenses and Other Current Liabilities The components of accrued expenses and other current liabilities are as follows (in millions): December 31, 2024 2023 Legal-related accruals (1) $ 5,523 $ 6,592 Accrued compensation and benefits 6,350 6,659 Accrued property and equipment 2,582 2,213 Accrued taxes 3,438 3,655 Other current liabilities 6,074 6,369 Total $ 23,967 $ 25,488 _________________________ (1) Includes accruals for estimated fines, settlements, or other losses in connection with legal and related matters, as well as other legal fees. For further information, see Legal and Related Matters in Note 12 — Commitments and Contingencies. 109 Table of Contents Note 12. Commitments and Contingencies Contractual Commitments We have $ 32.82 billion of non-cancelable contractual commitments as of December 31, 2024, which are primarily related to our investments in servers and network infrastructure, and content costs. The following is a schedule, by years, of non-cancelable contractual commitments as of December 31, 2024 (in millions): 2025 $ 26,335 2026 2,548 2027 812 2028 227 2029 153 Thereafter 2,749 Total $ 32,824 Additionally, as part of the normal course of business, we have entered into multi-year agreements to purchase renewable energy that do not specify a fixed or minimum volume commitment. We enter into these agreements in order to secure price. Using the expected volume consumption, the total estimated spend related to our renewable energy agreements as of December 31, 2024 was approximately $ 24.97 billion, a majority of which is due beyond five years . The ultimate spend under these agreements may vary and will be based on actual volume purchased. Legal and Related Matters With respect to the cases, actions, and inquiries described below, we evaluate the associated developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in some of these matters. Unless otherwise noted, with respect to the matters described below that do not include an estimate of the amount of loss or range of possible loss, such losses or range of possible losses either cannot be estimated or are not individually material, but we believe there is a reasonable possibility that they may be material in the aggregate. We are also party to various other legal proceedings, claims, and regulatory, tax or government inquiries and investigations that arise in the ordinary course of business. Additionally, we are required to comply with various legal and regulatory obligations around the world. The requirements for complying with these obligations may be uncertain and subject to interpretation and enforcement by regulatory and other authorities, and any failure to comply with such obligations could eventually lead to asserted legal or regulatory action. With respect to these other legal proceedings, claims, regulatory, tax, or government inquiries and investigations, and other matters, asserted and unasserted, we evaluate the associated developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in some of these other matters. We believe that the amount of losses or any estimable range of possible losses with respect to these other matters will not, either individually or in the aggregate, have a material adverse effect on our business and consolidated financial statements. The ultimate outcome of the legal and related matters described in this section, such as whether the likelihood of loss is remote, reasonably possible, or probable, or if and when the reasonably possible range of loss is estimable, is inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of management's estimates of loss, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected. For information regarding income tax contingencies, see Note 15 — Income Taxes. 110 Table of Contents Privacy and Related Matters Beginning on March 20, 2018, multiple putative class actions were filed in state and federal courts in the United States and elsewhere against us and certain of our directors and officers alleging various causes of action in connection with our platform and user data practices as well as the misuse of certain data by a developer that shared such data with third parties in violation of our terms and policies, and seeking unspecified damages and injunctive relief. With respect to the putative class actions alleging fraud and violations of consumer protection, privacy, and other laws in connection with the same matters, several of the cases brought on behalf of consumers in the United States were consolidated in the U.S. District Court for the Northern District of California ( In re Facebook, Inc., Consumer Privacy User Profile Litigation ). On September 9, 2019, the court granted, in part, and denied, in part, our motion to dismiss the consolidated putative consumer class action. On December 22, 2022, the parties entered into a settlement agreement to resolve the lawsuit, which provides for a payment of $ 725 million by us. The settlement was approved by the court on October 10, 2023, and the payment was made in November 2023. Two objectors appealed final approval ( one of which was voluntarily dismissed as of June 24, 2024). The objection is fully briefed and will be heard on February 7, 2025. In addition, our platform and user data practices, as well as the events surrounding the misuse of certain data by a developer, became the subject of U.S. Federal Trade Commission (FTC), state attorneys general, and other government inquiries in the United States, Europe, and other jurisdictions. We entered into a settlement and modified consent order to resolve the FTC inquiry, which took effect in April 2020. Among other matters, our settlement with the FTC required us to pay a penalty of $ 5.0 billion which was paid in April 2020 upon the effectiveness of the modified consent order. The state attorneys general inquiries and litigation and certain government inquiries in other jurisdictions remain ongoing. On June 1, 2023, the court presiding over the lawsuit filed by the District of Columbia granted our motion for summary judgment, resolving the case in our favor. On June 29, 2023, the District of Columbia filed a notice of appeal. The appeal is fully briefed and will be heard on January 30, 2025. Trial in the New Mexico Attorney General's case is scheduled to begin on December 1, 2025. On July 16, 2021, a stockholder derivative action was filed in Delaware Court of Chancery against certain of our directors and officers asserting breach of fiduciary duty and related claims relating to our historical platform and user data practices, as well as our settlement with the FTC. On July 20, 2021, other stockholders filed an amended derivative complaint in a related Delaware Chancery Court action, asserting breach of fiduciary duty and related claims against certain of our current and former directors and officers in connection with our historical platform and user data practices. On November 4, 2021, the lead plaintiffs filed a second amended and consolidated complaint in the stockholder derivative action. The pending consolidated matter is In re Facebook Inc. Derivative Litigation . On January 19, 2022, we filed a motion to dismiss, which was denied in part on May 10, 2023. The insider trading claim was dismissed as to all defendants except Mark Zuckerberg, and the motion was denied as to the breach of fiduciary duty claims. Trial is scheduled to begin on April 2, 2025. On May 3, 2023, the FTC filed a public administrative proceeding ( In the Matter of Facebook, Inc. ) seeking substantial changes to the modified consent order, which took effect in April 2020 after its entry by the U.S. District Court for the District of Columbia. The changes sought by the FTC are set forth in a proposed order and include, among others, a prohibition on our use of minors' data for any commercial purposes, changes to the composition of our board of directors, and significant limitations on our ability to modify and launch new products. On May 31, 2023, we filed a motion before the U.S. District Court for the District of Columbia ( USA v. Facebook, Inc. ) seeking to enjoin the FTC from further pursuing its agency process to modify the modified consent order. On November 27, 2023, the district court denied our motion, and we then appealed to the U.S. Court of Appeals for the District of Columbia Circuit ( U.S. v. Facebook, Inc. ) and sought to stay the FTC proceeding pending resolution of the appeal. Our motion for a stay pending appeal was denied in March 2024. The underlying appeal was then briefed and oral argument was held on November 5, 2024. The U.S. Court of Appeals for the District of Columbia Circuit has yet to rule. On November 29, 2023, we separately filed a complaint, also in the U.S. District Court for the District of Columbia ( Meta Platforms, Inc. v. FTC ), asserting constitutional challenges to the structure of the FTC, and seeking to preliminarily enjoin the FTC proceeding during the pendency of the litigation. On December 13, 2023, the FTC filed an opposition to our motion for preliminary injunction and a motion to dismiss the complaint. On March 14, 2024, the district court denied our motion to preliminarily enjoin the FTC proceeding during the pendency of the litigation, and also denied the FTC's motion to dismiss our complaint without prejudice, pending the U.S. Supreme Court's decision in SEC v. Jarkesy ( Jarkesy ). Our motion for a stay of the FTC proceeding pending appeal was denied in March 2024. Both the district court action and the appeal were stayed pending the Supreme Court's decision in Jarkesy . Following the Supreme Court's ruling in Jarkesy on June 27, 2024, the government filed a renewed motion to dismiss, which was fully briefed as of October 18, 2024. The district court has yet to rule. The parties are required to report back to the circuit court within 30 days of the district court's disposition of the FTC's motion to dismiss. 111 Table of Contents On April 1, 2024, we filed our response to the FTC's Order to Show Cause, arguing, among other things, that the Order to Show Cause proceeding was legally improper. Per FTC orders, we completed briefing on threshold legal issues on July 18, 2024, and the FTC held oral argument before the Commissioners on those issues on November 12, 2024. On January 10, 2025, the Commission issued a decision on certain threshold legal issues, including that the Commission has statutory authority to modify consent orders. The Commission stated that its decision is subject to Meta’s jurisdictional challenges currently pending before the U.S. Court of Appeals for the District of Columbia Circuit in U.S. v. Facebook, Inc. , and that the nature and scope of any further administrative proceedings would be addressed at a later date. Through the administrative process, the FTC could amend the order to impose the additional requirements set forth in the proposed order. We should have the opportunity to appeal an FTC decision modifying the order and could request the appellate court to stay the enforcement of the modifications to the order while the appeal is pending. It is unclear whether the appeal or the request for a stay would be successful. We also notify the Irish Data Protection Commission (IDPC), our lead European Union privacy regulator under the General Data Protection Regulation (GDPR), of certain other personal data breaches and privacy issues, issue similar notifications to European regulators under other laws (such as UK GDPR and Member State implementations of the ePrivacy Directive), and are subject to inquiries and investigations by the IDPC and other European regulators regarding various aspects of our regulatory compliance. For example, the IDPC is continuing to assess the compliance of our "subscription for no ads" consent model with requirements under the GDPR. In addition, on May 12, 2023, the IDPC issued a Final Decision concluding that Meta Platforms Ireland's reliance on Standard Contractual Clauses in respect of certain transfers of European Economic Area (EEA) Facebook user data was not in compliance with the GDPR. The IDPC issued an administrative fine of EUR € 1.2 billion as well as corrective orders, which is described further in "Legal Proceedings" contained in Part I, Item 3 of this Annual Report on Form 10-K. The interpretation of the GDPR is still evolving, including through decisions of the Court of Justice of the European Union, and draft decisions in investigations by the IDPC are subject to review by other European privacy regulators as part of the GDPR's cooperation and consistency mechanisms, which may lead to significant changes in the final outcome of such investigations. As a result, the interpretation and enforcement of the GDPR, as well as the imposition and amount of penalties for non-compliance, are subject to significant uncertainty. Although we are vigorously defending our regulatory compliance, we have accrued significant amounts for loss contingencies related to these inquiries and investigations in Europe, and we believe there is a reasonable possibility that additional accruals for losses related to these matters could be material individually or in the aggregate. Beginning on June 7, 2021, multiple putative class actions were filed against us alleging that we improperly received individuals' information from third-party websites or apps via our business tools in violation of our terms and various state and federal laws and seeking unspecified damages and injunctive relief (for example, In re Meta Pixel Healthcare Litigation; In re Meta Pixel Tax Filing Cases; Frasco v. Flo Health, Inc.; Doe v. Hey Favor, Inc. et al.; Doe v. GoodRx Holdings, Inc. et al. in the U.S. District Court for the Northern District of California; and Rickwalder, et al. v. Meta Platforms, Inc. in the Santa Clara County Superior Court). These cases are in different stages, but several of our motions to dismiss have been denied in whole or in part, while certain others have been granted in whole or in part. We are currently in discovery and litigating class certification in the cases that are most advanced. Competition We are subject to various litigation and government inquiries and investigations, formal or informal, by competition authorities in the United States, Europe, and other jurisdictions. Such investigations, inquiries, and lawsuits concern, among other things, our business practices in the areas of social networking or social media services, digital advertising, and/or mobile or online applications, as well as our acquisitions. For example, in 2019 we became the subject of antitrust investigations by the FTC and U.S. Department of Justice. On December 9, 2020, the FTC filed a complaint ( FTC v. Meta Platforms, Inc. ) against us in the U.S. District Court for the District of Columbia alleging that we engaged in anticompetitive conduct and unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act and Section 2 of the Sherman Act, including by acquiring Instagram in 2012 and WhatsApp in 2014 and by maintaining conditions on access to our platform. The FTC sought a permanent injunction against our company's alleged violations of the antitrust laws, and other equitable relief, including divestiture or reconstruction of Instagram and WhatsApp. On June 28, 2021, the court granted our motion to dismiss the complaint filed by the FTC with leave to amend. On August 19, 2021, the FTC filed an amended complaint, and on October 4, 2021, we filed a motion to dismiss this amended complaint. On January 11, 2022, the court denied our motion to dismiss the FTC's amended complaint. On April 5, 2024, we filed our motion for summary judgment and the FTC filed its opposition and its own motion for partial summary judgment on May 24, 2024. On November 13, 2024, the court granted in part and denied in part both our and the FTC's motions for summary judgment. Trial is set to begin on April 14, 2025. Multiple putative class actions have also been filed in state and federal courts in the United States 112 Table of Contents and in the United Kingdom against us alleging violations of antitrust laws and other causes of action in connection with these acquisitions and/or other alleged anticompetitive conduct, and seeking damages and injunctive relief. Several of the cases brought on behalf of certain advertisers and users in the United States were consolidated in the U.S. District Court for the Northern District of California ( Klein et al., v. Meta Platforms, Inc. ). On January 14, 2022, the court granted, in part, and denied, in part, our motion to dismiss the consolidated actions. On March 1, 2022, a first amended consolidated complaint was filed in the putative class action brought on behalf of certain advertisers. On December 6, 2022, the court denied our motion to dismiss the first amended consolidated complaint filed in the putative class action brought on behalf of certain advertisers. On December 30, 2024, we filed our motion for summary judgment in the putative class action brought on behalf of certain advertisers. In December 2022, the European Commission issued a Statement of Objections alleging that we tie Facebook Marketplace to Facebook and use data in a manner that infringes European Union competition rules. On November 18, 2024, the European Commission issued a decision that Meta infringed Article 102 on the Treaty of the Functioning of the European Union in relation to certain alleged business practices relating to Facebook Marketplace and imposed a fine of approximately EUR € 798 million. We appealed the European Commission's decision on January 28, 2025. In March 2024, the European Commission opened an investigation into the compliance of our "subscription for no ads" consent model with requirements under Article 5(2) of the Digital Markets Act. The European Commission issued preliminary findings on July 1, 2024 reflecting its preliminary view that our model does not comply with such requirements, and indicated that it will conclude its investigation by March 2025. Securities and Other Actions Beginning on March 20, 2018, multiple putative class actions and derivative actions were filed in state and federal courts in the United States and elsewhere against us and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in connection with our platform and user data practices as well as the misuse of certain data by a developer that shared such data with third parties in violation of our terms and policies, and seeking unspecified damages and injunctive relief. Beginning on July 27, 2018, two putative class actions were filed in federal court in the United States against us and certain of our directors and officers alleging violations of securities laws in connection with the disclosure of our earnings results for the second quarter of 2018 and seeking unspecified damages. These two actions subsequently were transferred and consolidated in the U.S. District Court for the Northern District of California ( In Re Facebook, Inc. Securities Litigation ) with the putative securities class action described above relating to our platform and user data practices. In a series of orders in 2019 and 2020, the district court granted our motions to dismiss the plaintiffs' claims. On January 17, 2022, the plaintiffs filed a notice of appeal of the order dismissing their case, and on October 18, 2023, the U.S. Court of Appeals for the Ninth Circuit issued its decision affirming in part and reversing in part the district court's order dismissing the plaintiffs' case. We filed a petition for writ of certiorari on March 4, 2024 with the U.S. Supreme Court, seeking review of the Ninth Circuit's order. The Supreme Court granted in part our petition for writ of certiorari on June 10, 2024, and following oral argument issued an order on November 22, 2024 dismissing the grant of certiorari as improvidently granted. We are also subject to other government inquiries and investigations relating to our business activities and disclosure practices. For example, beginning in September 2021, we became subject to government investigations and requests relating to a former employee's allegations and release of internal company documents concerning, among other things, our algorithms, advertising and user metrics, and content enforcement practices, as well as misinformation and other undesirable activity on our platform, and user well-being. We have since received additional requests relating to these and other topics. Beginning on October 27, 2021, multiple putative class actions and derivative actions were filed in the U.S. District Court for the Northern District of California against us and certain of our directors and officers alleging violations of securities laws, breach of fiduciary duties, and other causes of action in connection with the same matters, and seeking unspecified damages ( Ohio Pub. Empl. Ret. Sys. v. Meta Platforms, Inc .). On September 30, 2024, the court dismissed certain claims with leave to amend, but determined certain claims regarding content enforcement practices and user well-being could proceed against us and certain of our current and former directors and officers. 113 Table of Contents On March 8, 2022, a putative class action was filed in the U.S. District Court for the Northern District of California against us and certain of our directors and officers alleging violations of securities laws in connection with the disclosure of our earnings results for the fourth quarter of 2021 and seeking unspecified damages ( Plumbers & Steamfitters Local 60 Pension Trust v. Meta Platforms, Inc. ). On July 18, 2023, the court dismissed the claims against Meta and its officers with leave to amend. On September 18, 2023, the plaintiffs filed an amended complaint and on September 17, 2024, the court dismissed the claims with prejudice. On October 14, 2024, plaintiffs filed their notice of appeal. Youth-Related Actions Beginning in January 2022, we became subject to litigation and other proceedings that were filed in various federal and state courts alleging that Facebook and Instagram cause "social media addiction" in users, with most proceedings focused on those under 18 years old, resulting in various mental health and other harms. Putative class actions have been filed in the United States, Brazil, and Canada on behalf of users in those jurisdictions, and numerous school districts, municipalities, and tribal nations have filed public nuisance claims in the United States, Brazil, and/or Canada based on similar allegations. On October 6, 2022, the U.S. federal cases were centralized in the U.S. District Court for the Northern District of California ( In re Social Media Adolescent Addiction Product Liability Personal Injury Litigation) . Beginning in March 2023, U.S. states and territories began filing lawsuits on these topics in various federal and state courts. These additional lawsuits include allegations regarding violations of the Children's Online Privacy Protection Act (COPPA), child sexual abuse material and other child safety concerns, as well as violations of state consumer protection laws, unfair business practices, public nuisance, and products liability, with proceedings focused on our alleged business practices (including the use of end-to-end encryption) and harms to users under 18 years old. These lawsuits seek damages and injunctive relief, and include cases filed by various state attorneys general in In re Social Media Adolescent Addiction Product Liability Personal Injury Litigation in the U.S. District Court for the Northern District of California, as well as various state courts around the country. Beginning in November 2024, counsel for thousands of individual claimants began sending mass arbitration demands relating to “social media addiction” and related harms allegedly caused by Instagram. We are also subject to government investigations and requests from multiple regulators in various jurisdictions globally concerning the use of our products and services, and the alleged mental and physical health and safety impacts on users, particularly younger users. On May 16, 2024, the European Commission opened formal proceedings assessing our compliance with certain requirements under Articles 28, 34, and 35 of the Digital Services Act (DSA), including the way in which we identified, assessed, and mitigated against certain systemic risks to minors and other vulnerable users that may stem from the design and functioning of Instagram and Facebook. Other Actions Beginning on August 15, 2018, multiple putative class actions were filed against us alleging that we inflated our estimates of the potential audience size for advertisements, resulting in artificially increased demand and higher prices. The cases were consolidated in the U.S. District Court for the Northern District of California ( DZ Reserve v. Facebook, Inc. ) and seek unspecified damages and injunctive relief. In a series of rulings in 2019, 2021, and 2022, the court dismissed certain of the plaintiffs' claims, but permitted their fraud and unfair competition claims to proceed. On March 29, 2022, the court granted the plaintiffs' motion for class certification. On March 21, 2024, the U.S. Court of Appeals for the Ninth Circuit affirmed in part and reversed in part the order granting class certification. On May 3, 2024, we filed a petition for panel rehearing and rehearing en banc, which was denied by the Ninth Circuit. We filed a petition for a writ of certiorari with the U.S. Supreme Court on October 2, 2024, which was denied. Beginning on July 7, 2023, multiple putative class actions were filed against us in the U.S. District Court for the Northern District of California ( Kadrey, et al. v. Meta Platforms, Inc., Chabon, et al. v. Meta Platforms, Inc. and Farnsworth v. Meta Platforms, Inc. ) and U.S. District Court for the Southern District of New York ( Huckabee, et al. v. Meta Platforms, Inc. et al. , which was subsequently transferred to the U.S. District Court for the Northern District of California) alleging that we used various copyrighted books and materials to train our artificial intelligence models, and seeking unspecified damages and injunctive relief. These cases have all been consolidated into Kadrey, et al. v. Meta Platforms, Inc . 114 Table of Contents On April 30, 2024, the European Commission opened formal proceedings against us to assess Facebook and Instagram's compliance with certain requirements under Articles 14, 16, 17, 20, 24, 25, 34, 35, and 40 of the DSA, regarding a range of topics including elections, content reporting and appeals, third-party access to data, political content recommendations, potential deceptive advertising and disinformation, including the way in which we identified, assessed, and mitigated against certain systemic risks on Instagram and Facebook. We are also responding to regulatory inquiries and litigation related to allegedly deceptive advertising, including but not limited to financial scams, in other parts of the world. On September 18, 2024, staff of the Consumer Financial Protection Bureau (CFPB or Bureau) initiated a Notice and Opportunity to Respond and Advise (NORA) process related to its investigation of advertising for financial products and services on our platform, informing us that staff may recommend to the Director of the CFPB that the Bureau take legal action alleging violations of the Consumer Financial Protection Act, including based on our alleged receipt and use for advertising of financial information from third parties through certain advertising tools as well as our related user disclosures and controls, and provided us with an opportunity to respond. We disagree with the claims staff is considering and believe an enforcement action is unwarranted, and have responded through the NORA process. The result of the NORA process is uncertain at this time, but if the Director authorizes an action against us, the CFPB could file a lawsuit in the near-term and seek financial penalties and equitable relief. In addition, we are subject to litigation and other proceedings involving law enforcement and other regulatory agencies, including in particular in Brazil, Russia, and other countries in Europe, in order to ascertain the precise scope of our legal obligations to comply with the requests of those agencies, including our obligation to disclose user information in particular circumstances. A number of such instances have resulted in the assessment of fines and penalties against us. We believe we have multiple legal grounds to satisfy these requests or prevail against associated fines and penalties, and we intend to vigorously defend such fines and penalties. Indemnifications In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties with respect to certain matters. We have agreed to hold certain parties harmless against losses arising from a breach of representations or covenants, or out of intellectual property infringement or other claims made by third parties. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers, directors, and certain employees, and our certificate of incorporation and bylaws contain similar indemnification obligations. It is not possible to determine the maximum potential amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these agreements have not had a material impact on our consolidated financial statements. In our opinion, as of December 31, 2024, there was not a reasonable possibility we had incurred a material loss with respect to indemnification of such parties. Liabilities recorded for costs related to indemnification through December 31, 2024 were not material. 115 Table of Contents Note 13. Stockholders' Equity Common Stock Our certificate of incorporation authorizes the issuance of Class A common stock and Class B common stock. As of December 31, 2024, we are authorized to issue 5,000 million shares of Class A common stock and 4,141 million shares of Class B common stock, each with a par value of $ 0.000006 per share. Holders of our Class A common stock and Class B common stock are entitled to dividends when, as, and if declared by our board of directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. The holder of each share of Class A common stock is entitled to one vote, while the holder of each share of Class B common stock is entitled to ten votes. Shares of our Class B common stock are convertible into an equivalent number of shares of our Class A common stock and generally convert into shares of our Class A common stock upon transfer. Class A common stock and Class B common stock are collectively referred to as common stock throughout the notes to these financial statements, unless otherwise noted. As of December 31, 2024, there were 2,190 million shares of Class A common stock and 344 million shares of Class B common stock issued and outstanding. 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. As of December 31, 2023, $ 30.93 billion remained available and authorized for repurchases under this program. In January 2024, an additional $ 50 billion of repurchases was authorized under this program. In 2024, we repurchased and subsequently retired 65 million shares of our Class A common stock for an aggregate amount of $ 29.75 billion, which includes the 1% excise tax accruals as a result of the Inflation Reduction Act of 2022. As of December 31, 2024, $ 51.28 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. Dividend Beginning in February 2024, our board of directors declared quarterly cash dividend of $ 0.50 per share to the holders of our Class A and Class B common stock. RSUs granted on or after March 1, 2024 under our 2012 Equity Incentive Plan (Amended 2012 Plan), which was most recently amended in May 2024, are entitled to dividend equivalent rights. During the year ended December 31, 2024, total dividend and dividend equivalent payments were $ 4.38 billion and $ 691 million for Class A and Class B common stock, respectively. Subject to legally available funds and future declaration by our board of directors, we currently intend to continue to pay a quarterly cash dividend on our outstanding common stock. The declaration and payment of future dividends is at the sole discretion of our board of directors after taking into account various factors, including our financial condition, operating results, available cash, and current and anticipated cash needs. Share-based Compensation Plan We have one active share-based employee compensation plan, the 2012 Equity Incentive Plan (Amended 2012 Plan), which was most recently amended in May 2024. Our Amended 2012 Plan provides for the issuance of incentive and nonqualified stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares, and stock bonuses to qualified employees, directors, and consultants. Shares that are withheld in connection with the net settlement of RSUs or forfeited are added to the reserves of the Amended 2012 Plan. As of December 31, 2024, there were 483 million shares of our Class A common stock reserved for future issuance under our Amended 2012 Plan. 116 Table of Contents The following table summarizes our share-based compensation expense, which consists of the RSU expense, by line item in our consolidated statements of income (in millions): Year Ended December 31, 2024 2023 2022 Cost of revenue $ 1,055 $ 740 $ 768 Research and development 13,683 11,429 9,361 Marketing and sales 1,026 952 1,004 General and administrative 926 906 859 Total $ 16,690 $ 14,027 $ 11,992 The following table summarizes the activities for our unvested RSUs for the year ended December 31, 2024: Number of Shares Weighted-Average Grant Date Fair Value Per Share (in thousands) Unvested at December 31, 2023 149,062 $ 209.85 Granted 48,661 $ 506.80 Vested ( 64,769 ) $ 250.76 Forfeited ( 10,322 ) $ 255.04 Unvested at December 31, 2024 122,632 $ 302.27 The weighted-average grant date fair value per share of RSUs granted in the years ended December 31, 2023 and 2022 was $ 202.46 and $ 195.66 , respectively. The fair value as of the respective vesting dates of RSUs that vested during the years ended December 31, 2024, 2023, and 2022 was $ 33.14 billion, $ 17.46 billion, and $ 9.44 billion, respectively. The income tax benefit recognized related to awards vested during the years ended December 31, 2024, 2023, and 2022 was $ 6.95 billion, $ 3.65 billion, and $ 2.00 billion, respectively. As of December 31, 2024, there was $ 34.79 billion of unrecognized share-based compensation expense related to RSU awards. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years based on vesting under the award service conditions. Note 14. Interest and Other Income (Expense), Net The following table presents the detail of interest and other income (expense), net (in millions): Year Ended December 31, 2024 2023 2022 Interest income $ 2,517 $ 1,639 $ 461 Interest expense ( 715 ) ( 446 ) ( 185 ) Foreign currency exchange losses, net ( 690 ) ( 366 ) ( 81 ) Other income (expense), net 171 ( 150 ) ( 320 ) Total interest and other income (expense), net $ 1,283 $ 677 $ ( 125 ) 117 Table of Contents Note 15. Income Taxes The components of income before provision for income taxes are as follows (in millions): Year Ended December 31, 2024 2023 2022 Domestic $ 66,342 $ 43,499 $ 25,025 Foreign 4,321 3,929 3,794 Income before provision for income taxes $ 70,663 $ 47,428 $ 28,819 The provision for income taxes consists of the following (in millions): Year Ended December 31, 2024 2023 2022 Current: Federal $ 9,569 $ 4,934 $ 6,094 State 775 577 874 Foreign 2,696 2,688 1,928 Total current tax expense 13,040 8,199 8,896 Deferred: Federal ( 4,709 ) 67 ( 2,776 ) State ( 43 ) 123 ( 405 ) Foreign 15 ( 59 ) ( 96 ) Total deferred tax (benefits)/expense ( 4,737 ) 131 ( 3,277 ) Provision for income taxes $ 8,303 $ 8,330 $ 5,619 A reconciliation of the U.S. federal statutory income tax rates to our effective tax rate is as follows (in percentages): Year Ended December 31, 2024 2023 2022 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 0.7 1.1 1.0 Share-based compensation ( 3.7 ) ( 0.6 ) 2.6 Research and development tax credits ( 2.9 ) ( 1.5 ) ( 2.4 ) Foreign-derived intangible income deduction ( 4.9 ) ( 4.3 ) ( 7.0 ) Effect of non-U.S. operations 0.2 0.9 3.0 Other 1.4 1.0 1.3 Effective tax rate 11.8 % 17.6 % 19.5 % 118 Table of Contents Our deferred tax assets (liabilities) are as follows (in millions): December 31, 2024 2023 Deferred tax assets: Loss carryforwards $ 289 $ 353 Tax credit carryforwards 2,771 2,028 Share-based compensation 520 459 Accrued expenses and other liabilities 2,223 2,168 Lease liabilities 3,940 3,752 Capitalized research and development 16,743 9,292 Unrealized losses in securities and investments 115 232 Other 442 487 Total deferred tax assets 27,043 18,771 Less: valuation allowance ( 3,506 ) ( 2,879 ) Deferred tax assets, net of valuation allowance 23,537 15,892 Deferred tax liabilities: Depreciation and amortization ( 10,959 ) ( 8,320 ) Right-of-use assets ( 3,000 ) ( 2,708 ) Total deferred tax liabilities ( 13,959 ) ( 11,028 ) Net deferred tax assets $ 9,578 $ 4,864 The valuation allowance was approximately $ 3.51 billion and $ 2.88 billion as of December 31, 2024 and 2023, respectively, mostly related to U.S. state tax credit carryforwards, U.S. foreign tax credits, and unrealized losses in marketable securities. As of December 31, 2024, our state net operating loss carryforwards were $ 2.36 billion, which will begin to expire in 2031, if not utilized. We have federal tax credit carryforwards of $ 595 million, which will begin to expire in 2029, if not utilized, and state tax credit carryforwards of $ 5.47 billion, most of which do not expire. Utilization of our net operating loss and tax credit carryforwards may be subject to substantial annual limitations due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization. The events that may cause ownership changes include, but are not limited to, a cumulative stock ownership change of greater than 50 % over a three‑year period. The following table reflects changes in the gross unrecognized tax benefits (in millions): Year Ended December 31, 2024 2023 2022 Gross unrecognized tax benefits ‑ beginning of period $ 11,666 $ 10,757 $ 9,807 Increases related to prior year tax positions 685 168 210 Decreases related to prior year tax positions ( 6 ) ( 263 ) ( 172 ) Increases related to current year tax positions 2,882 1,204 1,166 Decreases related to settlements of prior year tax positions ( 9 ) ( 199 ) ( 254 ) Decreases related to lapses of statute of limitations ( 87 ) ( 1 ) — Gross unrecognized tax benefits ‑ end of period $ 15,131 $ 11,666 $ 10,757 119 Table of Contents These unrecognized tax benefits were primarily accrued for the uncertainties with our research tax credits and transfer pricing with our foreign subsidiaries, which include licensing of intellectual property, providing services and other transactions. During all years presented, we recognized interest and penalties related to unrecognized tax benefits within the provision for income taxes on our consolidated statements of income. The amount of interest and penalties accrued as of December 31, 2024, 2023, and 2022 were $ 2.21 billion, $ 1.48 billion, and $ 1.07 billion, respectively. If our gross unrecognized tax benefits of $ 15.13 billion as of December 31, 2024 were realized in a future period, this would result in a tax benefit of $ 10.11 billion within our provision of income taxes at such time. We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2017 through 2019 tax years. Our 2014 through 2016 tax years are with the IRS Independent Office of Appeals for certain unresolved issues. Our 2020 and subsequent tax years remain open to examination by the IRS. We are under examination by the Irish Revenue Commissioners for our 2020 tax year and our 2021 and subsequent tax years remain open to examination. In July 2016, we received a Statutory Notice of Deficiency (Notice) from the IRS related to transfer pricing with our foreign subsidiaries in conjunction with the examination of the 2010 tax year. While the Notice applies only to the 2010 tax year, the IRS stated that it will also apply its position for tax years subsequent to 2010 and has done so in years covered by the second Notice described below. We do not agree with the position of the IRS and have filed a petition in the Tax Court challenging the Notice. On January 15, 2020, the IRS's amendment to answer was filed stating that it planned to assert at trial an adjustment that is higher than the adjustment stated in the Notice. The first session of the trial was completed in March 2020 and the final trial session was completed in August 2022. We expect the Tax Court to issue an opinion in 2025 which will likely provide a transfer pricing value for intellectual property transferred. This value will need to be extrapolated into income adjustments to determine the specific tax liability, which will likely remain in dispute and will not be resolved until the Tax Court enters a decision. If the IRS prevails in its updated position, this could result in an additional federal tax liability of an estimated, aggregate amount of up to approximately $ 9.0 billion in excess of the amounts in our originally filed U.S. return, plus interest and any penalties asserted. Once the Tax Court decision is entered, the IRS and Meta will each have the option to file an appeal to the Ninth Circuit Court of Appeals. In March 2018, we received a second Notice from the IRS in conjunction with the examination of our 2011 through 2013 tax years. The IRS applied its position from the 2010 tax year to each of these years and also proposed new adjustments related to other transfer pricing with our foreign subsidiaries and certain tax credits that we claimed. If the IRS prevails in its position for these new adjustments, this could result in an additional federal tax liability of up to approximately $ 680 million in excess of the amounts in our originally filed U.S. returns, plus interest and any penalties asserted. We do not agree with the positions of the IRS in the second Notice and have filed a petition in the Tax Court challenging the second Notice. We have previously accrued an estimated unrecognized tax benefit consistent with the guidance in ASC 740, Income Taxes (ASC 740), that is lower than the potential additional federal tax liability from the positions taken by the IRS in the two Notices and its Pretrial Memorandum. In addition, if the IRS prevails in its positions related to transfer pricing with our foreign subsidiaries, the additional tax that we would owe would be partially offset by a reduction in the tax that we owe under the mandatory transition tax on accumulated foreign earnings from the 2017 Tax Cuts and Jobs Act. As of December 31, 2024, we have not resolved these matters and proceedings continue in the Tax Court. We believe that adequate amounts have been reserved in accordance with ASC 740 for any adjustments to the provision for income taxes or other tax items that may ultimately result from these examinations. The timing of the resolution, settlement, and closure of any audits is highly uncertain, and it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits. If the tax authorities prevail in the assessment of additional tax due, the assessed tax, interest, and penalties, if any, could have a material adverse impact on our financial position, results of operations, and cash flows. 120 Table of Contents Note 16. Segment and Geographical Information 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, augmented, and mixed reality related consumer hardware, software, and content. Our operating segments are the same as our reportable segments. Our chief executive officer is our chief operating decision maker (CODM), who allocates resources to and assesses the performance of each operating segment using information about the operating segment's revenue and income (loss) from operations. Our CODM does not evaluate operating segments using asset or liability information. Revenue and costs and expenses are generally directly attributed to our segments. These costs and expenses include certain product development related operating expenses, costs associated with partnership arrangements, consumer hardware product costs, content costs, and legal-related costs. Indirect costs are allocated to segments based on a reasonable allocation methodology, when such costs are significant to the performance measures of the operating segments. Indirect operating expenses, such as facilities, information technology, certain shared research and development activities, recruiting, and physical security expenses are mostly allocated based on headcount. Costs related to the operation of our data centers and technical infrastructure are generally allocated to our segments based on estimated usage, most of which is allocated to the FoA segment. Beginning in 2024 annual reporting, we adopted ASU 2023-07 retrospectively. The following table sets forth our segment information of revenue, expenses, and income (loss) from operations (in millions): Year Ended December 31, 2024 2023 2022 Family of Apps: Revenue $ 162,355 $ 133,006 $ 114,450 Employee compensation (1) ( 31,116 ) ( 28,878 ) ( 28,545 ) Other costs and expenses (2) ( 44,130 ) ( 41,257 ) ( 43,244 ) Income from operations $ 87,109 $ 62,871 $ 42,661 Reality Labs: Revenue $ 2,146 $ 1,896 $ 2,159 Employee compensation (1) ( 10,211 ) ( 8,942 ) ( 7,766 ) Other costs and expenses (3) ( 9,664 ) ( 9,074 ) ( 8,110 ) Loss from operations $ ( 17,729 ) $ ( 16,120 ) $ ( 13,717 ) Total: Revenue $ 164,501 $ 134,902 $ 116,609 Employee compensation (1) ( 41,327 ) ( 37,820 ) ( 36,311 ) Other costs and expenses ( 53,794 ) ( 50,331 ) ( 51,354 ) Income from operations $ 69,380 $ 46,751 $ 28,944 ____________________________________ (1) Employee compensation includes employee payroll, share-based compensation, bonus, and employee benefits for medical care, retirement, insurances and other. (2) Includes costs and expenses in FoA segment for infrastructure, professional services, partner arrangements, marketing, facilities, legal-related costs, and other expenses. (3) Includes costs and expenses in RL segment for inventory, professional services, marketing, infrastructure, facilities, and other expenses. 121 Table of Contents The following table sets forth our long-lived assets by geographic area, which consist of property and equipment, net and operating lease right-of-use assets (in millions): December 31, 2024 2023 United States $ 117,478 $ 91,940 Rest of the world (1) 18,790 17,941 Total long-lived assets $ 136,268 $ 109,881 _________________________ (1) No individual country, other than disclosed above, exceeded 10% of our total long-lived assets for any period presented. For information regarding revenue disaggregated by geography, see Note 2 — Revenue. 122 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.