What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-01-29 compared with 2025-01-30 · 422 added, 293 removed, 937 unchanged (43% of the section changed)

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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.

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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.

In addition, the Company believes it is reasonably possible that it will incur a loss in some of these matters described above.

When applicable, the Company discloses an estimate of the amount of loss or range of possible loss that may be incurred or that the amount of such losses or a range of possible losses cannot be reasonably estimated.

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 probability of loss, and its 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, evaluation and disclosure of loss contingencies, including controls relating to the Company's assessment of the likelihood that a loss will be incurred and its ability to reasonably estimate the potential range of possible losses.

Our audit procedures included reading the proceedings, claims, and regulatory or government inquiries and investigations, or summaries as we deemed appropriate, requesting and receiving legal counsel confirmation letters, meeting with 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 11 to the consolidated financial statements.

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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 discussed in Note 14 to the consolidated financial statements, the Company has received notices from the Internal Revenue Service (IRS) related to transfer pricing with the Company's foreign subsidiaries for certain periods examined.

The IRS has also applied its position to tax years subsequent to those examined.

If the IRS prevails in its position, the Company may incur an additional federal tax liability, plus interest and any penalties asserted.

The Company uses judgment to (1) determine whether a tax position's technical and legal 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 positions 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 and related legal rulings 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.

This included assessing the Company's correspondence with the relevant tax authorities, evaluating legal rulings, 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.

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We also evaluated the appropriateness of the related disclosures included in Note 14 to the consolidated financial statements in relation to these matters.

/s/ Ernst & Young LLP

Consolidation accounting for a variable interest entity

Description of the Matter

As described in Note 5 to the consolidated financial statements, the Company entered into an arrangement (the “Venture”) to co-develop a data center campus.

The Company determined whether it holds a variable interest in the Venture, whether the entity in which the Company has a variable interest is a variable interest entity (“VIE”), and whether the Company is required to consolidate the entity.

A VIE is consolidated by its primary beneficiary, which is the party that has both the power to direct the activities that most significantly affect the economic performance of the VIE and a variable interest that absorbs losses or receives benefits from the VIE that could potentially be significant to the VIE.

Auditing the Company’s determination of the primary beneficiary of the VIE was especially challenging due to the significant judgment required in determining the activities that most significantly affect the VIE’s economic performance based on the purpose and design of the entity and assessing whether the Company has the power to direct those activities.

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 determination of the primary beneficiary of the VIE, including controls relating to the determination of the activities that most significantly affect the VIE’s economic performance and assessing which party has the power to direct those activities.

To test the Company’s consolidation conclusion with respect to its interest in the VIE related to the Venture, our procedures included, among others, reading the relevant agreements related to the VIE to understand the purpose and design of the Venture.

We audited the Company’s determination of the primary beneficiary of the VIE, including its determination of the activities that most significantly affect the Venture’s economic performance and assessing which party has the power to direct those activities.

We also evaluated the appropriateness of the related disclosures included in Note 5 to the consolidated financial statements.

We have served as the Company's auditor since 2007.

/s/ Ernst & Young LLP

San Jose, California

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Total current assets 108,722 100,045

Non-marketable equity securities 6,070 6,141

Non-marketable equity investments 27,524 6,070

Property and equipment, net 176,400 121,346

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Additional paid-in capital 95,793 83,228

Accumulated other comprehensive loss ( 3,097 ) ( 2,155 )

Accumulated other comprehensive income (loss) 271 ( 3,097 )

Retained earnings 121,179 102,506

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Income from operations 83,276 69,380 46,751

Interest and other income (expense), net 1,283 677 ( 125 )

Interest and other income, net 2,656 1,283 677

Income before provision for income taxes 85,932 70,663 47,428

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Balances at December 31, 2022 2,614 $ — $ 64,444 $ ( 3,530 ) $ 64,799 $ 125,713

Net income — — — — 39,098 39,098

Other comprehensive income — — — 1,375 — 1,375

Issuance of common stock 65 — — — — —

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Share repurchases ( 92 ) — — — ( 20,033 ) ( 20,033 )

Other comprehensive loss — — — ( 2,837 ) — ( 2,837 )

Net income — — — — 23,200 23,200

Balances at December 31, 2023 2,561 — 73,253 ( 2,155 ) 82,070 153,168

Net income — — — — 62,360 62,360

Other comprehensive loss — — — ( 942 ) — ( 942 )

Issuance of common stock 65 — — — — —

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Share repurchases ( 65 ) — — — ( 29,754 ) ( 29,754 )

Other comprehensive income — — — 1,375 — 1,375

Net income — — — — 39,098 39,098

Dividends and dividend equivalents declared (1)

— — — — ( 5,121 ) ( 5,121 )

Other — — 6 — — 6

Balances at December 31, 2024 2,534 — 83,228 ( 3,097 ) 102,506 182,637

Net income — — — — 60,458 60,458

Other comprehensive income — — — 3,368 — 3,368

Issuance of common stock 63 — 450 — — 450

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Share repurchases ( 40 ) — — — ( 26,264 ) ( 26,264 )

Dividends and dividend equivalents declared ($ 2.00 per share) (1)

Dividends and dividend equivalents declared (1)

— — — — ( 5,421 ) ( 5,421 )

Other — — — — ( 12 ) ( 12 )

Other comprehensive loss — — — ( 942 ) — ( 942 )

Net income — — — — 62,360 62,360

Balances at December 31, 2025 2,530 $ — $ 95,793 $ 271 $ 121,179 $ 217,243

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(1) Our dividend program began in the first quarter of 2024.

(1) Dividend per share was $ 2.10 and $ 2.00 for the years ended December 31, 2025 and 2024, respectively.

See Accompanying Notes to Consolidated Financial Statements.

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Deferred income taxes 18,738 ( 4,738 ) 131

Unrealized (gain) loss on equity investments ( 1,138 ) ( 53 ) 102

Impairment charges for facilities consolidation — 383 2,432

Data center assets abandonment — ( 224 ) 1,341

Other ( 416 ) 140 309

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Sales and maturities of marketable securities 26,874 15,789 6,184

Payments for held-for-sale assets ( 2,432 ) — —

Proceeds from Venture distribution 2,554 — —

Purchases of non-marketable equity investments ( 18,330 ) ( 11 ) ( 1 )

Acquisitions of businesses and intangible assets ( 4,231 ) ( 270 ) ( 629 )

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Net cash used in financing activities ( 20,370 ) ( 40,781 ) ( 19,500 )

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

Effect of exchange rate changes on cash, cash equivalents, and restricted cash equivalents 235 ( 786 ) 113

Net increase (decrease) in cash, cash equivalents, and restricted cash equivalents ( 6,338 ) 2,611 27,231

Cash, cash equivalents, and restricted cash equivalents at beginning of the period 45,438 42,827 15,596

Cash, cash equivalents, and restricted cash equivalents at end of the period $ 39,100 $ 45,438 $ 42,827

Reconciliation of cash, cash equivalents, and restricted cash equivalents to the consolidated balance sheets

Cash and cash equivalents $ 35,873 $ 43,889 $ 41,862

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

Restricted cash equivalents, included in prepaid expenses and other current assets 837 353 99

Restricted cash equivalents, included in other assets 2,390 1,196 866

Total cash, cash equivalents, and restricted cash equivalents $ 39,100 $ 45,438 $ 42,827

See Accompanying Notes to Consolidated Financial Statements.

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Property and equipment in accounts payable and accrued expenses and other current liabilities $ 9,331 $ 7,127 $ 4,105

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

Acquisition of businesses and intangible assets in accounts payable, accrued expenses and other current liabilities, and other liabilities $ 2,659 $ 172 $ 119

See Accompanying Notes to Consolidated Financial Statements.

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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.

The consolidated financial statements include the accounts of Meta Platforms, Inc.

and its subsidiaries where we have controlling financial interests.

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

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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.

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 non-marketable equity investments, valuation of long-lived assets and their associated estimated useful lives, revenue recognition, valuation of goodwill, credit losses of available-for-sale debt securities, 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.

In January 2025, we completed an assessment of the useful lives of property and equipment, which resulted in an increase in the estimated useful lives of most servers and network assets to 5.5 years, effective January 1, 2025.

Based on the servers and network assets placed in service as of December 31, 2024, the financial impact of this change in estimate included a reduction in depreciation expense of $ 2.92 billion and an increase in net income of $ 2.59 billion, or $ 1.00 per diluted share, for the year ended December 31, 2025.

Revenue Recognition

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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.

RL revenue is generated from the delivery of consumer hardware products, such as Meta Quest and 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.

FoA other revenue consists of revenue from paid messaging from WhatsApp, Meta Verified subscriptions, net fees we receive from developers using our Payments infrastructure, and revenue from various other sources.

Cost of Revenue

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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.

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.

Share-based compensation expense consists of our restricted stock units (RSUs) expense.

RSUs granted to employees are measured based on the grant-date fair value.

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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.

In determining the valuation allowance, our accounting policy incorporates the expected impact of future years’ Corporate Alternative Minimum Tax in assessing the realizability of our deferred tax assets.

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.

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We incurred advertising expenses of $ 2.09 billion, $ 2.06 billion, and $ 2.02 billion for the years ended December 31, 2025, 2024, and 2023, respectively.

Cash and Cash Equivalents, Marketable Securities, and Restricted Cash

Cash and Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents

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 classify certain restricted cash and cash equivalent balances, consisting mainly 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.

Marketable Securities

We hold investments in marketable debt securities, consisting of U.S.

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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.

Our marketable debt securities are classified as available-for-sale (AFS) investments in marketable securities within current assets on our consolidated balance sheets because they represent investments of cash available for current operations.

The 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.

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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.

These marketable equity securities are measured at fair value at each reporting date with gains and losses recognized in interest and other income (expense), net on our consolidated statements of income.

Non-marketable Equity Investments

Our non-marketable equity investments include equity investments without readily determinable fair values accounted for using either the measurement alternative or the equity method.

Non-marketable equity investments accounted for using the measurement alternative, which is cost, less any impairment, are 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.

Other non-marketable equity investments, through which we exercise significant influence but do not have control over the investee, are accounted for under the equity method.

We periodically review our non-marketable equity investments for impairment.

When indicators of impairment exist and the estimated fair value of an investment is below its carrying amount, we write down the investment to its fair value in interest and other income (expense), net on our consolidated statements of income.

An impairment loss is recognized when the impairment is considered other-than-temporary for equity method investments.

For the years ended December 31, 2025 and 2024, impairment for non-marketable equity investments were not material.

For additional information, see Note 5 — Non-Marketable Equity Investments and Part II, Item 7, "Management’s Discussion and Analysis of Financial Conditions and Results of Operations — Critical Accounting Estimates" contained in this Annual Report on Form 10-K.

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:

We define fair value as the price that would be received to sell 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, 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 three-level hierarchy, which prioritizes the inputs used to measure fair value based on 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.

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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.

Our non-marketable equity investments accounted for using the measurement alternative are recorded at fair value on a non-recurring basis.

When an impairment loss or upward adjustment from observable price changes of qualified transactions occur, the respective non-marketable equity investment 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.

For the years ended December 31, 2025 and 2024, changes in the fair value recorded for our non-marketable equity securities were not material.

For additional information, see Note 5 — Non-Marketable Equity Investments.

Variable Interest Entities

At the inception of each arrangement, we determine whether an entity in which we have made an investment or in which we have other variable interests is considered a variable interest entity (VIE).

Significant judgment is required to identify the activities that most significantly affect the VIE’s economic performance, based on its purpose and design.

We assess whether we have both the power to direct those activities and the obligation to absorb the majority of the VIE’s losses or benefits.

We evaluate whether we are the primary beneficiary of the VIE, in which case we would consolidate the entity.

As of December 31, 2025, we are not the primary beneficiary of the VIEs related to our investments, and therefore the VIEs are not consolidated.

These investments are accounted for as equity method investments included within non-marketable equity investments on our consolidated balance sheet.

We continually monitor our involvement with the VIEs and will consolidate them if we become the primary beneficiary in the future.

For additional information, see Note 5 — Non-Marketable Equity Investments.

Accounts Receivable and Allowances

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Useful Life/ Amortization period

Servers and network assets Four to Five years (1)

Servers and network assets Five to 5.5 years

Buildings 25 to 30 years

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Leasehold improvements Lesser of estimated useful life or remaining lease term

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(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.

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 loss is recognized in income from operations.

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

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.

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 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 are used to support our core business and AI efforts.

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.

We also capitalize interest on our debt related to certain eligible CIP assets and depreciate the capitalized interest over the useful life of the related assets.

The cost of maintenance and repairs is expensed as incurred.

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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.

Our lease agreements generally do not contain any 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.

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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.

Loss Contingencies

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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.

The requirements for complying with these obligations may be uncertain and subject to interpretation and enforcement by regulatory and other authorities, and any failure or perceived failure to comply with such obligations could eventually lead to asserted legal or regulatory action.

be reasonably estimated.

We record such losses as general and administrative expenses on our consolidated statements of income.

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Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred.

For more information, see Note 8 —Acquisitions, Goodwill, and Intangible Assets.

Goodwill and Intangibles Assets

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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.

The evaluation of these intangible assets is 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.

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 loss is recognized.

The impairment losses 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.

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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

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.

Translation gains and losses are recorded in accumulated other comprehensive income (loss) as a component of stockholders' equity.

As of December 31, 2025, cumulative translation gains, net of tax was not material.

As of December 31, 2024, cumulative translation losses, net of tax was $ 2.66 billion.

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.

Foreign currency transaction gains, net were $ 352 million for the year ended December 31, 2025 and foreign currency transaction losses, net were $ 690 million, and $ 366 million for the years ended December 31, 2024 and 2023, 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.

Our financial instruments that are potentially subject to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash and restricted cash equivalents, marketable debt securities, and accounts receivable.

Cash equivalents consist mostly of money market funds, that primarily invest in U.S.

government and agency securities.

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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 generated 37 %, 36 %, and 37 % of our revenue for the years ended December 31, 2025, 2024, and 2023, respectively, from marketers and developers based in the United States, with a majority of the revenue outside of the United States in 2025 coming from customers located in western Europe, China, Singapore, and Brazil.

We perform ongoing credit evaluations of our customers and generally do not require collateral.

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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.

No customer represented 10% or more of total revenue or accounts receivable for the years ended December 31, 2025, 2024, and 2023.

Recently Adopted Accounting Pronouncements

Beginning in 2025 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.

Improvements to Income Tax Disclosures (ASU 2023-09) on a prospective basis.

This standard 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.

The adoption of this new standard did not have a material impact on our consolidated financial statements.

For additional information, see Note 14 — Income Taxes.

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No.

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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 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 with the year ending 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.

In September 2025, the FASB issued ASU No.

2025-06, Intangibles:

Goodwill and Other‒Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software (ASU 2025-06).

The guidance modernizes the accounting for software costs and enhances the transparency about an entity's software costs.

The guidance will be effective for the annual periods beginning with the year ending December 31, 2027 and for interim periods beginning January 1, 2028.

Early adoption is permitted.

Upon adoption, the guidance can be applied prospectively, retrospectively, or under a modified transition approach.

We are evaluating the effect that this guidance and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In December 2025, the FASB issued ASU No.

2025-11, Interim Reporting (Topic 270):

Narrow-Scope Improvements (ASU 2025-11), which clarifies interim disclosure requirements and the applicability of Topic 270.

The guidance will be effective for interim periods beginning January 1, 2028.

Early adoption is permitted.

Upon adoption, the guidance 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 December 2025, the FASB issued ASU No.

2025-10, Accounting for Government Grants (Topic 832):

Accounting for Government Grants Received by Business Entities (ASU 2025-10) to establish authoritative guidance on the recognition, measurement, and presentation of government grants received by business entities.

The guidance will be effective for the annual periods beginning with the year ending December 31, 2028 and for interim periods beginning January 1, 2029.

Early adoption is permitted.

Upon adoption, the guidance can be applied using a modified prospective, modified retrospective, or under a retrospective approach.

We are evaluating the effect that this guidance and do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

Revenue disaggregated by revenue source and by segment consists of the following (in millions):

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Asia-Pacific 53,817 45,009 36,154

45,009 36,154 27,760

Rest of World (2)

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(1) United States revenue was $ 74.78 billion, $ 59.73 billion, and $ 49.78 billion for the years ended December 31, 2025, 2024, and 2023, 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.

(2) 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.

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,

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.

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.

Deferred revenue was $ 1.08 billion and $ 772 million as of December 31, 2025 and 2024, respectively.

Our deferred revenue primarily relates to advertising prepayments and credits, as well as software updates and upgrades associated with RL hardware sales, most of which are expected to be realized in less than a year.

Earnings per Share

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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.

For the years ended December 31, 2025 and 2023, approximately 9 million and 16 million shares of RSUs, respectively, were excluded from the diluted EPS calculation, as including them would have an anti-dilutive effect.

RSUs with anti-dilutive effect were not material for the year ended December 31, 2024.

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):

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(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.

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Money market funds $ 27,928 $ 27,928 $ — $ —

government and agency securities 23 23 — —

government securities 1,623 1,623 — —

Time deposits 328 — 328 —

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Corporate debt securities 14,758 — 14,758 —

Marketable equity securities 1,226 1,226 — —

Total marketable securities 33,926 19,168 14,758 —

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Total $ 71,891 $ 56,549 $ 15,241 $ 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):

Marketable Debt Securities

The following tables summarize our available-for-sale marketable debt securities with unrealized losses as of December 31, 2025 and 2024, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in millions):

December 31, 2025

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Total $ 10,284 $ ( 99 ) $ 12,786 $ ( 382 ) $ 23,070 $ ( 481 )

The gross unrealized gains on our marketable debt securities were not material as of December 31, 2024 and 2023.

Contractual Maturities

The gross unrealized gains on our marketable debt securities were $ 300 million and not material as of December 31, 2025 and 2024, respectively, and the allowance for credit losses were not material for both periods.

The following table classifies our marketable debt securities by contractual maturities (in millions):

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Total $ 39,727

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.

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):

Non-marketable equity securities under measurement alternative:

Marketable Equity Securities

The net unrealized gains on our marketable equity securities recognized in interest and other income, net on our consolidated statements of income were $ 413 million and not material during the years ended December 31, 2025 and 2024, respectively.

Non-Marketable Equity Investments

Our non-marketable equity investments are in privately-held companies without readily determinable fair values.

The following table summarizes our non-marketable equity investments under measurement alternative and equity method (in millions):

Initial cost $ 20,271 $ 6,342

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Cumulative impairment/downward adjustments ( 624 ) ( 624 )

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.

Non-marketable equity investments under measurement alternative 20,076 6,018

Non-marketable equity investments under equity method 7,448 52

Total carrying value of non-marketable equity investments $ 27,524 $ 6,070

Non-Marketable Equity Investments Under Measurement Alternative

Our non-marketable equity investments accounted for under the measurement alternative mostly consist of our minority investments in Scale AI for $ 13.80 billion, which was closed during 2025, and our investment in Jio Platforms Limited of $ 5.82 billion as of December 31, 2025.

We do not have significant influence over these investees' operations.

Non-Marketable Equity Investments Under Equity Method

In October 2025, we entered into an arrangement to co-develop a data center campus in Louisiana (the Venture).

This Venture provides strategic optionality and flexibility, enabling us to effectively meet future infrastructure capacity needs as AI markets and technologies develop.

At Venture formation, we contributed $ 4.30 billion of held-for-sale assets, net of liabilities, and we received a one-time distribution of $ 2.55 billion.

We hold a 20 % membership interest in the Venture, which is accounted for under the equity method included within non-marketable equity investments on the consolidated balance sheets.

We provide construction management, administrative and property management services to the Venture.

The parties have committed to fund their respective pro rata share of approximately $ 27 billion in total estimated development costs.

We also entered into lease agreements with the Venture for the use of properties on the data center campus, which will commence in 2029.

The aggregate initial lease commitment is approximately $ 12.31 billion, with each property having an initial four-year lease term and options to renew for a total lease period of up to 20 years.

In addition, we have provided residual value guarantees (RVG) with an aggregate threshold of approximately $ 28 billion that decreases over time.

If we decide to terminate or not renew a lease, and if certain other conditions are met, our maximum RVG payment would equal any shortfall between the fair value at that time and the RVG threshold for that property.

As of December 31, 2025, RVG payments are not probable and therefore, no liability has been recorded.

We do not have the power to direct the activities that most significantly impact the Venture's economic performance.

Therefore, we are not the primary beneficiary and do not consolidate the variable interest entity (VIE).

Our maximum exposure to loss related to the Venture was $ 45.95 billion as of December 31, 2025, consisting of $ 1.83 billion carrying value of our equity investment, the lease commitments, our estimated future fundings, and the maximum RVG threshold.

In addition, our non-marketable equity method investments also include other types of unconsolidated VIEs for which we are not the primary beneficiary, as we do not direct the activities that would significantly affect their economic performance.

As of December 31, 2025, total maximum exposure to loss in these other VIEs was $ 5.58 billion, which equals the carrying value of our investments for the year ended December 31, 2025.

Property and Equipment

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Property and equipment, net $ 176,400 $ 121,346

Construction in progress includes costs mostly related to construction of data centers, network infrastructure and servers.

Construction in progress (CIP) includes costs mostly related to construction of data centers, network infrastructure and servers.

Interest expense capitalized for the eligible CIP assets was $ 535 million and $ 384 million during the years ended December 31, 2025 and 2024, respectively.

Depreciation expense on property and equipment was $ 18.00 billion, $ 15.29 billion, and $ 11.02 billion for the years ended December 31, 2025, 2024, and 2023, 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.

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.

Within property and equipment, servers and network assets depreciation expenses were $ 13.36 billion, $ 11.34 billion, and $ 7.32 billion for the years ended December 31, 2025, 2024, and 2023, respectively.

We extended the estimated useful lives of most servers and network assets to 5.5 years, effective January 1, 2025.

See Note 1 — Summary of Significant Accounting Policies - Use of Estimates.

During the years ended December 31, 2025, 2024, and 2023, total impairment losses for property and equipment were $ 237 million, $ 288 million and $ 738 million, respectively.

We have entered into various non-cancelable operating and finance lease agreements mostly for our data centers, offices, and certain network infrastructure.

Our leases have original lease periods expiring between 2026 and 2093.

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Total $ 4,525 $ 3,613 $ 3,040

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.

Impairment losses for operating lease right-of-use assets were not material for the year ended December 31, 2025.

For the years ended December 31, 2024 and 2023, $ 385 million and $ 1.76 billion were recorded as impairment losses for operating lease right-of-use assets, respectively.

Supplemental balance sheet information related to lease liabilities is as follows:

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Present value of lease liabilities $ 25,153 $ 1,184

$ 20,234 $ 709

Lease liabilities, current $ 2,213 $ 308

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Present value of lease liabilities $ 25,153 $ 1,184

$ 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.

As of December 31, 2025, we have additional operating and finance leases, that have not yet commenced, with total lease obligations of approximately $ 103.77 billion, mostly for data centers, colocations, and network infrastructure.

These operating and finance leases will commence between 2026 and 2030 with lease terms of greater than one year to 30 years.

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Operating cash flows for operating leases $ 3,189 $ 2,830 $ 2,233

$ 2,830 $ 2,233 $ 1,654

Operating cash flows for finance leases $ 31 $ 23 $ 20

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Finance leases $ 613 $ 181 $ 588

_________________

(1) Cash flows for operating leases during the year ended December 31, 2024 and 2023 include cash paid for terminations of certain operating leases .

Goodwill and Intangible Assets

Goodwill generated from our business acquisitions was primarily attributable to expected synergies and potential monetization opportunities.

Acquisitions, Goodwill, and Intangible Assets

During the year ended December 31, 2025, we completed several business acquisitions with total purchase consideration of $ 4.09 billion in cash and $ 450 million in shares of our Class A common stock, including $ 3.88 billion and $ 664 million allocated to goodwill and intangible assets, respectively.

Goodwill generated from these business acquisitions was primarily attributable to advancing our AI efforts, workforce, expected synergies, and potential monetization opportunities.

The amount of goodwill generated that was deductible for tax purposes was not material.

Acquisition-related costs were not material and were expensed as incurred.

Pro forma historical results of operations related to these business acquisitions have not been presented because they are not significant to our consolidated financial statements, either individually or in aggregate.

We have included the financial results of these acquired businesses in our consolidated financial statements from their respective dates of acquisition.

Changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2025 and 2024 are as follows (in millions):

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Acquisitions — — —

Adjustments ( 4 ) ( 5 ) ( 9 )

December 31, 2024 19,246 1,408 20,654

Acquisitions 3,697 99 3,796

Adjustments 85 ( 1 ) 84

December 31, 2025 $ 23,028 $ 1,506 $ 24,534

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(in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

Acquired software 2.6 $ 2,601 $ ( 400 ) $ 2,201 $ 250 $ ( 58 ) $ 192

Acquired technology 3.0 1,151 ( 235 ) 916 442 ( 247 ) 195

Acquired patents 6.4 224 ( 143 ) 81 252 ( 165 ) 87

Acquired software 2.7 250 ( 58 ) 192 — — —

Other 3.4 113 ( 16 ) 97 24 ( 8 ) 16

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Total $ 4,486 $ ( 794 ) $ 3,692 $ 1,393 $ ( 478 ) $ 915

During the year ended December 31, 2025, we also purchased software licenses of $ 2.40 billion which are classified as acquired software within the intangible assets.

Amortization expense of intangible assets for the years ended December 31, 2025, 2024, and 2023 was $ 615 million, $ 211 million, and $ 161 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):

As of December 31, 2025, expected amortization expense for finite-lived intangible assets for the next five years and thereafter is as follows (in millions):

Thereafter 37

Total $ 3,295

Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities are as follows (in millions):

Legal-related accruals (1)

$ 6,867 $ 5,523

Accrued compensation and benefits 7,151 6,350

Accrued property and equipment 4,402 2,582

Accrued taxes 1,922 3,438

Other current liabilities 10,387 6,074

Total $ 30,729 $ 23,967

_________________________

(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 11 — Commitments and Contingencies.

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):

In November 2025, we issued an aggregate of $ 30.0 billion of fixed-rate senior unsecured notes in six series.

The following table summarizes our fixed-senior unsecured notes (the Notes) and the carrying amount of our long-term debt (in millions, except percentages):

Maturity Stated Interest Rate Effective Interest Rate December 31, 2025 December 31, 2024

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$ 10,000 $ 10,000

May 2023 Notes 2028 - 2063 4.60 % - 5.75 %

4.68 % - 5.79 %

August 2024 Notes 2029 - 2064 4.30 % - 5.55 %

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10,500 10,500

November 2025 Notes 2030 - 2065 4.20 % - 5.75 %

4.27 % - 5.77 %

Total face amount of long-term debt 59,000 29,000

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Long-term debt $ 58,744 $ 28,826

Each series of the Notes in the table above rank equally with each other.

Interest on the Notes is payable semi-annually in arrears.

Each series of the Notes rank equally with each other and interest 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.

Interest expense, net of capitalized interest, recognized on the Notes was $ 1.09 billion, $ 683 million, and $ 420 million for the years ended December 31, 2025, 2024, and 2023, respectively.

The total estimated fair value of our outstanding Notes was $ 57.22 billion and $ 27.83 billion as of December 31, 2025 and 2024, respectively.

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As of December 31, 2025, future principal payments for the Notes, by year, are as follows (in millions):

2025 through 2026 $ —

Thereafter 48,750

Total $ 59,000

Accrued Expenses and Other Current Liabilities

The components of accrued expenses and other current liabilities are as follows (in millions):

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.

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.

We have $ 131.05 billion of non-cancelable contractual commitments as of December 31, 2025.

These commitments are mostly related to third-party cloud capacity arrangements and our continued investments in servers and network infrastructure, data centers, and consumer hardware products in Reality Labs.

The following is a schedule, by years, of non-cancelable contractual commitments as of December 31, 2025 (in millions):

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Total $ 131,046

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 .

Additionally, as part of the normal course of business, we have entered into multi-year agreements ranging from three to 25 years to purchase clean and renewable energy that do not specify a fixed or minimum volume commitment.

The ultimate spend under these agreements may vary and will be based on actual volume purchased.

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Additionally, we are required to comply with various legal and regulatory obligations around the world.

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.

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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.

On December 22, 2022, the parties entered into a settlement agreement to resolve the lawsuit, which provided for a payment of $ 725 million by us and became final on May 14, 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.

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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.

In addition, in December 2025, we entered into a settlement agreement with California to resolve its lawsuit alleging violations of consumer protection laws, which is subject to court approval.

Certain other 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.

The appeal was heard on January 30, 2025 and on July 31, 2025, the District of Columbia Court of Appeals reversed the decision on procedural grounds and remanded the matter to the lower court.

Trial in the New Mexico Attorney General's case, which has expanded to include various claims related to content moderation issues, is scheduled to begin on September 8, 2026.

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.

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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.

Trial began on July 16, 2025.

On July 17, 2025, the parties agreed to a settlement in principle to resolve all claims in the action, which is subject to court approval.

On May 3, 2023, the FTC filed a public administrative proceeding ( In the Matter of Facebook, Inc.

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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.

District Court for the District of Columbia 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.

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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.

Court of Appeals for the District of Columbia Circuit has yet to rule.

After the underlying appeal was briefed and oral argument was held on November 5, 2024, the U.S.

Court of Appeals for the District of Columbia Circuit issued its decision on May 16, 2025, reversing the district court's denial of our motion on jurisdictional grounds, and directed the district court to consider the merits of our arguments.

On July 10, 2025, the case was remanded to the district court to consider our claims in light of the Court of Appeals' determination that the district court retains jurisdiction over the entirety of the consent order.

On December 23, 2025, the district court ordered a schedule for supplemental briefing in light of the Court of Appeals decision, with briefing due to be complete by May 2026.

On November 29, 2023, we separately filed a complaint, also in the U.S.

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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 .

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.

On June 29, 2025, the district court granted our request for a stay in light of the Court of Appeals' May 16, 2025 decision in the jurisdictional case, and on January 20, 2026, the district court continued the stay and ordered the parties to file a status update by June 8, 2026.

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.

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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.

The Commission stated that its decision is subject to Meta's jurisdictional challenges then pending before the U.S.

Court of Appeals for the District of Columbia Circuit in U.S.

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, and that the nature and scope of any further administrative proceedings would be addressed at a later date.

On July 30, 2025, the Commission issued an order staying the Order to Show Cause proceeding pending final resolution of the two judicial cases we filed challenging the proceeding.

Through the administrative process, the FTC could amend the order to impose the additional requirements set forth in the proposed order.

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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.

In addition, we are subject to individual and class actions in Europe relating to matters that are or have been the subject of regulatory investigations.

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;

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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.

In Rickwalder , the Superior Court denied plaintiffs' motion for class certification and the plaintiffs have appealed that decision.

In Flo Health , on August 1, 2025, a jury returned a verdict on liability in favor of the plaintiffs and on behalf of a California subclass on the sole claim remaining against Meta under Section 632 of the California Invasion of Privacy Act.

Plaintiffs are seeking $ 5,000 in statutory damages per class member and have asserted that there are up to approximately 1.6 million class members.

The amount of potential damages is uncertain at this time.

In addition, we are subject to individual and class actions in Europe, as well as regulatory investigations in the United States, Europe, and elsewhere, relating to similar matters with regard to our business tools.

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.

For example, in 2019 we became the subject of antitrust

investigations by the FTC and U.S.

Department of Justice.

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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

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.

Trial began on April 14, 2025 and concluded on May 27, 2025.

On November 18, 2025, the court granted judgment in our favor.

On January 20, 2026, the FTC filed a notice of appeal of that ruling.

Multiple putative class actions have also been filed in state and federal courts in the United States 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.

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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.

On December 30, 2024, we filed our motion for summary judgment in the putative class action brought on behalf of certain advertisers, which is pending with the court.

On January 24, 2025, the court denied plaintiffs' motion for class certification in the action brought on behalf of users, permitting it to proceed only on an individual basis as to the named plaintiffs.

On September 29, 2025, in the user action, the court granted our motion, entering judgment in our favor.

On October 27, 2025, plaintiffs in the user action filed a notice of appeal.

On February 11, 2022, a putative class action was filed against us in the UK Competition Appeals Tribunal (CAT) under the UK collective proceedings regime ( Lovdahl-Gormsen v.

Meta Platforms, Inc.

On October 6, 2023, following the denial of class certification, the class representative submitted an amended claim alleging abuse of dominance relating to aspects of our data processing practices and seeking damages.

The CAT certified the amended claim on February 15, 2024.

Trial is scheduled to begin in September 2027.

We are also subject to litigation in Europe brought by news and media companies alleging anticompetitive conduct in relation to aspects of our historic data processing practices.

For example, on December 1, 2023, 87 news media companies filed a joint action against us in Spain in relation to our legal basis under the GDPR for behavioral advertising, alleging unfair competition and abuse of dominance ( Asociacion de Medios de Informacion (AMI) v.

Meta Ireland ).

On November 19, 2025, the court issued judgment against us, finding that AMI had failed to establish abuse of dominance but upholding its case on unfair competition and awarding damages of approximately EUR € 542 million.

We have appealed the decision.

In addition, on October 24, 2024, ten radio and television publishers commenced a separate claim against us in Spain on the same basis ( Union de Televisiones Comerciales Asociadas (UTECA) v.

Meta Ireland ).

In addition, on April 29, 2025, a similar unfair competition claim was filed against us by 67 media companies in France ( Amaury et al.

Meta Platforms Ireland Limited ).

Trial is expected to take place in 2027.

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.

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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.

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 (DMA).

The European Commission issued preliminary findings on July 1, 2024 reflecting its preliminary view that our model does not comply with such requirements.

In April 2025, the European Commission issued a final decision that our "subscription for no ads" model does not comply with such requirements and imposed a fine of EUR € 200 million.

Based on feedback from the European Commission in connection with the DMA, we launched less personalized ads (LPA) in November 2024 and made significant modifications to LPA since the European Commission issued its final decision.

We appealed the European Commission's decision on July 4, 2025, but further modifications to our model may be imposed during the appeal process, which could result in a materially worse user experience for European users and a significant impact to our European business and revenue.

Securities and Other Actions

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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.

On January 24, 2025, the U.S.

Court of Appeals for the Ninth Circuit returned the case to the district court.

On July 1, 2025, the plaintiffs filed a fourth amended complaint.

On September 2, 2025, we filed a motion to dismiss the fourth amended complaint.

We are also subject to other government inquiries and investigations relating to our business activities and disclosure practices.

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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.

On October 14, 2024, plaintiffs filed their notice of appeal and oral argument was held on January 6, 2026.

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.

Beginning in January 2022, we became subject to litigation and other proceedings that were filed in various federal and state courts in the United States as well as other jurisdictions 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, Canada, Europe, and elsewhere 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.

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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.

Certain of the lawsuits described above have since expanded to include various other claims relating to our services, including with respect to age verification, AI and AI chatbots, deceptive advertising, illicit or illegal activity with respect to drugs, fraud, and

firearms, and privacy-related matters, among others.

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.

Trial in the first of the personal injury cases began on January 27, 2026 in Judicial Council Coordination Proceeding No.

5255 pending in Los Angeles County California Superior Court.

Trial in the first of the state attorneys general cases is currently scheduled to begin on February 2, 2026 in the First Judicial District Court of New Mexico, in a case brought by the New Mexico Attorney General.

Trials in other state attorneys general cases are currently scheduled or expected to be scheduled in the second half of 2026 or in 2027.

The first trial in the multidistrict litigation ( In re Social Media Adolescent Addiction Product Liability Personal Injury Litigation ) is a school district bellwether case and is scheduled to begin on June 15, 2026.

Across the cases described above, the damages or penalties that plaintiffs have indicated they intend to seek range widely in amount, including in certain cases up to the high tens of billions of dollars.

In addition, beginning in November 2024, counsel for over one hundred thousand individual claimants have sent mass arbitration demands relating to "social media addiction" and related harms allegedly caused by Instagram.

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.

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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.

We then moved to compel arbitration, which the district court denied.

We appealed the denial of our motion to compel arbitration to the Ninth Circuit on December 3, 2025.

The matter is stayed in district court pending resolution of our appeal.

Beginning on July 7, 2023, multiple cases, including putative class actions, were filed against us in the United States and elsewhere, alleging that we improperly acquired, distributed, and used various copyrighted materials and/or other types of data to train our artificial intelligence models and seeking unspecified damages and injunctive relief.

In the United States, statutory damages for copyright liability are calculated on a per work basis, which may result in substantial damages, particularly given the large volumes of data required to train AI models.

The cases in the United States, which were filed in the U.S.

District Court for the Northern District of California ( Kadrey, et al.

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, 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.

District Court for the Northern District of California), have been consolidated into Kadrey, et al.

Meta Platforms, Inc .

Motions for summary judgment were heard in this case on May 1, 2025, including on the issue of the applicability of the fair use defense to use of copyrighted books for generative AI model training.

On June 25, 2025, the court granted our motion for summary judgment on fair use as to the named plaintiffs in the case.

The parties will proceed to brief the remaining claim of copyright infringement due to alleged distribution of books to third parties during the downloading process.

The court is scheduled to hear summary judgment motions on July 16, 2026.

Beginning in November 2025, additional cases with similar claims were filed against us in the U.S.

District Court for the Northern District of California ( Entrepreneur Media v.

Meta Platforms, Inc., Carreyrou et al.

Anthropic PBC, et al.

and TED Entertainment, Inc.

Meta Platforms, Inc .).

We expect some of these cases will be set for trial beginning in mid-2027.

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.

The Commission issued preliminary findings with respect to some of these topics on October 24, 2025 reflecting its preliminary view that we have infringed DSA obligations related to notice and action mechanisms for illegal content reporting, content moderation decision appeals, and data access for researchers.

We have an opportunity to respond to the preliminary findings, and would also have an opportunity to appeal a final decision by the Commission.

We are also responding to regulatory inquiries and litigation related to allegedly deceptive advertising, including but not limited to financial scams and the use of our services to promote deceptive activity, in other parts of the world.

We are also subject to other litigation and government inquiries and investigations relating to advertising on our platform and our alleged role in causing or contributing to various societal harms, including illegal activity with respect to drugs, fraud, deceptive activity, unlawful discrimination, and other harms potentially impacting large numbers of people.

We have received additional requests relating to these and other topics including in connection with news outlet reporting regarding these issues in the fourth quarter of 2025.

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.

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As of December 31, 2024, $ 51.28 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.

In 2025, we repurchased and subsequently retired 40 million shares of our Class A common stock for an aggregate amount of $ 26.26 billion, including excise taxes.

As of December 31, 2025, $ 25.03 billion remained available and authorized for repurchases.

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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.

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.

Our share repurchase program may be suspended, delayed, discontinued, or accelerated at any time.

The following table summarizes our dividends activities for the periods presented (in millions, except per share amounts):

Record Date Payment Date Dividend Per Share Class A Class B Total

March 14, 2025 March 26, 2025 $ 0.525 $ 1,145 $ 180 $ 1,325

June 16, 2025 June 26, 2025 $ 0.525 $ 1,142 $ 180 $ 1,322

September 22, 2025 September 29, 2025 $ 0.525 $ 1,143 $ 180 $ 1,323

December 15, 2025 December 23, 2025 $ 0.525 $ 1,148 $ 180 $ 1,328

February 22, 2024 March 26, 2024 $ 0.50 $ 1,099 $ 174 $ 1,273

June 14, 2024 June 26, 2024 $ 0.50 $ 1,093 $ 173 $ 1,266

September 16, 2024 September 26, 2024 $ 0.50 $ 1,090 $ 172 $ 1,262

December 16, 2024 December 27, 2024 $ 0.50 $ 1,095 $ 172 $ 1,267

Beginning in the first quarter of 2025, our board of directors increased the cash dividend by 5 % to $ 0.525 per share of outstanding Class A and Class B common stock.

During the years ended December 31, 2025 and 2024, dividend equivalent payments on eligible equity awards, which are not included above, were not material.

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.

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.

Our board of directors and stockholders approved our 2025 Equity Incentive Plan (2025 Plan), effective as of May 28, 2025, which serves as the successor to our 2012 Equity Incentive Plan (2012 Plan) and provides for the issuance of RSUs, incentive and nonqualified stock options, restricted stock awards, stock appreciation rights, performance shares, and stock bonuses to qualified employees, directors, and consultants.

No new awards will be issued under the 2012 Plan as of the effective date of the 2025 Plan.

Outstanding awards under the 2012 Plan continue to be subject to the terms and conditions of the 2012 Plan.

Shares that are withheld in connection with the net settlement of RSUs granted under the 2012 Plan and 2025 Plan, as well as forfeited shares underlying RSUs that were granted under the 2012 Plan and 2025 Plan, are added to the reserves of the 2025 Plan.

As of December 31, 2025, there were 454 million shares of our Class A common stock reserved for future issuance under our 2025 Plan.

Pursuant to the automatic increase provision under our 2025 Plan, the number of shares reserved for issuance increases automatically on January 1 of each of the calendar years during the term of the 2025 Plan, which will continue through May 2035, by a number of shares of Class A common stock equal to the lesser of (i) 2.5 % of the total issued and outstanding shares of our Class A common stock as of the immediately preceding December 31st or (ii) a number of shares determined by our board of directors.

Pursuant to this automatic increase provision, our board of directors approved an increase of 55 million shares of Class A common stock reserved for issuance, effective January 1, 2026.

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):

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Unvested at December 31, 2025 115,552 $ 500.68

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, 2025, 2024, and 2023 was $ 43.11 billion, $ 33.14 billion, and $ 17.46 billion, respectively.

The income tax benefit recognized related to awards vested during the years ended December 31, 2025, 2024, and 2023 was $ 9.33 billion, $ 6.95 billion, and $ 3.65 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.

Interest and Other Income (Expense), Net

The following table presents the detail of interest and other income (expense), net (in millions):

As of December 31, 2025, unrecognized share-based compensation expense related to RSU awards was $ 54.81 billion, which is expected to be recognized over a weighted-average period of approximately three years based on vesting under the award service conditions.

Interest and Other Income, Net

The following table presents the detail of interest and other income, net (in millions):

Year Ended December 31,

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Interest expense ( 1,165 ) ( 715 ) ( 446 )

Foreign currency exchange losses, net ( 690 ) ( 366 ) ( 81 )

Foreign currency exchange gains (losses), net 352 ( 690 ) ( 366 )

Other income (expense), net 1,346 171 ( 150 )

Total interest and other income (expense), net $ 1,283 $ 677 $ ( 125 )

Total interest and other income, net $ 2,656 $ 1,283 $ 677

The components of income before provision for income taxes are as follows (in millions):

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Provision for income taxes $ 25,474 $ 8,303 $ 8,330

As a result of the implementation of the One Big Beautiful Bill Act (OBBBA) enacted in July 2025, we expect to incur Corporate Alternative Minimum Tax (CAMT) beginning in 2025.

We recorded a $ 15.93 billion charge in the third quarter of 2025, of which $ 14.03 billion was a valuation allowance against our U.S.

federal deferred tax assets as of the enactment date of OBBBA, and the remaining was mostly related to the reduction of the benefit of the foreign-derived intangible income deduction.

In determining the valuation allowance, our accounting policy incorporates the expected impact of future years’ CAMT in assessing the realizability of our deferred tax assets.

Beginning in 2025 annual reporting, we adopted ASU 2023-09 prospectively.

See Note 1 — Summary of Significant Accounting Policies – Recently Adopted Accounting Pronouncements for additional details on the adoption of ASU 2023-09.

A reconciliation of the U.S.

federal statutory income tax rates to our effective tax rate is as follows (in percentages):

federal statutory income tax rate to our effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows (in millions, except percentages):

Year Ended December 31, 2025

federal statutory income tax rate $ 18,046 21.0 %

State and local income taxes, net of federal income tax effect (1)

( 202 ) ( 0.2 )

Foreign tax effects 1,464 1.7

Research and development tax credits ( 3,912 ) ( 4.6 )

foreign tax credits ( 1,405 ) ( 1.6 )

Valuation allowances (2)

Changes in unrecognized tax benefits (3)

Other adjustments

Excess tax benefits from share-based compensation ( 4,307 ) ( 5.0 )

Effective tax rate $ 25,474 29.6 %

_________________________

(1) California represents the majority of the tax effect in this category.

(2) Primarily related to the implementation of OBBBA.

(3) Changes in unrecognized tax benefits on an aggregated basis for all jurisdictions.

(4) Includes the tax effects of enactment of new tax laws (excluding implementation of OBBBA reflected in valuation allowances), effect of cross-border tax laws, and nontaxable or nondeductible items.

A reconciliation of the U.S.

federal statutory income tax rates to our effective tax rate for the years ended December 31, 2024 and 2023 is as follows (in percentages):

Year Ended December 31,

federal statutory income tax rate 21.0 % 21.0 %

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Effective tax rate 11.8 % 17.6 %

Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows (in millions):

Year Ended December 31, 2025

Federal $ 4,118

Cash paid for income taxes, net of refunds received $ 7,578

Our deferred tax assets (liabilities) are as follows (in millions):

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Right-of-use assets ( 4,453 ) ( 3,000 )

Unrealized gains in securities and investments ( 621 ) —

Other ( 387 ) —

Total deferred tax liabilities ( 21,362 ) ( 13,959 )

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.

Net deferred tax assets (liabilities) $ ( 9,167 ) $ 9,578

The valuation allowance was approximately $ 15.90 billion as of December 31, 2025, mostly related to U.S.

federal deferred tax assets, including certain tax credits and attributes that are not expected to be realized due to the anticipated impact of future years' CAMT, and state tax credit carryforwards.

The valuation allowance was approximately $ 3.51 billion as of December 31, 2024, 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.

As of December 31, 2025, our U.S.

federal net operating loss carryforwards were $ 16.35 billion, most of which do not expire.

Our state net operating loss carryforwards were $ 3.79 billion, which will begin to expire in 2031 if not utilized.

As of December 31, 2025, we have federal and state tax credit carryforwards of $ 7.85 billion and $ 6.80 billion, respectively, 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.

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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.

We have not accrued taxes related to the outside basis difference in the contributed capital of our foreign subsidiaries, as we currently intend to indefinitely reinvest that capital.

The determination of the amount of the deferred tax liability is not practicable.

The following table reflects changes in the gross unrecognized tax benefits (in millions):

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If our gross unrecognized tax benefits of $ 16.45 billion as of December 31, 2025 were realized in a future period, this would result in a tax benefit of $ 11.25 billion within our provision of income taxes at such time.

Our long-term income tax liabilities include $ 11.23 billion related to the uncertain tax positions and $ 9.78 billion related to deferred tax liabilities as of December 31, 2025.

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 2014 through 2016 tax years are with the Internal Revenue Service (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.

Our 2021 and subsequent tax years remain open to examination by the Irish Revenue Commissioners.

Facebook, Inc.

Comm'r of Internal Revenue

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.

We did not agree with the position of the IRS and filed a petition in the Tax Court challenging the Notice ( Facebook, Inc.

Comm'r of Internal Revenue (2010 tax year)).

On January 15, 2020, the IRS' 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.

In March 2018, we received a second Notice ("2011-2013 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.

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 ( Facebook, Inc.

Comm'r of Internal Revenue (2011-2013 tax years)).

On May 22, 2025, the Tax Court issued its opinion in Facebook, Inc.

Comm'r of Internal Revenue (2010 tax year).

The Tax Court opinion provided a value of $ 7.79 billion for the intellectual property transferred to our international subsidiary, which is $ 1.48 billion higher than we reported.

We estimated the net tax effects based on the revised value, and our provision for income taxes increased due to the remeasurement of unrecognized tax benefits.

The Tax Court will review tax estimates submitted by both parties and determine the tax due in its forthcoming Tax Court decision.

We will reassess any remeasurement of unrecognized tax benefits in the period in which the Tax Court decision is entered.

At that time, we and the IRS will each have the option to file an appeal to the Ninth Circuit U.S.

Court of Appeals.

In September 2025, we received a Statutory Notice of Deficiency ("2017-2019 Notice") from the IRS, asserting an additional $ 15.89 billion in tax, plus interest and penalties for our 2017 through 2019 tax years.

This 2017-2019 Notice primarily relates to transfer pricing with our foreign subsidiaries and other international tax adjustments.

The largest issue in the 2017-2019 Notice relates to the same underlying transfer pricing transaction that we litigated in the 2010 tax year trial and for which we received a Tax Court opinion in May 2025.

The IRS' proposed adjustments do not represent a final determination and do not reflect offsets, including reduction in tax we would owe under the mandatory transition tax on accumulated foreign earnings, global intangible low-taxed income tax, and foreign-derived intangible income deduction from the 2017 Tax Cuts and Jobs Act.

We do not agree with the IRS' position and filed a petition with the Tax Court in December 2025 to challenge the 2017-2019 Notice.

As of December 31, 2025, we believe our accrual for unrecognized tax benefits is adequate.

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.

We have a number of years remaining that are subject to examination, of which the timing of the resolution, settlement, and closure of any audits is highly uncertain.

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.

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FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services.

RL includes our virtual, augmented, and mixed reality related consumer hardware, software, and content.

RL includes our virtual and augmented 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 chief executive officer is our chief operating decision maker (CODM).

Our CODM uses consolidated and operating segment's revenue and income (loss) from operations to allocate resources during our annual planning process and to assess performance.

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.

These directly attributable 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.

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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):

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data