Financial Analysis

"Commitments and Contingencies Contractual Commitments 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): 2026 $ 30,634 2027 22,166 2028 21,221 2029 19,761 2030 19,407 Thereafter 17,857 Total $ 131,046 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. Legal and Related Matters With respect to the cases, actions, and inquiries described below, we evaluate the associated developments on a regular basis and accrue a liability when we believe a loss is probable and the amount can be reasonably estimated. In addition, we believe there is a reasonable possibility that we may incur a loss in some of these matters. Unless otherwise noted, with respect to the matters described below that do not include an estimate of the amount of loss or range of possible loss, such losses or range of possible losses either cannot be estimated or are not individually …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Revenue disaggregated by revenue source and by segment consists of the following (in millions): Year Ended December 31, 2025 2024 2023 Advertising $ 196,175 $ 160,633 $ 131,948 Other revenue 2,584 1,722 1,058 Family of Apps 198,759 162,355 133,006 Reality Labs 2,207 2,146 1,896 Total revenue $ 200,966 $ 164,501 $ 134,902 Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions): Year Ended December 31, 2025 2024 2023 United States and Canada (1) $ 78,866 $ 63,207 $ 52,888 Europe (2) 46,569 38,361 31,210 Asia-Pacific 53,817 45,009 36,154 Rest of World (2) 21,714 17,924 14,650 Total revenue $ 200,966 $ 164,501 $ 134,902 _________________________ (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) Europe includes Russia and Turkey, and Rest of World includes Africa, Latin America, and the Middle East.

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"Income Taxes The components of income before provision for income taxes are as follows (in millions): Year Ended December 31, 2025 2024 2023 Domestic $ 79,644 $ 66,342 $ 43,499 Foreign 6,288 4,321 3,929 Income before provision for income taxes $ 85,932 $ 70,663 $ 47,428 The provision for income taxes consists of the following (in millions): Year Ended December 31, 2025 2024 2023 Current: Federal $ 2,820 $ 9,569 $ 4,934 State 745 775 577 Foreign 3,154 2,696 2,688 Total current tax expense 6,719 13,040 8,199 Deferred: Federal 18,379 (4,709) 67 State 395 (43) 123 Foreign (19) 15 (59) Total deferred tax (benefits) expense 18,755 (4,737) 131 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 Recen …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Leases 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. Many leases include one or more options to renew. The components of lease costs are as follows (in millions): Year Ended December 31, 2025 2024 2023 Finance lease cost: Amortization of right-of-use assets $ 549 $ 387 $ 349 Interest 31 23 20 Operating lease cost 2,798 2,359 2,091 Variable lease cost and other 1,147 844 580 Total $ 4,525 $ 3,613 $ 3,040 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: December 31, 2025 2024 Weighted-average remaining lease term: Finance leases 15.1 years 13.7 years Operating leases 12.3 years 11.5 years Weighted-average discount rate: Finance leases 4.1 % 3.6 % Operating leases 4.3 % 3.9 % The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2025 (in millions): Operating Leases Finance Leases 2026 $ 3,211 $ 344 2027 3,237 97 2028 3,057 97 2029 2,985 88 2030 2,621 86 Thereafter 18,397 792 Total undiscounted cash flows 33,508 1,504 Less: Imputed interest (8,355) (32 …

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Long-term Debt 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 August 2022 Notes 2027 - 2062 3.50% - 4.65% 3.63% - 4.71% $ 10,000 $ 10,000 May 2023 Notes 2028 - 2063 4.60% - 5.75% 4.68% - 5.79% 8,500 8,500 August 2024 Notes 2029 - 2064 4.30% - 5.55% 4.42% - 5.60% 10,500 10,500 November 2025 Notes 2030 - 2065 4.20% - 5.75% 4.27% - 5.77% 30,000 Total face amount of long-term debt 59,000 29,000 Unamortized discount and issuance costs, net (256) (174) Long-term debt $ 58,744 $ 28,826 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 $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. The fair value is determined based on the quoted prices at the end of the reporting periods and categorized as Level …

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Recently Adopted Accounting Pronouncements Beginning in 2025 annual reporting, we adopted Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): 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. 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. 2024-03, Income StatementReporting Comprehensive IncomeExpense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (ASU 2024-03). 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 i …

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Revenue Revenue disaggregated by revenue source and by segment consists of the following (in millions): Year Ended December 31, 2025 2024 2023 Advertising $ 196,175 $ 160,633 $ 131,948 Other revenue 2,584 1,722 1,058 Family of Apps 198,759 162,355 133,006 Reality Labs 2,207 2,146 1,896 Total revenue $ 200,966 $ 164,501 $ 134,902 Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions): Year Ended December 31, 2025 2024 2023 United States and Canada (1) $ 78,866 $ 63,207 $ 52,888 Europe (2) 46,569 38,361 31,210 Asia-Pacific 53,817 45,009 36,154 Rest of World (2) 21,714 17,924 14,650 Total revenue $ 200,966 $ 164,501 $ 134,902 _________________________ (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) Europe includes Russia and Turkey, and Rest of World includes Africa, Latin America, and the Middle East. 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.

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Segment and Geographical Information We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes our virtual 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). 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 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. Indirect operating expenses, such as facilities, information technology, certain shared research and development activities, recruiting, and physical security expenses are mostly allocated based on headcount. Costs related to the operation of our data centers and technical infrastructure are gen …

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"Commitments and Contingencies Leases and Contractual Commitments In addition to the lease liabilities that are included on our balance sheet, we have operating and finance leases that have not yet commenced as of June 30, 2026. These lease obligations were approximately $278.99 billion, consisting of data centers, colocations, and certain network infrastructure, which will commence during the remainder of 2026 through 2036 with lease terms ranging from greater than one year to 30 years. In July 2026, we entered into additional data center leases with lease obligations of approximately $68 billion, which are expected to commence in 2027 and 2028, with lease terms of 18 to 20 years. As of June 30, 2026, we had $349.31 billion of non-cancelable contractual commitments, comprising both short-term and long-term arrangements. These commitments mostly relate to third-party cloud capacity arrangements and investments in servers and network infrastructure, data centers, and consumer hardware products in Reality Labs, with approximately $53.52 billion and $81.65 billion due in 2026 and 2027, respectively. In addition, as of June 30, 2026, we have contingent obligations to purchase up to $14.72 billion of cloud capacity over a five-year period, which may be reduced if the cloud service provider is able to sell such capacity to other customers. For agreements with variable terms, we do not estimate the total obligation beyond minimum quantities and/or pricing, as of the reporting date. …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

Revenue disaggregated by revenue source and by segment consists of the following (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Advertising $ 59,363 $ 46,563 $ 114,387 $ 87,955 Other revenue 1,007 583 1,891 1,093 Family of Apps 60,370 47,146 116,278 89,048 Reality Labs 431 370 833 782 Total revenue $ 60,801 $ 47,516 $ 117,111 $ 89,830 Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 United States and Canada $ 23,863 $ 18,454 $ 45,129 $ 35,323 Europe (1) 14,009 11,128 27,249 20,749 Asia-Pacific 16,073 12,858 31,518 24,097 Rest of World (1) 6,856 5,076 13,215 9,661 Total revenue $ 60,801 $ 47,516 $ 117,111 $ 89,830 ____________________________________ (1) Europe includes Russia and Turkey. Rest of World includes Africa, Latin America, and the Middle East.

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"Income Taxes Our tax provision for interim periods is determined using an estimated annual effective tax rate, adjusted for discrete items arising in that quarter, including excess tax benefits or shortfall tax expenses from share-based compensation and changes in unrecognized tax benefits. In each quarter, we update the estimated annual effective tax rate and make a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to significant volatility due to several factors, including our ability to accurately predict the proportion of our income (loss) before provision for income taxes in multiple jurisdictions, the effects of tax law changes, and the U.S. tax benefits from foreign-derived deduction eligible income. Our gross unrecognized tax benefits were $18.74 billion and $16.45 billion as of June 30, 2026 and December 31, 2025, respectively. These unrecognized tax benefits are primarily related to the uncertainties with our research tax credits and transfer pricing with our foreign subsidiaries, which include licensing of intellectual property, providing services and other transactions. If the gross unrecognized tax benefits as of June 30, 2026 were realized in a future period, this would result in a tax benefit of $12.73 billion within our provision for income taxes at such time. The amount of interest and penalties accrued was $2.97 billion and $2.60 billion as of June 30, 2026 and December 31, 2025, respectively. We expect to continue …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Long-term Debt In May 2026, we issued an aggregate of $25.00 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 June 30, 2026 December 31, 2025 August 2022 Notes 2027 - 2062 3.50% - 4.65% 3.63% - 4.71% $ 10,000 $ 10,000 May 2023 Notes 2028 - 2063 4.60% - 5.75% 4.68% - 5.79% 8,500 8,500 August 2024 Notes 2029 - 2064 4.30% - 5.55% 4.42% - 5.60% 10,500 10,500 November 2025 Notes 2030 - 2065 4.20% - 5.75% 4.27% - 5.77% 30,000 30,000 May 2026 Notes 2031 - 2066 4.55% - 6.45% 4.60% - 6.48% 25,000 Total face amount of long-term debt 84,000 59,000 Unamortized discount and issuance costs, net (336) (256) Long-term debt $ 83,664 $ 58,744 Each series of the Notes ranks equally with each other. Interest on the Notes is payable semi-annually in arrears. We may redeem the Notes at any time, in whole or in part, at specified redemption prices. We are not subject to any financial covenants under the Notes. Interest expense, net of capitalized interest, recognized on the Notes was $754 million and $1.29 billion for the three and six months ended June 30, 2026, respectively, and $232 million and $463 million for the three and six months ended June 30, 2025, respectively. The total estimated fair value of our outstanding Notes was $79.75 billion and $57.22 billion as of June 30, …

LongTermDebtTextBlock · excerpt; the full note is in the filing

Accounting Pronouncements Not Yet Adopted In May 2026, the FASB issued Accounting Standards Update (ASU) No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) . This standard establishes guidance for the recognition, measurement and disclosure of environmental credits and environmental credit obligations. The guidance will be effective for the annual periods beginning the year ending December 31, 2028 and interim periods within those annual periods. Early adoption is permitted. Upon adoption, the guidance is required to be applied on a retrospective basis. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.

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Revenue Revenue disaggregated by revenue source and by segment consists of the following (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Advertising $ 59,363 $ 46,563 $ 114,387 $ 87,955 Other revenue 1,007 583 1,891 1,093 Family of Apps 60,370 47,146 116,278 89,048 Reality Labs 431 370 833 782 Total revenue $ 60,801 $ 47,516 $ 117,111 $ 89,830 Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 United States and Canada $ 23,863 $ 18,454 $ 45,129 $ 35,323 Europe (1) 14,009 11,128 27,249 20,749 Asia-Pacific 16,073 12,858 31,518 24,097 Rest of World (1) 6,856 5,076 13,215 9,661 Total revenue $ 60,801 $ 47,516 $ 117,111 $ 89,830 ____________________________________ (1) Europe includes Russia and Turkey. Rest of World includes Africa, Latin America, and the Middle East. Deferred revenue was $1.16 billion and $1.08 billion as of June 30, 2026 and December 31, 2025, respectively. Our deferred revenue mostly relates to advertising prepayments and credits, as well as software updates and upgrades associated with Reality Labs hardware sales, the substantial majority of which are expected to be realized in less than a year.

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Segment Information We report our financial results for our two reportable segments: Family of Apps (FoA) and Reality Labs (RL). FoA includes Facebook, Instagram, Messenger, WhatsApp, and other services. RL includes our virtual and augmented reality related consumer hardware, software, and content. Our operating segments are the same as our reportable segments. The following table sets forth our segment information of revenue, expenses, and income (loss) from operations (in millions): Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Family of Apps: Revenue $ 60,370 $ 47,146 $ 116,278 $ 89,048 Employee compensation (1) (14,571) (9,336) (26,650) (18,366) Other costs and expenses (2) (22,405) (12,839) (39,334) (23,946) Income from operations $ 23,394 $ 24,971 $ 50,294 $ 46,736 Reality Labs: Revenue $ 431 $ 370 $ 833 $ 782 Employee compensation (1) (2,468) (2,523) (5,013) (5,301) Other costs and expenses (3) (2,582) (2,377) (4,467) (4,220) Loss from operations $ (4,619) $ (4,530) $ (8,647) $ (8,739) Total: Revenue $ 60,801 $ 47,516 $ 117,111 $ 89,830 Employee compensation (1) (17,039) (11,859) (31,663) (23,667) Other costs and expenses (2)(3) (24,987) (15,216) (43,801) (28,166) Income from operations $ 18,775 $ 20,441 $ 41,647 $ 37,997 ____________________________________ (1) Employee compensation includes employee payroll, share-based compensation, bonus, and employee benefits for medical care, retirement, insurances, and other expenses. Employee compens …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Subsequent Event In July 2026, we entered into an exclusivity agreement to co-develop a data center campus in El Paso, Texas, through a venture in which we would hold a 20% membership interest. The transaction is subject to the execution of definitive agreements and customary closing conditions. Upon closing, expected in the third quarter of 2026, we estimate that we will contribute approximately $2.3 billion of held-for-sale assets, net of liabilities, consisting mostly of construction in progress and land, and receive a one-time distribution of approximately $1 billion. We will enter into lease agreements for the use of properties to be developed on the data center campus. We will also provide residual value guarantees with a maximum aggregate exposure of approximately $13 billion.

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