AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 24/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · A global audience of 3.58–3.64B DAP and sustained increases in ad impressions and average price per ad across 2024–3Q26 support strong two-sided network effects that link user scale with advertiser demand.
durability · 2/4 · DAP and pricing trends suggest persistence, but durability is constrained by the lack of long-term advertiser commitments and by data/practice changes that reduce targeting effectiveness.
customer dependency · 2/4 · Meta derives substantially all revenue from ads on its Family of Apps and shows repeated demand, yet advertisers can leave at will due to no long-term commitments and ROI sensitivity.
erosion resilience · 2/4 · Despite prior targeting headwinds, average price per ad rose in 2024–3Q26 and management cites improved tools. However, the underlying targeting constraint persists as a risk.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Average price per ad increased 10% in 2024 and 9% in 2025, with further 12–14% increases in 1H–3Q26, while impressions also grew, indicating realized pricing strength.
retention · 2/4 · Rising DAP supports recurring user engagement, but metrics have stated measurement limitations and advertisers have no contractual lock‑in.
margin resilience · 1/4 · Despite strong revenue growth, operating margins fell in 2Q–3Q26 amid sharply higher costs and capex, demonstrating weak margin protection.
contractual freedom · 2/4 · Advertisers lack long-term commitments, supporting flexible pricing and inventory management, but also enabling rapid budget withdrawals when ROI falls.
Predictability85
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 9.48
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 6.80
Financial strength98
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 96.09
- netDebtEbitGrade
- 94.51
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 100.00
- Debt / FCF (x)
- 1.27
- Net debt / operating income (x)
- 0.27
- Interest coverage (x)
- 71.48
- Current ratio (x)
- 2.60
Capital allocation86
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 41.61
- 3-year average dilution (%)
- -2.09
- 3-year average SBC / revenue (%)
- 10.24
- cashConversionGrade
- 88.95
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · Large and growing contractual commitments and capex (with negative FCF in 3Q26) are balanced by strong operating cash flow and positive FCF in 2Q26, yielding a mixed record.
incentive alignment · 2/4 · Equity‑weighted compensation, CEO $1 salary, and an independent compensation committee support alignment, though separate voting control considerations remain.
execution · 2/4 · Substantial revenue growth in 1H–3Q26 and higher realized ad pricing indicate solid execution, offset by margin declines amid rising costs.
governance · 2/4 · Independent board committees exist, but dual‑class control concentrates voting power, reducing external accountability.
Evidence
Worldwide DAP increased 7% to 3.58 billion on average during December 2025 from 3.35 billion during December 2024.
Family metrics: DAP · Filed 29/01/2026
•Family daily active people (DAP) – DAP was 3.64 billion on average for September 2026, an increase of 3% year-over-year.
Operational highlights: DAP · Filed 21/10/2026
Ad impressions delivered during 2025 grew in all regions, especially in Asia-Pacific, which was driven by increases in users and their engagement on our products.
Trends in ad impressions · Filed 29/01/2026
In 2025, the average price per ad increased by 9%, as compared with an increase of 10% in 2024, year-over-year.
Average price per ad (2025) · Filed 29/01/2026
In 2024, the average price per ad increased by 10%, as compared with a decrease of 9% in 2023, year-over-year.
Average price per ad (2024) · Filed 30/01/2025
•Average price per ad – Average price per ad increased by 14% year-over-year.
Average price per ad (Q3 2026) · Filed 21/10/2026
Ad impressions delivered across our Family of Apps in the second quarter of 2026 increased 14% year-over-year, and our average price per ad in the second quarter of 2026 increased 12% year-over-year.
Average price per ad (Q2 2026) · Filed 30/07/2026
•Average price per ad – Average price per ad increased by 12% year-over-year.
Average price per ad (Q1 2026) · Filed 29/04/2026
Our Family of Apps (FoA) revenue represents the substantial majority of our total revenue.
FoA revenue share · Filed 29/01/2026
Currently, we generate substantially all of our revenue from selling advertising placements on our family of apps to marketers, which is reflected in FoA.
Revenue model (ads in FoA) · Filed 30/01/2025
As is common in the industry, our marketers do not have long-term advertising commitments with us.
Risk factor: no long-term ad commitments · Filed 29/01/2026
Some of these changes reduce our ability to effectively target ads, which has to some extent adversely affected, and will continue to adversely affect, our advertising business.
Risk factor: targeting reduced · Filed 29/01/2026
While the average price per ad declined year-over-year, we believe the improvements to our ad targeting and measurement tools have had a favorable impact on our ad performance and advertising demand.
Ad targeting tools impact on ad performance (2023) · Filed 02/02/2024
The increase in average price per ad in 2025 was driven by an increase in advertising demand, which we believe is mostly due to ongoing improvements to our ad performance from our ad targeting and measurement tools.
Management attribution: ad tools drove pricing (2025) · Filed 29/01/2026
The increase in average price per ad in 2024 was driven by an increase in advertising demand, which we believe is mainly due to ongoing improvements to our ad performance from our ad targeting and measurement tools.
Management attribution: ad tools drove pricing (2024) · Filed 30/01/2025
In the United States and internationally, we have filed various applications for protection of certain aspects of our intellectual property, and we currently hold a significant number of registered trademarks and issued patents in multiple jurisdictions and have acquired patents and patent applications from third parties.
Intellectual property portfolio (2025 10-K) · Filed 29/01/2026
In the United States and internationally, we have filed various applications for protection of certain aspects of our intellectual property, and we currently hold a significant number of registered trademarks and issued patents in multiple jurisdictions and have acquired patents and patent applications from third parties.
Intellectual property portfolio (Q3 2026 10-Q) · Filed 22/10/2026
In addition, other companies that control platforms, operating systems, or other services may also restrict or prohibit access to or integration with our AI features and technologies on their services, which could adversely affect our AI initiatives.
Risk: platform access restrictions affecting AI · Filed 22/10/2026
Second Quarter 2026 Financial Highlights
Three Months Ended June 30,
% Change
In millions, except percentages and per share amounts
2026
2025
Revenue
$
60,801
$
47,516
28
%
Costs and expenses
42,026
27,075
55
%
Income from operations
$
18,775
$
20,441
(8)
%
Operating margin
31
%
43
%
Provision for income taxes
$
2,908
$
2,197
32
%
Effective tax rate
16
%
11
%
Net income
$
15,848
$
18,337
(14)
%
Diluted earnings per share (EPS)
$
6.18
$
7.14
(13)
%
Second Quarter 2026 Operational and Other Financial Highlights
Q2 2026: revenue growth and margin decline · Filed 29/07/2026
Third Quarter 2026 Financial Highlights
Three Months Ended September 30,
% Change
In millions, except percentages and per share amounts
2026
2025
Revenue
$
64,601
$
51,242
26
%
Costs and expenses
51,613
30,707
68
%
Income from operations
$
12,988
$
20,535
(37)
%
Operating margin
20
%
40
%
Provision for income taxes
$
3,141
$
18,954
(83)
%
Effective tax rate
24
%
87
%
Net income
$
9,860
$
2,709
264
%
Diluted earnings per share (EPS)
$
3.83
$
1.05
265
%
Agreement with U.S.
Q3 2026: revenue growth and margin decline; costs up · Filed 21/10/2026
As of June 30, 2026, we had $349.31 billion of non-cancelable contractual commitments, comprising both short-term and long-term arrangements.
Non-cancelable contractual commitments (June 30, 2026) · Filed 30/07/2026
As of September 30, 2026, we had $454.52 billion of non-cancelable contractual commitments, comprising both short-term and long-term arrangements.
Non-cancelable contractual commitments (Sept 30, 2026) · Filed 22/10/2026
•Capital expenditures – Capital expenditures, including principal payments on finance leases, were $34.91 billion.
Capex Q3 2026 · Filed 21/10/2026
•Cash flow – Cash flow from operating activities was $32.79 billion, and free cash flow was negative $2.12 billion.(1)
Free cash flow Q3 2026 · Filed 21/10/2026
•Cash flow – Cash flow from operating activities was $31.86 billion, and free cash flow was $784 million.(1)
Free cash flow Q2 2026 · Filed 29/07/2026
•Our CEO continues to receive a base salary of $1 per year in addition to his overall security program, and he does not participate in the annual bonus plan or receive additional equity awards
Compensation Best Practices
•Compensation, nominating & governance committee composed of solely independent directors and advised by an independent compensation consultant
CEO compensation structure · Filed 16/04/2026
•Annual review and approval of our compensation strategy by the compensation, nominating & governance committee, including a review of our compensation-related risk profile
Compensation committee independence · Filed 16/04/2026
If, for example, Mr. Zuckerberg retains a significant portion of his holdings of Class B common stock for an extended period of time, he could, in the future, continue to control a majority of the combined voting power of our outstanding capital stock.
Controlled company voting control · Filed 29/01/2026
•Ad impressions – Ad impressions delivered across our Family of Apps increased by 14% year-over-year.
Ad impressions Q2 2026 · Filed 29/07/2026
•Ad impressions – Ad impressions delivered across our Family of Apps increased by 10% year-over-year.
Ad impressions Q3 2026 · Filed 21/10/2026
The slight decline in DAP on a quarter-over-quarter basis was driven by internet disruptions in Iran, as well as a restriction on access to WhatsApp in Russia.
Risk: regional access disruptions (Iran/Russia) · Filed 29/04/2026
Although we have generally taken measures to protect our proprietary rights, there can be no assurance that others will not offer products or concepts that are substantially similar to ours and compete with our business.
Risk: IP protection not assured; similar products may compete · Filed 22/10/2026
Further, our ability to continue to develop and effectively deploy AI technologies is dependent on access to specific third-party equipment, technology, and other technical and physical infrastructure, such as processing hardware, network capacity, models, computing power, and related energy requirements, as to which we cannot control the availability or pricing, especially in a highly competitive environment.
Risk: dependency on third-party AI hardware, infra · Filed 30/07/2026
Table of Contents
LIMITATIONS OF KEY METRICS AND OTHER DATA
Family Metrics
The numbers for our key metrics are calculated using internal company data based on the activity of user accounts.
Limitations of key metrics disclosure · Filed 29/01/2026
Marketers will not continue to do business with us, or they will reduce the budgets they are willing to commit to us, if we do not deliver ads in an effective manner, if they do not believe that their investment in advertising with us will generate a competitive return relative to other alternatives, or if they are not satisfied for any other reason.
Risk: marketers reduce budgets if ROI is not competitive · Filed 29/01/2026
First Quarter 2026 Financial Highlights
Three Months Ended March 31,
% Change
In millions, except percentages and per share amounts
2026
2025
Revenue
$
56,311
$
42,314
33
%
Costs and expenses
33,439
24,759
35
%
Income from operations
$
22,872
$
17,555
30
%
Operating margin
41
%
41
%
Provision (benefit) for income taxes (1)
$
(5,021)
$
1,738
NM
Effective tax rate (1)
(23)
%
9
%
Net income
$
26,773
$
16,644
61
%
Diluted earnings per share (EPS) (1)
$
10.44
$
6.43
62
%
____________________________________
NM — not meaningful
(1) Includes an $8.03 billion income tax benefit recognized in the first quarter of 2026, which partially offsets the $15.93 billion non-cash tax charge recorded in the third quarter of 2025 upon enactment of the One Big Beautiful Bill Act.
Q1 2026: revenue +33% yoy · Filed 29/04/2026
Total revenue for the second quarter of 2026 was $60.80 billion, an increase of 28% compared to the second quarter of 2025, due to an increase in advertising revenue.
Q2 2026: revenue +28% yoy · Filed 30/07/2026
