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 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · A 3.58-billion daily audience, the disclosed relationship between community size and advertiser value, and simultaneous ad-volume and price growth support a strong current audience network advantage. The strength of incremental network effects remains inferred.
durability · 2/4 · Engagement-driven growth and repeated annual price increases demonstrate persistence. Short advertiser commitments, realized targeting impairment, and younger-user warning signs limit evidence of long-term durability.
customer dependency · 2/4 · Daily usage and advertiser demand indicate recurring utility, assessed indirectly from aggregate operating evidence. Advertisers can leave without long-term commitments and require competitive returns; material contractual switching costs are not established.
erosion resilience · 2/4 · Rising impressions and prices despite acknowledged targeting impairment demonstrate some resilience. Younger-user usage signals and exposure to platform policies and regulation leave meaningful erosion channels.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Average ad prices rose 10% in 2024, 9% in 2025, and 12% year-over-year in the second quarter of 2026, alongside growing impressions. These are strong realized outcomes, although blended prices do not isolate like-for-like pricing or prove unilateral control.
retention · 2/4 · Daily audience size, engagement-driven impressions, and growing advertising demand indirectly support repeat usage and demand. Cohort retention is unavailable, advertiser spending is uncommitted, and younger-user data indicates possible erosion.
margin resilience · 1/4 · Second-quarter 2026 revenue grew 28%, but operating income fell 8% and consolidated operating margin declined from 43% to 31%. Family of Apps also experienced falling operating income. Realized pricing gains have provided weak protection against the disclosed expense surge.
contractual freedom · 2/4 · Meta demonstrably adjusts ad frequency and inventory, and advertiser relationships lack long-term commitments. This supports flexible monetization but also permits rapid budget withdrawal. The passages do not establish auction rules or unrestricted authority over prices and terms.
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 · Substantial operating earnings and liquidity coexist with rising debt, increased outstanding shares, and non-cancelable commitments increasing from $131.046 billion to $349.31 billion. Large additional lease obligations and declining operating income make discipline mixed; cash generation and ultimate investment returns cannot be established from the supplied passages.
incentive alignment · 2/4 · The actual 2025 program emphasized equity, with ownership guidelines and hedging restrictions. Service-based vesting and discretionary bonus determinations provide less direct performance discipline, while concentrated voting control limits outside shareholders' influence. This supports mixed alignment without assuming ownership percentages or future vesting.
execution · 2/4 · Revenue growth of 22% in 2025 and 28% in the second quarter of 2026, together with rising ad prices and impressions, demonstrates commercial execution. Operating income declines, substantial Reality Labs losses, and rapidly expanding commitments make the broader record mixed. Product effectiveness is assessed indirectly from operating outcomes.
governance · 2/4 · Actual independent standing committees, a substantial majority-independent board, and lead independent director authority provide oversight mechanisms. Dual-class voting concentration and restrictions on shareholder influence materially weaken accountability. Disclosed structures support a mixed assessment rather than proof of effective oversight outcomes.
Evidence
We build technology that helps people connect and share, find and build communities, and grow businesses.
Item 1, Business Overview: connection and community products · Filed 29/01/2026
•Family daily active people was 3.58 billion on average for December 2025.
2025 Business Highlights: December daily active people · Filed 16/04/2026
Trends in the number of people in our community affect our revenue and financial results by influencing the number of ads we are able to show, the value of our ads to marketers, as well as our expenses and capital expenditures.
MD&A: community size and advertising value · Filed 29/01/2026
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.
MD&A: 2025 impression growth and engagement · 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.
MD&A: average ad-price increases in 2025 and 2024 · Filed 29/01/2026
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.
MD&A: advertiser demand and management's explanation of ad performance · Filed 29/01/2026
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.
MD&A, second-quarter 2026 overview: impression and average ad-price growth · Filed 30/07/2026
As is common in the industry, our marketers do not have long-term advertising commitments with us.
Risk Factors: absence of long-term advertising commitments · 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 Factors: advertiser spending depends on competitive returns · 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 Factors: realized targeting impairment from data-practice changes · Filed 30/07/2026
For example, while user-provided data indicates a decline in usage among younger users, this age data may be unreliable because a disproportionate number of our younger users register with an inaccurate age.
Risk Factors: younger-user usage decline and age-data uncertainty · Filed 30/07/2026
Our advertising revenue can also be adversely affected by a number of other factors, including: •decreases in user engagement, including time spent on our products; •our inability to continue to increase user access to and engagement with our products; •product changes or inventory management decisions we may make that change the size, format, frequency, or relative prominence of ads displayed on our products or of other unpaid content shared by marketers on our products; •our inability to maintain or increase marketer demand, the pricing of our ads, or both; •our inability to maintain or increase the quantity or quality of ads shown to users; •changes to the content or application of third-party policies that limit our ability to deliver, target, or measure the effectiveness of advertising, including changes by mobile operating system and browser providers such as Apple and Google; •adverse litigation, government actions, or legislative, regulatory, or other legal developments relating to advertising, including developments that may impact certain advertisers' ability to advertise on our platform or our ability to deliver, target, or measure the effectiveness of advertising; •user behavior or product changes that may reduce traffic to features or products that we monetize at a higher rate, such as our Feed and Stories products, including as a result of increased usage of our Reels or other video or messaging products; •reductions of advertising due to our efforts to implement or enforce advertising policies that protect the security and integrity of our platform or that we believe are needed to comply with global content, security, or integrity obligations; •the availability, accuracy, utility, and security of analytics and measurement solutions offered by us or third parties that demonstrate the value of our ads to marketers, or our ability to further improve such tools; 60 Table of Contents •loss of advertising market share to our competitors, including if prices to purchase our ads increase or if competitors offer lower priced, more integrated, or otherwise more effective products; •limitations on our ability to offer a number of our most significant products and services, including Facebook and Instagram, in Europe as a result of European courts invalidating the EU-U.S.
Risk Factors: advertising competition, platform policies, and regulatory exposure · Filed 30/07/2026
In particular, the ads we show may vary by product (for example, our video and Reels products are not currently monetized at the same rate as our Feed or Stories products), and from time to time we increase or decrease the number or frequency of ads we show as part of our product and monetization strategies.
MD&A: product monetization differences and control over ad frequency · Filed 30/07/2026
Family of Apps Reality Labs Total Three Months Ended June 30, % change Three Months Ended June 30, % change Three Months Ended June 30, % change 2026 2025 2026 2025 2026 2025 (in millions, except percentages) Revenue $ 60,370 $ 47,146 28% $ 431 $ 370 16% $ 60,801 $ 47,516 28% Costs and expenses 36,976 22,175 67% 5,050 4,900 3% 42,026 27,075 55% Income (loss) from operations $ 23,394 $ 24,971 (6)% $ (4,619) $ (4,530) (2)% $ 18,775 $ 20,441 (8)% Operating margin 39 % 53 % (1,072) % (1,224) % 31 % 43 % •Net income was $15.85 billion, with diluted earnings per share (EPS) of $6.18 for the three months ended June 30, 2026.
Consolidated and Segment Results: second-quarter revenue, expenses, operating income, and margins · Filed 30/07/2026
The increase in costs and expenses was primarily due to increases in employee compensation, including severance expenses; infrastructure expenses related to our data centers, technical infrastructure, and third-party cloud services; legal-related costs; and third-party AI token costs.
MD&A: compensation, infrastructure, legal, and AI-token expense increases · Filed 30/07/2026
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.
Commitments: non-cancelable obligations at December 31, 2025 · Filed 29/01/2026
As of June 30, 2026, we had $349.31 billion of non-cancelable contractual commitments, comprising both short-term and long-term arrangements.
Commitments: non-cancelable obligations at June 30, 2026 · Filed 30/07/2026
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.
Lease disclosures: obligations for infrastructure leases commencing through 2036 · Filed 30/07/2026
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.
Lease disclosures: additional July 2026 data-center leases · Filed 30/07/2026
CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except number of shares and par value) (Unaudited) June 30, 2026 December 31, 2025 Assets Current assets: Cash and cash equivalents $ 15,462 $ 35,873 Marketable securities 74,798 45,719 Accounts receivable, net 21,752 19,769 Prepaid expenses and other current assets 13,463 7,361 Total current assets 125,475 108,722 Non-marketable equity investments 30,157 27,524 Property and equipment, net 225,724 176,400 Operating lease right-of-use assets 23,985 20,404 Goodwill 23,406 24,534 Other assets 21,209 8,437 Total assets $ 449,956 $ 366,021 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 15,889 $ 8,894 Operating lease liabilities, current 2,425 2,213 Accrued expenses and other current liabilities 38,065 30,729 Total current liabilities 56,379 41,836 Operating lease liabilities, non-current 26,229 22,940 Long-term debt 83,664 58,744 Long-term income taxes 18,326 21,005 Other liabilities 4,137 4,253 Total liabilities 188,735 148,778 Commitments and contingencies Stockholders' equity: Common stock and additional paid-in capital, $0.000006 par value; 5,000 million Class A shares authorized, 2,206 million and 2,187 million shares issued and outstanding, as of June 30, 2026 and December 31, 2025, respectively; 4,141 million Class B shares authorized, 342 million and 343 million shares issued and outstanding, as of June 30, 2026 and December 31, 2025, respectively 103,981 95,793 Accumulated other comprehensive income (loss) (603) 271 Retained earnings 157,843 121,179 Total stockholders' equity 261,221 217,243 Total liabilities and stockholders' equity $ 449,956 $ 366,021 See Accompanying Notes to Condensed Consolidated Financial Statements.
Condensed Consolidated Balance Sheets: liquidity, debt, and outstanding shares · Filed 30/07/2026
Design. Our 2025 executive compensation program continued to be heavily weighted towards equity compensation, in the form of restricted stock units (RSUs), with cash compensation that we believe is competitively positioned when compared to our peer companies.
Compensation Discussion and Analysis: actual 2025 equity-weighted compensation design · Filed 16/04/2026
We typically grant our executive officers an annual RSU award with service-based vesting conditions as discussed further in the section entitled "—Elements of Executive Compensation—Equity Compensation" below.
Compensation Discussion and Analysis: service-based RSU vesting · Filed 16/04/2026
(Compensia), a national compensation consulting firm, to advise the committee on compensation-related matters; •the compensation, nominating & governance committee conducts an annual review and approval of our compensation strategy, including a review of our compensation-related risk profile to ensure that our compensation-related risks are not reasonably likely to have a material adverse effect on our company; •executive officer bonus payouts are based on a company performance percentage that is determined in the sole judgment of the compensation, nominating & governance committee; and •our compensation philosophy and related governance features are complemented by several specific policies and practices that are designed to align our executive compensation program with long-term shareholder interests, including the following: ◦our executives are subject to stock ownership guidelines that require them to maintain significant ownership of our common stock, effective after an initial period following their appointment as an executive officer; ◦our executives are subject to company-wide policies that prohibit trading in futures and derivative securities and engaging in hedging activities relating to our securities, holding our securities in margin accounts, pledging our securities as collateral for loans (unless otherwise approved by our compensation, nominating & governance committee), and engaging in short sales of our securities; and ◦our executives participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees, with limited additional healthcare benefits for executives who are primarily located outside of the United States.
Compensation Governance: discretionary bonuses, ownership guidelines, and trading restrictions · Filed 16/04/2026
The dual class structure of our common stock has the effect of concentrating voting control with our CEO and certain other holders of our Class B common stock; this will limit or preclude your ability to influence corporate matters.
Risk Factors: dual-class voting control · Filed 30/07/2026
All of the standing committees of our board of directors are composed of independent directors.
Independent Board Oversight: independent standing committees · Filed 16/04/2026
We have a Lead Independent Director who has authority that mirrors that of the Chairman, including coordinating and setting board meeting agendas and the ability to call special meetings of the board of directors.
Independent Board Oversight: lead independent director authority · Filed 16/04/2026
Our board of directors, which consists of a substantial majority of independent directors, remains committed to ensuring that the interests of all shareholders, irrespective of the class of shares they hold, are adequately protected.
Governance discussion: substantial majority of independent directors · Filed 16/04/2026
Zuckerberg with the ability to control the outcome of matters requiring stockholder approval, even if he owns significantly less than a majority of the shares of our outstanding Class A and Class B common stock; •when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of common stock, certain amendments to our certificate of incorporation or bylaws will require the approval of two-thirds of the combined vote of our then-outstanding shares of Class A and Class B common stock; •when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, vacancies on our board of directors will be able to be filled only by our board of directors and not by stockholders; •when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, our board of directors will be classified into three classes of directors with staggered three-year terms and directors will only be able to be removed from office for cause; •when the outstanding shares of our Class B common stock represent less than a majority of the combined voting power of our common stock, our stockholders will only be able to take action at a meeting of stockholders and not by written consent; •only our board chair, our chief executive officer, our president, or a majority of our board of directors are authorized to call a special meeting of stockholders; •advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; •our certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established, and shares of which may be issued, without stockholder approval; and •certain litigation against us can only be brought in Delaware.
Risk Factors: controller authority and shareholder-rights restrictions · Filed 30/07/2026
Meta delivered strong business performance, with 2025 revenue up 22% from 2024.
Shareholder letter: realized 2025 revenue growth · Filed 16/04/2026
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.
MD&A: realized second-quarter 2026 revenue growth · Filed 30/07/2026
The methodologies used to measure these metrics require significant judgment and are also susceptible to algorithm or other technical errors.
Limitations of Key Metrics: estimation judgment and technical-error exposure · Filed 30/07/2026
