Meta reports $58.1B advertising revenue in Q4 2025 with 24% growth as GEM model improvements and Advantage+ tools deliver conversion gains while video generation reaches $10B run-rate.
Meta's advertising business generated $58.1 billion during the fourth quarter of 2025, marking 24% year-over-year growth as artificial intelligence improvements across ranking systems, creative tools, and campaign automation drove conversion acceleration through the period. The company announced results on January 28, 2026, revealing that ad impressions increased 18% while average price per ad rose 6%.
The strong advertising performance reflected continued advertiser demand despite infrastructure spending reaching $22.1 billion in the quarter. Full year advertising revenue totaled $196.2 billion, representing 22% growth over 2024. Meta's Q3 results showed similar momentum with $50.1 billion in advertising revenue.
Meta doubled the GPU cluster size for training its GEM ads ranking model during the quarter while adopting a new sequence learning architecture. The combined improvements drove a 3.5% lift in ad clicks on Facebook and more than 1% gain in conversions on Instagram, according to CFO Susan Li.
The sequence learning architecture processes longer sequences of user behavior and richer content information compared to previous systems. "This new sequence learning architecture is significantly more efficient than our prior architectures, which should enable us to further scale up the data, complexity and compute we use in our future ranking models to deliver performance gains," Li explained during the earnings call.
Conversion growth accelerated through the fourth quarter. Meta tracks value-weighted conversion rates that control for different advertiser objectives ranging from low-value brand impressions to high-value sales. Conversions grew faster than impressions when measured this way, indicating genuine performance improvements rather than volume increases alone.
Cost per action trends remained healthy when analyzing campaigns controlling for objective differences. VP of Finance Chad Heaton noted the complexity of measuring this metric given that advertisers optimize for objectives with vastly different values, from views to purchases.
The company launched a new runtime model across Instagram Feed, Stories, and Reels in the quarter, resulting in a 3% increase in conversion rates. These models operate downstream from foundational ranking systems like GEM, processing predictions at the moment ads are served to users.
Meta continued consolidating models under its Lattice framework. The company unified Facebook Stories and other surfaces into the overall Facebook model during the quarter, along with backend improvements driving 12% increases in ads quality. Meta expects to consolidate more models in 2026 than it did in the previous two years combined.
Video generation tools reached a $10 billion combined revenue run-rate, with quarter-over-quarter growth outpacing overall ads revenue by nearly 3x. The tools enable advertisers to create video content from static images through AI-powered animation and expansion features.
The incremental attribution feature achieved a multi-billion dollar annual run-rate just seven months after launching. The system optimizes for incremental conversions in real-time rather than total conversions, delivering 24% increases in incremental conversions versus standard attribution models according to Li.
Click-to-message ads revenue growth accelerated during the quarter. United States growth exceeded 50% year-over-year, driven primarily by Website to Message ads that direct people to business websites before launching chat conversations. This format performed better than direct message initiations for many advertisers.
WhatsApp paid messaging crossed a $2 billion annual run-rate in the quarter. Business messaging continues scaling across Meta's platform family, with over 1 million weekly conversations now happening between people and Business AIs in Mexico and the Philippines.
Meta is expanding Business AI availability to additional markets while extending capabilities beyond answering questions. Future versions will help people complete transactions directly within WhatsApp rather than simply providing information about products or services.
Nearly 10% of Reels viewed daily were created in the Edits app, almost tripling from the previous quarter. The dramatic adoption increase reflects improved creative tools and Meta's integration efforts making content creation more accessible to regular users rather than professional creators alone.
Advantage+ sales campaigns continue showing strong performance, with Meta reporting average 22% return on ad spend improvements throughout 2025. The automated campaign structure became the default for sales, leads, and app objectives during the year, though advertisers retain access to manual controls.
Instagram Reels watch time increased more than 30% year-over-year in the United States. Facebook video time grew double-digits, with product optimizations driving a 7% lift in views of organic Feed and video posts - the largest quarterly revenue impact from Facebook product launches in two years.
Ranking improvements drove incremental engagement across both platforms. Meta simplified ranking architecture to enable more efficient model scaling, unlocking the ability to consider longer interaction histories when identifying user interests. The changes benefit both organic engagement and advertising effectiveness through improved targeting signals.
Facebook systems now surface over 25% more Reels published that same day compared to the previous quarter, emphasizing content freshness. Instagram grew original content prevalence in the United States by 10 percentage points during Q4, with 75% of recommendations now coming from original posts rather than reposts or aggregated content.
Threads saw 20% lifts in time spent from optimizations made during the quarter. Meta began expanding ads on Threads to all remaining countries including the UK, European Union, and Brazil, completing the platform's monetization strategy.
Online commerce remained the largest contributor to year-over-year advertising revenue growth. Professional services and technology verticals followed as the next strongest contributors. All verticals showed healthy growth except politics as Meta lapped the 2024 U.S. presidential election cycle.
Holiday demand proved exceptionally strong according to company statements. Li characterized the demand leading up to the holiday shopping period as "very healthy for us," with strength sustained through Cyber Five and into year-end.
Revenue performance varied significantly by geography. U.S. and Canada advertising revenue reached $25.6 billion, up 22% year-over-year. Europe generated $14.2 billion, up 18%. Asia-Pacific contributed $10.9 billion, up 27%. Rest of World delivered $7.4 billion, up 31%.
The strongest impression growth came from Asia-Pacific at 24% and Rest of World at 14%. U.S. and Canada saw 13% impression growth while Europe recorded 13%. Average price per ad growth ranged from declining 2% in Asia-Pacific to increasing 19% in Europe, with U.S. and Canada up 9% and Rest of World up 15%.
Meta is beginning to test its Meta AI business assistant with advertisers for campaign optimization and account support. The feature will provide personalized recommendations based on business goals when rolled out more broadly in coming months. Each business will have an AI assistant that remembers their objectives and can chat about improving performance.
AI dubbing of videos into local languages now supports nine languages, with hundreds of millions of people watching AI-translated videos daily. This drives incremental time spent on Instagram and Meta plans to launch support for additional languages during 2026.
Daily actives generating media through Meta AI tripled year-over-year in the fourth quarter. Meta expects to advance the capabilities of underlying media generation models and ship new features to enhance the product experience throughout 2026.
Personalization represents a major focus area for Meta AI development. Early testing shows personalized responses drive higher engagement levels compared to generic responses. The company plans to significantly advance Meta AI personalization during 2026, drawing on content understanding investments that enable deeper analysis of individual interests.
Engineering productivity increased 30% during 2025, with the majority of growth coming from agentic coding adoption that accelerated in the fourth quarter. Power users of AI coding tools saw 80% year-over-year output increases, demonstrating substantial gains for those who effectively adopted the technology.
Meta expects investments in ads and organic engagement initiatives will enable continued strong revenue growth in 2026. Progress on AI models and products positions the company to capitalize on new revenue opportunities in subsequent years, according to Li.
The company is working to merge large language models with recommendation systems powering Facebook, Instagram, Threads, and advertising. Current systems help people discover content and stay connected, but future iterations will understand personal goals and tailor experiences accordingly.
The advertising system improvements include scaling complexity and size of models to better select which ads to show. Meta continues working toward running smaller numbers of highly capable models rather than numerous specialized systems.
New agentic shopping tools will allow people to find specific products from businesses in Meta's catalog. The company is focused on making these experiences work across both feeds and business messaging, significantly increasing WhatsApp capabilities over time.
Meta recently aligned with the European Commission on further changes to its Less Personalized Ads offering, which will begin rolling out during the first quarter. The company continues monitoring legal and regulatory headwinds in the EU and United States that could significantly impact business and financial results.
Threads began expanding ads to all remaining countries during the month, including the UK, European Union, and Brazil. WhatsApp is expected to complete rollout of ads in Status throughout the year, with ad levels remaining low near-term while Meta optimizes formats and performance before ramping inventory.
The first quarter redistribution of ads across users and sessions on Facebook delivered nearly 4x larger revenue impact than Facebook ad load increases in the second half of 2025. This work identifies optimal timing for delivering ads based on user interest levels rather than simply increasing total ad quantity.
Meta's extended its Andromeda ads retrieval engine during the quarter to run on Nvidia, AMD, and MTIA chips. This expansion, combined with model innovations, nearly tripled Andromeda's compute efficiency. The system processes tens of millions of ad candidates and narrows them to thousands of relevant options within strict latency constraints.
First quarter 2026 advertising revenue guidance reflects expected acceleration. Meta projects total revenue between $53.5 billion and $56.5 billion, with foreign currency providing approximately a 4% tailwind to year-over-year growth based on current exchange rates.
However, the company expects both full year reported and constant currency revenue growth will be below first quarter levels for several reasons. Currency tailwinds will dissipate later in the year based on current rates. Meta will lap stronger growth periods later in the year that benefited from 2025 ad performance investments and strong macroeconomic conditions.
The revised Less Personalized Ads offering in the EU beginning rollout in the first quarter could create headwinds. Meta cannot rule out that regulatory authorities or courts could seek further modifications that might result in materially worse user experience in the European Economic Area and Switzerland.
Headcount reached 78,865 as of December 31, 2025, a 6% year-over-year increase driven by hiring in monetization, infrastructure, Meta Superintelligence Labs, regulation, and compliance. Growth is expected to continue during 2026 in targeted priority areas with emphasis on technical roles carrying higher compensation profiles.
Full year 2026 total expenses are projected between $162 billion and $169 billion. The majority of expense growth will be driven by infrastructure costs including third-party cloud spend, depreciation, and operating expenses. Employee compensation represents the second-largest contributor reflecting technical talent investments.
Despite substantial infrastructure investment increases, Meta expects to deliver operating income above 2025 operating income levels in absolute dollars. This guidance reflects strong revenue expectations balanced against aggressive reinvestment in AI capabilities that management views as transformative for both technology and business opportunities.
Who: Meta Platforms reported fourth quarter 2025 advertising results, with CFO Susan Li and VP of Finance Chad Heaton providing performance details to investors and analysts about the company's AI-powered advertising systems.
What: Meta's advertising business generated $58.1 billion in quarterly revenue representing 24% year-over-year growth, driven by 18% impression growth and 6% price increases, with significant AI improvements including GEM model enhancements delivering 3.5% click lifts on Facebook, incremental attribution achieving multi-billion dollar run-rates with 24% conversion improvements, and video generation tools reaching $10 billion annual run-rate with 3x faster growth than overall advertising revenue.
When: Results were announced on January 28, 2026, covering the quarter ended December 31, 2025, with guidance provided for first quarter 2026 total revenue of $53.5-56.5 billion including approximately 4% foreign currency tailwind, though full year growth rates are expected below first quarter levels due to currency normalization, lapping strong 2025 comparisons, and potential European regulatory headwinds.
Where: Advertising growth varied by geography with U.S. and Canada generating $25.6 billion (22% growth), Europe contributing $14.2 billion (18% growth), Asia-Pacific delivering $10.9 billion (27% growth), and Rest of World producing $7.4 billion (31% growth), with online commerce remaining the largest contributor to year-over-year revenue gains followed by professional services and technology verticals.
Why: The results matter because they demonstrate Meta's ability to sustain strong advertising revenue growth through AI-powered optimization including ranking model improvements, campaign automation expansion, and creative tool adoption, while conversion acceleration and cost per action improvements validate the effectiveness of machine learning systems for advertisers despite ongoing debates about algorithmic control versus manual campaign management across the digital advertising industry.
