Meta Trials £3.99 Ad-Free Subscriptions on Instagram and Facebook in UK
Meta is prompting UK users over 18 to choose between personalized ads or ad-free experiences by subscribing at £3.99/month on mobile apps and £2.99 on web. This ‘consent or pay’ model follows UK ICO guidance and could generate additional direct-to-consumer revenue.
1. Meta Delivers Strong Fourth-Quarter Results
Meta reported fourth-quarter revenue of $59.89 billion, representing 24% year-over-year growth and surpassing analyst expectations of approximately $58.4 billion. Advertising demand was robust across its Family of Apps, with ad impressions up 18% and average price per ad rising 6% sequentially. Operating income reached $24.75 billion, yielding a 41% margin, while net income increased 9% year-over-year to $22.77 billion and diluted EPS climbed 11% to $8.88. Family daily active people averaged 3.58 billion in December, up 7% year-over-year, underscoring continued user engagement gains globally.
2. Reality Labs Posts Significant Q4 Operating Loss
Meta’s Reality Labs division recorded a fourth-quarter operating loss of $6.02 billion on $955 million in sales, exceeding consensus loss estimates of $5.67 billion. The segment’s cumulative operating losses now exceed $75 billion since late 2020. In January, the company reduced headcount by over 1,000 employees within Reality Labs to reallocate resources toward artificial intelligence and wearable device initiatives, including the Meta Ray-Ban Display glasses partnership with EssilorLuxottica.
3. Capital Expenditure and 2026 Build-Out Plans
Meta increased capital expenditures to $22.14 billion in the fourth quarter and $72.22 billion for full-year 2025, up from $72 billion the prior year. For 2026, the company forecast total capex between $115 billion and $135 billion, driven primarily by data center infrastructure investment to support Meta Superintelligence Labs and core business growth. Infrastructure costs, including third-party cloud spend and depreciation, alongside higher compensation for technical hires, are expected to comprise the bulk of expense growth, with full-year expenses projected at $162 billion to $169 billion.
4. Financial Position and Investor Outlook
As of December 31, Meta held $81.59 billion in cash, cash equivalents, and marketable securities, with long-term debt of $58.74 billion. Free cash flow for the quarter reached $14.08 billion, contributing to $43.59 billion for the full year. The company’s guidance for Q1 2026 revenue sits between $53.5 billion and $56.5 billion, assuming a 4% favorable currency impact. Despite higher spending, Meta anticipates operating income in 2026 to exceed 2025 levels and projects an effective tax rate of 13% to 16% for the year.