Thanks Mark and good afternoon everyone. Let's begin with our consolidated results. All comparisons are on a year-over-year basis unless otherwise noted. Q4 total revenue was $48.4 billion, up 21% on both a reported and constant currency basis. Q4 total expenses were $25 billion, up 5%, compared to last year. Before I cover the specific cost lines, I would note that our fourth quarter expense growth rate reflects a 13 percentage point favorable impact from legal accrual reductions in Q4 and lower year-over-year restructuring costs. In terms of the specific line items. Cost of revenue increased 15%, driven mostly by higher infrastructure costs. R&D increased 16%, primarily driven by higher employee compensation and infrastructure costs, which were partially offset by lower restructuring costs. Marketing & Sales were approximately flat year-over-year. G&A decreased 67%, driven mostly by lower legal-related expenses due to a $1.55 billion reduction in legal accruals related to certain legal proceedings. We ended the year with over 74,000 employees, up 10% year-over-year, with growth primarily driven by hiring in priority areas of monetization, infrastructure, generative AI, Reality Labs, as well as regulation and compliance.
Fourth quarter operating income was $23.4 billion, representing a 48% operating margin. Our tax rate for the quarter was 12%. Net income was $20.8 billion or $8.02 per share. Capital expenditures, including principal payments on finance leases, were $14.8 billion, driven by investments in servers, data centers and network infrastructure. Free cash flow was $13.2 billion. We paid $1.3 billion in dividends to shareholders, ending the year with $77.8 billion in cash and marketable securities and $28.8 billion in debt.
Moving now to our segment results. I'll begin with our Family of Apps segment. Our community across the Family of Apps continues to grow, and we estimate more than 3.3 billion people used at least one of our Family of Apps on a daily basis in December. Q4 Total Family of Apps revenue was $47.3 billion, up 21% year-over-year. And Q4 Family of Apps ad revenue was $46.8 billion, up 21% on both a reported and constant currency basis.
Within ad revenue, the online commerce vertical was the largest contributor to year-over-year growth. On a user geography basis, ad revenue growth was strongest in Rest of World at 27%, followed by Asia-Pacific and Europe at 23% and 22%, respectively. North America grew 18%. In Q4, the total number of ad impressions served across our services increased 6% and the average price per ad increased 14%. Impression growth was mainly driven by Asia-Pacific. Pricing growth benefited from increased advertiser demand, in part driven by improved ad performance. This was partially offset by impression growth, particularly from lower-monetizing regions and surfaces. Family of Apps other revenue was $519 million, up 55%, driven primarily by business messaging revenue growth from our WhatsApp Business Platform.
We continue to direct the majority of our investments toward the development and operation of our Family of Apps. In Q4, Family of Apps expenses were $19 billion, representing 76% of our overall expenses. Family of Apps expenses were up 5%, primarily due to growth in infrastructure costs and employee compensation, which were partially offset by lower legal-related expenses. Family of Apps operating income was $28.3 billion, representing a 60% operating margin.
Within our Reality Labs segment, Q4 revenue was $1.1 billion, driven by hardware sales and up 1% year-over-year. Reality Labs expenses were $6 billion, up 6% year-over-year, driven primarily by higher infrastructure costs and employee compensation, partially offset by lower restructuring costs. Reality Labs operating loss was $5 billion. Turning now to the business outlook.
There are two primary factors that drive our revenue performance: our ability to deliver engaging experiences for our community, and our effectiveness at monetizing that engagement over time. On the first, daily actives continue to grow across Facebook, Instagram and WhatsApp year-over-year, both globally and in the United States. In Q4, global video time grew at double-digit percentages year-over-year on Instagram, and we're seeing particular strength in the U.S. on Facebook, where video time spent was also up double-digit rates year-over-year. We see continued opportunities to drive video growth in 2025 through ongoing optimizations to our ranking systems. We're also making several product bets that are focused on setting up our platforms for longer-term success.
Creators are one of our central focuses. On Instagram, we continue to prioritize original posts in recommendations to help smaller creators get discovered. We also want to ensure creators have a place to experiment with their content, so we introduced a new feature in Q4 that allows creators to first share a Reel with people who don't follow them. This allows them to test content and see what performs best before deciding to share it with their followers, and also helps introduce them to entirely new audiences. Creative tools is another area we're investing in. In the coming weeks, we'll launch a new standalone app called Edits that provides a full suite of creative tools to make it easier for creators to make great Reels on their phone. Another focus is making it easier for people to connect over content. Reels are already reshared over 4.5 billion times a day, and we've been introducing more features that bring together the social and entertainment aspects of Instagram. In the U.S., we recently launched a new destination in Reels that consists of content your friends have left a note on or liked. We're seeing very positive early results and will look to expand this globally in the coming months. On Threads, we made tremendous progress in 2024 and our focus this year is establishing Threads as the place people come to keep up with what they care about. We're making a number of updates to our recommendation systems to prioritize more recent posts, surface content from top creators, and ensure people see more of the content from accounts they follow. We will also continue improving custom feeds so people can build personalized feeds on topics they're interested in. Finally, Meta AI usage continues to scale, with more than 700 million monthly actives. We're now introducing updates that will enable Meta AI to deliver more personalized and relevant responses by remembering certain details from people's prior queries and considering what they engage with on Facebook and Instagram to develop better intuition for their interests and preferences. Now to the second driver of our revenue performance: increasing monetization efficiency. The first part of this work is optimizing the level of ads within organic engagement. We continue to grow supply on lower monetizing surfaces, like video, while optimizing ad supply on each of our surfaces to deliver ads at the time and place they will be most relevant to people. For example, we are continuing to better personalize when ads show up, including the optimal locations in the depth of someone's feed, to introduce ad supply when it's most optimal for the user and revenue. This is enabling efficient supply growth. Longer term, we also see impression growth opportunities on unmonetized surfaces like Threads, which we are beginning to test ads on this quarter. We expect the introduction of ads on Threads will be gradual and don't anticipate it being a meaningful driver of overall impression or revenue growth in 2025. The second part of increasing monetization efficiency is improving marketing performance. The ongoing enhancements to our ads ranking systems are an important driver of this work. In the second-half of 2024, we introduced an innovative new machine learning system in partnership with Nvidia, called Andromeda. This more efficient system enabled a 10,000 times increase in the complexity of models we use for ads retrieval, which is the part of the ranking process where we narrow down a pool of tens of millions of ads to the few thousand we consider showing someone. The increase in model complexity is enabling us to run far more sophisticated prediction models to better personalize, which ads we show someone. This has driven an 8% increase in the quality of ads that people see on objectives we've tested. Andromeda's ability to efficiently process larger volumes of ads also positions us well for the future as advertisers use our generative AI tools to create and test more ads.
Another way we're delivering value for advertisers is through increased automation of their ad campaigns with Advantage+. Adoption of Advantage+ shopping campaigns continues to scale, with revenue surpassing a $20 billion annual run-rate and growing 70% year-over-year in Q4. Given the strong performance and interest we're seeing in Advantage+ Shopping and our other end-to-end solutions, we're testing a new streamlined campaign creation flow so advertisers no longer need to choose between running a manual or Advantage+ Sales or App campaign. In this new setup, all campaigns optimizing for sales, app or lead objectives will have Advantage+ turned on from the beginning. This will allow more advertisers to take advantage of the performance Advantage+ offers, while still having the ability to further customize aspects of their campaigns when they need to. We plan to expand to more advertisers in the coming months before fully rolling it out later in the year. Advantage+ creative is another area where we're seeing momentum. More than 4 million advertisers are now using at least one of our generative AI ad creative tools, up from one million six months ago.
There has been significant early adoption of our first video generation tool that we rolled out in October, Image Animation, with hundreds of thousands of advertisers already using it monthly. Next, I would like to discuss our approach to capital allocation. Our primary focus remains investing capital back into the business, with infrastructure and talent being our top priorities. On the first, we expect compute will be central to many of the opportunities we're pursuing as we advance the capabilities of Llama, drive increased usage of generative AI products and features across our platform, and fuel core ads and organic engagement initiatives. We're working to meet the growing capacity needs for these services by both scaling our infrastructure footprint and increasing the efficiency of our workloads. Another way we're pursuing efficiencies is by extending the useful lives of our servers and associated networking equipment. Our expectation going forward is that we'll be able to use both our non-AI and AI servers for a longer period of time before replacing them, which we estimate will be approximately 5.5 years. This will deliver savings in annual CapEx and resulting depreciation expense, which is already included in our guidance. Finally, we're pursuing cost efficiencies by deploying our custom MTIA silicon in areas where we can achieve a lower cost of compute by optimizing the chip to our unique workloads. In 2024 we started deploying MTIA to our ranking and recommendation inference workloads for ads and organic content. We expect to further ramp adoption of MTIA for these use cases throughout 2025 before extending our custom silicon efforts to training workloads for ranking and 0recommendations next year.
From a hiring standpoint, our focus continues to be on adding technical talent to support our strategic priorities. In the fourth quarter, nearly 90% of our year-over-year headcount growth was within the R&D function. The remaining growth was primarily in cost of revenue as we added infrastructure headcount to support our data center operations. In 2025, we expect headcount growth will continue to be primarily driven by technical roles across our priority initiatives within infrastructure, monetization, Reality Labs, generative AI, as well as regulation and compliance. We anticipate headcount growth in our business functions will remain relatively limited. To achieve our ambitions in these areas, we will need to continue executing at a rapid pace.
We're supporting this by building tools to help our engineering base be more productive. As part of our efficiency focus over the past two years, we've made significant improvements in our internal processes and developer tools and introduced new tools like our AI-powered coding assistant, which is helping our engineers write code more quickly. Looking forward, we expect that the continuous advancements in Llama's coding capabilities will provide even greater leverage to our engineers, and we are focused on expanding its capabilities to not only assist our engineers in writing and reviewing our code, but also to begin generating code changes to automate tool updates and improve the quality of our code base. Finally, we expect our strong financial position will enable us to support these investments while continuing to return capital to shareholders through share repurchases and dividends. Moving to our financial outlook.
We expect first quarter 2025 total revenue to be in the range of $39.5 billion to $41.8 billion. This reflects 8% to 15% year-over-year growth, or 11% to 18% growth on a constant currency basis as our guidance assumes foreign currency is an approximately 3% headwind to year-over-year total revenue growth, based on current exchange rates. This also reflects the effect of lapping leap day in the first quarter of 2024. While we are not providing a full-year 2025 revenue outlook, we expect the investments we're making in our core business this year will give us an opportunity to continue delivering strong revenue growth throughout 2025. Turning now to the expense outlook.
We expect full-year 2025 total expenses to be in the range of $114 billion to $119 billion. We expect the single largest driver of expense growth in 2025 to be infrastructure costs, driven by higher operating expenses and depreciation. We expect employee compensation to be the second-largest factor as we add technical talent in the priority areas that I referenced earlier. Turning now to the CapEx outlook. We anticipate our full-year 2025 capital expenditures will be in the range of $60 billion to $65 billion.
We expect CapEx growth in 2025 will be driven by increased investment to support both our generative AI efforts and our core business. The majority of our CapEx in 2025 will continue to be directed toward our core business. On to tax. Absent any changes to our tax landscape, we expect our full-year 2025 tax rate to be in the range of 12% to 15%. In addition, we continue to monitor an active regulatory landscape, including legal and regulatory headwinds in the EU and the U.S. that could significantly impact our business and our financial results.
In closing, this was a good year for our company, with investments across our priority areas delivering strong business performance and innovative new products for our community. We have a compelling set of opportunities to invest in this year, which we expect will help us drive continued strong growth and develop transformative technologies that shape the future of our company and of the industry. With that, Krista, let's open up the call for questions.