Meta shares fall 7% after hours on user dip, higher capex

Meta Platforms’ shares fell 7% in after-hours trading Wednesday after the company reported first-quarter results that beat revenue estimates but showed a sequential decline in daily users and a higher capital spending outlook. The quarter covered the three months ended March 31, 2026. Meta reported revenue of $56.31 billion, above analysts’ LSEG estimate of $55.45 billion, and adjusted earnings per share of $7.32, a figure the company said was not directly comparable with estimates.

Revenue rose 33% from $42.31 billion a year earlier. Net income was $26.77 billion, up 61% from $16.64 billion, and diluted EPS increased to $10.44 from $6.43. The company recorded a $5.02 billion income tax benefit that reduced its effective tax rate to negative 23%; Meta said diluted EPS would have been $3.13 lower without that benefit.

Costs and expenses increased 35% to $33.44 billion, driven by higher operating spending. Operating income rose 30% to $22.87 billion and operating margin remained at 41%.

Advertising activity grew: ad impressions across Meta’s Family of Apps rose 19% year over year and average price per ad increased 12%. Revenue grew 29% on a constant-currency basis.

Family daily active people averaged 3.56 billion in March 2026, up 4% from a year earlier but down slightly from the previous quarter. The company attributed the sequential decline to internet disruptions in Iran and restricted WhatsApp access in Russia.

CEO Mark Zuckerberg highlighted product and AI progress, noting, “We had a milestone quarter with strong momentum across our apps and the release of our first model from Meta Superintelligence Labs. We’re on track to deliver personal superintelligence to billions of people.”

Meta spent $19.84 billion on capital expenditures in Q1, including principal payments on finance leases, and raised its 2026 capex guidance to $125 billion to $145 billion from $115 billion to $135 billion, citing higher component prices and additional data center costs. The company returned $1.35 billion to shareholders through dividends and ended the quarter with $81.18 billion in cash, cash equivalents and marketable securities. Operating cash flow was $32.23 billion and free cash flow was $12.39 billion.

For the second quarter, Meta guided revenue to $58 billion to $61 billion and said current exchange rates should add about two percentage points to year-over-year revenue growth. Full-year operating expenses remain projected at $162 billion to $169 billion, and the company reiterated that operating income for 2026 is expected to exceed 2025. Meta expects a tax rate of 13% to 16% for the remaining quarters of 2026 unless tax rules change.

Meta noted active legal and regulatory matters in the U.S. and EU, including youth-related scrutiny and several U.S. trials this year that could result in material losses. Headcount at the end of the quarter was 77,986, up 1% from a year earlier.