Meta Platforms NASDAQ: META executives struck an upbeat tone on the company’s first-quarter 2026 earnings call, pointing to growing engagement across its apps, accelerating AI product development, and a major step-up in infrastructure investment tied to model training and inference capacity.
CEO Mark Zuckerberg said the quarter was “strong” for Meta’s community and business, while highlighting what he described as a key AI milestone: the release of the Muse family of models, including the company’s first model, “Muse Spark,” and a “significantly upgraded new version of Meta AI.” CFO Susan Li reported 33% year-over-year revenue growth and a 41% operating margin, while also detailing a higher capital expenditure forecast due mainly to component pricing.
Engagement trends across the family of apps
Zuckerberg said more than 3.5 billion people use at least one Meta app every day, though the company saw “a small decrease in total family dailies due to internet outages in Iran and blocks in Russia.” Li quantified that figure, estimating 3.56 billion daily active people in March, which declined slightly from December due to “internet disruptions in Iran and a restriction on access to WhatsApp in Russia.”
Despite those disruptions, Zuckerberg said “trends across our apps are strong,” citing continued growth in daily and monthly active users on Instagram and Facebook, and “all-time high engagement” driven by video. He added that WhatsApp is seeing “strong momentum,” including in the U.S., and that Threads is “on its trajectory to be the leading app in its category.”
Li provided details on the recommendation improvements driving engagement:
- On Instagram, ranking improvements in Q1 drove a 10% lift in Reels time spent.
- On Facebook, total video time increased more than 8% globally in Q1, which Li said was the largest quarter-over-quarter gain in four years.
- In the U.S. and Canada, Facebook ranking improvements drove a 9% increase in video watch time in Q1.
Li also said Meta doubled the length of user interaction sequences used for training on Instagram and increased the richness of how interactions are described. She said the company increased the speed at which ranking models index new posts, enabling earlier recommendations, and used more advanced content understanding to identify potentially relevant posts. As a result, Li said same-day posts now represent more than 30% of recommended Reels on both Instagram and Facebook, “more than double the levels one year ago.”
Another lever has been AI-enabled translation and dubbing. Li said more than half a billion users on each of Facebook and Instagram now watch AI-translated videos weekly.
AI roadmap: Muse Spark, Meta AI, and agents
Zuckerberg framed the Muse Spark release as the first launch from Meta Superintelligence Labs, which he said shows the company is “on track to build a leading lab.” He said Spark has already made Meta AI “a world-class assistant,” and noted large increases in use since the updates, adding that the Meta AI app has been “near the top of the app stores.”
Both Zuckerberg and Li emphasized the company’s focus on “personal and business agents.” Zuckerberg described Meta’s goal as delivering agents that can understand a person’s goals and “work day and night” to help achieve them, positioning AI as amplifying people rather than replacing them. He said Meta is testing early versions of business AIs, with weekly conversations growing 10x since the start of the year.
Li echoed that traction, stating there are now more than 10 million conversations each week facilitated through business AIs, up from 1 million at the start of the year. She said Meta plans to expand access to more countries in Q2 and add more capabilities, while noting business AIs are currently free for most businesses and that the company expects to work toward a longer-term monetization model over time.
In response to questions about returns on investment, Zuckerberg outlined how he evaluates progress: model quality, product scaling, then monetization and efficiency. He said Meta’s approach has historically been to build experiences that reach billions and “focus on monetizing them once you get to scale.”
Li added that Meta is deploying AI deeper into ad systems and tools. She cited Q1 improvements to Lattice and the GEM model architecture that drove “a more than 6% increase in conversion rate for landing page view ads,” and said expanding coverage of the company’s “adaptive ranking model” to support offsite conversions drove a 1.6% increase in conversion rates across major surfaces on Facebook and Instagram.
Financial results: revenue up 33%, tax benefit boosts GAAP earnings
Li reported first-quarter total revenue of $56.3 billion, up 33% year-over-year (29% on a constant currency basis). Family of apps revenue was $55.9 billion, and ad revenue was $55.0 billion, both up 33% year-over-year. The number of ad impressions served increased 19%, while the global average price per ad increased 12%.
Family of apps “other revenue” was $885 million, up 74%, driven primarily by WhatsApp paid messaging and subscriptions revenue. Reality Labs revenue was $402 million, down 2% year-over-year due to lower Quest headset sales, partially offset by “continued strong growth in AI glasses revenue,” Li said.
Total expenses rose 35% to $33.4 billion, which Li attributed mainly to infrastructure costs and employee compensation. She said infrastructure costs increased due to higher depreciation, data center operating costs, and third-party cloud spend, while compensation growth was driven by technical hiring over the past year, “particularly AI talent.”
Operating income was $22.9 billion, representing a 41% operating margin. Interest and other income was -$1.1 billion due to unrealized losses on equity investments.
Li said Meta’s tax rate was -23% in the quarter, favorably impacted by an $8.03 billion tax benefit related to updated U.S. Treasury guidance issued in February 2026 on the tax treatment of previously capitalized U.S. R&D expenditures. Absent the benefit, she said the tax rate would have been 14%.
Net income was $26.8 billion, or $10.44 per share. Absent the tax benefit, Li said net income and EPS would have been $18.7 billion and $7.31, respectively.
Capex raised as compute needs climb; efficiency focus and headcount plans
Meta reported capital expenditures of $19.8 billion in Q1, driven by investments in servers, data centers, and network infrastructure. Free cash flow was $12.4 billion. The company ended the quarter with $81.2 billion in cash and marketable securities and $58.7 billion in debt.
Zuckerberg said Meta is increasing its infrastructure CapEx forecast for the year, driven mostly by higher component costs, “particularly memory pricing.” He said Meta is focused on investment efficiency, including rolling out “more than 1 gigawatt” of custom silicon developed with Broadcom, plus AMD chips to complement new NVIDIA systems.
Li said Meta expects 2026 capital expenditures (including principal payments on finance leases) of $125 billion to $145 billion, up from its prior range of $115 billion to $135 billion, reflecting higher component pricing and, to a lesser extent, additional data center costs to support future capacity. She also said multi-year cloud deals and infrastructure purchase agreements drove a $107 billion step-up in contractual commitments in the quarter.
On headcount, Li said Meta ended Q1 with more than 77,900 employees, down 1% from Q4, as optimization efforts were partially offset by hiring in priority areas. She also said the company plans to “reduce the size of our employee base in May,” describing a push toward a “leaner operating model.”
For the second quarter, Li guided to total revenue of $58 billion to $61 billion, assuming foreign currency is an approximately 2% tailwind to year-over-year growth. Meta reiterated a full-year 2026 total expense outlook of $162 billion to $169 billion and said it expects 2026 operating income to be above 2025 operating income.
Li also noted the company is monitoring legal and regulatory matters, including “headwinds in the EU and the U.S.” and said scrutiny on youth-related issues and additional U.S. trials scheduled for the year “may ultimately result in a material loss.”
About Meta Platforms NASDAQ: META
Meta Platforms, Inc NASDAQ: META, formerly Facebook, Inc, is a global technology company best known for building social networking services and immersive computing platforms. Founded in 2004 and headquartered in Menlo Park, California, the company operates a family of consumer-facing products and services that connect users, creators and businesses. In October 2021 the company rebranded as Meta to reflect an expanded strategic focus on augmented and virtual reality technologies alongside its social media businesses.
Meta's core consumer products include Facebook, Instagram, WhatsApp and Messenger, which enable social networking, messaging, content sharing and community building across mobile and desktop devices.
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