Meta announces a record revenue of $56.3 billion, but for the first time, there is a decline in daily users. Capital expenditures have increased to $145 billion, and the company is cutting 8,000 jobs.

      **TL;DR** Meta announced a record Q1 2026 revenue of $56.31 billion (up 33%) and net income of $26.8 billion (up 61%), although $8.03 billion of that profit resulted from a one-time tax benefit. Daily active users fell 5% sequentially to 3.56 billion, marking the first decline in Meta’s app family history, attributed to the war in Iran and a WhatsApp ban in Russia. After hours, the stock declined 9% as Meta increased its capex guidance to $125-145 billion while laying off 8,000 employees.

      Meta recorded its most profitable quarter ever yet saw a 9% drop in stock. Revenue climbed 33% to $56.31 billion, surpassing Wall Street's expectation of $55.49 billion. The net income of $26.8 billion marked a 61% increase year-over-year. However, daily active users declined for the first time since Meta started reporting its app family as a collective, decreasing over 5% sequentially to 3.56 billion, falling short of the 3.62 billion analysts anticipated. As a company that created the world's largest social network, it is now experiencing profit growth outpacing its user base while investing heavily in artificial intelligence infrastructure and laying off 8,000 employees, believing machines can perform certain tasks better. Despite achieving record profits, the market reacted negatively, deeming it insufficient for Meta's evolving direction.

      **The Numbers**

      The key numbers leave no doubt: With $56.31 billion in Q1 revenue, Meta recorded its best-ever performance, driven by a 19% rise in ad impressions and a 12% increase in average ad prices. The advertising machine that supports the entire operation is operating at full steam. However, the net income figure is nuanced; of the reported $26.8 billion, $8.03 billion came from a one-off tax benefit linked to the One Big Beautiful Bill Act from the Trump era, which altered how capitalized R&D costs were treated under the Corporate Alternative Minimum Tax. Without this benefit, the net income would have stood at $18.7 billion, reporting earnings per share of $7.31 instead of the stated $10.44. Historically, the quarter was still outstanding, but it's noteworthy that a significant portion of profit improvement stemmed from a tax windfall rather than operational gains, which is crucial as investors are being asked to back a $145 billion capital spending plan.

      The market was unsettled by the user decline. Meta reported 3.56 billion daily active users across its apps in March 2026, a 4% increase year-over-year yet over a 5% drop from Q4 2025. The decline has been attributed to internet disruptions due to the Iran war and governmental restrictions limiting WhatsApp access in Russia. CFO Susan Li indicated on the earnings call that without these factors, user numbers would have risen. While this may be accurate, it marks the first instance where Meta had to justify a decrease in its user base, revealing that its growth is now susceptible to geopolitical factors beyond its control. Consequently, a war and governmental restrictions resulted in an immediate loss equivalent to roughly 190 million daily users in a single quarter, with their return dependent on circumstances in Tehran and Moscow rather than Menlo Park.

      **The Spending**

      Meta has raised its full-year 2026 capital expenditure forecast to between $125 billion and $145 billion, an increase from the previous estimate of $115 billion to $135 billion given three months prior. The company attributed the rise to higher component costs and increased data center capacity, indicating it will allocate more on infrastructure this year than the GDP of over 130 nations. This expenditure will go towards Nvidia GPUs, custom chips from Amazon and Broadcom, data centers that now necessitate their own power sources, and the computational foundation for “personal superintelligence” as envisioned by Mark Zuckerberg. Meta is committed to developing generations of custom MTIA processors with Broadcom using a 2-nanometre process, signed a $27 billion infrastructure contract with Nebius, and is even investigating space-based solar energy to power facilities with electricity demands surpassing the reliability of local grids.

      Reality Labs, the division for Quest headsets, Ray-Ban Meta glasses, and the company’s augmented and virtual reality aspirations, recorded $402 million in revenue but incurred a $4.03 billion operating loss. Cumulative losses for Reality Labs since its establishment by Meta have now exceeded $90 billion. Throughout 2026, this sector has faced ongoing layoffs, with its budget reduced by 30% in prior rounds before the broader reduction of 8,000 announced to take effect on May 20. Zuckerberg remains committed to the metaverse concept; however, the allocation of funds demonstrates a clearer narrative than statements from earnings calls: $145 billion is dedicated to AI infrastructure,