Meta reported first-quarter earnings that beat expectations on both the top and bottom lines, but investors punished the stock anyway. Revenue hit $56.31 billion, up 33% year over year and ahead of the $55.45 billion analysts were expecting. Adjusted earnings per share came in at $7.31, beating the $6.79 consensus. The profit number includes a one-time tax benefit of $8.03 billion from a Treasury Department rule change in February that simplified the corporate alternative minimum tax, partially offsetting the $15.93 billion tax bill from last year's tax-cut law.
Revenue and profit both surprised to the upside, but shares slid about 7% in after-hours trading. The culprit? Capital spending, again. Meta raised its full-year capex guidance from a range of $115 billion to $135 billion to $125 billion to $145 billion — an extra $10 billion at the midpoint. For context, the company spent $72.2 billion on capex in all of 2025, so it's nearly doubling its annual run rate. CFO Susan Li blamed the increase on higher component prices and new data center construction, adding on the earnings call that "so far, we've been underestimating compute demand."
User numbers also dragged on sentiment. Daily active people across Meta's family of apps hit 3.56 billion, up 4% year over year but below the 3.62 billion analysts had forecast, and down from the previous quarter. Meta attributed the miss to the internet shutdown in Iran and restricted access to WhatsApp in Russia.
Advertising remains the core engine. Ad revenue was $55.02 billion, accounting for more than 98% of total revenue. Ad impressions grew 19% year over year, while the average price per ad rose 12%.
CEO Mark Zuckerberg called Muse Spark, a model from the Meta Super Intelligence Lab led by Alexandr Wang, the company's "biggest milestone of the year" on the call — a move that echoes how other AI players are consolidating their model lines, like OpenAI's recent decision to merge its standalone Codex model into the main GPT line. Since its release, Meta AI has seen double-digit growth in sessions per user. Zuckerberg also said Meta is "not opposed" to building programming tools but that "it's not our primary focus."
Meta also disclosed plans to lay off about 10% of its workforce in May, affecting roughly 8,000 employees, and cancel 6,000 open positions. CFO Li said the cuts will help the company "move faster" and offset infrastructure investments. As of the end of March, Meta had 77,986 employees.
Q2 revenue guidance came in at $58 billion to $61 billion, roughly in line with analyst expectations.