EARNINGS REVIEW
Meta, 2026 Q1 Earnings Results
Historical quarterly report · Results and outlook reflect information available at the time of that release. Actual results from subsequent quarters are not incorporated into the outlook.
Revenue rose sharply as both ad impressions and prices increased, but costs also grew rapidly. Net income included a tax benefit, while an upward revision to the annual investment plan increased future pressure on FCF.
Assessment · The advertising business's growth foundation was confirmed. The next question is how far operating income growth, excluding tax benefits, can support accelerating investment spending. Future FCF may depend heavily on investment timing as well as revenue growth.
Key management and company statements
Earnings release · Short original excerpt“strong momentum across our apps”Meaning · Business momentum across the apps is strong.
Context · The actual drivers of revenue growth were a 19% increase in ad impressions and a 12% increase in average ad prices.
Original statement ↗01 Revenue, operating income and results versus expectations
Year over year · Revenue 42.314 → 56.311 B$ (+33.1% · +13.997 B$), Operating income 17.555 → 22.872 B$ (+30.3% · +5.317 B$).
Quarter over quarter · Revenue 59.893 → 56.311 B$ (−6.0% · −3.582 B$), Operating income 24.745 → 22.872 B$ (−7.6% · −1.873 B$), Operating margin 41.3% → 40.6% (−0.7%p).
The company reported revenue growth of 33%, or 29% excluding currency effects. Costs rose 35%, faster than revenue, and the operating margin before rounding declined slightly year over year. Family of Apps operating income was 21.765 → 26.900 B$, and Reality Labs' operating loss was 4.210 → 4.028 B$.
Results versus previous guidance
Revenue guidance 53.500~56.500 B$ → actual 56.311 B$. Within the range, 0.189 B$ below the high end.
02 Earnings sustainability · From operating income to net income
The income tax line was a net benefit of 5.021 B$, rather than an expense. This is distinct from the special tax benefit of 8.030 B$ included in that amount. The company said its effective tax rate would have been 37%p higher without that benefit.
Revenue and operating income grew, but the growth rate in net income cannot be treated directly as a sustainable earnings growth rate.
- Operating income
- 22.872 B$
- Net non-operating income/loss
- −1.120 B$
- Income tax expense
- 5.021 B$
- Consolidated net income
- 26.773 B$
Net income of 26.773 B$ in the existing quarterly data is on a consolidated basis.
03 Cash flow quality · Net income → OCF → FCF
Company FCF was 12.386 B$, calculated by deducting cash PP&E investment of 18.997 B$ and finance lease principal of 0.843 B$ from OCF of 32.226 B$. Align the treatment of lease principal when comparing investment ratios and FCF.
- Consolidated net income
- 26.773 B$
- Total net adjustments, including non-cash items and working capital¹
- 5.453 B$
- Operating cash flow
- 32.226 B$
- Cash CapEx
- −18.997 B$
- Additional company-defined adjustments and disclosure rounding²
- −0.843 B$
- Company-defined FCF
- 12.386 B$
¹ Total net adjustments calculated as OCF minus net income. This is not a single disclosed line item; it combines non-cash items, working capital, classification differences and other adjustments.
² Difference between company FCF and OCF minus cash CapEx. The detailed scope follows the explanation above and the original definition.
FCF versus the previous quarter · 14.077 → 12.386 B$, a 1.691 B$ deterioration.
04 Financial capacity · Net debt and payment obligations
Previous-quarter net cash · 2025-12-31
Cash and liquid assets 81.592 / Borrowings 58.744 B$
Current-quarter net cash · 2026-03-31
Cash and liquid assets 81.180 / Borrowings 58.748 B$
Net debt deteriorated by 0.416 B$ from the previous quarter. The carrying amount of current borrowings is 0.000 B$. This may differ from the principal maturity schedule.
Cash and liquid assets below comprise cash and current marketable securities. Company-reported CapEx includes finance lease principal, while the interest-bearing borrowings table below excludes separate lease liabilities. Do not treat the scope of investment and financing obligations as identical.
Common definitions · Cash and liquid assets = cash equivalents + current investments and deposits. Borrowings = carrying amount of interest-bearing debt (current + non-current), excluding separate lease liabilities. This differs from total liabilities of 151.569 B$. Restricted cash, non-current securities and non-current deposits are excluded from cash and liquid assets.
05 Investment, capital allocation and cash recovery
Annual company-defined CapEx guidance increased from 115~135 B$ to 125~145 B$. Higher component prices were the main reason, alongside data center costs for future capacity. Subtracting Q1 spending of 19.840 B$ implies 105.160~125.160 B$ is required across the remaining three quarters. This does not imply evenly distributed quarterly spending.
This quarter, cash CapEx/revenue was 33.7% and FCF/revenue was 22.0%. These ratios should not be used as a simple ranking of companies with different business models and FCF definitions.
06 Next-quarter and full-year outlook and implications
YoY +22.1%~+28.4% · QoQ +3.0%~+8.3%. Comparison revenue was 47.516 B$ in the corresponding prior-year quarter and 56.311 B$ in the current quarter. Growth rates were calculated from the underlying amounts.
The annual expense outlook was maintained at 162~169 B$, and 2026 operating income was expected to exceed 2025. The tax-rate outlook for the remaining quarters was 13~16%; Q1's negative tax rate should not be extrapolated.
Quarterly results · CY-aligned view
Amounts in B$. The table shows all 4 quarters of the prior year and the current year's reported quarters, based on the report's CY-aligned year. Each fiscal quarter is assigned to the calendar quarter with the greatest overlap in its actual reporting period; the original FY/CY label and start and end dates are also shown. Amounts have not been recalculated into actual calendar quarters.
| CY alignment | 2025 · 4 quarters | 2026 · 1 quarter | Change this quarter | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Metric | 2025 total4-quarter totalBalances are at period end | 1Q2025 Q125-01-01 ~25-03-31 | 2Q2025 Q225-04-01 ~25-06-30 | 3Q2025 Q325-07-01 ~25-09-30 | 4Q2025 Q425-10-01 ~25-12-31 | 2026 YTD1-quarter totalBalances are at period end | 1Q2026 Q126-01-01 ~26-03-31 | QoQvs 2025 Q4 | YoYvs 2025 Q1 |
| Revenue | 200.965 | 42.314 | 47.516 | 51.242 | 59.893 | 56.311 | 56.311 | −6.0%−3.582 B$ | +33.1%+13.997 B$ |
| Operating income | 83.276 | 17.555 | 20.441 | 20.535 | 24.745 | 22.872 | 22.872 | −7.6%−1.873 B$ | +30.3%+5.317 B$ |
| Operating margin | 41.4% | 41.5% | 43.0% | 40.1% | 41.3% | 40.6% | 40.6% | −0.7%p | −0.9%p |
| FCF · Company definition | 43.585 | 10.334 | 8.549 | 10.625 | 14.077 | 12.386 | 12.386 | −1.691 B$ | +2.052 B$ |
| Operating cash flow | 115.800 | 24.026 | 25.561 | 29.999 | 36.214 | 32.226 | 32.226 | −11.0%−3.988 B$ | +34.1%+8.200 B$ |
| Cash CapEx | 69.691 | 12.941 | 16.538 | 18.829 | 21.383 | 18.997 | 18.997 | −11.2%−2.386 B$ | +46.8%+6.056 B$ |
| Net cash | 22.848 | 41.401 | 18.239 | 15.614 | 22.848 | 22.432 | 22.432 | −0.416 B$ | −18.969 B$ |
| Cash and liquid assets | 81.592 | 70.230 | 47.071 | 44.448 | 81.592 | 81.180 | 81.180 | −0.5%−0.412 B$ | +15.6%+10.950 B$ |
| Borrowings | 58.744 | 28.829 | 28.832 | 28.834 | 58.744 | 58.748 | 58.748 | +0.0%+0.004 B$ | +103.8%+29.919 B$ |
Indented rows are components of, or reference items for, the parent metric. Net cash = cash and liquid assets − borrowings. Depending on company definitions, FCF may include additional adjustments such as lease principal and therefore differ from operating cash flow − cash CapEx. See the cash flow discussion for the detailed definition.
Annual totals and year-to-date totals precede the quarters for each year. Revenue, earnings and cash flow are sums of quarterly values; operating margin equals total operating income divided by total revenue; net cash, cash and borrowings are the final quarter's ending balances. Do not make a simple annual comparison of totals covering different period lengths.
Net cash = cash and liquid assets − borrowings. A negative value indicates net debt. Changes in FCF and net cash are shown as absolute amounts in B$. Quarterly values were not adjusted to match disclosed annual totals.
Comparison bases, calculations and quarterly sources
Calculations and presentation · Amounts in B$. US disclosures in millions of dollars were preserved by dividing by 1,000. Where only cumulative cash flow was available, the preceding cumulative amount in the same fiscal year was subtracted. YoY, QoQ and margins were calculated before display rounding. Earnings growth from negative or 0 bases is shown as a sign change and/or absolute amount.
Opinions and outlook · Management quotations include short original excerpts and translations. Unless identified as earnings call transcripts, quotations come from earnings releases. Interpretations and implications are the author's judgments. No numerically unverified probabilities of achieving targets are assigned.