Meta Platforms Inc. shares fell more than 6% in after-hours trading Wednesday, even as the company delivered strong beats on revenue and earnings for its fiscal 2026 first quarter. The sell-off was triggered by raised capital expenditure guidance and a sequential drop in daily active users.
For the quarter ending March 31, Meta reported adjusted earnings per share of $10.44, up from $6.43 a year ago, on revenue of $56.31 billion, a 33% increase. Both figures topped analyst expectations. However, the EPS number included an $8.03 billion one-time tax benefit. Excluding that, EPS would have been $7.31-still a solid beat but less dramatic.
Net income jumped 61% to $26.77 billion. Operating income rose 30% to $22.87 billion, with operating margin flat at 41%. Free cash flow was $12.39 billion.
Revenue from the Family of Apps, which includes Facebook, Instagram, Messenger, and WhatsApp, rose 33% to $55.91 billion. Advertising revenue alone hit $55.02 billion. Reality Labs posted $402 million in revenue and an operating loss of $4.03 billion, slightly narrower than last year.
Daily active people averaged 3.56 billion in March, up 4% year-over-year but down from the prior quarter. Meta attributed the dip to internet disruptions in Iran and restricted access to WhatsApp in Russia.
Research and development spending surged 46% to $17.70 billion, the largest cost increase, reflecting continued investment in AI infrastructure and the company's new Meta Superintelligence Labs. Capital expenditures in the quarter reached $19.84 billion.
For the second quarter, Meta expects revenue of $58 billion to $61 billion. It kept its full-year expense outlook unchanged at $162 billion to $169 billion but raised its 2026 capital expenditure range to $125 billion to $145 billion, up from $115 billion to $135 billion, citing higher component pricing and additional data center costs.
Though headline beats were strong, the capex revision spooked investors who are already nervous about the scale of the AI buildout. The user-growth dip-even if geopolitically driven-added to the concern. Meta also flagged ongoing legal exposure from youth-safety trials scheduled this year, warning they "may ultimately result in a material loss."