Meta, along with consumer and business AI agents, continued to deliver more personalised and relevant content. By improving the timing and targeting of ads, the company was able to monetise user engagement more effectively and deliver another solid quarter.
| Financial indicator | Q1 2025 (US$ million) | Q1 2026 (US$ million) | Percentage change |
| Revenue | 42,314 | 56,311 | +33.1% |
| Family of Apps | 41,902 | 55,909 | +33.4% |
| Reality Labs | 412 | 402 | -2.4% |
| Operating income | 17,555 | 22,872 | +30.3% |
| Net income | 16,644 | 26,773 | +60.9% |
Ad impression across regions grew 19% year-on-year in Q1 2026, driven by increased user engagement, user growth, and optimised ad loads. As a result, the company can drive incremental conversions without having to show too many ads. Average ad price increased 12% over the same period, driven by better ad performance, stronger macroeconomic conditions, and international currency tailwinds despite higher impression volumes from lower-monetising regions. Commerce continues to be Meta’s largest ad vertical. Net income surged 60.9% year-on-year to US$26.8 billion in Q1 2026, partially offset by higher depreciation, data centre operating costs, and employee compensation. Excluding a US$8.0 billion tax benefit, net income would have just increased 12.4% year-on-year to US$18.7 billion instead.
Revenue from Reality Labs declined 2.4% year-on-year to US$402 million in Q1 2026 while operating loss narrowed from US$4.2 billion to US$4.0 billion over the same period. The segment was affected by lower Quest headset sales, partially offset by revenue growth from AI smart glasses.
Driven by improved ad recommendation models, landing page conversion rates rose 6%, while the Adaptive Ranking expansion delivered a 1.6% conversion lift on Facebook and Instagram. Active advertisers using generative AI creative tools doubled to over 8 million, with video generation features driving a conversion boost of over 3%. Both partnership ads and value optimisation suite doubled their revenue year-on-year with annualised run rates of US$10 billion and US$20 billion respectively.
Capital expenditures (CapEx) amounted to US$19.8 billion during the quarter, driven by investments in servers, data centres, and network infrastructure. CapEx guidance in 2026 was raised to hover between US$125 billion and US$145 billion, driven by higher memory prices and data centre investments. Meta committed US$107 billion in additional infrastructure capacity. The company is in the midst of rolling out over 1GW of custom silicon codeveloped with Broadcom, while also deploying AMD chips and Nvidia systems.
Revenue in Q2 2026 is expected to range between US$58 billion and US$61 billion amid a 2% foreign exchange tailwind and a full-quarter impact of less personalised ads in Europe. Operating income is forecast to grow year-on-year. The company expects lower employee compensation expense in 2026 because of planned workforce reduction in May, partially offset by restructuring costs.
Family of Apps
Meta’s daily active user base exceeded 3.5 billion despite a sequential decline due to the internet blackout in Iran and the full ban on WhatsApp in Russia. Excluding these disruptions, the company would have recorded net quarter-on-quarter user growth. Family of Apps other revenue surged 73.5% year-on-year to US$885 million, driven primarily by WhatsApp paid messaging and subscription offerings.
Facebook and Instagram
The number of daily and monthly active users across Instagram and Facebook continues to grow as video engagement rose to an all-time high across these apps.
Over 30% of recommended Reels are published on the same day, more than doubled year-on-year. Over 500 million users consume AI-translated videos on these apps weekly.
Ranking improvements led to over 8% and 10% growth in time spent across Facebook video and Instagram Reels respectively during the quarter, the largest sequential gain in four years. Users in the US and Canada spent 9% more time watching Facebook videos in Q1 2026.
WhatsApp and Messenger
Hundreds of millions of users view WhatsApp Status daily, with posting activity now outpacing Instagram Stories. Meta is rolling out new ad formats within Status to capture this long-term inventory opportunity. Growth faces structural challenges due to limited WhatsApp user data and lower ad spend per capita across its primary markets in Latin America, Asia, and Africa compared to Instagram.
Business AIs were expanded on WhatsApp during the quarter across Latin America and Indonesia as well as Messenger in Asia-Pacific. The number of weekly conversations facilitated through business AIs surged to over 10 million currently from 1 million at the beginning of 2026.
Threads and Meta AI
Threads’ popularity continues to rise with daily active users exceeding 150 million. There is notable growth across the US and Japan as ads availability expands to over 200 countries. Alongside WhatsApp Status, the app is not expected to be a significant impression or revenue driver in 2026.
The integration of Muse Spark has enhanced Meta AI’s capabilities across segments from personal superintelligence to shopping, triggering a double-digit increase in Meta AI user sessions following the recent update.
Reality Labs
The number of users who wear AI glasses daily tripled year-on-year. According to CEO Mark Zuckerberg, AI glasses is “one of the fastest-growing categories of consumer electronics ever.” He reaffirmed Meta’s position as the largest investor in virtual reality.
Meta saw strong initial interest in its latest wearable lineup, including the Ray-Ban Meta AI Glasses Gen 2, the Meta Ray-Ban Display glasses, and the gesture-controlled Meta Neural Band, driven by hardware upgrades.
Key analyst questions
CEO Mark Zuckerberg thinks AI helps service individual goals and acts as personal agents for individuals. He added that Meta maintains a typically scale-first monetise-later philosophical approach to AI. The Wall Street in general is worried about the hundreds of billions of CapEx Meta spends on cloud as it does not have an external cloud business. Meta Superintelligence Labs products are currently only optimised for engagement rather than generating revenue. The Labs introduced the Muse family of models, launching Muse Spark alongside an upgraded version of Meta AI.
CFO Susan Li defended the company’s elevated CapEx guidance as it has consistently underestimated its compute needs, driven by robust internal use cases and accelerating AI product demand. To scale capacity for AI workloads through 2026 and 2027, Meta is utilising multi-year contracts with third-party cloud providers besides investing in its own long-term data centres. This approach grants Meta the flexibility to meet immediate compute demands more quickly while its owned infrastructure comes online in later years.
The conflict in Iran erupted at the end of February, coinciding with a reduction in advertiser spend.Notable impact was noticed primarily in the Middle East as well as the US and Western Europe. The spending situation improved globally in April.
The fifth perspective
Meta will maintain high CapEx to fund its multi-year growth while improving operational efficiencies. Revenue in the near term remains driven by AI-powered ad targeting, expanding ad inventory, and business messaging. Over the long term, Meta focuses on scaling business agents for direct monetisation and deploying personal assistants to maintain user engagement.
