Meta Exceeds Q1 2026 Expectations, Announces 10% Workforce Reduction
Meta Platforms reported its first quarter 2026 financial results on Wednesday, exceeding analyst expectations for both revenue and earnings. The company also announced a significant restructuring plan, including a workforce reduction, and raised its full-year capital expenditure forecast.
Financial Results
For the first quarter of 2026, Meta reported revenue of $56.31 billion, a 33.1% increase year-over-year. This figure surpassed the analyst consensus estimate of $55.5 billion.
GAAP earnings per share (EPS) were $10.44, exceeding the estimated $6.68.
The company's operating margin was 40.6%, unchanged from the same quarter last year. Its free cash flow margin was 22%, down from 23.5% in the previous quarter.
Guidance and Capital Expenditure
For the second quarter of 2026, Meta guided for revenue of approximately $59.5 billion, in line with analyst expectations.
The company raised its full-year 2026 capital expenditure (capex) guidance to a range of $125 billion to $145 billion, up from the previous range of $115 billion to $135 billion. CFO Susan Li attributed the increase to higher component pricing and additional data center costs. The company’s capital expenditures are primarily directed toward artificial intelligence (AI) development.
Restructuring and Workforce Reduction
Meta announced a restructuring plan that includes reducing its workforce by approximately 10%. The plan also involves reassigning over 7,000 employees to AI-related projects, eliminating managerial layers, and canceling thousands of open positions.
The company stated the changes are intended to support increased investment in AI infrastructure and products. Meta operates platforms including Facebook, Instagram, WhatsApp, Messenger, and Reality Labs.
Executive Compensation
In March 2025, Meta disclosed stock option awards to five executives: CTO Andrew Bosworth, CPO Christopher Cox, CFO Susan Li, CLO Curtis Mahoney, and President Dina Powell McCormick. Each received seven tranches of stock options with exercise prices ranging from $1,116 to $3,727 per share.
CEO Mark Zuckerberg was not included in these grants. He receives a $1 salary and security expenses of $25.1 million in 2024. Mr. Zuckerberg’s Meta stake is valued at approximately $230 billion.
Market Context and Stock Performance
Meta’s stock fell over 6% in after-hours trading following the earnings announcement. The company’s current market capitalization is $1.70 trillion. Its forward price-to-earnings (P/E) ratio is 21.1, compared to the S&P 500 index’s forward P/E of 21.9.
Product and Platform Developments
Meta reported that its daily active people (DAP) reached 3.56 billion, an increase of 130 million year-over-year, though this figure was below expectations.
The company partnered with EssilorLuxottica to launch a new line of AI smart glasses with a starting price of $299.
The glasses are the first to run on Muse Spark, a debut model from Meta's Superintelligence Labs, and do not carry Ray-Ban or Oakley branding.
Earlier in 2024, Meta invested $14.3 billion in ScaleAI and brought cofounder Alexandr Wang in-house. The company also faces an order to unwind its $2 billion acquisition of Manus, a Chinese-founded AI startup.