Meta Platforms reported lower second-quarter profit on Wednesday as higher legal expenses and severance costs tied to workforce reductions weighed on earnings, despite revenue surpassing Wall Street expectations.
The company, which owns Facebook, Instagram, WhatsApp, Messenger and Threads, reported net income of $15.85 billion, or $6.18 per share, for the April–June quarter. That compared with $18.34 billion, or $7.14 per share, during the same period a year earlier, representing a 14% decline in profit.
Revenue rose 28% to $60.8 billion, exceeding analysts’ average estimate of $60.22 billion, according to FactSet. Earnings per share, however, fell short of the $7.19 forecast.
The results illustrate Meta’s efforts to balance continued investment in artificial intelligence with rising legal and restructuring costs.
Revenue Growth Driven by AI Strategy
Chief Executive Officer Mark Zuckerberg said artificial intelligence continues to strengthen Meta’s existing platforms while creating new long-term business opportunities.
“AI is accelerating our core business today, powering our next generation of products, and opening the door to entirely new enterprise opportunities,” Zuckerberg said in a statement.
“The results are already showing, and I’m optimistic about the potential ahead.”
Meta has increasingly positioned AI as the centerpiece of its long-term strategy, investing heavily in AI infrastructure, products and enterprise capabilities.
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User Growth Continues Across Platforms
Meta said its family of applications—including Facebook, Instagram, Messenger, WhatsApp and Threads—reached 3.6 billion daily active users, an increase of 3% from the same quarter last year.
Zuckerberg also said Instagram surpassed 2 billion daily active users, while Threads reached 500 million monthly active users.
The company did not disclose revenue generated by individual platforms.
Workforce Shrinks Following Layoffs
Meta reported 75,472 employees as of June 30, down 1% from a year earlier.
The company said that figure still includes approximately 8,000 employees affected by layoffs announced previously. Meta said its third-quarter report will reflect the updated workforce total after those reductions are completed.
Legal and Restructuring Costs Pressure Earnings
Meta increased the lower end of its projected full-year expenses after recognizing $2.4 billion in legal expenses during the quarter.
The company now expects full-year 2026 expenses to total between $165 billion and $169 billion.
Second-quarter operating expenses rose 55% to $42.03 billion, including:
- $2.40 billion in legal-related charges.
- $1.18 billion in severance expenses associated with layoffs announced in May.
The higher spending also affected cash generation.
Meta’s free cash flow fell 91% to $784 million, compared with $8.55 billion during the same quarter last year.
Analysts Assess Meta’s AI Position
Meta’s earnings were released as the company continued an extensive campaign promoting its artificial intelligence strategy.
Emarketer analyst Minda Smiley said Meta has worked to better communicate its AI ambitions through advertising and public messaging as it seeks a stronger competitive position in the rapidly expanding AI market.
Ahead of the earnings announcement, Zuckerberg published an opinion article in The Wall Street Journal arguing that artificial intelligence could eventually provide “personal superintelligence to everyone.”
Smiley said Meta’s optimistic messaging about AI comes as the company continues to face criticism over allegations concerning the impact of social media on children, creating additional challenges as it seeks to shape public perceptions of its AI initiatives.
Outlook Falls Short of Expectations
For the current quarter, Meta forecast revenue between $61 billion and $64 billion.
The midpoint of $62.5 billion is below analysts’ consensus estimate of $63.14 billion, tempering investor optimism despite stronger-than-expected revenue growth during the latest quarter.
Following the earnings release, Meta shares fell $24.76, or 4.2%, to $560.85 in after-hours trading.
While the company continued to report robust revenue growth and expanding user engagement, investors focused on the financial impact of legal expenses, restructuring costs and continued investment in artificial intelligence.
The latest results underscore Meta’s challenge of sustaining growth through AI-driven innovation while managing rising costs associated with legal matters, workforce restructuring and long-term technology investments.
This report is based on reporting by The Associated Press.
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