Meta Platforms (META) shares declined sharply in after-hours trading on Wednesday after surging second-quarter costs and weaker profitability overshadowed robust revenue growth across the company's businesses.

Shares had fallen 1.31% to close at $585.61 during the regular session, then dropped an additional 6.25% to $549.00 in after-hours trading following the earnings release.

Revenue Growth Fails to Offset Profit Pressure

Meta generated second-quarter revenue of $60.80 billion, a 28% increase from $47.52 billion in the same quarter a year earlier. On a constant-currency basis, revenue rose 27%, reflecting broad expansion across the company's global markets and advertising operations. Advertising demand remained firm, with impressions increasing 14% and average ad prices climbing 12% year over year, underscoring Meta's continued dominance in digital advertising even as competing platforms vie for marketer budgets.

However, total costs and expenses surged 55% to $42.03 billion, far outpacing revenue growth. Meta recorded $2.40 billion in legal charges and $1.18 billion in severance expenses tied to recent workforce restructuring. These charges followed the May 2026 workforce reduction and placed significant pressure on operating earnings, margins, and quarterly profitability.

Operating income fell 8% to $18.78 billion, while the operating margin narrowed to 31% from 43%. Net income declined 14% to $15.85 billion, compared with $18.34 billion in the prior-year quarter. Diluted earnings dropped 13% to $6.18 per share.

Capital Spending Constrains Free Cash Flow

Meta committed $31.08 billion to capital expenditures, including principal payments tied to finance leases and infrastructure expansion projects. The company continued investing in data centers, computing capacity, and systems supporting advertising, consumer products, and enterprise opportunities. This level of spending places Meta among the largest infrastructure investors in the technology sector, reflecting an industry-wide buildout race as major platforms expand artificial intelligence and cloud computing capabilities.

As a result, free cash flow totaled just $784 million, despite operating cash flow of $31.86 billion for the quarter. Investors and analysts have been closely monitoring whether this aggressive investment cycle will translate into revenue-generating products and services over time.

Meta ended June with $90.26 billion in cash, cash equivalents, and marketable securities. Long-term debt stood at $83.66 billion. The company returned $1.35 billion to shareholders through dividends and dividend-equivalent payments during the quarter.

User Engagement and Headcount

Family daily active people averaged 3.60 billion in June, up 3% from the same month last year. Meta reported 75,472 employees, down 1%, with approximately 8,000 workers still counted as affected by the May reduction. The company expects most affected employees to depart during the third quarter as it tightens workforce management and controls costs. The pace of headcount reduction signals a shift toward leaner operations even as capital investment accelerates, a combination that will shape operating performance in coming quarters.