Meta’s second-quarter earnings showed that Reality Labs, its virtual and augmented reality development business, has lost a staggering $21.3 billion since January 2022 — and executives warned the bleeding will only get worse.
The unit recorded $276 million in Q2 sales this year — down from the $339 million it drew in during Q1, underscoring how VR and AR technology has yet to infiltrate the mainstream.
The losses were wider than analysts expected, though CFO Susan Li suggested in the report that Meta will continue to invest in the tech, which is used to power the metaverse.
“For Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem,” Li wrote.
Just last month, Meta unveiled its Quest 3 headset for $499, which Mark Zuckerberg touted as “the first mainstream headset with high-res color mixed reality,” though it’s unclear how successful the tech has been so far.
Just as Li said, Reality Labs has consistently logged operating losses, including $3.7 billion this past quarter.
Meta lost $3.99 billion in operating costs in the first quarter and a total of $13.7 billion over the course of 2022.
The latest earnings report, however, showed that the Zuckerberg-owned company scored an overall quarterly revenue of $32 billion — up 11% from last year.
Reality Labs, the Meta unit that develops technology for the metaverse, lost $21.3 billion since January 2022. Operating costs for the unit were also down $3.7 billion last quarter.Bloomberg via Getty Images
The increase immediately boosted shares, which were up over 6% in after-hours trading on Wednesday after the report was released.
As of pre-market trading on Thursday, Meta’s share price edged nearly 9% higher to $325.25.
Li added that in Q3, Meta expects revenue to remain about the same, between $32 billion and $34.5 billion.
The company is also anticipating surpassing its expectations on expenses for the year.
“We anticipate our full-year 2023 total expenses will be in the range of $88-91 billion, increased from our prior range of $86-90 billion due to legal-related expenses recorded in the second quarter of 2023,” Li said in the report.
The Post has reached out to Meta for comment.
Earlier this month, Meta found itself on the defense in a copyright infringement lawsuit filed by stand-up comic Sarah Silverman and authors Christopher Golden and Richard Kadrey, who alleged that Meta’s artificial intelligence-backed language models were trained on illegally-acquired datasets containing the authors’ work.
The suit against Meta points to the allegedly illicit sites used to train LLaMA, the ChatGPT competitor the company launched in February.
Despite the losses associated with its investment in virtual reality, Mark Zuckerberg unveiled Meta’s Quest 3 mixed-reality headset last month.AFP via Getty Images
Elon Musk has also threatened to sue Meta over its new Threads platform, which saw a short-lived surge in popularity in its early days but hasn’t been proving to be the “Twitter killer” Zuckerberg hoped it would be.
According to a letter sent to the Facebook parent boss by Alex Spiro — the lawyer for Twitter, now known as X — Meta hired former Twitter employees who “had and continue to have access to Twitter’s trade secrets and other highly confidential information.”
“Twitter intends to strictly enforce its intellectual property rights, and demands that Meta take immediate steps to stop using any Twitter trade secrets or other highly confidential information,” Spiro wrote in the letter, which was obtained by Semafor.
Meta spokesperson Andy Stone responded via Threads post. “No one on the Threads engineering team is a former Twitter employee — that’s just not a thing,” he wrote.
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