Meta’s Reality Labs Faces Big Losses Despite High Revenue.
Meta’s division focused on virtual and augmented reality, known as Reality Labs, recorded a significant operating loss of $4.6 billion in the last quarter of 2023. This happened even though the division saw one of its best quarterly revenue performances, bringing in nearly $1.1 billion.
The details, released on February 1, reveal that Reality Labs suffered its most significant quarterly loss since Meta began reporting its financial performance separately in 2020. For the entire year of 2023, Reality Labs earned just under $1.9 billion in revenue, with a substantial portion coming in the last quarter, coinciding with the release of the Meta Quest 3 headset. The total loss for the year was $16.1 billion, marking a 17.5% increase from the previous year.
The highlighted Reality Labs’ quarterly revenue and operating losses are the largest ever. Source: Meta
During an earnings call, Meta’s CEO, Mark Zuckerberg, attributed the revenue surge to strong holiday sales of the Quest VR headsets and highlighted the promising start of the Quest 3, launched on October 10, 2023. He emphasized Meta’s commitment to investing in AI and the metaverse as crucial elements of the company’s long-term strategy.
“I still expect that this next generation of AR VR and [mixed reality] computing platforms to deliver a realistic sense of presence that will be the foundation for the future of social experiences.”
Susan Li, Meta’s Chief Financial Officer, warned that losses for Reality Labs are expected to grow significantly in the coming year, attributing this to ongoing product development in AR and VR and efforts to expand their ecosystem.
Despite these challenges, Meta’s stock remained stable on the announcement day but saw a 15% increase in after-hours trading. The company’s total revenue for 2023 was $134.9 billion, surpassing Wall Street’s expectations and showing a 16% increase from 2022. Meta also announced its first-ever dividend payment of 50 cents per share, set for March 26, with plans for regular quarterly dividends.
