- Meta’s Reality Labs unit, which develops augmented and virtual reality technologies, logged an operating loss of $4.4 billion in the third quarter.
- Reality Labs revenue rose 29% year-over-year to $270 million in the third quarter, below analysts’ expectations of $310.4 million.
- In September, Meta CEO Mark Zuckerberg unveiled the company’s prototype Orion AR glasses, which generated excitement about Meta’s ambitious hardware plans.
Meta’s ambitious metaverse plans continue to rack up massive losses, despite some bright spots. The company’s Reality Labs division focuses on developing augmented and virtual reality technologies that CEO Mark Zuckerberg believes will position Meta as a leader in the next generation of computing. However, the investment so far has extracted a steep cost.
Financial Results
In Q3 2022, Reality Labs posted an operating loss of $4.4 billion on revenue of just $270 million, falling short of analyst revenue expectations of $310 million. The division has now lost over $58 billion since 2020.
The wider Meta business reported mixed results in Q3, with revenue declining 4% year-over-year to $27.7 billion but beating analyst estimates of $27.4 billion. Earnings per share came in at $1.64, below expectations of $1.90. The company’s stock initially jumped after results but then sank on the Reality Labs losses.
AR/VR Product Updates
While financials were weak, Meta did showcase some progress on the product front. In September, CEO Mark Zuckerberg unveiled the company’s Orion AR prototype glasses, generating excitement about future consumer devices.
Meta also recently released its new Quest 3 VR headset, pitching it as a more affordable $299 entry point into virtual reality. However, the company’s premier VR offering remains the advanced Quest Pro headset aimed at professionals.
Outlook and Analysis
The huge Reality Labs losses show Meta has a long road ahead to make its metaverse investment financially viable. But products like Orion and the Quest 3 suggest Zuckerberg and team remain committed to pushing forward in building the next computing platform.
With Meta reliant on fickle digital advertising revenue, the company is hoping its AR and VR products can establish new revenue streams and lock users into its apps and services. But it needs to get costs under control and ship compelling consumer devices for that vision to become reality.
