Reality Labs

Performance indicators

2023

Net losses of $3.74 billion

According to the results of the third quarter of fiscal year 2023 (it was closed on September 30, 2023), Meta Platforms (recognized as an extremist organization; activities on the territory of the Russian Federation are prohibited) showed revenue in the amount of $34.15 billion. This is 23% more than last year's result, when $27.71 billion was received. Such data are provided in a report published on October 25, 2023.

Meta's net income for the three-month period under review was $11.58 billion. For comparison, a year earlier, the company earned $4.4 billion. Thus, year-on-year growth was at 164%.

Meta Platforms reported revenue of $34.15 billion

However, against the background of general positive dynamics, the negative results continue to be demonstrated by the Reality Labs division, which is responsible for virtual reality technologies and the Meta Platforms metaverse. Revenue in this area in the third quarter of fiscal 2023 amounted to $210 million against $285 million a year earlier. Net losses on an annualized basis increased from $3.67 billion to $3.74 billion.

Meta expects Reality Labs' operating losses to increase "significantly" in the future. At the same time, the company continues to spend money on this failed project. The founder of the company, Mark Zuckerberg, said in 2022 that in terms of metaverse development, a "significant amount" of money will be lost within three to five years. In early October 2023, it became known that Meta plans to lay off a number of employees in the Reality Labs division.

The report also said the company was cutting capital investment in data centers and server hardware. According to the results of the third quarter of 2023, the figure amounted to $6.8 billion, while a year earlier the costs were $9.52 billion. Meta's annual headcount decreased by a quarter to 66,185 employees.^[1]

Losses of $31.6 billion since the beginning of 2020

In the second quarter of 2023, the losses of the VR division of Reality Labs by Meta (recognized as an extremist organization; activities on the territory of the Russian Federation are prohibited) amounted to $3.74 billion. For comparison, a year earlier this group lost 2.81 billion. This was reported in the financial report released on July 26, 2023.

Reality Labs revenue in the second quarter of 2023 was recorded at $276 million. In the second quarter of 2022, the unit brought in $452 million. Thus, the drop was approximately 39%. Meta accounts for cash receipts from consumer virtual and augmented reality devices, related software and content.

In the direction of Reality Labs, we expect a significant increase in operating losses due to ongoing product development efforts for the augmented and virtual reality market, and due to investments in further scaling our ecosystem, Meta said in its report.

Since the beginning of 2020, the Reality Labs division has brought Meta losses of $31.6 billion. During 2022, the losses of this group amounted to $13.7 billion on revenue of $2.16 billion. In the first quarter of 2023, the unit showed a loss of $3.99 billion. The negative results are partly due to sales of Quest VR headsets.

In general, Meta Platforms in the second quarter of 2023 received revenue of $32 billion. This is 11% more than last year's result, when $28.82 billion was received. Net profit amounted to $7.79 billion against $6.69 billion in the second quarter of 2022. The total number of employees as of June 30, 2023 was 71,469. The number of the state on an annualized basis decreased by about 14%.^[2]

2022: Loss of $13.72 billion

At the end of 2022, the losses of the VR division of Reality Labs of Meta (recognized as an extremist organization; activities on the territory of the Russian Federation are prohibited) amounted to $13.72 billion. For comparison: in 2021, the losses were less - $10.19 billion. Such data are reflected in the financial report, which was published on February 1, 2023.

Reality Labs deals with virtual reality technologies and projects. In particular, the division is responsible for developing the concept of the metaverse - a comprehensive digital space in which people can work, communicate, shop, play and receive education. The metaverse will be the company's future, Meta CEO Mark Zuckerberg said. In the summer of 2022, he announced that approximately by 2025 the number of metaverse users engaged in commercial activities will reach approximately 1 billion people. Before this is possible, however, the company needs to spend many billions of dollars to develop the virtual and augmented reality technologies behind the concept.

Meta's VR division of Reality Labs has a loss of $13.72 billion

The published report says that Reality Labs revenue in 2022 amounted to approximately $2.16 billion. This is less than the figure for the previous year, equal to $2.27 billion. Users are cool about the concept of the metaverse, in connection with which Meta warned of a further increase in losses of the Reality Labs division. In 2022, metaverse costs soared and the company's core online advertising business was hit by economic hardship and increased competition in the market.

After 2023, we expect investments in Reality Labs to be made in a way that allows us to meet our goal of increasing the company's operating profit over the long term, Meta says.[3]

Notes