Reality Labs posted another exuberant quarterly loss, but it would be strange if it actually made money at this stage.
Meta's free-spending AR, XR and metaverse division, which houses its Quest business and is reportedly putting employees through the wringer–lost $4.4 billion in the third quarter.
The company formerly known as Facebook said it expects such losses to “increase significantly year over year” due to ongoing product development efforts. “Within our Reality Labs segment, third quarter revenue was $270 million, up 29% driven by hardware sales,” Meta said.
“Reality Labs' expenses were $4.7 billion, up 19% year over year, primarily due to higher personnel-related expenses and infrastructure costs. Reality Labs' operating loss was 4. 4 billion dollars.”
Discussing specific business ventures, Meta CEO Mark Zuckerberg highlighted the positive critical response to the Quest 3S headphones and said the company is eager to see how the device performs this holiday season.
Reality Labs and billion-dollar losses have become something of an iconic duo. The division reported losses for the full year $16.1 billion AND 13.7 billion dollars over the course of 2023 and 2023 and, taking into account its latest quarterly results, it has lost more than $12.7 billion during the current fiscal year.
Meta has regularly told investors that things will get worse before they get better, underscoring the need to speculate for long-term accumulation where Reality Labs is concerned.
Meta CFO Susan Li stuck to that script during a follow-up call to investorsnoting that Reality Labs represents a “really large investment portfolio” for Meta.
When asked when spending will start to slow, however, Li said Meta is currently having a “budget conversation” that includes how to make Reality Labs more efficient.
“So there's – it's just a big portfolio at Reality Labs. It's a place where, while the ambitions are significant and, again, they span a lot of products, it's also a place where we focus on efficiency as well,” he added.
“That's definitely part of the budget conversation, which is where are we able to be more efficient in Reality Labs so that we have room to expand our ambitions on things like smart glasses and accelerate their take to market and look to find compromises as we think about Reality Labs' portfolio.”
On another earnings callLi reiterated that Meta is still “evaluating” its plans for Reality Labs in 2025, and said the company is thinking about how it can “create maximum flexibility in how we think about infrastructure or staffing plans.”