Meta’s Reality Labs Losses $3.74 Bln in Q3

During the last quarter, Meta incurred a massive loss of $3.7 billion while trying to develop the metaverse in its Reality Labs division.

In the financial report for the third quarter, Reality Labs, the mixed reality department that previously housed Oculus, suffered an operating loss of $3.74 billion during the quarter. This loss represents an increase from the $2.63 billion loss incurred in the same period in 2022.

The struggling division has accumulated losses of $11.4 billion during the current fiscal year while only generating $825 million in revenue. The revenue for Q3 alone amounted to $210 million, which is a 20% decline year-over-year. Meta attributed the drop in revenue to lower sales of Quest 2.

In this regard, Meta’s CFO, Susan Li, stated that the company expects to experience significantly higher losses year-over-year due to its ongoing efforts in product development for augmented reality/virtual reality and investments made to scale its ecosystem. She explained that most of the costs incurred by Reality Labs are direct expenses in operating costs, product cost of goods sold, and headcount.

Li mentioned that although Meta will continue investing in the division to support the development of next-generation VR/AR products, the company understands that it must earn the ability to invest by delivering consolidated income growth over time. She emphasized that Meta is entirely focused on achieving this goal.

During Q3, Meta had over 66,100 employees, down 7% from the previous quarter, due to its ongoing restructuring plan. Over 20,000 jobs will be cut.

“Our third quarter headcount no longer included the substantial majority of the employees impacted by the previously announced layoffs,” she explained.

When asked about the health of Reality Labs a few months ago, Zuckerberg admitted that there may be some investor “discomfort” as Meta aims to dominate the mixed reality market. He described the company’s continued investment as a “very long-term bet.”