Facebook parent company Meta has disclosed its second-quarter earnings which shows that its Reality Labs division, responsible for creating virtual reality and augmented reality technologies for the metaverse, recorded an operating loss of $3.7 billion.
In the second quarter, the unit’s sales were $276 million, which declined from the $339 million revenue from the first quarter. The company’s shares also went up about 5% after an 11% rise in revenue due to an advertising rebound which led to Meta issuing a sales forecast for the third quarter.
Meta CEO Mark Zuckerberg says, “We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while. We’re making good progress with Reels, seeing lots of enthusiasm around Llama 2 and Threads, and have some big releases later this year, including new AI products and Quest 3.”
A promising roadmap, but more losses to come
“This was a good quarter for our business. We’re seeing strong engagement trends across our apps. There are now more than 3.8 billion people who use at least one of our apps every month.”
The CEO adds that the company currently has an exciting roadmap with continued progress on multiple products including Threads, Reels, Llama 2 and, “Some ground-breaking AI products in the pipeline as well as the Quest 3 launch coming up this fall.”
Meta says it is focused on executing this roadmap and that its investments are starting to play out. However, the company’s Reality Labs unit lost around $13.7 billion last year, with $2.16 billion in revenue.
The company said in its earnings call that it expects operating losses in its Reality Labs unit, “To increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and investments to further scale our ecosystem.”
Meta’s mixed reality headset
Meta says its big thing on the Reality Labs is the launch of Quest 3 MR headset at Connect, calling it, “Our most powerful headset yet.” The company says Quest 3 will have better displays and resolution, including the next-gen Qualcomm chipset with twice the graphics performance.
The WhatsApp parent company says Quest 3 is 40% thinner than Quest 2 and the MR headset will, “Blend the physical world and the virtual one by intelligently understanding the physical space around you.” Meta also says it is making good progress with Horizon Worlds as well as improvements with Avatars.
Focusing on AI and the metaverse
“Now that we’ve gotten through the major layoffs, the rest of 2023 will be about creating stability for employees, removing barriers that slow us down, introducing new AI-powered tools to speed us up and so on.
“I expect that we’re still going to hire in key areas, but newly budgeted headcount growth is going to be relatively low. That said, as part of this year’s layoffs, many teams chose to let people go in order to hire different people with different skills they need, so much of that hiring is going to spill into 2024.”
Zuckerberg went on to say that the company remains focused on two technological waves with AI in the near term and the metaverse over the longer term.
“Investments that we’ve made over the years in AI, including the billions of dollars we’ve spent on AI infrastructure, are clearly paying off across our ranking and recommendation systems and improving engagement and monetisation,” said Meta.
Meta will host its Connect conference on September 27th where it’ll reveal more of its AI and metaverse offerings.
Isa Muhammad is a writer and video game journalist covering many aspects of entertainment media including the film industry. He's steadily writing his way to the sharp end of journalism and enjoys staying informed. If he's not reading, playing video games or catching up on his favourite TV series, then he's probably writing about them.
