Overview

Meta, formerly known as Facebook, announced its second-quarter earnings and revealed that its Reality Labs unit, responsible for developing virtual reality and augmented reality technologies for the metaverse, incurred an operating loss of $3.7 billion.

The unit generated $276 million in sales during the second quarter, down from $339 million in the previous quarter. Analysts had projected sales of $421 million with $3.5 billion in operating losses for Reality Labs.

Despite the losses, Meta’s stock rose by approximately 5% after reporting an 11% increase in revenue, largely driven by a rebound in advertising. However, this reaffirms Meta’s position as an advertising-focused company with significant costs.

Reality Labs’ Performance

Last year, Meta’s Reality Labs unit suffered a total loss of $13.7 billion, while generating $2.16 billion in revenue. These losses were partially offset by the unit’s sales of Quest-branded VR headsets. In the first quarter of this year alone, Reality Labs recorded a loss of $3.99 billion, bringing the total losses to approximately $21.3 billion since the beginning of last year.

In its earnings report, Meta stated that it expects the operating losses of Reality Labs to significantly increase year-over-year due to ongoing product development efforts in augmented reality/virtual reality and investments to expand its ecosystem.

Recent Developments

In June, Meta introduced Meta Quest+, a VR subscription service priced at $7.99 per month. This service is compatible with Meta’s Quest 2, Quest Pro, and upcoming Quest 3 headsets. Subscribers gain access to two new VR games each month, as long as their subscription remains active.

During the same month, Meta’s CEO, Mark Zuckerberg, unveiled details about the Quest 3 headset. This new device, priced starting at $499, is 40% thinner than the Quest 2 and features a next-generation Qualcomm chipset.