In the October-December 2022 quarter, Meta’s metaverse-related Reality Labs unit within Meta posted a loss of $4.28 billion versus $3.3 billion in the fourth quarter of 2021.
The unit’s total loss for the year was $13.7 billion (2021: $10.2 billion).
Reality Labs revenue declined from $2.27 billion to $2.16 billion, and in October-December to $737 million from $877 million a year earlier.
Meta CEO Mark Zuckerberg attributed the deterioration in the division’s financial performance to weaker Quest 2 headset sales and a 20% rise in costs related to restructuring and employee compensation.
The founder and top executive said he did not see grounds for changing Reality Labs’ long-term strategy. Meta will continue to invest “significant resources,” as it sees the direction as a driver of operating profit.
Zuckerberg forecast higher losses for Reality Labs in 2023. He split the business into three components:
- AR — here the company faced a “research problem”;
- VR — there have been certain successes and an expansion of the product lineup on Quest Pro;
- Software, which, alongside the social platform, may be among the most important components of the company’s operations.
Zuckerberg said that more than 100 million WhatsApp users created avatars in the app, with one in five using them as profile photos. He saw this as an example of the integration of Reality Labs and Family of Apps, which includes the company’s platforms.
“Although most of Reality Labs’ investments are directed at future computing platforms — glasses, headsets and the software to run them — as the technology evolves, most people will first see the metaverse on smartphones and begin creating their digital identities using our apps,” he explained.
Meta CEO separately said that currently more than 200 applications are available on the company’s VR devices, which generated more than $1 million in revenue. He did not specify the time period.
In total Meta for October-December posted revenue of $32.17 billion (-4.5% YoY) and operating income of $6.4 billion (-49.2%).
The company announced a $40 billion share buyback program and a $5 billion cut in operating costs in 2023.
Thanks to the favorable backdrop following the Federal Reserve meeting, investors reacted positively to Meta’s news.
Shares rose in after-hours trading by almost 20%. Over the past year, the company’s market capitalization collapsed by 51.12%.
As previously reported, in December the company’s CTO and head of Reality Labs, Andrew Bosworth, acknowledged that it may take years before Meta’s full AR glasses appear, despite billions in investment.
Earlier in the year, the company urged policymakers to refrain from regulating metaverses.