Meta’s Reality Labs division, which oversees augmented and virtual reality operations, lost $3.7 billion in the third quarter. Here are all the details from the latest earnings report.
The loss stems from the significant expenses Meta is amassing to bring CEO Mark Zuckerberg’s Metaverse vision to life.
Meta’s year-to-date spend is double last year’s, and there’s another quarter to come in 2022.
Screenshot from: investor.fb.com. October 2022.Several billions of those expenses went into Meta’s Reality Labs division, which brought in just $285 million in revenue.
Meta’s $3.7 billion loss in the third quarter at Reality Labs is larger than its $2.8 billion loss in the second quarter.
Screenshot from: investor.fb.com. October 2022.The losses won’t end there, however, as Meta expects even more significant operating losses in 2023.
Meta’s investors have urged the company to reduce spending on Metaverse projects, though Zuckerberg says it would be a “mistake” not to proceed:
“A lot of people might disagree with this investment. But as far as I can tell, I think this is going to be a very important thing, and I think it would be a mistake if we didn’t focus on one of those areas that I think are going to be fundamental to the future .”
Zuckerberg adds that losses will increase in 2023, although he remains hopeful the investment will pay off:
“We expect Reality Labs operating losses to increase significantly year-over-year in 2023. Beyond 2023, we expect to accelerate Reality Labs’ investments to meet our goal of growing overall company operating income over the long term.”
Meta shares fell over 15% in after-hours trading on Wednesday, in part due to Zuckerberg’s commitment to increase spending at Reality Labs. Meta shares are down over 60% in 2022.
Highlights from Meta’s earnings report
Meta’s net income continues to decline, earning $4.395 billion in the third quarter, compared to $9.194 billion last year.
Screenshot from: investor.fb.com. October 2022.Meta’s revenue was $27.71 billion, down 4% year over year. However, at constant exchange rates, sales would have increased.
Ad impressions grew 17% year over year, even though the average price per ad fell 18% year over year.
Daily active Facebook users were 1.98 billion as of September 30, up 3% year over year. Facebook’s monthly active users are 2.96 billion, up 2% year over year.
There are more than 140 billion Reels games on Facebook and Instagram, up 50% from six months ago.
Sources: Meta Investor Relations, investor.fb.com (PDF link)
Featured image: TY Lim/Shutterstock
