reality labs revenue

Reality Labs Revenue Drops to Lowest Point on Record Ahead of Quest 3 Launch

News, reality labs revenue, XR Industry News / Ryan Harris / October 26, 2023

Meta today announced its third quarter earnings, revealing that revenue of its Reality Labs XR division dropped to its lowest point on record, just ahead of the launch of Quest 3. All eyes are now on the holiday season to see if Meta’s new hardware will move the needle.

Meta announced the latest Reality Labs revenue figures today during its Q3 earnings call. While the division had shown strong performance when Quest 2 was the company’s hot new product, revenue has fallen on average as the headset has aged. That led Reality Labs’ Q3 2023 revenue to drop to $210 million, and a loss of 27% year-over-year. That’s the lowest point on record since Meta began divulging Reality Labs revenue in Q4 2020.

Due to Meta’s significant ongoing investments in Reality Labs, the division overall lost a whopping $3.74 billion in Q3 2023, continuing the trend of significant losses over the last 12 quarters. Meta has previously warned investors that these major investment expenses may not pay off until the 2030s.

Next quarter ought to see a significant revenue boost for Reality Labs thanks to a combination of new hardware and the holiday shopping season.

Quest 3 and Meta’s new Ray-Ban smartglasses launched just after the end of Q3. That means we won’t begin to see the impact of those new products on revenue until the company’s Q4 earnings announcement.

Historically, the Q4 holiday quarter has been the best performer for Reality Labs, and it’ll be interesting to see if Q4 2023 can top the division’s revenue record of $877 million in Q4 2022.

As for comments on the call, Meta executives didn’t have much to share at this point about the performance of the launch of Quest 3 or the Ray-Ban smartglasses. They didn’t offer much more than saying only that initial reviews were positive and they are happy with the launch of the new products, and excited to have them on the market on the leadup to the holidays.

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Meta’s XR Revenue Down 39% “due to lower Quest 2 sales,” as Quest 3 & Vision Pro Loom

apple vision pro, Meta, Meta Quest 2, Meta Quest 3, Meta Quest Pro, meta reality labs, meta revenue, meta xr revenue, News, Quest 2, quest 3, reality labs, reality labs q2 2023, reality labs revenue, VR Industry / Mike M. / July 28, 2023

Meta’s latest quarterly results show its Reality Labs XR division is again reporting an operating loss just south of $4 billion. Now, for its Q2 2023 results, the company says Reality Labs’ revenue was down by 39% due to lower Quest 2 sales, making for the worst quarterly performance in the past two years.

Meta has been clear about its plan to spend aggressively on XR over the next several years, so it’s again no surprise we’re seeing operating budgets in the billions with only a fraction of that coming back in via Quest 2 hardware and software sales.

In fact, Quest 2 sales play such an important role in Reality Labs’ quarterly performance that Meta has reported $276 million in revenue in Q2 2023, or 39% lower than last quarter.

Meta reported that Reality Labs expenses were $4 billion, which was up 23% since the same period last year. The company says this was due to lapping a reduction in Reality Labs loss reserves and growth in employee-related costs, bringing the XR division’s operating loss to $3.7 billion for Q2 2023.

Meta says it expects continued operating losses in the future, saying losses will likely “increase meaningfully year-over-year due to our ongoing product development efforts in AR/VR and our investments to further scale our ecosystem.”

Meanwhile, the company is preparing to launch Quest 3 in late 2023, the $500 follow-up headset that integrates many of Quest Pro’s mixed reality capabilities. Meta’s $1,000 Quest Pro has also reportedly been discontinued, however (without substantiating that particular claim) Meta CTO Andrew Bosworth implied earlier this month that a Quest Pro 2 isn’t off the table.

Apple’s Vision Pro is also looming, set to launch sometime next year. As rising tides lift all boats, hype around Vision Pro could actually benefit Meta in the short term. Apple’s $3,500 XR headset has attracted new attention to the space, however Meta’s consumer-friendly pricing and extensive game catalogue for Quest 3 may be well positioned this holiday to capitalize on that Apple-adjacent cachet.

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Meta Reality Labs Earnings Reveal a Less Successful Holiday Season & Highest Operating Costs Yet

Meta, meta q4 earnings, meta q4 quest earnings, meta q4 reality labs earnings, meta revenue, News, reality labs revenue, VR Industry / Blake Jones / February 1, 2023

Meta today revealed its latest quarterly earnings results, showing that Reality Labs, the company’s XR and metaverse arm, had a smaller holiday season than the last, while operating costs have reached their highest levels yet.

Today during the company’s Q4 earnings call, Meta revealed the latest revenue and operating cost figures for its XR and metaverse division, Reality Labs, providing one of the clearest indicators of the success the company is seeing in this space.

The fourth quarter has consistently been the best performer for Reality Labs, no doubt thanks to the holiday season driving sales of the company’s offerings.

In the fourth quarter of 2022, the company saw $727 million in revenue, which was 17% less compared to the fourth quarter of 2021 when the company pulled in $877 million in revenue.

The fourth quarter of 2021 was a good performer for Reality Labs revenue thanks to the success of Quest 2 which had launched earlier that year.

In the fourth quarter of 2022, the company’s latest headset to launch was Quest Pro, it’s high-end MR headset. Unsurprisingly, the more expensive device—which has yet to find a strong value proposition at $1,500—doesn’t seem to have performed as well as Quest 2 did in its launch year. Just days ago, Meta temporarily discounted the price of the headset to $1,100, appearing to test the waters at that lower price. Granted, XR headsets aren’t the only product Reality Labs offers, which means the division’s other product lines—video calling speakers and smart glasses—may have had a role to play.

In addition to a smaller holiday season than last year, the latest earnings for Reality Labs show the division’s expenses were greater than in any previous quarter, surpassing $4 billion for the first time.

This continues a trend of Meta’s ever-growing investments in Reality Labs which the company has warned investors may not flourish until the 2030s.

In the face of operating costs far outpacing revenue, Meta CEO Mark Zuckerberg told investors that his management theme for 2023 was “efficiency,” saying he wants to focus the company on streamlining its structure to move faster while being more aggressive about shutting down projects that aren’t performing.

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