Meta
reported second-quarter earnings on Wednesday and
announced that its Reality Labs unit, responsible for developing virtual reality and augmented reality technologies for the metaverse, incurred a $3.7 billion operating loss.
The unit generated $276 million in sales during the second quarter, a decrease from the $339 million in revenue achieved in the first quarter. Analysts surveyed by StreetAccount had anticipated sales of $421 million and operating losses of $3.5 billion for Reality Labs.
Meta’s stock rose by approximately 5% after the release of its earnings report, which revealed an 11% increase in revenue due to a rebound in advertising. The company also provided a positive sales forecast for the third quarter. This indicates that Meta is still primarily an advertising company with a significant cost center.
In the previous year, Meta’s Reality Labs unit experienced a total loss of $13.7 billion while generating $2.16 billion in revenue, driven in part by the sales of Quest-branded VR headsets. Reality Labs suffered a loss of $3.99 billion in the first quarter alone, bringing its total losses to approximately $21.3 billion since the beginning of last year.
Meta stated in its earnings report that it anticipates significant year-over-year increases in operating losses for its Reality Labs unit, as a result of ongoing product development efforts in augmented reality/virtual reality and investments to scale its ecosystem.
In June, Meta introduced Meta Quest+, a VR subscription service available for $7.99 per month. This service is compatible with Meta’s Quest 2, Quest Pro, and upcoming Quest 3 headsets, allowing subscribers to access two new VR games each month for as long as their subscriptions remain active.
Additionally, in June, CEO Mark Zuckerberg shared details about the Quest 3 headset shortly before Apple announced its Vision Pro VR and AR headset, which will carry a price tag of $3,499 upon its release in 2024. The Quest 3 will be priced starting at $499, be 40% thinner than the Quest 2, and feature a next-generation Qualcomm chipset, according to Meta.
Watch: CEO Evan Spiegel reveals that Snapchat+ has reached 4 million subscribers, establishing itself as a subscription-based revenue stream.
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