Meta Records $3.7B Q2 Loss From Metaverse Division


Meta’s metaverse-related division Reality Labs is not performing optimally according to its second-quarter earnings report which was released recently.

Reality Labs confirmed that it lost $3.7 billion to operating losses in Q2 and sadly, this is a wider-than-expected loss according to analysts. At the same time, investors have been warned of the possibility for this downtrend to get worse before it finally gets better. 

Reality Labs’ Revenue Down From Q2 2022

The earnings report for Meta which was released on Wednesday, July 26th showed that the metaverse unit recorded up to $276 million in revenue in Q2 of this year. Notably, this figure is down from $452 million in the same period last year. 

During an earnings call, Meta’s Chief Executive Officer (CEO) Mark Zuckerberg said “As our investments in AI continue, we remain fully committed to the metaverse vision as well. We’ve been working on both of these two major priorities for many years in parallel now, and in many ways, the two areas are overlapping and complementary.”

Meta’s Metaverse Keeps Getting Worse

In Q2 2022, the loss from this same division was pegged at $2.8 billion. Again, Meta reported a loss of over $3.7 billion from its Reality Labs in Q3 while it made a total income of just $285 million. At the time, the total loss from the metaverse division was approximately $9.4 billion. Noteworthy, Q1 2023 has not been any different, as the division recorded a loss of $4 billion. 

Susan Li, Meta’s Chief Financial Officer, explained that Reality Labs’ expenses amounted to $4 billion in the second quarter, “up 23% due to a reduction in Reality Labs loss reserves in Q2 of last year as well as growth in employee-related costs.”

Meta Remains Fixated on Reality Labs

The drop in revenue has not caused the firm to rethink its investment in the metaverse. Instead, Meta has confirmed that it remains fully committed to metaverse development. 

Before the beginning of this year, Reality Labs’ CTO Andrew Bosworth hinted at the possibility of Meta allocating 20% of its 2023 budget to the metaverse division, and this was around $19 billion at the time.

Zuckerberg is confident that the firm is not shifting the Reality Labs strategy long term.

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