Meta’s ambitious plans to develop the metaverse is still costing the company billions of dollars a quarter, CNBC reported.
As part of the company’s second-quarter earnings report on Wednesday, Meta’s Reality Labs unit, which houses augmented and virtual reality technologies, recorded an operating loss of $4.55 billion. Analysts polled by StreetAccount were expecting a lost of $4.55 billion.
Since late 2020, the Reality Labs unit has generated cumulative losses of about $50 billion, underscoring CEO Mark Zuckerberg’s massive investments into the hardware and software that underpins what he says will be the next era of personal computing.
Revenue in Reality Labs, largely derived from the company’s Quest family of VR headsets and Ray-Ban Meta smart glasses, came in at $353 million, representing growth of 28% from $276 million a year earlier. Analysts were expecting the unit to bring in $371 million in sales.
Variety reported Meta’s social-media empire keeps minting digital-ad dollars — while its metaverse and AR/VR business continues to rack up bigger losses.
The company, which operates apps including Facebook, Instagram, and What’sApp, reported top-line revenue of $39.07 billion (virtually all of it from advertising), up 22% year over year. Net income was $13.47 billion, or $5.16 per share. Wall Street on average expected revenue of $38.31 billion and EPS of $4.73, according to financial data provider LSEG.
“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” Meta co-founder, CEO and chairman Mark Zuckerberg said in announcing the earnings. He added, “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”
Meanwhile, Meta’s Reality Lab segment — which houses the Quest AR/VR headset and metaverse initiative — posted a higher loss for Q2, as Zuckerberg’s passion project continues to crash and burn up cash. The unit had quarterly sales of $353 million (up 28%) and an operating loss of $4.49 billion (versus a loss of $3.74 billion a year earlier).
Reality Labs has now lost an aggregate of $59.5 billion since the start of 2019. The company has said that in 2024, it expects Reality Labs operating losses to “increase meaningfully” year-over-year “due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our system.”
The Hollywood Reporter wrote: Meta handily beat Wall Street estimates in Q2 2024, but warned investors that it continues to lose billions on its “Reality Labs” division, and added that the company expects to loose even more next year as it builds out its artificial intelligence division.
“We currently expect significant capital expenditures growth in 2025 as we invest to support our artificial intelligence research and product development efforts,” the company wrote in its in its earnings report. It also warned of “an active regulatory landscape including the increasing level and regulatory headwinds in the EU and U.S. that could significantly impact our business and our financial results.”
In my opinion, if Mark Zuckerberg is upset about the losses in revenue that appear to be happening regarding its AI, he could just stop using it.