Meta’s Reality Labs Records Best Quarter Despite Losses Exceeding $4 Billion

Reality Labs, Meta's division focusing on Augmented Reality (AR), Virtual Reality (VR), and the metaverse, achieved a significant milestone by generating over $1 billion in revenue during the final quarter of 2023. This success is attributed to the popularity of the Quest headsets and the Ray-Ban Meta smart glasses.

Despite reaching a revenue milestone, Reality Labs continues to face substantial losses. In the mentioned quarter, the division incurred a loss of $4.6 billion, contributing to a total loss of more than $16 billion in 2023. The losses are expected to persist due to ongoing product development efforts in AR/VR and investments to scale the ecosystem. Meta's CFO, Susan Li, stated that these losses are anticipated to "increase meaningfully year-over-year." The company appears committed to investing heavily in the development and expansion of its AR, VR, and metaverse technologies.

In the fourth quarter of 2023, Reality Labs, Meta's division for AR, VR, and the metaverse, experienced significant success, generating over $1 billion in revenue. The popularity of the Quest headsets and the Ray-Ban Meta smart glasses contributed to this achievement. Mark Zuckerberg mentioned that the smart glasses had performed exceptionally well, with EssilorLuxottica planning to produce more than initially expected due to high demand. Both Quest 2 and Quest 3 were reported to be performing well, with Quest 3 labeled as the "most popular mixed reality device."

Despite Reality Labs' success, Meta reported a strong overall quarter, closing 2023 with $40.1 billion in revenue, bringing the total revenue for the year to just under $135 billion. Meta's user base also expanded to 2.1 billion daily active users (DAUs). However, Meta CFO Susan Li announced that the company was transitioning away from reporting user metrics, including daily or monthly active users. This change reflects Meta's evolving emphasis on its "family of apps" and the shifting dynamics within its portfolio, with Instagram growing in the US while Facebook use remains relatively flat.

Meta's Threads app continues to see growth, with Mark Zuckerberg mentioning that the service now has 130 million monthly users, up from "just under" 100 million in the previous fall. Despite an initial surge in growth during its launch, Threads has sustained and surpassed its peak user numbers.

Zuckerberg also reiterated Meta's ambition to create artificial general intelligence (AGI), stating that it would be the "theme" of the company's product work moving forward. He highlighted the need for developing full general intelligence to enable the next generation of services, emphasizing reasoning, planning, coding, memory, and other cognitive abilities.

Regarding the controversial new developer policies introduced by Apple in Europe, Zuckerberg expressed skepticism about the feasibility of offering Meta's apps in alternative app stores. He mentioned that the implementation of Apple's policies makes it challenging for developers, including Meta, to seriously consider alternative app stores due to the perceived onerous nature and misalignment with the intent of EU regulations.