In Facebook’s Q1 2020 earnings call today, the company overviewed its latest financial situation and noted that Oculus products were a major contributor to $297 million in non-advertising revenue.

While Facebook makes the vast majority of its revenue from advertising, the company also separately reports non-advertising revenue which includes the sale of Oculus hardware and software, Portal video calling products, and more.

During the company’s Q1 2020 earnings call today, Facebook CFO David Wehner said that non-advertising revenue had reached $297 million, an increase of 80% year-over-year. Wehner specifically noted that the increase was “driven primarily by the sales of Oculus products.” He also reminded the audience that “we launched Quest in May 2019,” seemingly to suggest that the product has been selling well since then.

In the expense department, Wehner also said that Facebook’s R&D costs had grown 40% year-over-year, and that the increase was “driven primarily by investments in core product as well as our innovation efforts, particularly in AR/VR.”

Facebook's Mark Zuckerberg Thinks AR/VR is a Solution to the Housing Crisis

Responding to an audience question regarding the traction of Oculus products during the pandemic, Facebook CEO Mark Zuckerberg spoke directly to Quest, the company’s fully-featured standalone headset:

On the virtual reality side—this has always been a long-term vision—Quest has surpassed our expectations. I wish we could make more of them faster during this period. I do think that [considering the pandemic] it’s one of those areas where as people can’t go out and into the world as much, the ability to have technology that allows us to feel present even when we can’t be physically together—whether that’s quest or portal or any of the software that we’re building around video presence—that stuff has certainly seen especially large spikes in usage. And it’s possible that [the pandemic] accelerates some of the trends around virtual or augmented reality, but I’m not sure what will happen there long term. But in the near-term I’m quite pleased with how Quest is doing and I wish we could make more of them.

Last year after launch of Quest and well before the pandemic, Zuckerberg said, “we’re selling them as fast as we can make them.” As the 2019 holiday shopping period approached, it became increasingly hard to find Quest (and to some extent, Rift S) in stock. Shortly after the holidays the Coronavirus began to impact the availability of Oculus’ headsets, and since February it’s been very hard to directly purchase the headset from Oculus or retailers. It’s clear that Zuckerberg’s comments about wanting to be able to “make them faster” speaks to a desire to fulfill the demand the company is seeing.

This week seems to have given a glimmer of hope for those looking to get their hands on Quest; as we reported earlier today, global availability of Quest appears to be returning, though Rift S is still largely unavailable.

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Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • starchaser28

    This is fantastic news, and a clear sign that there’s a hug potential market for VR that will continue to grow as the ecosystem grows.

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  • nejihiashi88

    the moment when vr will reach the masses is when the performance gained through vr using foveated rendering which will give 50% performance boost over flat screens , and it can only be used through a vr headset, then people will use the media which give them more immersion and more performance, also with some AI like hardware dlss in nvidia it will also give like 50% performance boost (yes 2d screens can use it but the vr will benefit more from it) so VR future is looking bright, hope we see it spreading faster.

  • A VR Enthusiast

    A great news considering health of VR industry.

  • It’s good that Quest is selling so well… I wonder how much of this money is due to hardware, and how much to software

  • Let’s do some napkin maths.

    The 80% growth means 165M in added revenue (compared to Q1 2019).

    – If it’s mostly Oculus, let’s say 60% Oculus = 99M.

    – Let’s then assume that Quest (hardware + software) represents 2/3 of that, with the rest for Rift S and Go = 66M. (Quest didn’t have revenue in Q1 2019, so it can’t claim a portion of the rest of the 297M)

    – Let’s then assume half of this is hardware revenue. (Units sold in Q1 2020, compared to software sold for all Quest units sold since May 2019) = 33M.

    – That would mean 95.000 Quest units sold at $350 average revenue/unit. (Why the low revenue/unit? Because a reasonable portion of Quests – probably the majority – is sold through online/offline retail partners, and retailer discount can be up to 50%).

  • Ardra Diva

    on the other hand, it’s sad that a pandemic is what it’s going to take to make VR a must-have product for travel, training, socializing, etc. Gee, a virus is the only thing really missing from “Ready, Player One”s dystopia.

  • NooYawker

    What other non-ad revenue does Facebook have?