Meta today announced its fourth quarter earnings for 2023, revealing how Reality Labs has fared during the holiday season. It’s been a banner quarter for Meta’s XR division, with Reality Labs posting record revenue numbers, but also record costs.

During its Q4 earnings call, Meta revealed its XR division had crossed over $1 billion in revenue for the first time, but also had its biggest quarter in terms of costs at $5.72 billion, resulting in a quarterly loss of $4.65 billion. This beats the division’s revenue record of $877 million in Q4 2022, and handily beats it’s second largest quarters for costs of operation in Q4 2022, $5.01 billion.

Image created by Road to VR, data courtesy Meta

Meta says its uptick in revenue was primarily driven by Quest 3 sales, its latest VR headset released in October 2023. Undoubtedly some of that record revenue was also supported by Quest 2, which was dropped from $300 to $250 prior to the holiday season, putting the company’s 2020-era headset at half the price of the new Quest 3.

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Meta revealed that in addition to strong Quest sales, EssilorLuxottica is set to manufacture more Ray-Ban Meta smartglasses to fulfill continued demand.

Holiday quarters are typically the most performant, and this is absolutely true for Meta’s Reality Labs division, showing over a 47% increase in revenue year-over-year. Here’s a closer look at revenue gains year-over-year:

The company says however we can expect “more meaningful losses” in the coming years, as Meta says it will continue to invest in the XR space. This is largely expected, as the company has been insistent that major investment expenses may not pay off until the 2030s.

We’re still listening in on the earnings call and diving into the particulars, so check back soon as this story is breaking.

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Well before the first modern XR products hit the market, Scott recognized the potential of the technology and set out to understand and document its growth. He has been professionally reporting on the space for nearly a decade as Editor at Road to VR, authoring more than 3,500 articles on the topic. Scott brings that seasoned insight to his reporting from major industry events across the globe.
  • Anonymous

    Despite all these hard evidence, continued devotion and heavy lifting for the entire VR industry, the elitist PCVR community will still shit on the Quest just because FB and Standalone in general because devs shouldn’t be “greedy”.

    • ViRGiN

      Large portion of them absolutetly believe most Quests sold are used exclusively with SteamVR; and that praydog mods helped to move tens of thousands of headsets LMAO

      • dextrovix

        LMAO, show me the evidence that the mod has moved tens of thousands of headsets by the master race PCVR community.

        You won’t, you’ll just throw an insult and not sensibly debate, but I’m happy to run you through the mill a few times, so let’s go for it.

        • ViRGiN

          Are you banned from google or something?
          Nice piss poor attempt! You know posting links here is not possible, and yet you DEMAND them because you can’t be bothered to search on your own.

          • dextrovix

            Cite where it is, silly person. Countless time troll says “do your own research”… no, you do it, or stop spouting uncited opinions as facts.

          • ViRGiN

            that’s like your opinion man. you have right to be wrong.

          • dextrovix

            “You have right to be wrong”. I long for more AI authored responses like this so please, continue.

  • MackRogers

    Since 2022 Meta Labs has lost $22 billion.

    For what? I have seen nothing more interesting in terms of use case that Valve didn’t accomplish with index years earlier. Standalone has added nothing to the experience and was premature at best.

    Running it off a cellphone chip and putting all your hope in qualcomm turned out to be a disastrous call. This will continue forward.

    • MeowMix

      over half of RL spending is on AR and research …..
      JFC dood, do you ever turn off ? ….

    • alxslr

      You and VirGin should make a show together :-D

    • philingreat

      when Meta spends money on VR it’s called “lost”, when other companies do the same, it’s called “invest”. A lot of money went into research of headsets we haven’t even seen yet. Apple worked on the Vision Pro for over 7 years.

    • Manny

      As much as I hate what Meta did to the VR industry.. I think they actually saved it!
      I’m a big fan of my Valve Index but also appreciate how Meta made VR a little bit more mainstream. Not everyone can afford a $2000 PC to run a $1500 VR setup.

  • Dragon Marble

    So wonderful to see both the record-breaking revenue and the record-breaking expenses! To the mainstream media who spread the false narrative of Meta pivoting away from VR and who declared VR dead based on the 2023Q3 revenue: 1) I told you so, 2) next time educate yourself of the subject before you write about something.

  • Till Eulenspiegel

    Apple is doing the marketing for VR/AR and Meta is getting the benefits.

    “Have you heard about that Apple Vision Pro? It looks interesting… shit, it’s so expensive!”

    “The Meta Quest 3 is much cheaper, let’s get one to try it out.”

    • Christian Schildwaechter

      Unlikely. For one most of the AVP hype was around June following the presentation, and even in XR specific media the AVP largely vanished until January with announced pre-sale dates and first impressions about 30min demos reported by several news outlets.

      AVP wasn’t a prominent subject during Q4’23, and while some of the reviewers familiar with Quest 3 compared the two, the general public doesn’t. So it’s doubtful Apple sold/will sell a lot of Quest 3. A lot of the sales will have gone to Quest 2 owners looking for an improved gaming experience due to better lenses and higher GPU performance, not at all what Apple is trying to sell with AVP.

      • Till Eulenspiegel

        You are obviously not an Apple user. Apple websites like MacRumors and AppleInsider can’t stop talking about the Vision Pro since it was announced.

        • Christian Schildwaechter

          I’m an Apple user that more than a decade ago stopped following sites like MacRumors and AppleInsider regularly, because the changes on iPhones and Macs became smaller and smaller, and the flood of even the tiniest detail reported about everything Apple wasn’t all that enlightening.

          I recently checked them more often for AVP, but quickly left again for the same reasons as before. I also wouldn’t count them as XR specific media or general public either, and am rather sure that very few of their visitors were ever tempted to buy a Quest 3 due to the excessive reports on AVP on these sites.

          • Till Eulenspiegel

            “…am rather sure that very few of their visitors were ever tempted to buy a Quest 3 due to the excessive reports on AVP on these sites.”

            Most Apple users have never tried a VR headset or even considered one – until Apple announced their Vision Pro. If it triggered their curiosity but found the price tag unattainable, they will consider something cheaper and Quest 3 is the best choice.

          • Christian Schildwaechter

            It’s actually a lot more likely that they will wait for two to five years for Apple to release a lighter and cheaper version. Apple users know that buying a first generation device from Apple is often dangerous (with some exceptions like M1). And the Vision Pro comes with so many compromises like external battery, high price, huge weight, short runtime and insane repair costs that it will be very obviously replaced with something a lot more mature and more useful.

          • Till Eulenspiegel

            When someone’s curiosity is piqued, they are not going to sit around waiting for a few years.

            My point is – Apple’s marketing has global reach, it’s about creating an awareness for XR, which will benefits the entire industry.

    • Manny

      The Apple Vision is a fantastic piece of hardware but the Quest 3 can do pretty much the same thing for a fraction of the cost!
      Plus it comes with controllers to play games! The best the vision Pro can do is probably play Angry Birds AR.

  • ViRGiN

    Thanks Mark for continious belief in this massive project.

    • dextrovix

      I agree, but he doesn’t read your comments. You should get an article published on here if you can get a few more coherent sentences put together, then email the link to him. And in the mean time, print it out and put it in that shrine you have of him at home. In your bedroom wardrobe that you told your mother she mustn’t open. Ever.

      If you want to return one of your witticisms of “Gayben”, “PCVR” or “Gorilla Tag” please, go ahead, I await your response.

      • ViRGiN

        Mark is my old buddy. You are not in my friend circle. Stick to your lord gaybens.

        • dextrovix

          What I say before about the term “Gayben”. You have about three insults, use an original one. How about “pray-bitch” for PCVR players, you can have that one for nothing and I look forward to your adding that to your repertoire in future.

          • ViRGiN

            “gayben” is spelled with all lower-case.
            straydog!

          • dextrovix

            Sentences and names are in upper case. But I can tell you’ve only just moved on from crayons, so go you, you’ll get there!

          • ViRGiN

            why so stiff?

          • Daniel G

            Another swing and another miss *whiff*

  • Christian Schildwaechter

    Short: Quest 2 responsible for 60% of the revenue, 5th best quarter for Quest 2 revenue, 2nd highest Quest 2 unit sales

    1.5 months after Quest 3 launched, Road To VR reported that Quest 2 was outselling Quest 3 on Amazon by 3:1. Assuming that this was true for all of Q4 and that only the lowest storage variants were sold at their cheapest price †, three USD 249 Quest 2 for one USD 499 Quest 3 means Quest 2 generated 60%, Quest 3 40% of the revenue.

    So USD 1.07bn quarterly revenue would be USD 0.642bn Quest 2, USD 0.428bn Quest 3, making this the 5th highest quarter for Quest 2 after Q4’21 (USD 0.88bn), Q4’22 (USD 0.73bn), Q4’20 (USD 0.72bn) and Q1’22 (USD 0.7bn). And since the smallest Quest 2 sold for USD 299 in all those quarters except Q4’22, this would be the second highest quarter regarding Quest 2 unit sales after Q4’21.

    The headline “Quest 3 Pushed Meta Reality Labs to Record Revenue in Q4” would still be true, as these Quest 2 sales were certainly due to a halo effect from the launch, with many people becoming aware of Quest 3 and then finding the seemingly very similar Quest 2 as a bargain at only half the price.

    † [The assumptions are of course flawed: a lot of USD 649 Quest 3 were sold at launch, Quest 3 was not available for the full quarter, not all revenue is from Quest hardware and Amazon may not be representative. Only Meta knows the actual sales ratio and numbers].

  • This is good news!

  • eadVrim

    Meta is a company that makes a lot of money. What is the use of this money if you do not invest it in new technology and in the future? Will it deposit it in the bank to dance in front of it, or will it distribute it to speculators? Unlike Google, despite all the money that it make, it doesn’t want to lose a penny on something new. It also canceled its development of augmented reality devices.

    • Christian Schildwaechter

      Google’s/Alphabet’s Waymo is the company that has pushed autonomous vehicles the furthest, with the best safety record and running fleets of robotaxis now without safety drivers and open to customers in San Francisco and Phoenix, where they just started using freeways to prepare for higher-speed rides.

      Waymo goes back to the 2005 DARPA challenge, where not a single car got further than 5% of the 150mi/240km open course with no other traffic. Today their cars are “driven” by Google TPUs developed by their deep learning researchers. It will take a lot more time and billions to replace drivers in all cars, but Google is willing to pay, even though there’s still no end in sight after 20 years.

      No doubt Google kills lots of projects they don’t see getting enough traction. Nonetheless they are absolutely willing to continuously invest in projects that will be unprofitable not only in the short term. They just have to believe that eventually there will be a mass market interest. They will support XR HMDs from Samsung and others with Android and their experience with VR and billions of phones running ARCore. It is up to Meta to prove that consumer VR is a viable way to get there, not just a dead end with less than 10mn active users after a decade that will be surpassed by solutions extending existing use cases instead of reinventing everything.

      • eadVrim

        I agree that Google has done a lot for the Internet and also for humanity. But if Google has all the capabilities, why has it become afraid of taking risks in recent years? Is Google watching from afar and waiting for the success of mixed reality until it enters its programs because it considers itself a software company? Or is the reason related to profits continuing to grow more than the previous year? I see that augmented reality glasses are more beneficial to Google than any other company, because most of its services may be compatible with it Google Maps, GPS, Google Lens, Gmail, Search, Assistant … Even Youtube.
        I will give you another example of Android. Google’s success was because it was a popular company open to all types of people and colors, but when it became too focused on quality, it entered to Apple territory. where competition in its field is very difficult and it may lose the strength of Android.

        • Christian Schildwaechter

          Google Glass launched in 2013, a perfect fit for all their AR, location based technology, but failed even for enterprise, mostly because the technology wasn’t ready. I don’t know why exactly they dropped Daydream or Tango, but they never quit XR. They kept developing AR solutions for phones instead of HMDs.

          An argument can be made that the technology wasn’t ready for mobile VR either, that Facebook should have let it mature by sticking to Oculus Rift and PCVR longer. But Meta entered XR for strategic reasons, to rid themselves of Google and Apple. They simply couldn’t afford to wait for technology to mature, as by then their competitors could dominate with their huge user bases.

          It made little sense for Google to follow Meta’s path, burning billions for a better start position, when waiting a few years to then extend their Android phone business into XR would be cheaper and easier. That’s of course avoiding risk, but avoiding unnecessary risks is smart. The risks were unavoidable only for Meta, while Google could focus on improving XR on phones, allowing for an easy transition to HMDs once the tech advanced enough for mass market acceptance.

          • eadVrim

            I see the opposite. Even augmented reality on phones has been left behind by Google. Do you use augmented reality app on your phone? Perhaps Google believes that augmented reality is not useful to it in the future or in the field of ads, I see this is a big mistake. On the other hand, Google is useful in augmented reality and not in mixed reality, exactly as I thought about the first Google Lenses. It is good to use regular glasses and see augmented information about an image or object on television or a translation subtitle, or see the direction of the road in augmented reality while driving the car. Or even a small screen for YouTube and other many things …

      • Newlot

        Do you think Waymo or Tesla will win the race to autonomy? Why and why not? Or will it be a different company?

  • Michael Speth

    Meta products are inferior in every way to other VR companies. From their hardware to their software. Therefore, there is no way that Meta is spending $5B USD on R&D this Quarter. The $5B costs is correlated with the $1B revenue.

    Meaning, Meta is selling their hardware at 5x the loss of the actual costs.

    Why? Meta is not a charity so there must be a secret reason they are willing to lose money on selling products (which is the opposite of most companies).

    It must be related to capturing YOUR personal data and using it to fuel future revenue opportunities.

    Because of this, Meta is not good for the VR industry. It produces sub-standard hardware and software at an unknown future cost to personal liberty.

    • Foreign Devil

      Meta stock just jumped over 20% after earnings. . in one day! So they added $200 billion to market value over 24 hours. It was a record. Kind of makes that 5 billion in R&D and losses not a big deal at all.

      • Michael Speth

        You actually believe in the stock market?

        • Andrew Jakobs

          Well it’s how businesses like this work.

    • kool

      It’s not that deep they want to make a meta verse you can subscribe to full adverts…

      • Michael Speth

        They don’t need to spent $5B per quarter to do that.

        • kool

          How much should it cost?

          • ViRGiN

            DisplayPort is much, much cheaper than that. xD

    • Christian Schildwaechter

      – Meta sells the worst consumer HMD with at least usable color passthrough in the sub USD 500 category, the Quest 3.

      – They also sell the best consumer HMD with at least usable color passthrough in the sub USD 500 category, the Quest 3.

      Because they are the only one selling a consumer HMD with at least usable color passthrough in the sub USD 500 category, the Quest 3.

      The idea that their products are inferior in every way to other VR companies is a little strange, as there are no companies directly competing with them. The only candidate would have been Pico, who now switch away from consumer VR, while all others occupy different niches. And it makes little sense to e.g. compare the resolution of a USD 499 Quest 3 to a USD 3999 Varjo XR-4, and then complain about the Quest 3 not beating a HMD 8x the price.

      Meaning, Meta is selling their hardware at 5x the loss of the actual costs.

      No. They’d get into a lot of trouble for price dumping. They could double the research cost or drop research, and current production costs would stay the same, the aren’t directly related.

      We basically deliver our devices at cost or at a slight subsidy, or slightly more than cost in some cases.

      Zuckerberg 2022-07

      • Michael Speth

        We basically deliver our devices at cost or at a slight subsidy, or slightly more than cost in some cases.

        Which is it?

        * Sell devices at loss?
        * Sell device at cost?
        * Sell devices at profit?

        It cannot be all three at the same time.

        Considering they lost $4Billion this quarter, we can safely assume Meta sells the vast majority of their headsets at a loss.

        Also, your quote from Zuck has directly contradicted your claim: “No. They’d get into a lot of trouble for price dumping.”

        Zuck stating clearly they are selling at a loss, do you do logic?

        • Christian Schildwaechter

          It’s not that difficult. At the time Zuckerberg said this, the Quest 2 with 128GB sold for USD 299, the Quest 2 with 256GB sold for USD 399, with no other Meta HMDs available. The spot market price for the extra 128GB flash was around USD 20, and this was the only difference impacting production cost.

          So if one sold slightly below, one slightly above retail price, with “slightly” being the same percentage for both and the production price difference USD 20, the 128GB Quest 2 cost USD 339 to build, the 256GB Quest 2 USD 359, leading to USD 40 loss or profit, depending on model. Very simple math, doesn’t even require “do you do logic”. Numbers would slightly shift due to extra costs for retail margin, shipping etc.

          It cannot be all three at the same time.

          In fact it can, if we are talking about multiple devices either alone or combined. A large company is not allowed to unfairly exclude competitors from the market by systematically selling products below production price, but they are allowed to give away some for promotion, sales etc. As long as Meta can proof that the whole product line basically makes back at least the production cost, they are fine, as others could compete with that.

          Eating billions in “separate” research and development cost doesn’t count for anti-competitive behavior from a legal point of view, even though it very obviously gives them an unfair advantage and makes it impossible for others to compete, unless they are also willing to do the same. But formally selling “at cost” is enough. Without that rule, Meta would probably sell the HMDs even cheaper to grow the market faster, as the hardware costs are actually only a very small part of their expenses.

          • Michael Speth

            $5 billion in R&D huh? Let’s say the average engineer makes $200,000 USD per year so $50k for the quarter. You don’t even need to do ‘simple math’ to understand that Meta would have to employ 100,000 top dollar engineers to account for that $5 billion R&D figure. We already know that Meta has hacked it’s workforce this year, last year and in 2022. So they are lucky to have < 10k employees which only a subset will be top dollar engineers.

            So that $5B costs isn't coming from labor, where is it going? Infrastructure? No way.

            The only way they are spending $5B when their Revenue has increased substantially is that the Revenue and the Cost are tied together. Which means they are selling at a loss.

            Perhaps they are lying on the books, I have no way of knowing and neither do you. It is funny that you believe companies won't do something because there is a law. How many times do companies have to get busted for fraud before the general public stops believing that laws prevent companies from doing anything?

          • Arno van Wingerde

            The total workforce of Meta is about 86.000, which again seems to support your point.

          • Michael Speth

            It is also clearly evident that Meta is failing when compared to its competitors. Their Microsoft Mesh failure is subpar when compared to Immersed (a small startup with no where near Meta level money).

            Their headsets are still lacking in components when compared to others. Apple vision pro for instance is more advanced in all categories with the real cost being $3.5k. Immersed Visor going to be a competitor about $1k.

            The price for the meta headsets is simply untrue and all of the vendors, all of the competitors KNOW IT. It is funny that people like you pretend its not.

          • ViRGiN

            Immersed is a complete failure, used by a handful of people who are full of PTSD and ADHD who need to “tune out” in some crappy environment while they are doing their $7 an hour “work” using 5 monitors in low resolution and heavy headset. You’re dickhard.

          • Andrew Jakobs

            Avp more advanced? Not according to reviews which keeps telling lenses are worse. And the real cost if the avp is far from $3500, it has the same Apple margin as it has on all other Apple devices, almost 50%+. Yes, the Meta headset is sold at (material)cost or a slight loss, just like the xbox and the playstation consoles. But at least they try to get a headset as low as possible to the mainstream consumer and not come out with some pretentious crap headset like the AVP (for the money they ask). Fov, sharpness less then the Q3 for 7 times the price? That’s just really crap.

          • Arno van Wingerde

            I believe your arguments, however, like Michael, I do seem to notice a relation between losses and revenue, which is odd if the losses are due to research only.

          • Christian Schildwaechter

            Nobody claimed that operating costs (not losses) are only research. Research is the biggest part, and could be split into salaries, office rent, buying equipment, outsourcing development and more. But there are also people just dealing with selling Quest, answering questions, cleaning the floors and more. Operation costs also include all the money Meta has to pay for the Quest production, and unless they produce at full capacity all year, production will increase during Q4 to have enough devices for Christmas, with corresponding increased manufacturing costs. Advertising also shoots up during the holiday season.

            Earnings/losses is what remains after you’ve subtracted the revenue from operation costs, and everything generating revenue also generates costs. So the graph has to expand/shrink in both directions simultaneously . The research cost should be mostly independent from seasonal changes, and if you imagine a graph where the operation costs bar has been shortened by the length of the revenue bar, you get a much more steady “losses” graph. Not perfectly, because some delayed costs move losses/revenue to the next quarter. But those steady costs unrelated to “sales” are a lot larger than the part of the operating costs that fluctuates with revenue, and much of it will be research.

  • JB1968

    Meta’s VR loses are terrible and their headset prices dumping just distort whole VR market. I wonder how long will the investors and shareholders trust Zuckerberg’s tales about “Metaverse producing golden eggs”.

    • ViRGiN

      Voice of someone waiting for volvo dickhard

    • Arno van Wingerde

      Both you and Google shareholders seem to be unaware how long it takes to actually develop something new. Apple has been working on VR for something like 10 years and the AVP is everything but finished. It will still take another 10 years, and over 50 billion dollars before we get to a really consumer ready product. Quest 3 and AVP are great … in the sense that the Commodore 64 was a great computer.

  • KingArt

    I have stopped using FB for many years. I am NOT a fan of social media and its toxicity but I love VR. I appreciate Mark keep pursuing his goals and dreams (Yes I know how toxic metaverse can be but there are its upsides for humanity)

  • Manny

    Personally I’m excited that Meta has been spending so much on R&D to keep driving VR/XR/AR forward! I feel that VR would probably be on its last leg had they not jumped into the race!
    I’m a PCVR enthusiast that plays on a Valve Index and was outraged when I saw all the studios dumping PCVR to jump on the stand-alone bandwagon. But finally.. we are seeing near PCVR quality games coming out on the Quest 3 and I believe it won’t be long until we see Half Life Alyx quality games coming out for standalone headsets! Specially if Valve ever releases their Deckard headset.