Reality Labs is a division of Meta and is responsible for the research and development of the Quest headset, Ray-Ban smart glasses, the Horizon platform, AR glasses, and its neural wristband input device. In today's fourth-quarter earnings conference, Meta announced that Reality Labs achieved revenue of 10 percent in the fiscal fourth quarter$700 million.
As a holiday season, Q4 has been Reality Labs' strongest quarter since Meta began reporting its financials in Q4 2020. Compared to the past, this quarter has achieved the strongest performance since the establishment of the department.
Meta CFO Susan Li told investors that the record revenue was "driven by Quest 3 sales during the holiday season." The Quest 3 launched on October 10 last year, and the fourth quarter includes October, November, and December.
In contrast, there are data that Apple has sold more than 200,000 Vision Pro pre-orders, which equates to more than $700 million in revenue.
However, Meta Reality Labs also reported the highest cost ever in Q4 at 57$200 million, resulting in a quarterly loss of 46$500 million.
While it is technically correct to describe it as a loss in a financial sense, it is actually more accurate to describe it as a long-term investment. XR headsets like the Quest are still a relatively early technology, far from mature, and Meta hasn't even launched its first AR glasses yet. More than 50% of Reality Labs' spending is on R&D for AR glasses.
Susan Li said she expects these losses to increase significantly in the new year due to "the ongoing product development work in the AR VR space and our investments to further expand the ecosystem".
This product development refers to AR glasses and future Quest headsets. Meta is reportedly planning to launch a cheaper version of the Quest 3, possibly called the Quest 3 Lite, in the coming months, and the company is reportedly working with LG on the 2025 Quest Pro 2. It's unclear what "investments to further expand the ecosystem" means, but it could refer to VR content and developer funding.
Earlier, Zuckerberg had told investors that Reality Labs was a long-term investment in the future of computing, and that the division was not expected to be truly profitable until 2030.