Meta’s mixed-reality division, Reality Labs, notched an operating loss of over $4.6 billion in the fourth quarter of 2023 despite posting one of the strongest quarterly revenue results in its history.
Meta’s fourth quarter results released on Feb. 1 show Reality Labs — its virtual and augmented reality (VR/AR) research arm — lost $4.65 billion in Q4, while revenue came in at nearly $1.1 billion.
It’s the largest quarterly operating loss for the division since the fourth quarter of 2020 when Meta first added Reality Labs’ financials to its reporting.
Reality Labs’ total revenues in 2023 came in at just under $1.9 billion, with more than half of the year’s revenue coming in the fourth quarter alone when it released the Meta Quest 3. Total operating loss for 2023 was $16.1 billion, a 17.5% year-on-year increase from 2022.
On an earnings call, Meta founder and CEO Mark Zuckerberg pinned Reality Labs’ revenues on a “strong holiday season” for its Quest line of VR headsets, adding that its newest Quest 3, released on Oct. 10, 2023, was “off to a strong start.”
He added the firm’s artificial intelligence (AI) and metaverse plays were “major parts of our long-term vision,” and it would continue to invest heavily in both areas.
“These days, there are a lot of questions about AI that I get, and that field is moving very quickly,” Zuckerberg said.
“I still expect that this next generation of AR VR and [mixed reality] computing platforms to deliver a realistic sense of presence that will be the foundation for the future of social experiences.”
Meta chief financial officer Susan Li said it expects Reality Labs’ losses to “increase meaningfully year-over-year” due to its AR and VR product development and “investments to further scale our ecosystem.”
Meta shares traded flat on the day but jumped by over 15% to near $455 after the bell on Feb. 1, according to Google Finance.
Meta’s full-year 2023 revenue was $134.9 billion, beating estimates from Wall Street research house Zacks and a 16% jump from its 2022 results.
The tech giant also said it would pay its first-ever dividend of 50 cents a share on March 26 and plans to issue a quarterly dividend on an ongoing basis.
