Meta Reality Labs achieved its highest revenue yet in Q4 2023, over $1 billion for the first time.
Reality Labs is the division of Meta behind Quest headsets, the Ray-Ban smart glasses, the Horizon platform, and research & development toward AR glasses and their neural wristband input device.
In its Q4 earnings call today Meta reported $1.07 billion Reality Labs quarterly revenue.
Being the holiday season, Q4 has always been the strongest quarter for Reality Labs since Meta started breaking out its financials in Q4 2020. But Q4 2023 was the strongest ever by far.
Meta CFO Susan Li told investors this record revenue was "driven by Quest 3 sales during the holiday season". Quest 3 launched on October 10, and Q4 includes October, November, and December.
For comparison, Apple has reportedly sold just over 200,000 Vision Pro preorders, equating to over $700 million in revenue.
Meta Reality Labs also reported its highest ever costs in Q4 however, $5.72 billion, resulting in a $4.65 billion quarterly "loss".
But while describing this as a loss is technically correct in a financial sense, in reality it's more accurate to describe most of it as long term investment. XR headsets like Quest are still a relatively early technology, far from maturity, and Meta hasn't even launched its first AR glasses yet. More than 50% of Reality Labs spending is on the research and development of AR glasses.
Li told investors she expects these losses to increase meaningfully over the next year due to "ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem".
That product development refers to the AR glasses and future Quest headsets. Meta reportedly plans to ship a cheaper version of Quest 3 this year that may be called Quest 3 Lite, and is reportedly working with LG on a Quest Pro 2 for 2025.
It's less clear what "investments to further scale our ecosystem" means, but it could refer to VR content and developer funding. Meta has acquired eight game studios in recent years and just released two AAA games for Quest, Asgard's Wrath 2 from one of its studios and Assassin's Creed Nexus from Ubisoft. It also continues to heavily invest in its Horizon "metaverse" platform, bringing it to mobile and web last year and building a first-party studio to ship high quality games inside it.
Mark Zuckerberg has in the past told investors that he doesn't expect Reality Labs to be profitable until the 2030s, seeing it as a long-term investment in the future of computing.
