Meta records its highest quarter since 2021, even amidst escalating metaverse expenses

Meta has reported its most successful quarter since 2021, despite its ongoing and substantial financial losses linked to the metaverse. In fact, the company has forecasted an even greater deficit due to metaverse ventures in the upcoming year.

The company’s Reality Labs division, which supervises its virtual and augmented reality projects, recorded a staggering loss of $3.7 billion in the second quarter of 2023. It was only able to generate $276 million in revenue during the same period, as per the company’s recent earnings report. The firm reiterated its prediction of an acceleration in metaverse expenditures, with CFO Susan Li stating that the losses at Reality Labs are set to “increase significantly” compared to last year, when the division’s endeavors resulted in over $13 billion in losses.

Despite these significant losses, Meta’s CEO, Mark Zuckerberg, underscored the company’s unflagging commitment to the metaverse vision during its earnings call. When probed for more information on the company’s metaverse expenses, he referred to the forthcoming Quest 3 headset, slated to be launched at the Meta’s Connect event in September. He characterized it as “the most significant headset that we’ve released since 2020,” noting the considerable expenses associated with its market launch.

Meta had a robust quarter aside from the metaverse, reporting revenues of $32 billion, marking an 11 percent rise from the previous year. Zuckerberg extolled the merits of Reels, which now garner 200 billion views daily across Facebook and Instagram, fueled by the company’s renewed focus on AI-powered recommendations. He further spotlighted the recent introduction of Threads and the Llama 2 large language model.

Zuckerberg also addressed the reported decline in user engagement with Threads since its launch, based on early analytics data. He claimed that the company is “witnessing more daily return users than anticipated” and envisioned the app eventually attracting “hundreds of millions” of users.

Meta confirmed that the majority of its layoffs, resulting in over 20,000 job cuts since the previous fall, are now “largely completed.” Previously, Zuckerberg referred to 2023 as Meta’s “year of efficiency,” as he trimmed down staff and streamlined the company’s management. He pointed to the launch of Threads, managed by a comparatively smaller team, as evidence of successful “cultural changes” at Meta.

However, Zuckerberg did not provide a definitive timeline for when the company’s metaverse investments might begin to yield returns. “This is a very long-term bet,” he conceded, acknowledging the apprehension many investors have regarding it. “While I can’t guarantee you that this bet will certainly pan out, I firmly believe that this is the path the world is taking,” he added.

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More about Meta’s financial performance

• Meta’s Q2 2023 Earnings Report
• Introduction of Meta’s Quest 3 Headset
• Launch of Meta’s Threads App
• Meta’s Workforce Reduction
• Zuckerberg’s Perspective on Metaverse Investments