Meta’s AR/VR Revenue Rebound Continued in Q3

For the third quarter in a row, the income of Meta’s Actuality Labs division was greater than it was final yr.

Actuality Labs is the division of Meta behind Quest headsets and their Horizon software program platform, the expertise aspect of the Ray-Ban Meta good glasses, and analysis & growth of AR glasses and their EMG wristband enter gadget.

Meta reported $270 million Actuality Labs income for Q3 2024, a 29% improve in comparison with Q3 2023. This continues the development of Q1 and Q2 additionally being greater than 2023, by 30% and 28% respectively.

It is a notably notable development as a result of the other occurred within the first three quarters of 2023, as Quest 2 entered its third yr in the marketplace and following the business failure of Quest Professional. That fall utterly reversed in This autumn, when Quest 3’s launch led to Reality Labs’ highest ever revenue.

Nonetheless, whereas greater than the primary three quarters of 2023, Actuality Labs income for this yr to this point continues to be decrease than within the first three quarters of 2021 and 2022, when Quest 2 gross sales had been at their peak.

That is nearly actually as a result of Quest 3 is priced $200 greater than Quest 2 was, that means it is not reaching anyplace close to its scale after the preliminary wave of launch season gross sales from lovers.

And to be clear, Q3 ended on September 30, that means the income information we’re seeing immediately does not embrace the launch of Quest 3S. We’ll see that in Meta’s This autumn earnings on February 1, giving us a sign of whether or not Meta’s XR enterprise is about for brand spanking new heights or nonetheless trailing the success of Quest 2.

Even Quest 3S will not carry Actuality Labs anyplace close to making a revenue, although. The $270 million Q3 income got here alongside a whopping $4.67 billion in prices, leading to a quarterly “loss” of round $4.4 billion.

However whereas describing this as a loss is technically right in a monetary sense, in actuality it is extra correct to explain most of it as long-term funding. XR headsets like Quest are nonetheless a comparatively early expertise, removed from maturity, and more than 50% of Actuality Labs spending is on the analysis and growth of AR glasses, a future product line that hasn’t even launched but.

As in lots of earlier quarters, Meta’s CFO Susan Li informed traders she expects these “losses” to proceed to extend this yr because of “ongoing product growth efforts and our investments to additional scale our ecosystem”.

Meta’s AR/VR Hardware Teams Must Cut Spending By 20%

Meta’s AR/VR hardware teams have been told to cut spending by 20% by 2026, The Information reports.

Meta could also be planning to slowly rein in spending beginning subsequent yr although, as over the summer time it reportedly informed its {hardware} groups to chop spending by 20%. Mixed with revenues from Quest 3S this yr, HUD glasses subsequent yr, two Quest 4 fashions deliberate for 2026, and an ultralight headset in 2027, Meta may quickly begin steering Actuality Labs on the very lengthy path to eventual profitability, which Mark Zuckerberg beforehand indicated to traders ought to arrive someday within the 2030s.