Meta’s Reality Labs revenue grew 35% year-on-year in Q1 2022, but costs grew 55%.
Reality Labs is the division of Meta responsible for Quest VR hardware & software, Portal video calling appliances, and the Ray-Ban Stories camera glasses – as well as researching and developing AR glasses and other future AR and VR devices.
The division brought in $695 million revenue in Q1 2022, up from $534 in Q1 2021. But the cost of this division was a whopping $3.6 billion, up from $2.36 billion in Q1 2021. The result is a loss of $2.96 billion, up from a loss of $1.83 billion in Q1 2021.
Meta’s CFO said the revenue growth was “driven by sales of Quest 2”. Plotting a trendline, it’s clear that while costs are growing significantly, revenue is slowly growing too:
This increase in costs isn’t unexpected however – Mark Zuckerberg warned investors in October that investments in AR & VR would reduce Meta’s overall 2021 profit by $10 billion, and said “I expect this investment to grow even further for each of the next several years”. Zuckerberg has described the metaverse as “still a long way out”, and is signaling to investors he intends to spend tens of billions of dollars “to build it”.
Zuckerberg today told investors he’s prepared to trade off short term profits for the long term opportunities AR and VR present. This could turn out to be the largest bet in the history of the tech industry – but will it work?