Meta's Reality Labs Division Posts $2.9 Billion in Losses in Q1 2022, Zuckerberg Still Optimistic

Reality Labs, the division overseeing development of the metaverse within Facebook, lost another $2.9 billion in the first quarter. In the final quarter of last year, the division lost $3.3 billion, shocking Wall Street. Concern about Zuckerberg's ambitions plans for the metaverse, imagined as an immersive 3-D world of avatars and digital goods entered into through VR devices, has only increased since then.

The Reality Labs division — formerly known as Facebook’s Oculus division — has been spending increasing sums of capital on developing virtual reality and metaverse-related products, posting a $2.9 billion loss for Q1 2022. That’s 61% more than its $1.8 billion loss in Q1 2021.

Overall Reality Labs revenue came in above expectations, seeing $695 million in revenue during the first quarter of this year from the sales of things like virtual reality (VR) headsets and Meta Portal hardware.

In a Wednesday earnings call, Meta CEO Mark Zuckerberg said losses in this division are to be expected, owing to the fact that Reality Labs is still largely focused on research and development for a series of software and hardware products such as Project Cambria.

“I recognize it’s expensive to build this, it’s something that’s never been built before. And it’s a new paradigm for computing and social connection,” said Zuckerberg.

“We expect to be meaningfully better at monetization than others in the space, and we expect that should become a sustainable advantage for our platforms as they develop.”

In financial reports from earlier this year, Reality Labs posted an approximate $10 billion loss throughout 2021, with roughly $4 billion of those losses owing to employee costs and research and development.

Overall, the company’s total revenue for Q1 2022 is $27.9 billion up 6.9% from $26.1 billion in the first quarter of last year. Meta’s quarterly report was well received by the market, with Meta’s stock price up 18% in after-hours trading at the time of writing.

Continuing the growth trend, Meta’s overall employee count surged by 28% year-over-year, with 77,805 employees as of March 31.

In February, Meta suffered the largest daily crash in stock market history as $251 billion was wiped from the company’s market cap. The crash came in the wake of the number of daily active users dropping by roughly 1 million.

April 28, 2022