Meta's VR/AR division struggles with $4.4 billion loss as expenses rise to $4.7 billion in Q3

• “Our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there too," said CEO Mark Zuckerberg

Meta Reality Labs reported a $4.4 billion loss in Q3 2024 as the firm continues to invest heavily in virtual and augmented reality.

The company's latest earnings report showed expenses for the division rose 19% year-over-year to $4.7bn. Revenue for Reality Labs was $270 million, up 29% driven by hardware sales. 

Meta's CFO Susan Li comments that Reality Labs expects significant increases in operating losses for 2024 due to ongoing product development and ecosystem expansion. 

VR/AR investments despite losses

When asked about “peak losses" and the VR/AR products that'll have the “biggest potential” in the coming years, Li said: “We aren't sharing expectations beyond 2024 at this point. We're certainly thinking about where we want to make sure we're putting our sort of focus and energy." 

Meta said it won't be slowing down its investments into Reality Labs anytime soon. “We have a really big investment portfolio here," said Li. "It is multifaceted across both the current and next generation of hardware devices and software."

She added: “Overall, I'd say Reality Labs is clearly one of our strategic long-term priorities, and we expect it will be an area of significant investment in as we build out towards the very ambitious product roadmap that we have there."

AI advances

Elsewhere in Meta's latest earnings, the tech giant said Meta AI is projected to have more than 500 million MAUs by the end of the year, with India at the forefront of this growth as its largest market.

Meta's ad impressions also increased by 7%, with average ad prices rising by 11%, The company put this down to AI-enhanced placements and improved targeting.

“We are making a lot of progress with our AI efforts and we're seeing AI have a positive impact on nearly all aspects of our work -- from our core business engagement and monetisation to our long-term roadmaps for new services and computing platforms," said CEO Mark Zuckerberg. 

He added: “Our AI investments continue to require serious infrastructure, and I expect to continue investing significantly there too."

A decent quarter 

In Q3, total revenue was up 19% to $40.6 billion, while total expenses rose by 14% year-over-year to $23.2 billion. Net income was reported at $15.7 billion.

Looking ahead to Q4, revenue is projected to hit $45bn to $48bn.

Meta said it expects its full year 2024 total expenses to be in the range of $96bn to $98bn, updated from its prior range of $96bn $99bn

Despite the company's recent layoffs, it ended the third quarter with over 72,400 employees, a 9% YoY that's driven by new hires in monetisation, infrastructure, Reality Labs, generative AI, and regulatory compliance.