Meta shares rose over 18% in after-hours trading Wednesday following a rosier-than-expected quarterly earnings report. But rising tides across Meta still couldn’t lift the tech giant’s embattled metaverse division.
The company’s metaverse-focused Reality Labs lost a whopping $4.28 billion in 2022’s final fiscal quarter, Meta announced, marking a new low for the struggling department that has been repeatedly positioned as the company’s future. Wednesday’s announcement brought the metaverse division’s total 2022 losses to a staggering $13.72 billion.
The division pulled in only $727 million in revenue in the final months of 2022, down 17% from revenue posted in the same period last year.
Reality Labs designs hardware and software for virtual and augmented reality experiences, including the Quest virtual reality headset and the Horizon Worlds metaverse project.
Despite such abysmal figures, Meta’s leadership was in relatively high spirits on its quarterly earnings call Wednesday, as the company beat overall forecasts for revenue, daily active users, monthly active users, and average revenue per user.
Perhaps most notably, the company pulled in $32.1 billion in revenue across all departments and apps, beating revenue forecasts of $31.53 billion.
Meta CEO Mark Zuckerberg framed the upcoming fiscal year on Wednesday’s earnings call as a “year of efficiency,” one kickstarted by the founder’s decision to pink slip 11,000 employees in November.
Zuckerberg insisted that Meta would remain scrappy beyond those layoffs, in any way possible.
“We’re going to be more proactive about cutting projects that aren’t performing,” he said, as an example.
Apparently, though, flailing metaverse ambitions don’t count.
Zuckerberg repeatedly made clear on Wednesday that Reality Labs was not on any chopping block, but instead worthy of continued—and potentially increasing—investment.
“Our priorities haven’t changed,” Zuckerberg said. “The two major technological waves driving our roadmap are AI today, and, over the longer term, the metaverse.”
The tech mogul expressed particular optimism about the company’s next-generation VR headset, the Quest 3, which is set to debut later this year.
“I expect [Quest 3] will establish this technology as the baseline for all headsets going forward, and eventually for AR headsets as well,” Zuckerberg said.
Meta hopes the headset will not just increase hardware revenue for the beleaguered division, but also popularize the company’s Horizon Worlds virtual reality ecosystem, which Zuckerberg has previously touted as the future of interactive business, entertainment, and social interaction.
In October, a report surfaced that despite tens of billions of dollars in Reality Labs funding, Horizon Worlds was so difficult and unpleasant to use that even Meta employees building the project avoided using it whenever possible.