Mark Zuckerberg's avatar in the metaverse. Meta lost $3.99 billion on the metaverse this quarter. Source: Getty

Meta’s Reality Labs bleeds $3.99 billion for the metaverse

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Meta has released its first quarter earnings for 2023, and Reality Labs, the company’s division responsible for realising Mark Zuckerberg’s metaverse ambition, lost US$3.99 billion (AU$6.04 billion).

Reality Labs’ operating losses are up from $2.96 billion (AU$4.48 billion) in 2022. Alongside this, Reality Labs reported a revenue of US$339 million (AU$512 million), down from US$695 million (AU$1.05 billion) in the previous year.

In Meta’s earnings release statement, CEO Mark Zuckerberg says he expects Reality Lab’s operating losses to “increase year-over-year in 2023.”

According to TechCrunch, in Meta’s earnings call this morning, Mark Zuckerberg reiterated his commitment to the metaverse amid the ongoing AI race in Silicon Valley.

“A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say up front that that’s not accurate,” Zuckerberg reportedly reassured investors.

“We’ve been focusing on AI and the metaverse, and we will continue to.” he added.

Meta layoffs

Meta’s earnings report comes after the company’s latest layoff announcement in March, where 10,000 employees were let go. Zuckerberg described 2023 as the “year of efficiency”, and promised to cut down the size of middle management. 

As of last week, Meta began its second round of mass layoffs which impacted 4,000 staffers.

In early April, The Washington Post reported that despite an aggressive push to cut costs, sources say Meta is paying programmers compensation anywhere from US$600,000 (AU$908,000) to US$1 million (AU$1.5 million) to build VR-powered games and apps.

Besides Reality Labs, however, Meta has delivered great results this quarter. The company reported a revenue of US$28.6 billion (AU$43.3 billion) including ad sales of US$28.1 billion (AU$42.5 billion), and net income of US$5.7 billion (AU$8.63 billion).

Meta’s ‘family of apps’, i.e. Facebook, Instagram, and WhatsApp, saw an increase in daily active people

Meta’s share price surged over 10% after hours to US$209 (AU$316) per share, up over 10% at the time of writing.