Meta’s Reality Labs Unit Registers USD 2.8 Billion Losses In Q2

Meta’s Reality Labs Unit Registers USD 2.8 Billion Losses In Q2

Meta, the social media company, has reported that its metaverse division, the Reality Labs Unit, is losing large amounts of money. While the Reality Labs unit managed to register USD 400 million in sales, its losses reached USD 2.8 billion, mainly due to research and development costs associated with metaverse and VR products.

The Metaverse Push Is Making It Lose Funds

Meta, one of the first companies that announced a pivot from social media to the metaverse, is struggling to make its new unit profitable. In its most recent report on the economic performance of the company during Q2, it announced that its metaverse division, the Reality Labs unit, had lost more than USD 2.8 billion during the quarter, even though it managed to register more than USD 400 million in sales.

Reality Labs is in charge of the metaverse strategy of the company, including the development of virtual reality and augmented reality products. The monetization of Meta’s metaverse initiatives is still a work-in-progress, with its flagship VR app, Horizon Worlds, opening its monetization options to users with the company keeping up to 50% of each sale.

Negative Predictions

Meta’s outlook for Q3 2022 is also negative. The company has blamed the prediction on the "continuation of the weak advertising demand environment we experienced throughout the second quarter, which we believe is being driven by broader macroeconomic uncertainty."

Mark Zuckerberg, CEO of Meta, also hinted at the possibility of layoffs during the next year, stating that "this is a period that demands more intensity and I expect us to get more done with fewer resources." The company reported having increased its workforce by 32% since last year, with its headcount reaching 83,553.

In July, Zuckerberg made remarks on slowing the company’s hiring strategy and raising performance standards for current Meta employees.

The company also projected that Reality Labs would continue losing money in the next quarter. However, Zuckerberg has referred to this metaverse pivot as a long-term group of investments, as he believes that the metaverse will scale in time to house billions of users, who will all be making transactions in the metaverse, with each one of the transactions being monetized by the company.