Meta Reports First Quarter Earnings: Reality Labs Division Continues to Struggle

Meta, the parent company of popular social media platforms like Facebook and Instagram, reported its first quarter earnings yesterday, showcasing impressive growth and profitability in most areas of the business. However, the AR/VR Reality Labs division continued to struggle, reporting significant operating losses.

Despite the challenges faced by Reality Labs, Meta’s overall revenue for the quarter was $36.5 billion, a 27% increase from the previous year. Net income also saw a substantial jump, reaching $12.4 billion, up 117% year-on-year.

The Reality Labs division saw revenue of $440 million, a 30% increase from the previous year. However, the operating loss for the division was reported at $3.85 billion, compared to $3.99 billion in the first quarter of the previous year.

Meta CEO Mark Zuckerberg emphasized the company’s commitment to Reality Labs, stating that they expect operating losses to increase year-over-year due to ongoing product development efforts and investments to scale the ecosystem. Additionally, Meta announced plans to increase its investment in AI, with expected expenditures in the field ranging from $35 billion to $40 billion for the full year.

During an earnings call with investors, Zuckerberg acknowledged that it will take time for the company’s AI investments to translate into profitable services, cautioning that this strategy may impact the company’s stock price in the short term. Despite this, Zuckerberg expressed confidence in the long-term benefits of investing in AI technology.

Following the earnings report, Meta’s stock price experienced a significant drop in after-hours trading, falling as much as 17% from its Wednesday closing price. Despite this setback, Meta remains optimistic about the future of its business and the potential of its AI investments to drive growth and innovation in the coming years.