Meta drops 15% on weak outlook and high AI and metaverse spending

April 24, 2024 Coin Telegraph

Meta Q2 earnings: Reality Labs losses top $7.7B year to date

July 27, 2023 Coin Telegraph

Meta Q2 earnings: Reality Labs losses top .7B year to date

Meanwhile, Meta's metaverse-building business has racked up around $21 billion in losses since the start of 2022.

Meta's metaverse-related losses topped $3.74 billion over the second quarter with the Big Tech player spending $7.7 billion on its virtual reality business so far in 2023.

Its second-quarter 2023 results released on July 26 saw Meta report an 11% revenue gain compared to the same quarter last year, totaling $31.9 billion.

Its metaverse-focused Reality Labs revenue topped $276 million, its lowest in two years and a nearly 40% drop compared to Q2 2022.

*Meta's segment results in millions since Q2 2021 with* *added* *highlights on Reality Labs' Q2 2023 revenue and operating losses. Source: Meta*

On an earnings call, Meta's financial chief Susan Li said Reality Labs' revenue drop was due to lower sales of its Quest 2 virtual reality (VR) headset. The department's expenses were up 23% to $4.0 billion partly caused by a growth in staffing costs.

Reality Labs' operating losses are set to increase through 2023, Meta said. It cited VR-related product development efforts and further investments in its metaverse as the reason for the losses extending.

On the call, Meta chief Mark Zuckerberg said the firm is focusing on artificial intelligence "in the near term and the metaverse over the longer term."

He reiterated Meta is "fully committed" to its metaverse alongside its AI investments and said the two areas are "overlapping and complementary."

He added its AI model Llama is being used to build a number of products that will help users "create worlds and the avatars and objects that inhabit them as well" and said he would share more later in the year.

Meta's stock price jumped on the earnings and is up over 7% in after-hours trading to around $320 according to Google Finance data. Meta shares have gained nearly 140% year-to-date but are still off from their September 2021 all-time high of over $378.

*Meta's stock price spiked to over $320 in after-hours trading on July 26. Source: Google Finance*

Zuckerberg mentioned its July 6 launched platform Threads was “seeing more people coming back daily than I’d expected” and said Meta was focused firstly on Threads user retention, then growth and would later focus on monetizing the platform.

The comments come the same day as a July 26 report from data analytics firm Similarweb that claimed Threads users have declined 60% from launch.

Threads peaked at 49 million daily active users on July 7 but fell to 12.6 million daily active users by July 23 with users spending less than five minutes a day on the app over the past week.

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Metaverse division’s $4B loss drags on positive first quarter for Meta

April 27, 2023 Coin Telegraph

<div>Metaverse division's B loss drags on positive first quarter for Meta</div>

Augmented Reality

Zuckerberg expects Reality Labs operating losses to increase year-over-year in 2023.

Meta suffered a nearly $4 billion loss from its metaverse unit with Reality Labs in what was otherwise a solid first quarter for the Mark Zuckerberg-led social media empire which posted a final profit of $5.7 billion.

While the $4 billion loss follows a $14 billion loss in 2022, Zuckerberg explained in the earnings report that Reality Labs will likely suffer more losses in the remainder of 2023.

“We continue to expect Reality Labs operating losses to increase year-over-year in 2023,” predicted Zuckerberg.

Meta’s metaverse-focused Reality Labs unit suffered another big loss. Source: Meta

The losses suffered by Reality Labs were however negated by the firm’s developments in its artificial intelligence (AI) segment, the firm’s chief executive explained.

"Our AI work is driving good results across our apps and business. We're also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long-term vision.”

While Zuckerberg recently labeled AI as the firm’s “single largest investment,” he said Meta’s metaverse ambitions remain a top priority for the firm.

“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." he said before adding, "we've been focusing on both AI and the metaverse for years now and we will continue to focus on both.”

In addition, Zuckerberg explained that metaverse tech will help its AI visions and vice versa.

“Metaverse technology will also help deliver AI as well. For example, embodying AI agents will take advantage of the deep investment that we’ve made in Avatars over the last several years.”

Zuckerberg explained in a Feb. 28 Facebook post that the firm is building a suite of creative and expressive tools that can help “turbocharge” the efficiencies of some of its existing products:

“Over the longer term, we'll focus on developing AI personas that can help people in a variety of ways. We're exploring experiences with text (like chat in WhatsApp and Messenger), with images (like creative Instagram filters and ad formats), and with video and multi-modal experiences.”

Though Zuckerberg stated the firm has “a lot of foundational work to do” before it can provide “really futuristic experiences” for its audience.

Meta stock bounced 11.7% after hours following the news of its better-than-expected first quarter, according to Google Finance:

Meta’s share price bounced back after a strong first quarter. Source: Google Finance

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Meta Calls 2023 a ‘Year of Efficiency;’ Anticipates More Losses in Its Metaverse Division

February 4, 2023 Bitcoin.com

Meta CEO Zuckerberg steadfast on metaverse plans despite $13.7B setback

February 2, 2023 Coin Telegraph

Meta CEO Zuckerberg steadfast on metaverse plans despite .7B setback

Coin Telegraph

During a Q4 earnings call, Mark Zuckerberg said he saw no reason to deviate from the company’s long-term metaverse strategy.

Meta founder and CEO Mark Zuckerberg says the company has no plans to change its long-term strategy for the metaverse, despite operating losses for its Reality Labs business peaking in 2022.

Meta on Feb. 1 released earnings showing that Reality Labs lost $13.7 billion in 2022 — the largest ever yearly losses recorded for its metaverse-building division.

The fourth quarter was particularly costly, with the division losing nearly $4.3 billion, which was also the largest quarterly loss within the department since financials for the business were first published.

On a Feb. 1 earnings call, Zuckerberg was steadfast in the company’s metaverse strategy. Answering a question about how the firm’s efficiency applies to Reality Labs, he answered:

“None of the signals that I've seen so far suggest that we should shift the Reality Labs strategy long term.”

He added that later in 2023 the company would launch another “next generation consumer headset” following the October launch of its Quest Pro Virtual Reality (VR) headset.

*The Meta Quest Pro is the tech firm’s latest, and most expensive, VR headset offering. Source: Meta*

Meta’s chief financial officer, Susan Li, similarly doubled down on the Reality Labs business, echoing Zuckerberg’s statement from a Q3 earnings call that losses in the business would increase in 2023.

“We still expect our full-year Reality Labs losses to increase in 2023, and we're gonna continue to invest meaningfully in this area given the significant long-term opportunities that we see.”

Meta’s overall revenue for the fourth quarter was $32.1 billion, beating Wall Street expectations.

The better-than-expected revenue figures caused Meta’s stock price to jump after the bell, gaining nearly 19.5% in after-hours trading at the time of writing, according to Yahoo Finance.

Meta Will Continue to Push Metaverse Investments in 2023 According to Head Of Reality Labs

December 20, 2022 Bitcoin.com

Meta ‘powering through’ with Metaverse plans despite doubts — Zuckerberg

December 1, 2022 Coin Telegraph

Apple

Billions of dollars have been poured into Meta’s virtual world with little return on investment, but CEO Mark Zuckerberg says he is holding fast.

Meta CEO Mark Zuckerberg is still hopeful about the company’s Metaverse plans regardless of the billions of dollars it’s sucking up from the company, claiming “someone has to build that.”

Appearing remotely for an interview at the Nov. 30 DealBook Summit in New York, Zuckerberg was asked his thoughts on whether the tech giants’ Metaverse play was still viable given its cost and the doubts cast over the platform, answering:

“I think things look very different on a ten-year time horizon than the zone that we're in for the next few years [...] I'm still completely optimistic about all the things that we've been optimistic about.”

He added part of “seeing things through” in the longer term was “powering through” the doubts held about its ambitions.

Meta's latest earnings, released on Oct. 26, revealed the largest-ever quarterly loss in its metaverse-building arm Reality Labs dating back to the fourth quarter of 2020. Zuckerberg’s virtual reality has cost $9.44 billion in 2022, closing in on the over $10 billion in losses recorded for 2021.

On the earnings call at the time Zuckerberg was unfazed by the cost, calling its metaverse the “next computing platform.” He doubled down on this claim at DealBook:

“We're not going to be here in the 2030s communicating and using computing devices that are exactly the same as what we have today, and someone has to build that and invest in it and believe in it.”

However, Zuckerberg admitted that the plans have come at a cost, Meta had to lay off 11,000 employees on Nov. 9 and the CEO said it had “planned out massive investments,” including into hardware to support its metaverse.

He said the company “thought that the economy and the business were going to go in in a certain direction” based on positive indicators relating to e-commerce businesses during the height of the COVID-19 pandemic in 2021. “Obviously it hasn't turned out that way,” Zuckerberg added.

“Our kind of operational focus over the next few years is going to be on efficiency and discipline and rigor and kind of just operating in a much tighter environment.”

Despite the apparent focus from Meta to build its metaverse, Zuckerberg claimed 80% of company investments are funneled into its flagship social media platforms and will continue that way “for quite some time.”

Investments in Reality Labs are “less than 20%” at least “until the Metaverse becomes a larger thing” he said.

Of the 20% invested in Reality Labs, Zuckerberg said 40% of it goes toward its Virtual Reality (VR) headsets with the other “half or more” building what he considers “the long-term most important form factor [...] Normal-looking glasses that can put holograms in the world.”

Zuck takes bite at Apple

Zuckerberg also took a few jabs at its peer tech company Apple regarding its restrictive App Store policies, the likes of which have placed restrictions on crypto exchanges and nonfungible token (NFT) marketplaces, saying:

“I do think Apple has sort of singled themselves out as the only company that is trying to control unilaterally what apps get on a device and I don't think that's a sustainable or good place to be.”

He pointed to other computing platforms such as Windows and Android which are not as restrictive and even allow other app markets and sideloading — the use of third-party software or apps.

He added its been Meta’s commitment to allow sideloading with its existing VR units and upcoming Augmented Reality (AR) units and hoped the future Metaverse platforms were also open in such a manner.

“I do think it is it is problematic for one company to be able to control what kind of app experiences get on the device.”

Meta Announces Layoffs Affecting 13% of Workforce; More Than 11,000 Employees to Be Fired Amidst ‘Cultural Shift’

November 9, 2022 Bitcoin.com

Meta reportedly plans ‘large-scale layoffs,’ but what of its metaverse division?

November 7, 2022 Coin Telegraph

artificial intelligence

As of the end of September, Meta had more than 87,000 employees — a large proportion of which is said to work in the Reality Labs division.

Social media and tech giant Meta is reportedly gearing up for “large-scale layoffs” this week amid rising costs and a recent collapse of its share price.

According to Wall Street Journal (WSJ) report on Nov. 6 citing people familiar with the matter, the planned layoffs could impact thousands of employees in a broad range of divisions across Meta’s 87,000-strong workforce.

It is not currently understood whether the firm's Reality Labs division, which registered a $3.7 billion loss in the third quarter, would see staff cuts.

Last week, Meta CEO Mark Zuckerberg said that the company would be focusing its investment on “a small number of high-priority growth areas," including its Artificial Intelligence (AI) Discovery Engine and its advertisement and business messaging platforms in addition to the Metaverse, stating:

“So that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year [...] In aggregate, we expect to end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”

During the earnings call, the billionaire entrepreneur appeared to double down on the firm’s investments in these areas, saying he believes they’re “on the right track with these investments” and should “keep investing heavily in these areas.”

The report comes only a week after Meta reported its third-quarter earnings, which missed revenue expectations and saw a rise in its operating costs. Its stock price also took a battering, with shares in Meta currently priced at $90.79 — down 7.56% over the last five days and 73.19% year-on-year, according to Yahoo Finance.

The company appears to still be actively hiring into its metaverse division regardless, with its list of job openings revealing 38 of its 413 listings are related to Augmented Reality and Virtual Reality.

Cointelegraph has reached out to Meta for clarification and whether there would be any changes to its metaverse division but did not receive an immediate response.

Metaverse losses top $3.6B for Meta with spending set to increase

October 27, 2022 Coin Telegraph

Metaverse losses top .6B for Meta with spending set to increase

Big Tech

The tech giant is just over $500 million away from topping its more than $10 billion Metaverse department losses in 2021, but it said its spending will only grow next year.

Big Five technology player Meta is still burning cash through its Metaverse research and development arm Reality Labs with a $3.67 billion loss posted for the third quarter of 2022, stating those losses will further deepen next year.

The company’s Q3 2022 earnings released on Oct. 26 show the biggest-ever quarterly losses for Reality Labs from earnings dating back to the fourth quarter of 2020, the business also made $285 million in revenue for the third quarter, its lowest on record within that time.

With its Reality Labs business marking its third straight quarterly loss totaling $9.44 billion so far in 2022, Meta is shaping up to beat its 2021 losses on its metaverse play which saw just over $10 billion in losses last year.

Those year-on-year losses are set to deepen as Meta CFO Dave Whener stated in the earnings:

“We do anticipate that Reality Labs operating losses in 2023 will grow significantly year-over-year. Beyond 2023, we expect to pace Reality Labs investments such that we can achieve our goal of growing overall company operating income in the long run.”

On Meta’s earnings call, CEO Mark Zuckerberg continued to be unfazed by the company’s big investment in what he called the “next computing platform.” He said it was the firm’s top priority and told investors that building a Metaverse and its related hardware is “a massive undertaking.”

“It's often going to take a few versions of each product before they become mainstream,” he added. “I think that our work here is going to be of historical importance and create the foundation for an entirely new way that we will interact with each other and blend technology into our lives as well as the foundation for the long term of our business.”

Overall the company slightly exceeded its revenue expectations from Wall Street analysts, bringing in $27.71 billion in revenue for the quarter but bought in $1.64 earnings per share, missing its estimate of $1.88 per share.

Meta’s stock price has fallen over 19.5% in after-hours trading at the time of writing according to Yahoo Finance with the company’s shares down over 61.5% since the start of 2022.

Meta’s big bet on its virtual world has some investors urging the firm to scale back its investment, with Brad Gerstner, founder of technology investment firm Altimeter Capital and Meta shareholder penning an open letter to Zuckerberg and the board of directors.

Gerstner said its “investment in an unknown future is super-sized and terrifying” and that it could take a decade for its Metaverse to start making a profit, he said the firm should focus on an artificial intelligence offering as it has the potential to better the company’s results.

Some are not optimistic about the future of the Metaverse in the hands of Zuckerberg, Meta whistleblower Frances Haugen in April said its virtual world will repeat “all the harms of Facebook” if the company doesn’t commit to transparency.

Reality Labs

Zuck takes bite at Apple

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