Meta’s VR division hit the billion-dollar revenue mark for the first time in Q4 2023, thanks to Quest 3.
After a record low in the third quarter of 2023, Reality Labs posted its biggest quarterly revenue to date, breaking the billion-dollar mark for the first time. The division responsible for Quest headsets and the Ray-Ban Meta Smart Glasses brought in around $1.07 billion in the fourth quarter of 2023 (October-December).
According to Meta CFO Susan Li, the record sales were due to strong sales of Quest 3 during the holiday season. Quest 3 launched on October 10th. The latest SteamVR stats also indicate that Quest 3 is off to a strong start. Within three months, the device is already used by 14 percent of SteamVR users, almost as much as the (much cheaper) Quest 2 after it launched back in 2020.
Investments in Reality Labs also reached a new high at the same time. Meta spent 5.7 billion US dollars on its VR/AR division in the fourth quarter of 2023. After deducting revenue, a record loss of 4.6 billion US dollars remains.
In a conference call with investors, CFO Susan Li predicted a further increase in expenses for next year: “Finally, for Reality Labs, we expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts in AR/VR and our investments to further scale our ecosystem.”
Meta emerges from deep crisis stronger than ever
Meta has recovered from its severe crisis in 2022 and is now stronger than at any time in its history, thanks to the AI boom, the growing number of users of its family of apps (8 percent more daily users year-over-year), and a resurgent advertising business (Meta’s total quarterly revenue increased by 25 percent compared to last year). The stock rose to $450 in after-hours trading, an increase of nearly 15 percent.
With this in mind, and Apple’s entry into the XR market, criticism of Meta’s Metaverse spending is likely to subside for the time being.