Meta shares increased considerably in after-hours trading following the release of better-than-anticipated quarter earnings on Wednesday. However, the struggling metaverse division of the tech giant could not be saved by rising metaverse tides.
Reality Labs, the company's metaverse-focused division, lost a staggering $4.28 billion in the final fiscal quarter of 2022, according to an announcement from Meta, setting a new low for the faltering division that has frequently been touted as the company's future.Metaverse's total 2022 losses reached $13.72 billion with Wednesday's statement. The metaverse is still a major goal, according to the leadership of Meta, despite the statistics.
Only $727 million in sales was generated by the division in the last quarter of 2022, a 17% decrease from the amount generated during the same period in 2021.
The Horizon Worlds metaverse project and the Quest virtual reality headset are two examples of the hardware and software for virtual and augmented reality experiences created by Reality Labs.
In spite of these appalling numbers, Meta's management appeared to be in a rather good mood during its quarterly earnings call on Wednesday because the business exceeded expectations in terms of revenue, daily active users, monthly active users, and average revenue per user.
The company's $32.1 billion sales surpassed estimates of $31.53 billion across all departments and apps, which is perhaps the most notable achievement.
On Wednesday, Zuckerberg made it abundantly apparent that Reality Labs was not in danger of being shut down but rather was deserving of continued—and possibly increased—investment.
According to Zuckerberg, "Our priorities haven't changed." The metaverse and AI are the two main technology waves that are currently influencing our path.
The tech tycoon voiced special hope for the company's upcoming Quest 3 VR headgear, which will be released later this year. "I anticipate [Quest 3] will establish this technology as the standard for all headsets moving forward, and eventually for AR headsets as well."
In addition to boosting hardware sales for the struggling sector, Meta is hoping that the headset will spread awareness of its virtual reality ecosystem, Horizon Worlds, which Mark Zuckerberg has previously hailed as the future of interactive commerce, entertainment, and social interaction.
The social media company, which has rapidly increased its employee numbers since the beginning of the coronavirus outbreak, has attempted to reduce expenditures as Wall Street has begun to doubt its loss-making efforts to create the metaverse.
Meta announced its largest personnel cutbacks in November, laying off 11,000 people, or around 13% of the whole workforce. Other measures were also implemented, such as lowering budgets, cutting employee benefits, and reducing its "real estate footprint".