Meta Reports $4.5B Metaverse Loss in Q2, Focuses on AI Expansion

The metaverse division of Mark Zuckerberg’s Meta Platforms, Reality Labs, is still losing a lot of money. Reality Labs has lost around $60 billion since 2019. The company announced a $4.5 billion loss for the second quarter of this year. Meta is steadfast in its commitment to realizing its metaverse vision in spite of these obstacles.

During the July 31 earnings call for Q2, Meta revealed impressive financial results. The company achieved $49 billion in revenue, a 22% increase from the previous year and the second-largest quarter in its history. Additionally, Meta posted a $13.5 billion profit, largely driven by advancements in artificial intelligence (AI) and the growth of its apps, including Threads and WhatsApp. Zuckerberg highlighted that Meta’s AI assistant, Meta AI, is on track to become the most used AI assistant globally by the end of 2024. He also noted the positive reception of AI-infused Ray-Ban Meta smart glasses, launched last September.

“We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps,” said Zuckerberg. Following the earnings call, Meta’s share price jumped 7.1% in after-hours trading, surpassing most analyst expectations.

Investment in AI and Future Growth

Meta plans to significantly increase its capital expenditure in 2025, focusing on AI research and development. Zuckerberg addressed the public perception of Facebook as an older demographic’s platform, with CFO Susan Li noting that younger users are increasingly flocking to Facebook Marketplace. Meanwhile, Reality Labs, responsible for developing VR headsets like the Meta Quest 3, reported $353 million in Q2 sales but still faced a substantial $4.5 billion loss. Since its inception in 2019, Reality Labs has accumulated $59.9 billion in losses.

Despite the ongoing financial challenges, Li expects Reality Labs’ operating losses to “increase meaningfully” year-over-year due to continued product development in augmented reality and virtual reality. The company remains dedicated to further investments in the metaverse ecosystem, aiming to drive future growth and innovation.