Facebook Parent Meta’s Metaverse Division Lost $13.7B in 2022

Meta Platforms (META) continued to lose massive amounts of money in its fledgling Facebook Reality Labs (FRL) division, which comprises its augmented and virtual reality operations, according to its earnings release Wednesday.

FRL accounted for a loss of $4.3 billion in the quarter, better than the consensus of analyst estimates for a loss of $4.4 billion and up from a loss of $3.7 billion in the third quarter.

For the whole of 2022, Meta lost $13.7 billion in the division on revenue of $2.2 billion, up from a loss of $10.2 billion on revenue of $2.3 billion in 2021. The company has previously said it expects FRL’s operating losses in 2023 to grow “significantly” over 2022 as Meta invests in what it sees as a crucial part of its future.

Meta also reported fourth-quarter FRL revenue of $727 million, down from year-ago division revenue of $877 million, but up from $285 million in the third quarter.

Meta has recently faced investor calls to reduce its spending on the metaverse as falling user growth numbers and reduced ad spending have cut into its profits.

On an earnings call with analysts on Wednesday, CEO Mark Zuckerberg said he expects the Reality Labs ecosystem to grow significantly over the next few years. Meta plans to ship its next-generation consumer VR headset later this year, and Zuckerberg said he anticipates it will “establish this technology as the baseline for all headsets going forward and eventually, of course, for AR [augmented reality] glasses as well.“

As signs of progress, Zuckerberg noted there are now over 200 virtual reality apps in Meta’s ecosystem that have more than $1 million in revenue, and that more than 100 million WhatsApp users have created animated avatars since the feature was launched last quarter. Zuckerberg pointed out that as VR technology develops, “most people will experience the metaverse first on their phones and then will start to build out their digital identities across our apps.”

For the company as a whole, Meta reported adjusted quarterly earnings per share for the fourth quarter of $1.76, missing the analyst consensus estimate of $2.26, according to FactSet, while Meta's overall revenue of $32.2 billion beat estimates of $31.6 billion. It guided for first-quarter revenue of between $26 billion to $28.5 billion, which at its midpoint of $27.25 billion was slightly ahead of the consensus estimate of $27.2 billion. Facebook’s daily active users also hit 2 billion for the first time in the quarter.

Shares of Meta were up 20% to $184 in after-hours trading on Wednesday. Shares are down more than 50% over the last year, but up 27% year to date.

Read more: Facebook Parent Meta Dips Toe Back Into Policy Circles to Boost Metaverse

UPDATE (Feb. 1, 21:38 UTC): Added info on Meta's overall results.

UPDATE (Feb. 1, 23:56 UTC): Added comments from Zuckerberg on Meta's earnings call.

UPDATE (Feb. 2, 07:43 UTC): Updates share move.