Meta’s Actuality Labs division’s quarterly income grew 30% year-over-year in Q1 2024.
Actuality Labs is the division of Meta behind Quest headsets, the Ray-Ban Meta sensible glasses, and analysis & improvement towards AR glasses and their neural wristband enter gadget.
In its Q1 2024 earnings name at this time Meta reported $440 million Actuality Labs quarterly income, 30% larger than Q1 2023. Meta CFO Susan Li advised traders this document income was “pushed by Quest headset gross sales”. Nonetheless, it is also 36% decrease than Q1 2022 and 18% decrease than Q1 2021.
This means Quest 3 is constant to promote effectively after its launch quarter, which noticed Actuality Labs’ highest quarterly income ever, although is not sustaining post-launch gross sales momentum in addition to Quest 2 did (although it does have larger retention).
That is nearly definitely as a result of Quest 3 launched with a $200 larger entry value. Even adjusted for inflation, that is nonetheless $150 larger, placing it in a special value phase than Quest 2.
A leaked Meta {hardware} roadmap from final 12 months and stories from The Wall Avenue Journal, Bloomberg, and a Chinese language analyst who has been dependable prior to now counsel Meta plans to quickly launch a less expensive model of Quest 3 to immediately exchange Quest 2, rumored to be known as “Quest 3S” or “Quest 3 Lite”. Meta’s latest actions counsel it is attempting to clear inventory of Quest 2 and its official equipment to make approach for this new decrease priced headset.
This cheaper model of Quest 3 can be essential for Actuality Labs’ prospects of attaining total yearly progress.
Actuality Labs reported $4.29 billion prices in Q1 2024, a minuscule lower of 1% in comparison with Q1 2023.
Meaning Actuality Labs made a $3.85 quarterly “loss” in Q1 2024. However whereas describing this as a loss is technically appropriate in a monetary sense, in actuality it is extra correct to explain most of it as long run funding. XR headsets like Quest are nonetheless a comparatively early know-how, removed from maturity, and Meta hasn’t even launched its first AR glasses but. Greater than 50% of Actuality Labs spending is on the analysis and improvement of AR glasses.
Additionally, Meta managed to lower quarterly prices by 1% whereas growing income by 30%, this implies Actuality Labs is slowly progressing on the trail to profitability. It may also counsel Quest 3 is much less subsidised than Quest 2 was.
As in earlier quarters, Susan Li advised traders she expects these losses to proceed to extend meaningfully over the subsequent 12 months because of “ongoing product improvement efforts and our investments to additional scale our ecosystem”.
Mark Zuckerberg has prior to now advised traders that he would not anticipate Actuality Labs to be worthwhile till the 2030s, seeing it as a long-term funding in the way forward for computing.