Metaverse Division Reports Q4 Operating Loss of $4.279B


Meta Reality Labs, the VR division of Facebook, reported a fourth-quarter operating loss of $4.279 billion and revenues of $727 million for the quarter.

This was the company’s largest loss yet for its metaverse division, but stock prices are going up in after-hours trading as the results were better than expected. The company launched the Meta Quest Pro, an enterprise high-end version of its headset, for $1,500 during the quarter.

Meta is investing in the metaverse, the universe of virtual worlds that are all interconnected. They raised the prices of their Meta Quest 2 VR headsets by $100 each and expect Reality Labs losses to continue into 2023. They are investing in the Meta Quest 3 family for consumers, the Meta Quest Pro for enterprises, and other long-term areas that aren’t being described yet. Those areas include new computing platforms, glasses and software.

Mark Zuckerberg announced that Meta is shifting its focus to developing a software and social platform, while also taking a $4.2 billion restructuring charge related to the termination of some office-space leases, redesigns of datacenter projects, and severance for employees laid off in Q4. Another $1 billion in restructuring costs will come in 2023.

In Q4, Meta’s net income was $4.652 billion with revenue of $32.165 billion and 2.96 billion daily active users. This is a decrease in net income from the previous year of $10.285 billion and an increase in daily active users of 5%. Monthly active users were 3.74 billion on December 31, up 4%.

After the close of trading, Meta’s stock price rose 17.75% to $180.30 per share. Although the company did not meet its net income expectations, it surpassed analysts’ predictions for revenue and other key metrics. Specifically, revenues totaled $31.53 billion (versus the expected $30.86 billion), Facebook daily active users were 2 billion (compared to the anticipated 1.98 billion) and family of apps daily active users totaled 2.96 billion (in comparison to the forecasted 2.92 billion).

At the end of Q4, meta had 86,400 employees, 11,000 of whom were kept on payroll due to severance costs. These individuals will no longer be counted going forward. In a call, CFO Susan Li stated that the macroeconomic environment continues to cause uncertainty and instability in advertising demand.

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