Meta lost $3.7 billion during the last quarter attempting to birth the metaverse within its Reality Labs division.
The company's fiscal report for the third quarter ended September 30, 2023, shows Reality Labs—the mixed reality division that houses the company formerly known as Oculus—posted an operating loss of $3.74 billion during the quarter. That's a notable year-over-year increase on the $2.63 billion loss it posted in Q3 2022.
The struggling division has recorded $11.4 billion in losses during the current fiscal year while earning just $825 million in revenue. $210 million that total was amassed during Q3, representing a 20 percent decline year-on-year. Meta said lower Quest 2 sales were responsible for that dip.
Commenting on the current state of the division, Meta CFO Susan Li said the company expects losses to "increase meaningfully year-over-year due to our ongoing product development efforts in augmented reality/virtual reality and our investments to further scale our ecosystem."
Expanding on those remarks in an earnings call, Li said the majority of costs incurred by Reality Labs are "direct costs in headcount, operating expenses, and product COGS (cost of goods sold)."
She did, however, state that while Meta will continue investing in the division to "support the development of next-gen VR/AR products," the company recognizes that it has to "earn the ability to invest" by delivering consolidated income growth over time. "That's something we're very much focused on," added Li.
Meta layoffs result in huge job losses, but the company might now accelerate recruitment
Discussing its ongoing restructuring plan, which will result in Meta cutting over 20,000 jobs, Li said the company ended Q3 with over 66,100 employees—down 7 percent on the previous quarter.
"Our third quarter headcount no longer included the substantial majority of the employees impacted by the previously announced layoffs," she explained.
Despite gutting various teams, including staff at game studios like Ready at Dawn and Downpour Interactive, and previously suggesting Meta would be implementing a hiring freeze, Meta CEO Mark Zuckerberg has indicated the company might actually ramp up recruitment in the short term.
"One dynamic that I want to flag is that we have a sizable hiring backlog right now since part of our layoffs earlier this year included teams swapping out certain skillsets for being able to hire others, and we’re still going to be hiring for those roles going into 2024," he told investors.
"That means that even though we're planning to grow headcount at a much slower rate going forward, the actual rate next year may temporarily be faster as we work through this hiring backlog."
Commenting on the health of Reality Labs a few months ago, Zuckerberg conceded there would be some investor "discomfort" as Meta looks to corner the mixed reality market and described the company's continued investment as a "very long-term bet."