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Meta has reduced its losses for its metaverse-driven Reality Labs arm as CEO Mark Zuckerberg highlights the company's focus on artificial intelligence (AI).
In its Q1 earnings report on Wednesday, Meta announced a Reality Labs operating loss of $3.99 billion, generating $399 million in revenue.
The loss is a slight reduction from the previous quarter's $4.28 billion, which saw $727 million in revenue.
Reality Labs reported a whopping loss of US$13.7 billion in 2022, compared to a loss of US$10.2 billion in 2021. In Q4 alone, the segment's loss was over US$4.3 billion, marking its worst quarter since Q4 2020.
Read more: Meta's Metaverse Arm Reality Labs Revenue Win Overshadowed By Growing Losses
In its outlook for the unit, Meta stated, "We continue to expect Reality Labs operating losses to increase year-over-year in 2023."
Nonetheless, revenue for Meta's entire operations increased by 3% from last year to $28.6 billion, exceeding analysts' expectations for it to decrease to $27.7 billion. Meta's forecast for the current quarter's revenue of between $29.5 billion and $32 billion also beat expectations of $29.46 billion.
News of Meta's expectations beat sent its stock price up over 12% in after hours trading.
AI = VR?
On the earnings call, Zuckerberg clarified that Meta is not abandoning its metaverse ambitions.
“A narrative has developed that we’re somehow moving away from focusing on the metaverse vision, so I just want to say up front that that’s not accurate,” Zuckerberg said. “We’ve been focusing on AI and the metaverse, and we will continue to.”
Nonetheless, Zuckerberg informed investors that Reality Labs' AR and VR work does involve AI.
“Our vision for AR glasses involves an AI-centric operating system that we think will be the basis for the next generation of computing,” he said.
“Our AI work is driving good results across our apps and business. We’re also becoming more efficient so we can build better products faster and put ourselves in a stronger position to deliver our long-term vision.”
Zuckerberg emphasised that Meta's AI involvement will not overshadow its metaverse focus.
“Building the metaverse is a long-term project, but the rationale for it remains the same, and we remain committed to it,” Zuckerberg said.
Last month, Meta ended support for NFTs on its platforms less than one year after rolling it out, whilst the firm prepares for additional job cuts.
Read more: Meta "Short-Sightedly" Pulls NFTs From Instagram in Crypto U-Turn
The move came as Zuckerberg declared 2023 the “year of efficiency,” making an additional 10,000 job cut in March, with a new round of April layoffs targeting technical workers.
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