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Loyal Blockhead readers are probably too familiar with this headline by now but once again, Meta has smashed its earnings but failed to turn its metaverse arm, Reality Labs, into real-world profitability.
Reality Labs reported an operating loss of $4.48 billion in Meta's Q2 2024 earnings report, which although less than analysts' expectations of $4.55 billion, isn't exactly the most impressive improvement from previous quarters.
“A few years ago I would have predicted that holographic AR would be possible before smart AI but now it looks like those technologies will actually be ready in the opposite order,” Meta CEO Mark Zuckerberg said on the earnings call. “We’re well positioned for that because of the Reality Labs investments we’ve already made.”
Last quarter, Reality Labs recorded a $3.85 billion operating loss, marking a reduction in its loss from the previous quarter's $4 billion.
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Losses in the segment continue to compile and since late 2020, Reality Labs has generated cumulative losses of $50 billion.
Revenue in unit largely comes from Meta’s Quest family of VR headsets and Ray-Ban Meta smart glasses. This quarter, revenue came in at $353 million, which actually marked growth of 28% from last year's $276 million.
In yet another familiar tale, Meta's nonetheless stock price surged in after-hours trading more than 7%, taking it over the $500 mark, due to the company's overall earnings beat.
Revenue hit $39.07 billion compared to $38.31 billion expected while earnings recorded $5.16 per share, beating $4.73 per share. Net income rose 73% to $13.47 billion from $7.79 billion last year.
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The figures mark a fourth straight quarter of growth in excess of 20% and a fourth straight quarter of Reality Labs' losses.
“We had a strong quarter, and Meta AI is on track to be the most used AI assistant in the world by the end of the year,” Zuckerberg said in a statement. “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”
