Meta Platforms’ Reality Labs division recorded an operating loss of $4.2 billion in Q1 and revenue of $412 million, down 6 per cent year-on-year.

The division develops VR and AR technologies to enable CEO Mark Zuckerberg’s vision of creating a metaverse. It booked a loss of $3.9 billion in Q1 2024.

CFO Susan Li explained on an earnings call the revenue decline was due in part to lower sales for its Quest headsets, which were slightly offset by increased sales of its of Ray-Ban Meta AI glasses.

She said expenses at the unit were $4.6 billion, up 8 per cent, primarily driven by higher employee compensation.

Last week Meta Platforms laid off an undetermined number of Reality Labs staff.

Li said Meta Platforms is seeing strong traction with its Ray-Ban Meta-AI smart glasses, with more than four-times as many monthly actives asQ1 2024. She added more people are using voice commands to answer questions and control their glasses.

“This month, we fully rolled out live translations on Ray-Ban Meta-AI glasses to all markets for English, French, Italian and Spanish.”

Q1 metrics
Meta Platforms’ revenue rose 16 per cent to $42.3 billion, surpassing analysts’ average estimate of $41.4 billion. Net income increased 35 per cent to $16.6 billion.

Li said Meta Platforms expects Q2 revenue of between $42.5 billion and $45.5 billion, compared with analyst estimates of $44 billion.

Meta Platforms boosted its 2025 capex plans to between $64 billion and $72 billion.

Zuckerberg stated earlier this year it planned capex of $60 billion to $65 billion to broaden its AI infrastructure.

Li said the company expects full year expenses “in the range of $113 to $118 billion, lowered from our prior outlook of $114 to $119 billion”.

“This updated outlook reflects additional data centre investments to support our AI efforts, as well as an increase in the expected cost of infrastructure hardware.”

Zuckerberg said the company is focused on several opportunities to drive growth.

One is to improve advertising using AI so businesses can set objectives and their desired outlay.

Meta Platforms is also tapping AI to increase the amount of time users spend on Facebook, Instagram, Reels and WhatsApp. Zuckerberg said the company also sees an opportunity for increased revenue from messaging apps.

“We’re well positioned to navigate the macroeconomic uncertainty,” Zuckerberg said.