Meta loses another $3.8 billion on VR/AR
Overall company's revenues and profits surge, but stock dips on plans to increase AI spending
Meta reported its first quarter earnings after the close of trading yesterday, showing continued losses in its AR/VR Reality Labs division that were more then offset by growth and profitability in the rest of the business.
The numbers three months ending March 31:
- Revenue: $36.5 billion (up 27% year-on-year)
- Net income: $12.4 billion (up 117% year-on-year)
- Revenue: $440 million (up 30% year-on-year)
- Operating loss: $3.85 billion, compared to a loss of $3.99 billion last year's first quarter
The highlights:
Meta's story largely continued as it has, with the VR/AR division dragging on the success of the its various services like Facebook, Instagram, Messenger, and WhatsApp, but not enough to keep the company from growing both revenues and profits.
Despite losing money at a rate of more than $1 billion per month since June of 2022, Meta affirmed its commitment to Reality Labs, saying, "we continue to expect operating losses to increase meaningfully year-over-year due to our ongoing product development efforts and our investments to further scale our ecosystem."
The company also said it was stepping up its investment in AI, increasing its expected full-year expenditures in the field to $35 billion to $40 billion, up from its previous range of $30 billion to $37 billion, with an even larger spend on AI in 2025.
In an earnings call with investors, Meta CEO Mark Zuckerberg cautioned that it will be years before the company's AI investments have scaled up into profitable services, and acknowledged the impact that kind of strategy has had on the company's stock price in the past.
"Historically, investing to build these new scaled experiences in our apps has been a very good long-term investment for us and for investors who have stuck with us," Zuckerberg said. "And the initial signs are quite positive here too. But building the leading AI will also be a larger undertaking than the other experiences we've added to our apps, and this is likely going to take several years."
In after-hours trading, Meta stock was trading down as much as 17% from its Wednesday closing price of $493.50.