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Facebook Reality Labs lost $2.8 billion during META's Q2 2022

In the company's Q2 2022 earnings report, Facebook reveals that Reality Labs lost $2.8 billion.

Meta
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Today, Facebook (META) shared its earnings report for Q2 2022. In the report, the company chronicled its financial performance over the most recent period. In the last few months, Facebook missed on both EPS and revenue expectations. However, that wasn’t the only aspect of the company’s business that was hurting in the report. In Q2 2022, Facebook Reality Labs lost $2.8 billion.

Facebook’s (META) Q2 2022 earnings report was published on the company’s website earlier today. In the report, it’s revealed that Reality Labs brought in $452 million in revenue over the quarter. However, the division still lost $2.8 billion during that same period. Reality Labs is the group within Facebook (META) that’s working on AR and VR hardware and software. It’s the driving force behind the company’s desire to be the architect of the metaverse.

The Meta Quest 2 VR headset.

Source: Meta

Facebook went on to say that it doesn’t expect things to get much better for Reality Labs in the upcoming quarter. “We also anticipate third quarter Reality Labs revenue to be lower than second quarter revenue. Our guidance assumes foreign currency will be an approximately 6% headwind to year-over-year total revenue growth in the third quarter, based on current exchange rates.” The company specifically points to the ongoing currency headwinds, a factor that Netflix recently attributed its slow revenue growth to.

Reality Labs losing $2.8 billion is quite significant, and will likely have a profound impact on Facebook’s (META) business in the coming months. It’s not the only piece of information found in the latest earnings report, as we also learned Facebook had 2.93 billion monthly active users in Q2 2022. For more on the latest business happenings at Facebook, Shacknews is your place.

News Editor

Donovan is a young journalist from Maryland, who likes to game. His oldest gaming memory is playing Pajama Sam on his mom's desktop during weekends. Pokémon Emerald, Halo 2, and the original Star Wars Battlefront 2 were some of the most influential titles in awakening his love for video games. After interning for Shacknews throughout college, Donovan graduated from Bowie State University in 2020 with a major in broadcast journalism and joined the team full-time. He is a huge Star Wars nerd and film fanatic that will talk with you about movies and games all day. You can follow him on twitter @Donimals_

From The Chatty
  • reply
    July 27, 2022 1:54 PM

    Donovan Erskine posted a new article, Facebook Reality Labs lost $2.8 billion during META's Q2 2022

    • reply
      July 27, 2022 2:16 PM

      People are going to laugh because fuck Facebook but the implication here for any other company trying to take VR seriously is that the market leader is willing to set $10bn/year on fire for awhile to build out future capabilities.

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        July 27, 2022 2:29 PM

        Apple earned almost $100 billion last quarter, so it can probably handle it.

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          July 27, 2022 2:40 PM

          yes, so the only potential competitors must be in the category of 'largest company in the world'. Imagine someone like Valve's position. They started as an early entrant and basically gave up on being a mass market player because this is a level of investment they can't/won't make. Sony will make investments periodically (once a generation) but can't possibly invest at this level to be on the cutting edge all the time. Etc.

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            July 27, 2022 3:04 PM

            Meta seems to understand it's them versus Apple for all the marbles. It'll be interesting to see how it plays out.

            https://www.theverge.com/2022/7/26/23279478/meta-apple-mark-zuckerberg-metaverse-competition

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              July 27, 2022 3:31 PM

              right, they want a hardware platform captive audience where their ad tracking and data harvesting and reselling has no boundaries. that's what it is about. create a whole new ecosystem they control in all directions.

              that's how it is going to play out.

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                July 27, 2022 3:35 PM

                Not really, they are behind an open standard, which they think will be more successful than Apple's closed system.

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                  July 27, 2022 4:40 PM

                  … the open system for what purpose?

                  data harvesting

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                  July 27, 2022 5:25 PM

                  So much this. Apple's hardware will, undoubtedly, be incredible, but I'm seriously worried they're going to have a wrecking ball effect on the XR ecosystem just as standards are starting to take hold. Apple doesn't give a damn about what is good for consumers in regards to XR, they just want you in their walled garden.

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                  July 28, 2022 7:27 AM

                  It won’t be open. It will mimic the App Store where anyone can submit something, but the purpose is rampant data harvesting and repackaging to sell.

                  It’s amazing that people even remotely believe anything Facebook says. Nothing they say is true. We just had another literal whistleblower situation to bring light to how weaponized Facebook is and no one listened.

                  They want into the hardware market. They tried the “call grandma on the Facebook video chat box” and thank FUCK that product died.

                  If Facebook uses the word “open” people should run away even faster. Ackbar has a pro tip for you. It’s a fucking trap.

                  Never believe Facebook.

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              July 28, 2022 12:42 AM

              Don’t count out Valve.

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            July 27, 2022 3:31 PM

            I don't think that's an accurate reading of where Valve is right now, though we'll see.

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              July 27, 2022 5:00 PM

              I mean they initially launched at the top of mass market prices ($500) and then knowing full well that what the platform needs most for success is mass adoption they instead opted for the follow up to be a super enthusiast SKU ($1000 Index) while Facebook went the opposite direction to console prices. Maybe Valve has a new $300-500 unit in the works but it's been a long time since they launched at that price point.

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                July 28, 2022 12:52 AM

                A device that's at least somewhat quest like is what rumors point to, but I have no idea what price point they'd target.

                They've expressed surprise at the most expensive steam deck model being by far also the most popular, and I'm sure they're considering that.

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            July 27, 2022 6:36 PM

            so you're against the consolidation of game developers / publishers, as well as services like Gamepass?

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              July 27, 2022 8:29 PM

              I wasn’t making any statement about what I’m for or against, I was noting the implications of this for the industry. It’s not unlike the cost of console development but those costs are usually not broken out so directly in a companies financials in such a way that you can directly observe the R&D expenses of a particular product.

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        July 27, 2022 3:12 PM

        Also from an investor perspective you just watched Apple take $10bn+ from Facebook with its anti tracking measures. That loss of revenue is ongoing. So obviously from Facebook's perspective investing 10s of billions in hopes of disintermediating Apple out of future business has high ROI if they succeed

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        July 28, 2022 1:33 AM

        AR is where they money will be at the beggining imo

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        July 28, 2022 7:28 AM

        That’s fine they can do whatever they want doesn’t mean I have to get invested one way or another. It’s very easy not to.

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      July 27, 2022 2:22 PM

      and ppl think $100 raise on the quest2 is greedy lol

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      July 27, 2022 5:06 PM

      lol Apple cost Mega $10B in ad revenue:


      The social network reported its first-ever yearly decline in revenue for the second quarter, announcing a 1 percent drop to $28.8 billion, and predicted that growth in the third quarter could fall even more. The overall profit for its parent company, Meta, fell 36 percent to $6.7 billion. The Reality Labs division responsible for building Mark Zuckerberg’s metaverse dreams lost $2.8 billion in the quarter.

      While the first-ever drop in revenue growth was expected on Wall Street going into Wednesday’s earnings report, it solidifies how challenged Meta’s business has quickly become on all fronts. Apple’s “Ask app not to track” prompt on iPhones has made its ads much less effective, costing Meta $10 billion in ad revenue last year alone. And now a rapidly slowing economy has caused advertisers to pull back on their spending.


      https://www.theverge.com/2022/7/27/23281294/facebook-meta-revenue-declines-for-first-time

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        July 27, 2022 5:09 PM

        Perfect time for Apple to coincidentally improve its own ad tracking network and increase the number of ad surfaces inside their products

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          July 27, 2022 5:10 PM

          God you hate privacy

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            July 27, 2022 6:08 PM

            I hate Apple’s definition that the platform owner can track and aggregate all your behavior across all their properties with impunity

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              July 27, 2022 7:45 PM

              Do you still work for the big same place you used to?

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            July 27, 2022 6:25 PM

            Apples advertising really works on you doesn’t it.

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              July 27, 2022 6:26 PM

              Apple are aggressively head hunting our Ads reliability and targeting people. Why do you think they might be doing that?

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                July 27, 2022 6:34 PM

                because their jobs probably kind of suck right now?

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                  July 28, 2022 1:40 AM

                  Honestly the people I know who aren’t tied down and have left have moved because of compensation: with everyone down you can “reset” your comp by moving companies.

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      July 27, 2022 6:04 PM

      Looking at the 1 year stock chart, Meta is down 55%. That’s horrendous. How long can they keep burning money on VR?

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