Meta Reality Labs quarterly revenue was 6% lower in Q1 2025 than it was in Q1 2024.
The quarter saw Meta’s metaverse and wearables division bring in $412 million, compared to $440 million for the same quarter last year.
During Meta’s Q1 2025 earnings call, CFO Susan Li told investors the drop was “due to lower Meta Quest sales, which were partially offset by increased sales of Ray-Ban Meta AI glasses”.
While headset sales decreased, Mark Zuckerberg told investors that Quest is seeing “deeper engagement”. At GDC in March Meta’s Director of Games revealed that monthly headset usage increased 30% in 2024, and last year he said that Quest 3 has higher retention than previous headsets.
Zuckerberg also told investors that the Ray-Ban Meta glasses had “tripled in sales in the last year”, and Li said that the glasses have four times as many monthly active users compared to Q1 2024.
The lackluster Q1 revenue comes after Q4 2024 saw Reality Labs bring in its highest ever revenue with the launch of Quest 3S. The headset was also the top selling console on Amazon US in 2024.
This suggests that while Quest 3S had a strong launch, and was a popular gift over the holiday season, its momentum hasn’t carried through into the beginning of this year.
Q1 is always the worst quarter for consoles and similar consumer tech, as consumers pull back on spending after the holidays, but it’s still a bigger drop than last year. It wasn’t the worst ever Q1 for Reality Labs though. Q1 2023 saw just $339 million brought in during Quest 2’s 12-month $100 price hike.
As always, the Meta Reality Labs revenue came at an enormous cost, and the division remains deeply unprofitable. Meta spent $4.6 billion on it in Q1 alone, resulting in a “loss” of $4.2 billion.
Though while describing this as a loss is technically correct in a financial sense, much of it could also be described as long-term investment. XR headsets like Quest are still a relatively early technology, far from maturity, and as of 2022 more than 50% of Reality Labs spending was on the research and development of AR glasses, a future product line that hasn’t even launched yet.
Asked about Reality Labs spending by an analyst from an investment research firm during the followup call, Zuckerberg responded that the division is now “focused on doing the work more efficiently”, but that he wants to invest heavily in scaling the smart glasses product line given its strong growth over the past year. Because of this, last quarter Susan Li told investors to expect Reality Labs losses to increase in 2025.
“There are big product bets we’re making and there’s sort of a deep technological set of challenges that we know that we need to unlock in order to be able to bring scalable consumer products to market”, Li told investors last quarter.
David Heaney
Later this year, Meta and EssilorLuxottica reportedly plan to launch Oakley Meta glasses, and Meta reportedly plans to introduce higher-end smart glasses with a HUD too, controlled by its long-in-development sEMG neural wristband.
