Meta's Reality Labs hit $1 billion in revenue
Mark Zuckerberg is on a mission to bring the metaverse to life, and Meta (formerly Facebook) has been working diligently to lay the groundwork for this ambitious vision. In the last three months of the year, Meta's Reality Labs division achieved a significant milestone, surpassing $1 billion in revenue for the first time. However, the company also reported losses of $4.65 billion during the same period. It's worth noting that virtual reality (VR) headsets still represent a small portion of Meta's overall revenue, which continues to be driven by its advertising business.
During a conference call with analysts and investors, Zuckerberg expressed satisfaction with the progress made, stating, "It was a good quarter. We've made a lot of progress on our vision for advancing AI and the metaverse." As a result, Meta's stock experienced a 14.92% increase in after-hours trading. The company anticipates a significant year-over-year increase in operating losses for the Reality Labs division due to investments in augmented reality and virtual reality product development. Research and development expenditures rose by 8% in the fourth quarter, primarily driven by costs associated with expanding the workforce. Notably, the Quest app, which enables VR headset owners to purchase games, became the most downloaded app in Apple's App Store on Christmas Day.
In its fourth-quarter earnings report, Meta announced revenue of $40.1 billion, a 25% increase compared to the same period the previous year, surpassing Wall Street expectations. Additionally, the tech giant declared its inaugural dividend payment, set at 50 cents per share.
Generative AI and Meta's Approach
While Microsoft focused on its cloud services and AI products for customers, Meta highlighted its plans to incorporate generative AI into its various offerings when pitching to investors.
Meta revealed its intention to launch multi-model AI features this year. Zuckerberg expressed his belief that consumers will increasingly desire new device categories that leverage AI capabilities without relying on their smartphones. He also disclosed Meta's plan to purchase 150,000 H100 GPUs by the end of the year, indicating the development of more advanced AI products.
Zuckerberg boasted that every creator will have an AI for their community to engage with, businesses will have AI systems for customer interactions and purchases, and developers will have open-source models for building. Moreover, Meta has joined the race with OpenAI to advance artificial general intelligence (AGI), which refers to AI models capable of human-level reasoning. The company is positioning its open-source AI model called Llama to compete with OpenAI's closed-source GPT model.
Meta's Focus on Efficiency
In the past year, Meta initiated its "year of efficiency" strategy, which involved reducing its workforce by over 10,000 employees and realigning its business around AI and the metaverse.
During the conference call, Zuckerberg outlined his vision for the year ahead, aiming to strengthen Meta as a technology company, streamline its operations, and realign its businesses for the future. He emphasized that Meta's initiatives should not be viewed as short-term endeavors, asserting, "That's not really how we operate."
Meta's relentless pursuit of the metaverse and investment in AI technologies underscore its commitment to shaping the future of digital experiences. As Meta continues to refine its strategies, the stage is set for an exciting journey toward realizing the full potential of the metaverse.