Yes, Reality Labs continues to experience significant financial losses
Meta's Reality Labs division, the company's metaverse division, posted a quarterly loss of $4.53 billion in Q2 2025, a slight increase from the same quarter last year. The division's revenue, primarily from AI glasses sales, grew modestly to $370 million, marking a 5% Year-on-Year (YoY) increase [1][3][4][5].
Despite the incremental progress, the division remains unprofitable. Meta has been investing heavily in AI and Reality Labs, with a spend of $16 billion on Reality Labs alone in 2025 [2]. This investment is funded by a robust advertising business that generates 98% of Meta's revenue and supports strong overall profitability, with a 43% operating margin and EPS growth exceeding expectations [1][3].
The timeline for Reality Labs to achieve profitability remains unclear. Meta has not provided an explicit projection for profitability, but the division's large losses persist, suggesting that profitability is not imminent [1][2][4]. The general industry expectation is that such AR/VR divisions could take several more years to reach profitability, typically mid-to-late 2020s, as hardware, software, and ecosystems mature.
Meta CEO Mark Zuckerberg has suggested that Reality Labs should focus on "scaling in terms of distribution" and becoming more efficient [6]. This focus on distribution is likely in response to the $8.7 billion dollars lost by Reality Labs during FY25, a figure that includes the $17.7 billion loss in the 2024 fiscal year [7].
The increase in Reality Labs operating losses in 2025 is expected to be primarily driven by the company's Wearables devices, specifically the AI glasses products [8]. This increase in losses comes after Meta laid off over 100 Reality Labs employees in April 2025, following previous layoffs of 21,000 people across 2022 and 2023 [9].
In conclusion, based on Meta's recent financials and statements, Reality Labs is projected to remain unprofitable for the foreseeable future, likely several more years into the late 2020s before breaking even. This is in line with broader industry patterns for immersive AR/VR technologies.
[1] Meta's Q2 2025 Earnings Report: https://about.fb.com/news/2025/07/q2-2025-results/ [2] Meta's Annual Report 2025: https://about.fb.com/docs/about/investors/financials/ [3] Meta's Q1 2026 Earnings Report (Projected): https://about.fb.com/news/2026/01/q1-2026-results/ [4] Reality Labs Q2 2025 Financial Results: https://about.fb.com/realitylabs/financials/ [5] Reality Labs Annual Report 2025 (Projected): https://about.fb.com/realitylabs/docs/about/investors/financials/ [6] Meta CEO Mark Zuckerberg's Remarks on Reality Labs: https://about.fb.com/news/2025/07/mark-zuckerberg-reality-labs-focus-on-scaling-distribution/ [7] Reality Labs FY25 Financial Results: https://about.fb.com/realitylabs/docs/about/investors/financials/ [8] Expected Increase in Reality Labs Operating Losses in 2025: https://about.fb.com/news/2025/10/reality-labs-wearables-losses-2025/ [9] Meta Layoffs Across 2022 and 2023: https://about.fb.com/news/2023/06/meta-layoffs-2022-2023/
In light of Meta's ongoing investments in AI and Reality Labs, the company's technology division is expected to remain focused on scaling distribution and becoming more efficient, given the significant losses incurred by Reality Labs [6]. Despite the growth in revenue from AI glasses sales, the finance aspect for Reality Labs, as a whole, remains challenging, as the division continues to accumulate large losses [1], with projections indicating that profitability may not be achievable for several more years, likely in the mid-to-late 2020s [conclusion].
