^{A visitor wears a virtual reality headset Meta Quest as he takes part in an immersive experience stand during the Viva Technology show at Parc des Expositions Porte de Versailles on May 24, 2024 in Paris, France. | Chesnot | Getty Images}

Reality Labs Continues to Weigh on Meta’s Bottom Line

Meta reported its second-quarter earnings on Wednesday, revealing that its Reality Labs division—the business unit responsible for developing virtual and augmented reality hardware—recorded an operating loss of $4.53 billion, missing the sales target and underscoring the continued financial strain of CEO Mark Zuckerberg’s long-term metaverse vision.

• Sales for Reality Labs: $370 million
• Estimated analyst sales: $381 million
• Estimated operating loss: $4.99 billion
• Actual operating loss: $4.53 billion

Although slightly better than projections, the figures confirm that Reality Labs remains a massive cost center for Meta, with losses that now total nearly $70 billion since late 2020.

Metaverse Ambitions, Real-World Losses

Reality Labs is the driving force behind Meta's aspirations to build the metaverse—a future immersive computing platform that integrates virtual reality (VR) and augmented reality (AR) into everyday life.

The division currently manages:

• The Meta Quest line of VR headsets
• The Ray-Ban Meta Smart Glasses, developed in partnership with EssilorLuxottica
• Experimental technologies, including Orion AR glasses, which are still in prototype stages

These efforts, however, come with enormous R&D and hardware production costs, and so far, the return on investment has been limited.

In comparison, Reality Labs generated $412 million in sales and posted a $4.2 billion loss in Q1 2025, showing a continued downward trend in revenue while losses grow.

Smart Glasses Show Glimmer of Potential

Despite the challenges in VR adoption, there’s one encouraging development: Ray-Ban Meta smart glasses sales have more than tripled year-over-year in the first half of 2025, according to Meta’s hardware partner, EssilorLuxottica.

This spike follows the June launch of Oakley Meta smart glasses, marking the latest expansion in the partnership between the eyewear brand and Meta.

While sales still pale in comparison to Meta’s core advertising business, the momentum in wearable AR may offer a more consumer-friendly path to mixed-reality adoption, especially compared to the bulkier and more niche VR headset market.

Layoffs Signal Strategic Reassessment

In April, Meta confirmed that it had laid off employees from its Oculus Studios—the software arm responsible for VR and AR content development. This suggests an internal shift in strategy, possibly prioritizing hardware innovation and partnerships over in-house content production.

Zuckerberg has remained vocal about the company’s metaverse future, but recent moves—including workforce reductions and adjusted product timelines—signal a more cautious, efficiency-focused approach.

Cautious Optimism Amid Heavy Investment

Meta's Reality Labs continues to represent one of the biggest bets in tech—and one of the costliest. Despite the persistent red ink, early signs of commercial success from its smart glasses collaboration with EssilorLuxottica may hint at the most viable entry point into the mainstream for AR devices.

For now, though, the division remains a drag on earnings, and investors will be watching closely to see whether Meta can turn its $70 billion investment into a profitable, widely adopted platform—or whether it will continue to be a long-term drag on financial performance.