CEO Mark Zuckerberg's metaverse ambitions have proven costly for Meta, and the most recent quarter was no exception.
While the social media giant exceeded analysts' expectations with fourth-quarter results—shares jumped after hours—its metaverse division Reality Labs reported a loss of $13.7 billion for 2022, up from a $10.2 billion loss in 2021.
It also reported a loss of $4.3 billion for the fourth quarter, its worst since the last quarter of 2020. The company started breaking out the division’s results during the last quarter of 2021.
Despite the lagging performance of Reality Labs, Zuckerberg said during Meta’s fourth-quarter earnings call that investing in the metaverse remains a top priority.
"Our priorities haven't changed since last year," Zuckerberg said.
He pointed to the company's release of the Quest Pro headset as a win, and touted and a next-generation consumer headset to be released next year as tech that will become, in his words, "the baseline for all headsets going forward."
Zuckerberg also said that the company will focus more on mixed reality, which differs from virtual reality because it mixes physical and digital elements. The company's Quest Pro headset already incorporates the technology, and its new consumer headset will do the same.
"The MR (mixed reality) ecosystem is relatively new, but I think it's gonna grow a lot over the next few years," Zuckerberg said.
On the earnings call, the Meta chief executive also mentioned that 100 million people have already created avatars in WhatsApp after the company launched the capability in December. He suggested that introducing features like avatars on mobile could drive more people toward the company's metaverse products.
"Most people are going to experience the metaverse for the first time on phones, and start building up their digital identities across our apps," he added.
Despite the lackluster performance from Reality Labs, Meta's stock jumped 19% after hours to $181 from its Wednesday close of $153. Along with a reported $32.2 billion in revenue, which beat expectations, it also announced a $40 billion stock buyback.
The company's shares sagged nearly 62% in 2022 as the company reported its first decline in revenue since going public in 2012. Zuckerberg has deemed 2023 the "year of efficiency," and pledged on Wednesday's call to remove obstacles in middle management to make quicker decisions. The company cut 11,000 employees in November.
"I think a lot of what we do," Zuckerberg said, "it really just makes sense to really focus on on the efficiency a lot more than we had previously."
