Meta Q4 2023 earnings report shows record-breaking Quest 3 sales, ad profits

The Meta sign at the company campus at 1 Hacker Way.
(Image credit: Michael Hicks / Android Central)

What you need to know

  • Meta's final Q4 2023 earnings report showed $40.1 billion in revenue and a 41% operating margin.
  • Reality Labs invested about $5.6 billion in R&D, but earned $1.07 billion back in Quest 2 and Quest 3 sales. 
  • Meta's primary focus continues to be AI, with plans for Llama 3 and improving the Meta AI assistant. 

Meta ended its "Year of Efficiency" by earning $40 billion in revenue and $14 billion in net income, both the highest totals in the company's history. 

The Meta Q4 2024 earnings report allowed CEO Mark Zuckerberg to focus on his company's positives, after having to apologize at Congress the previous day for the negative impacts of social media on the mental health of teenagers.

"Our communities are growing and our business is back on track," Zuckerberg said, after listing out the significant user growth for new apps like Instagram Reels and Threads. 

Reportedly, "people reshare 3.5 billion Reels every day," while Threads has grown to 130 million active monthly users — compared to under 100 million as of Meta's Q3 2023 report. Overall, nearly 4 billion people use Meta's "Family of Apps" monthly, earning Meta about $10.10 per person. 

The Meta Quest 2, Meta Quest Pro, and Meta Quest 3 on a table

(Image credit: Nicholas Sutrich / Android Central)

On the Reality Labs front, Meta spent $4.65 billion dollars, its highest operating loss on record. Most of this came from R&D for future projects like the Quest 4, Quest Pro 2, and AR glasses projects — though Meta is allegedly shifting focus away from AR to VR and MR projects that will bring more profit in the short term. 

Meta has reasons to be positive, however, as Reality Labs earned over $1 billion in revenue for the first time, nearly 5X more than the last quarter and higher than when the Quest 2 launched in 2021. The Quest 3, which launched in October, is "off to a strong start," Zuckerberg claims, while the Quest 2 continues to "perform well." 

"I expect [the Quest 3] to continue to be the most popular mixed-reality device," Zuckerberg proclaimed, an obvious challenge to the Apple Vision Pro launching the following day. 

Despite this, CFO Susan Li confirmed that Reality Labs' operating losses will "increase meaningfully year-over-year due to our ongoing product development efforts in AR & VR." Essentially, no matter how well the Quest 3 sells in 2024, it won't be enough to offset the research costs for future products. 

Using Meta AI chat to bring up Reels

(Image credit: Meta)

Meta will also use its record profits to grow its "AI infrastructure capacity this year," Li explained. 

Earlier this month, Meta announced it would merge its GenAI and FAIR teams to work together on an open-source artificial general intelligence (AGI) that will be far more powerful than Llama 2, its large-language model announced at Connect 2023. The hope is that it will be a "human-level AI."

Overall, Meta's Q4 2023 earnings were a triumph for the company, given its poor profits in 2022. CFO Li did warn that they're facing "increasing legal and regulatory headwinds in the EU and the U.S.," particularly from the FTC. This could "have an adverse impact on [their] business."

Michael L Hicks
Senior Editor, Wearables & AR/VR

Michael is Android Central's resident expert on wearables and fitness. Before joining Android Central, he freelanced for years at Techradar, Wareable, Windows Central, and Digital Trends. Channeling his love of running, he established himself as an expert on fitness watches, testing and reviewing models from Garmin, Fitbit, Samsung, Apple, COROS, Polar, Amazfit, Suunto, and more.