Meta had a record year in 2025, yet the company plans to spend even more money in 2026 despite massive Reality Labs restructuring

What you need to know

• Meta reported record quarterly and annual revenue, topping $59.89 billion in Q4 2025 and $200.97 billion for the full year, representing 22% Q4 and 24% YoY growth.
• Meta's family of apps was used by 3.58 billion people on average daily in December, an increase of 7% year-over-year.
• Reality Labs posted one of its biggest quarters ever, driven by strong sales of Meta Quest 3S and Meta AI glasses.

Once again, Meta is reporting record revenue for its "Family of Apps," which includes Facebook, Instagram, and WhatsApp, with ad spending increasing 6% in the fourth quarter and 9% year-over-year in 2025.

Meanwhile, the company's Reality Labs division generated nearly $1 billion in Q4 2025 and $2.27 billion for the year, showing a slight decrease in Q4 revenue but more revenue overall in 2025. The company notes that strong sales of the Meta Quest 3S and AI glasses like Ray-Ban Meta (Gen 2) were responsible for the increase.

Much of CEO Mark Zuckerberg's statement during the earnings call highlighted the company's big AI push and how Meta will be utilizing Reality Labs in 2026. He noted that, in 2026, "new agentic shopping tools (from Meta) will help people find just the right, very specific set of products."

Zuckerberg also highlighted the success of AI glasses. "We think our glasses are some of the fastest-growing consumer electronics in history." Meta is expected to double or triple smart glasses production in 2026 to capitalize on its success and ensure it remains the market leader, even as we expect Google and Samsung to make big pushes into the market.

As a result, Zuckerberg noted that Reality Labs is directing its investments toward smart glasses and wearables "while focusing on making Horizon a massive success on mobile going forward, and making VR a profitable ecosystem over the coming years."

Meta laid off 10% of its Reality Labs workforce last week, including most of its in-house game development studios, with the company's CTO explaining that it isn't done with VR by any means; it's just shifting its strategy.

Perhaps most surprisingly, Meta noted that Reality Labs' "losses" in 2026 will remain at 2025 levels. The company will continue to invest in AI infrastructure, estimating it will spend between $162 and $169 billion on infrastructure and development in 2026.

Android Central's Take

Turns out, VR wasn't the reason Meta's Reality Labs division spent so much money every quarter. Investors and VR naysayers have highlighted that Meta is "wasting billions on the Metaverse" since 2020, but after making substantial cuts to the company's VR strategy at the end of Q4 2025, Meta says Reality Labs spending will still hover around $20 billion in 2026.

What Meta is spending all this money on is anyone's best guess. R&D isn't cheap, to be sure, and maintaining funding and infrastructure for an entire gaming ecosystem with millions of gamers is also pricey, but the company has always been secretive about exactly what it spends this money on and how efficient Reality Labs is. If anything, these moves and comments make Reality Labs even murkier than it already is.

With the massive cuts made to Meta's VR studios in mid-January, the company eroded any goodwill it had left among many outspoken game developers and consumers. Given that these changes aren't even moving the needle on Reality Labs' spending, it makes us wonder how wise it was for Meta to pull back so harshly and suddenly.