Meta Platforms (FB) posted a second-quarter loss of $2.81 billion in its Facebook Reality Labs (FRL) division, which comprises its augmented and virtual reality operations, according to its earnings report released Wednesday. That was down slightly from its loss of $2.96 billion in the first quarter and better than analyst estimates for a loss of $3.67 billion for the division for the quarter, according to FactSet.
FRL generated revenue of $452 million in the second quarter, down from $695 million in the first quarter. That was a small fraction of the $28.4 billion generated in the quarter from Meta’s family of apps, which includes Facebook, Instagram and WhatsApp.
The company said it expected Reality Labs revenue to be lower in the third quarter compared to the second quarter.
On the company's earnings call with analysts, CEO Mark Zuckerberg said the company is more focused on its long-term metaverse and Reels growth than maximizing short-term revenue from monetization. "Developing these [metaverse] platforms could unlock hundreds of billions if not trillions in revenue over time," Zuckerberg said.
Meta announced in last year’s fourth quarter that it would be breaking out results for the division to show the performance and investments in a group that it considers key to the next generation of online social experiences.
For 2021, Meta reported a loss of $10.2 billion on revenue of $2.3 billion for FRL. The company has said it is committed to spending even more on the division for the next several years.
During the company’s first-quarter earnings call, Zuckerberg said the company's metaverse arm is currently "laying the groundwork for a very successful 2030s."
Overall, Meta’s adjusted quarterly earnings per share for Q2 of $2.46 missed analysts' average estimate of $2.54, according to FactSet, while its overall revenue of $28.8 billion fell just short of estimates of $28.9 billion.
Meta's shares fell close to 4% to $163.25 in after-hours trading on Wednesday on the results. Shares of Facebook are down more than 50% this year.
Eli Tan contributed reporting to this story.
UPDATE (July 27, 21:22 UTC): Updated with comments from Meta's earnings call with analysts.