Earlier this month, Meta cut around 10 percent of its Reality Labs workforce, reportedly affecting up to 1,000 employees. Now, the company’s latest earnings report suggests why those cuts were necessary.
According to Meta’s fourth-quarter earnings released on Wednesday, Reality Labs posted a loss of $19.1 billion in 2025, widening from the $17.7 billion it lost in 2024. In the final quarter alone, the unit recorded a loss of $6.2 billion.
Those losses stand in sharp contrast to the unit’s revenue. Reality Labs generated $955 million in sales during the fourth quarter and about $2.2 billion across the full year.
Zuckerberg says losses will continue, for now
During Meta’s earnings call, CEO Mark Zuckerberg struck a cautiously optimistic tone, even as he acknowledged that Reality Labs will remain deeply unprofitable in the near term.
“For Reality Labs, we are directing most of our investment towards glasses and wearables going forward, while focusing on making Horizon a massive success on mobile and making VR a profitable ecosystem over the coming years,” Zuckerberg said.
However, he made it clear that 2026 will not bring immediate relief. “I expect Reality Labs losses this year to be similar to last year,” he said, adding that this year would “likely be the peak” before losses begin to gradually decline.
From metaverse hype to mounting skepticism
Meta’s aggressive pivot toward the metaverse in 2021 was met with widespread scepticism from the outset. In its early years, the company’s VR push attracted sharp criticism, with detractors questioning both the technology’s readiness and the scale of Meta’s spending.
Nearly five years later, that scepticism has not faded. Reality Labs continues to burn billions of dollars annually, even as Meta increasingly positions artificial intelligence, rather than virtual reality, as its primary growth engine.
Recent moves suggest Meta may be scaling back some of its more ambitious VR efforts. Last week, CNBC reported that the company plans to shut down several VR studios alongside the latest round of layoffs.
Meta has also announced that it will retire its standalone Workrooms app, which had been pitched as a virtual meeting space for office workers. The decision further underscores the company’s struggle to find mainstream use cases for VR beyond gaming and experimentation.
An uncertain future for Reality Labs
Despite continued investment in wearables and mixed reality, it remains unclear what will ultimately turn Reality Labs into a sustainable business. With losses mounting and Meta redirecting resources toward AI, the company’s once-grand metaverse vision appears increasingly constrained by financial reality.
For now, Reality Labs remains one of the most expensive bets in tech, with no clear path to profitability in sight.
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