Meta reported strong overall revenue for the third quarter of 2025, but its Reality Labs division continued to struggle financially. The company posted revenue of 56 billion dollars for the quarter, reflecting a 26 percent increase year over year. However, the Reality Labs division, which manages the development of Quest branded virtual reality headsets and AI powered smart glasses under the Ray Ban and Oakley brands, recorded losses of 4.4 billion dollars in the same period.
Despite losses, sales within Reality Labs showed notable growth. The division generated 470 million dollars in revenue, compared to 270 million dollars in the same quarter last year, marking a 74 percent year over year increase. This indicates that products like Meta AI glasses are gaining popularity among consumers. Yet, the high costs of research, manufacturing, and development in virtual and augmented reality continue to outweigh revenue gains.
A report highlighted that Reality Labs has accumulated around 70 billion dollars in losses since late 2020, making it one of the least profitable segments of the company. According to Meta CEO Mark Zuckerberg, the strong performance of AI glasses contributed positively, but the costs linked to Quest headsets remain a major factor. He noted that better sales this quarter came partly from retail partners preparing for the holiday season. “The significant year over year growth in Q3 was partly due to retail partners stocking up on Quest headsets ahead of the holiday season. We did not have a similar benefit in the third quarter of last year since our Quest 3S headset launched in the fourth quarter of 2024,” he said.
Looking ahead, Meta expects lower revenue for Reality Labs in the fourth quarter. Meta Chief Financial Officer Susan Li stated, “We expect that Q4 Reality Labs revenue will be lower than last year for a couple of reasons that I alluded to. The biggest factor is we are lapping the introduction of Quest 3S in Q4 of last year, and we do not have a new headset in the market this year.”
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