What you need to know
- Meta earned $39 billion in revenue this quarter, a 22% YoY increase and its second-biggest quarter ever.
- 3.27 billion people now use Meta apps daily, while Threads has grown to 200 million users.
- Meta CEO emphasized the continued focus on investing billions in AI and Reality Labs to keep up with competitors.
- Reality Labs R&D now totals $50 billion since Meta began tracking this data in earnings reports.
Meta maintained its strong growth in 2024, growing its total revenue by $7 billion compared to 2023 and its viewed ads by 10%. CEO Mark Zuckerberg boasted about the growth of products like Meta AI, Whatsapp, Threads, and Meta Ray-Ban smart glasses while glossing over Reality Labs' operating losses.
On Wednesday, Meta reported its Q2 2024 earnings. The company grew its total users to 3.27 billion, or 200 million more than last year. Zuckerberg highlighted that its X rival, Threads, now has 200 million users, while the internationally popular Whatsapp now has 100 million monthly U.S. users.
He also claimed that "against public perception," Facebook has become much more popular with "younger users," with CFO Susan Li claiming that this generation loves using Facebook Marketplace in particular.
Zuckerberg bragged multiple times that Meta AI is on track to become "the most used AI assistant by the end of the year" while "improving quickly both in intelligence and features." He claims that it has answered billions of queries since launch, many coming from the popular Meta Ray-Ban smart glasses. Interestingly, India is the "largest market for AI queries."
Financial analysts on the call expressed skepticism that Meta could profit from its AI investments, especially its open-source Llama 3 AI. Zuckerberg and Li emphasized that they're focusing on expanding their reach for now before "monetizing [AI] over time" and that AI has helped Meta better target ads to users.
Meta only briefly touched upon Reality Labs, the R&D department dedicated to the Meta Quest 3 and its mysterious AR glasses. Zuckerberg claimed that Quest 3 sales are "exceeding our expectations," but that didn't stop RL from hitting $4.5 billion in quarterly losses despite $353 million in Quest sales.
Li attributed the higher losses to a "20% increase due to headcount." In June, The Verge reported that Meta would lay off Reality Labs employees while branching off the division into a second Wearables group. In theory, these changes could reduce RL losses going forward.
Still, Meta's total Reality Labs losses have reached a total of $50 billion since the company began reporting these numbers in Q4 2020. While future VR products like the Meta Quest 3S could mitigate some losses, it's clear that this number will only grow. Li repeated the same warning from past earnings calls on Wednesday: "We continue to expect 2024 operating losses to increase meaningfully year-over-year due to our ongoing product development efforts."
During the call, Zuckerberg hinted at major announcements at Meta Connect 2024 on September 25. We expect Meta to unveil its (intentionally) leaked AR glasses at the event, but industry reports suggest they will be a proof of concept, not a consumer-ready product.
