Meta’s Reality Labs division continued to lose billions in the second quarter of 2026, even as its revenue improved. The VR and AR business recorded a $4.6 billion income loss against $431 million in revenue, leaving a gap that remains difficult to ignore.
Meta’s total second-quarter revenue reached $60.80 billion, up about 28% year over year. Its shares were reportedly down by about 10% after the results, according to Reuters’ market report.
Reality Labs’ $431 million in quarterly revenue was still a 16% increase from the same period last year, when the division brought in $370 million. During Meta’s latest earnings call, CFO Susan Li attributed the increase to strong growth from AI glasses, partly offset by weaker Quest headset sales.
The division’s loss also grew from the $4.03 billion recorded in the first quarter of 2026, an increase of roughly $570 million. Reality Labs’ worst quarter so far came in the fourth quarter of 2025, when it lost $6.02 billion.
CEO Mark Zuckerberg also pointed to Meta’s glasses business, calling it one of the fastest-growing consumer electronics businesses ever. He said the frames created with Kylie Jenner had performed better than Meta expected. That momentum has not yet been enough to cover the division’s research, hardware, and development costs.
Meta is still spending on future hardware
Reality Labs is also funding projects that have not reached consumers. Meta’s Orion AR glasses, which use an EMG wristband and a separate Compute Puck, remain unreleased. The company has also worked on the Meta Quest 4, while another mixed-reality project called Phoenix was pushed back until 2027.
Those projects help explain why Reality Labs continues to require such a large budget, but the financial pattern has been in place for years. The division lost $19.1 billion across 2025, and Meta previously reported heavy VR and AR losses in 2024, 2023, and 2022. The company also closed three VR studios and cut roughly 10% of Reality Labs as it placed more attention on AI-powered wearables.
For now, AI glasses are the clearest bright spot in the division’s results, while Quest headset sales are moving in the opposite direction. Reality Labs will need much more than a year-over-year revenue increase to close a multibillion-dollar quarterly deficit.
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