Meta’s Reality Labs Revenue Jumps 74% in Q3, Fueled by Holiday Stocking
Meta’s Reality Labs division, responsible for virtual and augmented reality products, reported a 74% increase in revenue for the third quarter of 2025, driven by retailers preparing for the holiday shopping season.
Reality Labs brought in $470 million during the quarter, marking its second-best Q3 performance ever, compared to $270 million in Q3 2024. This surge is largely attributed to retailers stocking up on Quest headsets, according to Meta CFO Susan Li, who stated during an earnings call that the increase was also bolstered by “strong AI glasses revenue.” However, Li cautioned that this early stocking will likely result in lower revenue for Q4 2025 compared to the same period last year.
Despite the revenue gains, Reality Labs remains a significant financial drain on Meta, with $4.9 billion spent in Q3 alone, resulting in a loss exceeding $4.4 billion. Much of this spending is dedicated to long-term research and development, particularly in augmented reality glasses, a product line still under development – a strategy similar to other tech giants investing in future technologies like the broader AR market. Sales of Ray-Ban Meta smart glasses have more than tripled year-to-date, demonstrating growing consumer interest in wearable AI technology, and are a key focus for future investment.
Looking ahead to 2026, Meta is prioritizing a shift in focus towards AI glasses within Reality Labs, citing strong demand and the potential for integrating AI experiences into a natural, wearable form factor. As Meta continues to invest heavily in the metaverse and related technologies, the success of these ventures will be crucial for the company’s long-term growth.
Li indicated that budget details for 2026 are still being finalized, but the company is actively working to align resources with the growing demand for AI-powered eyewear.
Meta Reality Labs revenue for Q3 was 74% higher than in 2024, with Meta explaining it as retailers stocking Quest headsets for the holiday season.
Reality Labs is the division of Meta responsible for Quest headsets and their Horizon OS, first party VR software like Horizon Worlds, the Ray-Ban and Oakley branded smart glasses, and the Meta Neural Band.
The latest quarter saw Reality Labs bring in $470 million, making it the division’s second best Q3 ever. The figure is 74% higher than the $270 million of Q3 2024.
However, Q3 2024 was right before the launch of Quest 3S, which had widely leaked in the months before. During the earnings call this week, Meta CFO Susan Li told investors that the high revenue was due to “retail partners procuring Quest headsets” in order to “prepare for the holiday season”, as well as “strong AI glasses revenue”.
Li also warned that the early Quest stocking means that Meta expects Q4 2025 revenue to be lower than Q4 2024.
“We’re still expecting significant year-over-year growth in AI glasses revenue in Q4, as we benefit from strong demand for the recent products that we’ve 10 introduced, but that is more than offset by the headwinds to the Quest headsets”, Li noted.
As always, the Meta Reality Labs revenue came at an enormous cost, and the division remains deeply unprofitable. Meta spent $4.9 billion on it in Q3 alone, resulting in a “loss” of over $4.4 billion.
Though while describing this as a loss is technically correct in a financial sense, much of it could also be described as long-term investment. XR headsets like Quest are still a relatively early technology, far from maturity, and as of 2022 more than 50% of Reality Labs spending was on the research and development of AR glasses, a future product line that hasn’t even launched yet.
Ray-Ban Meta Sales Have More Than Tripled This Year So Far
Sales of Ray-Ban Meta glasses so far this year have more than tripled compared to the same time last year, more than 200% growth.
During the call, when asked by a Wall Street analyst about whether Reality Labs spending would be lower in 2026, Li responded by saying that Meta is “still working through the budget details”:
“We’re not sharing an outlook for Reality Labs operating losses in 2026 in part, again, because we are still working through the budget details. What I can say from the process so far is we’re really trying to shift momentum towards AI glasses.
And that’s been one of the biggest priorities looking at the Reality Labs’ budget and roadmap for 2026. And that’s in part because we have seen that there is a lot of demand. I would say we were stocked out multiple times over the course of this year, and we want to get ahead of that.
Both because there is product market fit, and also because it’s a great and very natural platform or form factor for AI experiences that can be built on top of those and carried with you into the world. So, that’s really what we are looking at as our highest priority when we think about what the 2026 Reality Labs roadmap looks like.”
