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Meta has reportedly considered ramping up its hiring efforts in 2024 due to an ongoing “hiring underrun” in a bid to procure more technical positions for its metaverse ambitions.
in the company’s third quarter (Q3) earnings, Meta indicated a silver lining on the company’s massive Reality Labs research and development (R&D) expenses.
Meta wrote in its report,
“We anticipate that our full-year 2023 total expenses will be in the range of $87-89 billion, lowered from our prior range of $88-91 billion. This outlook includes approximately $3.5 billion of restructuring costs related to facilities consolidation charges and severance and other personnel costs. We expect Reality Labs operating losses to increase year-over-year in 2023”
However, the report noted that much of its overhead costs were due to “higher infrastructure-related costs” for the 2024 fiscal year.
It explained further: “Given our increased capital investments in recent years, we expect depreciation expenses in 2024 to increase by a larger amount than in 2023. We also expect to incur higher operating costs from running a larger infrastructure footprint.”
It also outlined that Reality Labs, Meta’s virtual, augmented, and mixed reality (VR/AR/MR) division, would “expect operating losses to increase meaningfully year-over-year.” This is due to its massive investments in product development and ecosystem scaling up.
Meta also estimates its 2023 capital expenses to sit around $27 billion to $29 billion USD, adjusted slightly from its initial estimates of $27 billion to $30 billion USD.
Furthermore, Meta expects to spend roughly $30 billion to $35 billion in capital expenses for the full year of 2024.
The Menlo Park-based firm plans to expand its investments in data centres, non-artificial intelligence (AI) and AI-linked hardware, and other solutions. It plans to do this as “we ramp up construction on sites with the new data center architecture we announced late last year.
Despite this, the company reported strong ad revenues from its family of apps (FoA), including Instagram, Facebook, and WhatsApp.
Mark Zuckerberg, Chief Executive and Founder, Meta, said,
“We had a good quarter for our community and business. I’m proud of the work our teams have done to advance AI and mixed reality with the launch of Quest 3, Ray-Ban Meta smart glasses, and our AI studio”
Analysis on Meta Platforms Hiring Push
Demond Cureton, Senior Journalist, XR Today here to analyse the latest updates on Meta’s hiring ambitions.
It seems like the revolving doors continue to spin at many tech firms around the world. Meta’s Q3 announcement indicates a solid decision to ride the waves of uncertainty in the tech market by investing in its high-skilled labour.
I’ve covered much of the issues behind Meta’s rising R&D expenses, which squarely comes amid its gamble on spatial computing technologies. Rightfully so, Zuckerberg and Co are pouring investments into XR due to the rise of metaverse technologies across the enterprise, education, manufacturing, and social media.
Overhead costs linked to pushing forth these emerging technologies has become the major sticking point for its overall net revenues.
This comes also after Meta announced it would integrate augmented reality advertisements into Facebook and Instagram Reels. Marketing teams and businesses using the new tools have seen huge increases in shopper engagement, and as developers gain steam, Meta can leverage its XR devices to accommodate these digital trends.
If it can combine the two tools—immersive ads and AR/VR technologies—Meta has the capability to build a sustainable revenue model that can support its hardware efforts over the next product life cycle.
This is key as, during the Metaverse Gold Rush last year, efforts to build profitable XR ventures eventually led to a major glut in technologies with less-than-expected results. This triggered massive layoffs and project closures across companies like Meta, Microsoft, Google, Snap, Salesforce, and many others.
As before, Meta is playing the long game, and hopes to compete with major tech rivals like Microsoft, Apple, Google, Snap, and others entering the 3D advertising market.
Sharp demand for AR advertising and Faux-out-of Home (FOOH) experiences has the potential to allow Big Tech to sustain its advertising revenues worldwide and convert more ads to sales transactions.
This is especially important as Meta has been battling serious issues with ad losses due to Apple changing its privacy policies and the EU cracking down on Meta’s data violations in recent years.
Revolving Door Policies at Meta?
However, it is important that history does not repeat itself. Meta has just shed around 21,000 employees since last year. Due to the downward trend in revenues, historic fines over global data transfers, and several lawsuits, the company has experienced major upheavals in workers at its Reality Labs division.
Much of its workforce growth took place during the COVID-19 pandemic era, where the tech market remained bullish on remote collaboration, work from home, and immersive meetings.
However, as the pandemic cleared in 2022 onwards, more and more bosses demanded a return-to-office schedule, creating headaches for employees that had uprooted to seek cheaper or more favourable accommodate elsewhere.
Further layoffs ensued after Reality Labs announced it would cut employees from its Facebook Agile Silicon Team (FAST), which the company tasked with developing bespoke processors.
Due to growing ties and collaboration with Qualcomm’s Snapdragon ecosystem, the company remains steadfast with its support after adopting Snapdragon XR2 Gen 2 chipsets for the Quest 3.
Reuters originally revealed the news, stating that employees had received their redundancy notices on Meta’s internal discussion forum, Workspaces. Meta later informed them of their individual work status
Slow Quest for Quest 3 Profitability, Meta RSC Facility
Furthermore, data from Veteran tech analyst Ming-Chi Kuo revealed that Meta’s Reality Labs department had estimated 7 million unit sales by the end of the year. However, the company downgraded these estimates to roughly 2.5 million headsets.
The significantly lower-than-expected demand and continued order cuts for Quest 3 imply that Meta’s Reality Labs losses will continue to worsen / 需求顯著低於預期且持續砍單的Quest 3意味著Meta的Reality Labs虧損將持續惡化https://t.co/SbWkOX1GIf
— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) October 27, 2023
Kuo’s latest report on Meta’s Reality Labs AR/VR division claims the original forecast for Quest 3 was 7 million units by the end of this year, but that has been downgraded to around 2.5 million.
More people seemingly ordered the 512 gigabyte (GB) model compared to the 128 GB headset. Revealed at the Connect 2023 event, the head-mounted display (HMD) has received a lot of fanfare and praise for its full-colour passthrough and specs sheet.
On the other hand, it has yet to catch up to sales compared to its predecessor, the Quest 2, which has sold nearly 20 million units since 2020. However, the company has diversified its product line-up with an upgraded Meta Quest 3 and its second-generation Ray-Ban smart glasses.
Only time will tell how the company organises its workforce and with which specific ambitions in Reality Labs. From the report, it looks like it will continue working on its infrastructure expansion amid increased demand for hosting more data securely at its upcoming Research SuperCluster (RSC) centre.
The new facility, currently under construction, will ensure safer interactions for users on its platform with a host of AI-backed technologies. They will be able to filter out any significant issues with harmful content, namely after a serious incident took place in the United Kingdom, leading lawmakers in Westminster to pass its Online Safety Bill.
The views expressed in this report do not reflect those of XR Today, Today Digital, or its affiliates.
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