Earnings calls are usually about advertising, and Meta’s latest, on October 21, mostly was too. Total revenue for the third quarter came in at $64.6 billion, up 26% on last year. But tucked inside the numbers is the clearest picture yet of where Meta thinks the future of wearables lies, and it isn’t VR.
The headline split: glasses rising, headsets falling
Revenue in Reality Labs, the division behind Meta’s headsets and glasses, was $443 million for the quarter, down 6% on last year. CFO Susan Li put the drop down to “lower Quest headset sales,” partly offset by “continued strong growth in AI glasses revenue.”
In other words, the two halves of the business are moving in opposite directions. Fewer people are buying Quest headsets, and more are buying glasses. Mark Zuckerberg put it simply on the call: “Glasses sales continue to grow rapidly.”
Meta didn’t share unit numbers for its glasses, so we can’t say exactly how fast. But it’s consistent with what TrendForce reported last week, when it named Meta the clear leader in a glasses market set to more than double this year.
A new rule for VR
The most striking line of the call wasn’t about glasses at all. Zuckerberg said Meta is “changing our approach to virtual reality to only ship new devices when we have major breakthroughs.”
That’s a significant change from a company that has released VR headsets on a steady schedule for years. Read alongside the sales numbers, the message is clear: VR stays, but it’s no longer where the momentum is. The everyday wearable Meta is betting on sits on your nose, not over your eyes.
The losses are shrinking, slowly
Reality Labs is still a very expensive business. Meta now expects the division to lose between $18 billion and $19 billion this year, which would be lower than 2025. For 2027, Li said losses should narrow to “around $15 billion as we reallocate investment towards other priority areas,” with Zuckerberg describing the division as “trending towards profitability from there.”
There’s also a hint about how Meta plans to make money. Zuckerberg said the company has “priced our devices not to make a large profit on the hardware.” The plan is to make the glasses affordable and earn from the AI services on them, with Li expecting “paid subscriptions will increase.” Meta’s new AI agent, Muse, is coming to its glasses starting next month.
Our take
We’ve spent this month pointing at signals that AR glasses are becoming a real market: a memory giant writing them into its annual report, an independent forecast of shipments doubling, and celebrities lining up to sell them. Meta’s results are the biggest signal yet, because they come from the company with the most to lose.
Meta has spent years and tens of billions of dollars on VR. When it says it will now only release headsets for major breakthroughs, while glasses sales “continue to grow rapidly,” it’s telling the world where it believes the next computer will live. The losses are still enormous, but the direction has never been clearer. Glasses are winning the argument.