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hmate9

Stock is up 18% after hours.

Revenues and earnings:

- Daily Active Users 1.96BN, beating Est. of 1.94BN, up 4% Y/Y

- Monthly Active Users 2.94BN, missing Est. 2.95BN, up 3% Y/Y

- EPS $2.72, beating estimate $2.56

- Revenue $27.91 billion, beating estimate $28.24 billion (Bloomberg Consensus)

- Advertising rev. $27.00 billion, missing estimate $27.48 billion

- Family of Apps revenue $27.21 billion, missing estimate $27.52 billion

- Reality Labs revenue $695 million, beating estimate $677.1 million

- Other revenue $215 million, beating estimate $189.3 million

A red flag here: yes, revenue grew 7% YY, but that was the slowest pace of growth since the company went public in 2012. Meanwhile, US revenue barely grew in Q1 at $12.671BN, up from $12.405 BN.

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For me, that Reality Labs is the division beating estimates drives home that Meta's bet on XR is going to pay. Ad revenue might be down because of changes in Apple and Google mobile policies, but they are going to control the platform of the future and set their own rules.

I bought a Quest 2 out of curiosity, and am amazed by it. Zuckerberg apparently says they're still 5-10 years away from where they want to be with the technology, so I'm guessing what's coming down the pipeline is going to be pretty impressive.

I think people are really underestimating how much impact these technologies are going to have. People thought the first iPhone was only good for fart apps. I think this will be a similar story.

I just hope someone can compete with FB.

I bought one and I can’t stand it. Too heavy and uncomfortable. The UI is annoying and confusing. I tried to find some games for my kids (ages 7-9) but they either couldn’t figure them out or they were boring. What’s up with that start area, why can’t I explore it? It’s collecting dust for me. I see the potential but it seems a ways off.

> I tried to find some games for my kids (ages 7-9)

they won't even recommend it as safe for kids that age yet, so it isn't surprising you couldn't find any games targeted to that age range.

You should be aware there are some potentially scary things going on in any of the social apps [0]

[0] https://www.theguardian.com/tv-and-radio/2022/apr/25/a-barra...

Nobody should be letting their kids play any multi-player games. Not only for their sake (people say some fucked up shit on there), but for the sake of all the other adults playing those games.

Unfortunately, many people are letting their kids (young teens, pre-teens) do that. (Where "letting them" simply means, not actively stopping them, being unaware etc).

Which is half the problem. The other half of the problem is that Facebook is actively pushing developers to social-enable their games by integrating Facebook based social features into them (hence the mandatory Facebook account). So even games that have no reason to be using those features are seeing them added.

While many apps (social ones) are not safe for kids yet (funny enough it's usually unsafe because of other kids - teenagers), there are still many apps that work really well for kids. The Guardian article is quite sensationalized (primarily about VRChat and maybe RecRoom, but the Oculus has more).

> Too heavy and uncomfortable

Upgrade the strap, it's a much better experience.

My nieces and nephews are all around that age, I usually let them play Job Simulator. They love it.

Current generation VR just doesn't excite or interest me.

But I am excited for what's going to come, now that VR is getting some serious investment.

My wishlist:

  - no motion sickness or headaches (not sure if this is going to be possible for 100% of people)

- lighter, less bulky, less ridiculous looking, more comfortable headsets; the dream would be something like a pair of regular glasses, or goggles - higher resolution

And, with time, I'd like to see hardware become less expensive, giving it a chance to become more mainstream.

All of those reasons are why VR will be a niche, as in not mass market like smart phones, for a long while.

VR? Maybe. AR? Likely 5 years away.

> - no motion sickness or headaches

We can do this right now on the Index. You need:

- A computer that can output 144 fps consistently without drops.

- Well-positioned lighthouses.

- Software that only moves the virtual world in response to the player moving in the real world (except via blink teleportation).

Unseen Diplomacy, The Lab, and Half Life Alyx, when played with the right settings or hardware, should make basically no one motion sick.

Unfortunately, people don't like blink teleportation because it usually sucks. Games like Unseen Diplomacy are able to create large spaces without teleportation, but have pretty large play space requirements. IMO, there's room for more creativity in this space. Budget Cuts, for example, manages to make blink teleportation really work.

Plenty of low end titles also have good comfort options without requiring top tier GPUs to achieve stable framerates, my personal picks are Rec Room for a social experience and "Garden of the Sea" for a chill single player experience. Both have snap-turn and teleportation as first-class movement option.

I wanted to go deeper (esp. with VRChat) so I eventually caved in to free movement. It was very motion sickness inducing at first, but doing it bit by bit you get used to it after a while.

Personal recommendation for any VR experience: I have a bar stool in my VR space where I can lie on or just sit. The difference from a chair is that it doesn't offset you vertically when you lie/sit, which tends to mess with games.

> Both have snap-turn and teleportation as first-class movement option.

Tiny note, snap turn can cause motion sickness! (And even personally, I have friends who get motion sick from it.) It's obviously better than "smooth turning", but just changing the direction can be disorienting. There's really no replacement for 360 degree tracking.

I also got a Quest 2 and am amazed by it.

I loathe Facebook, and use their products only when absolutely necessary.

But after reading a comment on HN about value the Quest 2 delivers for exercise, I decided to give it a go. I had and used the Oculus DK1 but had done zero VR since.

> I think people are really underestimating how much impact these technologies are going to have.

Unquestionably. People are totally underestimating VR/AR.

> I just hope someone can compete with FB.

I think FB will be competing with Snap, Samsung/Microsoft and others for the Android market.

If you use the Oculus in a room with Siri enabled (via homepod / smarthome stuff like fans / lights) it becomes obvious the experience must stretch beyond the headset.

Facebook has neither the privacy track record nor smarthome footprint needed to support this. Though Oculus will have existed first, and FB may get an improved headset to market out in the meantime, Apple will create the market expectations for VR/AR

There was never any moment where the iPhone was a fart app novelty. It was immediately and obviously wildly better and more useful than every phone than came before it.

You may have had more vision than others, because I definitely remember the fart app and the tip-to-pour-a-beer-app and people just kind of laughing at them. I'm not saying that stage lasted a long time, but that was what I saw of it in the very early days.

I have multiple Quests, and got Vive a while back too. VR is always amazing at first but it hasn’t had a lasting use case for most people I own that own it.

Furthermore, Apple is really well positioned for AR, which may be more adoptable than full on VR. iPhones already have had pretty good AR capabilities built in and Apple has really just been developing the technology probably to ultimately integrate it into the rumored headset.

> VR is always amazing at first but it hasn’t had a lasting use case for most people I own that own it.

Fair, but I was meaning more of what's coming down the pipeline. Five to ten years of Meta money committed to the "metaverse" - the might address some of those issues ("no-one else is on it" probably being one of them)

> Furthermore, Apple is really well positioned for AR, which may be more adoptable than full on VR

Maybe? No-one's seen their rumoured device. Meta's way ahead in terms of actual adoption today (even if it's VR and not AR). I hope Apple does something awesome, but it remains to be seen. And it's hard to imagine the Oculus team at Meta couldn't do AR if they were asked to.

I can’t see how they will make comfortable and safe, 3ds can’t be used by children!

> For me, that Reality Labs is the division beating estimates drives home that Meta's bet on XR is going to pay.

> they are going to control the platform of the future and set their own rules.

This.

Lots of people are overlooking this part of Meta and they are quite far ahead with XR.

Old people

That

It's interesting that we are all waiting for the other shoe to drop in that Apple is forever "about to" release it's XR devices. Yet so far it hasn't happened. Apple is famous for waiting until quality hits a certain mark, but nonetheless, it tells me that what Oculus/Meta has achieved is more special than people think. This stuff is hard. It looks simple on the surface but watch any of John Carmack's talks and see how much complexity there is underlying it all.

I do think Meta is completely wasting its time with it's current approach of trying to re-invent Facebook inside the Metaverse. Hopefully they get past that sooner rather than later. But I have no doubt this is going to be an extremely important platform in the future and other than Apple if they ever show up, it's very hard to see anybody catching Meta.

It's beating the estimate by less than $20 million, or about 7 %, at a level where it's a rounding error anyway.

Google says Apple AirPods are responsible for $23 billion in revenue, or 23x Reality Labs. It's running laps around Meta, in reality.

Headphones are a well established market with pretty much no growth upside. Apple captures share from incumbents. RL is building out an entirely new market.

I'm having a hard time tracking down what kind of growth that revenue represents.

it's going to take a lot of marketing to get people to accept VR in large numbers, too much dystopian sci-fi that instantly makes people not interested. When I look at those headsets I instantly think some combination of The Matrix and Brave New World.

But maybe Zuck knows about some forthcoming propaganda campaign to focus on getting people to use VR to distract from income inequality, putting the majority of the population into the digital world seems like the best way to distract from real world issues

I think it's more the cost and awkwardness of the headsets and the lack of any "killer" apps that are holding VR back, moreso than dystopian sci-fi.

Well it's interesting having teenage kids.

Because while the adults are all busy pooh-poohing it, this tech is rapidly penetrating in that market. Which is to say, something like 80% of my kids friends have access to / use VR routinely. And it's 100% Oculus/Meta.

I have no doubt that kids (and the young at heart) are having a ball playing VR games, but the real question is whether there's compelling use cases outside of that, of the sort that Meta is constantly trying to highlight. Meta is banking that there is.

So far I haven't seen a compelling mass market use case outside of games (which is a relatively niche market), but if you open up development tools well I suppose the hope is that someone will come up with something.

> whether there's compelling use cases outside of that

Indeed, this is the billion dollar question. It's very clear there are compelling use cases but the really obvious ones are niche industrial uses, commercial applications etc. So the real question is compelling mass market use cases.

The two mass market ones that are apparent at the moment are fitness and virtual office spaces. Fitness is already well on the way, virtual office use is still tenuous and really needs hardware improvements to get off the ground. Those improvements look likely in the next generation of hardware so it's going to be an interesting 24 months to see whether it takes off or not.

The elephant in the room, as you point out, is that neither of these match Faceook's supposed aspiration to create a Metaverse. So I see Facebook/Meta's ultimate success here being dictated heavily by how fast they can get over that and target the real mass market use cases as their primary focus.

Live entertainment will be a massive market for VR once camera, AI, and VR tech gets there.

This is what FB did during one the Nets games.

https://www.youtube.com/watch?v=pq4JMWcnUCw

Just look at the comment and you tell people are interested, If they can improve the quality on this. This will be a huge for sports fans, especially fans in different countries/states that can't go to the games.

Now expand this across music events and other events. You have a massive TAM.

The Quest 2 sales numbers are in the ballpark of the new consoles.

Do you feel the same way about headphones? I think headsets are basically headphones for eyes. I can listen to low fidelity 2d sound from my laptop speaker, or I can put on headphones, noise-cancellation and immerse myself in 3d audio. I think eventually we'll come to see vr headsets as essentially the same

That entire segment makes two orders of magnitude less revenue than Meta's core business, so I'd still not consider a marginal beating of expectations to be too informative.

> Revenue $27.91 billion, beating estimate $28.24 billion

Is that a mistake? How does getting less than the estimate constitute beating it?

Agree, I think parent meant to write "missing" there?

>>> Reality Labs revenue $695 million, beating estimate $677.1 million

On $3B loss. Insane R&D spend for CV ;)

Can one really trust any of the reported user numbers?

I imagine they can decide to dial down efforts to detect bots/fake profiles and more or less hit the numbers they want.

Unlike search ads, businesses buying fb/insta ads care a lot about attribution (at what rate does someone who saw the ad buy something).

If ads aren’t effective businesses will stop buying them.

Fake clicks will always result in a no-purchase, and therefore would devalue FB’s offering in the #1 metric ad buyers care about.

Not to mention that would be fraudulent behavior and they’d be opening themselves up to huge litigation risk.

I'm not necessarily talking about bots clicking ads, could just be fake profiles for whatever reason: inflating the number of likes of a page, writing reviews, phishing attempts, propaganda etc

Let's say FB has 200 million bots. Do you think businesses could tell that there's actually 1.7b users and not 1.9b?

As someone who had bought ads there, I can tell you this is not as true as you think. You pay for the ad and the business picks up a bit, but the reported conversion numbers at least for me never made sense. It's really about making more money than you put in that you keep it going. Now given the ethics around Facebook, I don't do it anymore. I say it's all about CPC, I admit here it isn't.

Not sure I follow - isn't making more money than you put in a direct result of a high conversion rate?

But I'm curious to learn what you mean! I have no direct ad purchasing experience

Far bigger problem is that DAU and MAU are a vague metric and don’t reflect the amount of time on the site, click through rates, advertiser interest etc.

For a crude yardstick during a growth phase, sure. For measuring the long term health of a mature business, nope.

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