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Meta announced Q1 earnings yesterday, including $42.31 billion in revenue, up 16 percent year-over-year. Performance was driven by AI-fueled ad targeting. This was at first a workaround to iOS privacy restrictions, but is now Meta’s biggest revenue accelerant.
Resting under those high-level Q1 results, Meta Reality Labs’ (MRL) revenue was $412 million. This is down 6.4 percent year-over-year, and 62 percent quarter-over-quarter. The former is the more apples-to-apples metric considering cyclical patterns in a given year (read: holidays).
Meanwhile, the year-over-year decline was expected given last year’s Q1, which was the first full quarter of availability for Quest 3. It has since reached a certain degree of saturation, and thus dampened sales. That was offset to some degree in Q1 by Ray-Ban Meta sales.
There’s much to be said about all these dynamics. But our main question today is how Q1 revenue translates to hardware unit sales. This is an exercise we’ve done every quarter for several years (see last quarter), which helps inform broader VR momentum and market sizing.
Reverse Engineering
Diving in, MRL made $412 million in Q1, as noted. As done in the past, we can use this figure to reverse-engineer unit sales. This exercise gets harder every year due to more revenue sources. It’s not just one flagship Quest headset anymore… but several devices in the mix.
To that end, we’ve estimated Meta Reality Labs’ revenue share breakdowns based on several signals we’re tracking. You can see those share estimates below. In this hardware-centric exercise, we’ll focus on the last three bullets, which account for 80 percent of MRL revenue.
- VR software (game & app sales): 18 percent*
- First-party accessories (head straps, etc): 2 percent
- Quest 3: 34 percent
- Quest 3s: 26 percent
- Ray-Ban Meta Smart Glasses: 20 percent
Quest 3
Based on the above revenue shares, Quest 3’s estimated Q1 revenue was $140.1 million. Considering a Q1 average unit price of $499**, Meta sold an estimated 280,721 units during the quarter.
Quest 3s
Based on the above revenue shares, Quest 3s’ estimated Q1 revenue was $107.1 million. Considering a Q1 unit price of $329***, Meta sold an estimated 325,593 units during the quarter.
Ray-Ban Meta Smart Glasses
Based on the above revenue shares, RBMS estimated Q1 revenue was $82.4 million. Considering a Q1 unit price of $329 (and a revenue split with EssilorLuxottica), Meta sold an estimated 499,394 units during the quarter.
Grand Total
Adding up all devices, we get an estimated 1,105,708 units sold in Q1 – or 606,314 if considering just VR headsets.
So there you have it. Of course, much of this exercise is based on the above-estimated revenue shares across Meta Reality Labs’ commercial products. Those share estimates are educated but up for debate: anyone can adjust them and calculate accordingly using the above model.
*This figure represents the Oculus Store’s gross revenue, before developer payouts, which are usually 70 percent after taxes. Meta realizes 100 percent of revenue in some cases, such as first-party titles and releases from VR game studios it has acquired (e.g., Beat Games).
**During Q4, Quest 3’s 128GB base model was discontinued, and the 512GB model was repriced at $499.99 – the single active price for Q1.
***During Q1, Quest 3s’ 128GB base model was $299 while the 256GB model was $399. This averages out to $329 given weighted sales at the lower end.
Storm Clouds
Stepping back, Ray-Ban Meta sales were formidable, but not enough to negate the declines for Quest 3 noted earlier. That’s mostly because of a smaller price tag. In other words, unit sales fluctuations for Ray-Ban Metas have a smaller overall revenue impact than the costlier Quest 3.
But as an additional point of validation for the above unit estimates, they confer a lifetime total of 2.17 million Ray-Ban Metas, when added up with our past quarterly estimates. That figure aligns with the February revelation that the device had sold 2 million lifetime units at that point.
Back to Q1, Quest 3s also deserves some credit. Q1 was its first full quarter in the market, where it entered with an attractive price point and specs. That makes it a cheaper and younger variant of Quest 3 with less market saturation, meaning more headroom to grow into.
Another accelerant sits down the road in Cupertino: Vision Pro. Apple tends to mainstream entire product categories when it enters markets. In Vision Pro’s case, this halo effect boosts mixed-reality demand and could buoy competitive devices with drastically lower price tags.
Quest 3s is at the top of that list, followed by immersive entertainment devices (Vision Pro’s top-marketed use case) such as Xreal One. Put more simply and directly, Vision Pro could have a part in propelling Quest 3 and 3s sales. But in fairness, they’re reputable on their own merits.
Meanwhile, MRL remains massively in the red with a $4.2 billion Q1 loss. And storm clouds lie ahead given that tariffs would surely impact Meta’s hardware supply chain. There’s uncertainty there, which doesn’t help consumer buying appetites either. We’ll have to wait and see.
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