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Meta announced Q1 earnings last week, including $56.3 billion in revenue, up 33 percent year-over-year. Revenue performance continues to be driven by AI-fueled ad targeting. This is a powerful revenue driver but also a costly one, given escalating CapEx spending.
Resting under those high-level Q1 results, Meta Reality Labs’ (MRL) revenue was $402 million. This was down 3.5 percent year-over-year, and 58 percent quarter-over-quarter. The former is the more apples-to-apples metric, considering cyclical patterns in a given year (e.g., holidays).
Strong MRL growth was driven by Ray-Ban Meta Smartglasses (RMS), which tripled in year-over-year sales for full-year 2025 as noted in the previous earnings call. The now-familiar earnings narrative is that AI smart glasses are the growth engine, while VR headset sales slow or decline.
There’s much to say about all these dynamics (more in a bit). But our main question 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’s top-line revenue was $402 million in Q1, as noted. As done in the past, we can use this 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 estimates below. In this hardware-centric exercise, we’ll focus on the last six bullets, which account for 90 percent of MRL revenue.
- VR software (game & app sales): 9 percent*
- First-party accessories (head straps, etc): 1 percent
- Quest 3: 16 percent
- Quest 3s: 14 percent
- Meta Ray-Ban Display Glasses: 4 percent
- Ray-Ban Meta Smart Glasses: 45 percent
- Oakley Vanguard: 5 percent
- Oakley HSTN: 6 Percent
(percentages apply to revenue shares in dollars, not units)
*This figure represents the Oculus Store’s gross revenue, before developer payouts when applicable, which are usually 70 percent after taxes.
Per-Device Unit Sales
Quest 3
Based on the above revenue shares, Quest 3’s estimated quarterly revenue was $64.3 million. Considering an average unit price of $499, Meta sold an estimated 128,898 units during the quarter.
Quest 3s
Based on the above revenue shares, Quest 3s’ estimated quarterly revenue was $56.3 million. Considering an average unit price of $329, Meta sold an estimated 171,064 units during the quarter.
Meta Ray-Ban Display Glasses (MRD)
Based on the above revenue shares, MRD estimated quarterly revenue was $16.1 million. Considering an average unit price of $799 (and a revenue split with EssilorLuxottica), an estimated 26,845 units were sold during the quarter.
Ray-Ban Meta Smart Glasses (RMS)
Based on the above revenue shares, RMS estimated quarterly revenue was $181 million. Considering an average unit price of $329 (and a revenue split with EssilorLuxottica), an estimated 1,096,364 units were sold during the quarter.
Oakley Vanguard
Based on the above revenue shares, Vanguard’s estimated quarterly revenue was $20.1 million. Considering an average unit price of $499 (and a revenue split with EssilorLuxottica), an estimated 80,400 units were sold during the quarter.
Oakley HSTN
Based on the above revenue shares, HSTN’s estimated quarterly revenue was $24.1 million. Considering an average unit price of $429 (and a revenue split with EssilorLuxottica), an estimated 112,186 units were sold during the quarter.
Grand Total
Adding up all devices, we get an estimated 1,615,756 units sold in Q1. That consists of 1,315,794 smart glasses and 299,962 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.
Expensive Endeavors
Stepping back, smart glasses are growing rapidly, but offset to a degree by declines (or flat growth in some quarters) for VR. That offset is impactful due to price tags: Unit sales fluctuations in VR headsets have a greater revenue impact than AI glasses due to their price tags.
Altogether, the headline is that AI glasses are the growth engine. Meta will continue to internalize these demand signals and course-correct its road map accordingly. Today, that means non-display AI glasses (RMS) and, to a lesser extent, flat-AR display glasses (MRD).
This is Meta’s message to the market as MRL endures massive losses. The division remains massively in the red with about $4.03 billion in Q1 losses. But due to Meta’s recent MRL cuts and shifting priorities towards building an AI stack, it projects MRL expenses to decline this year.
Wall Street seems to like that narrative, as Meta shifts spending to massive CapEx requirements for AI infrastructure. Though there’s some skepticism on the street for such high CapEx among tech giants, there’s defensibility in owning the AI stack (Meta) versus outsourcing it (Apple).
Mark Zuckerberg learned this lesson the hard way throughout the smartphone era. By not owning or controlling the user touchpoint – ceding positioning to Apple and Google – Facebook suffered. MRL was created to own the XR stack, and the same approach is now in play for AI.
The bad news is that applying a full-stack development approach to two major product areas is costly. So MRL will continue to get budget pulled away for AI investment. But the good news is that headsets and wearables could play a role as the hardware layer of that full-stack AI puzzle.