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Facebook's Non-Ads Revenue Growth 'Driven By Continued Strong Quest 2 Sales'

Facebook’s Q1 2021 non-ads revenue was 2.5x that of Q1 2020, continuing a trend that CFO David Wehner described to investors as “driven by continued strong Quest 2 sales”.

The company’s non-advertising revenue in quarter 1 of 2021 was $732 million, up from $297 million in Q1 2020.

Chart denotes era of product sold. Data also includes Portal and revenue from payments in Facebook smartphone apps.

The non-ads revenue category also includes Portal hardware sales and revenue from payments in Facebook smartphone apps. That means it’s not possible to derive unit sales from these figures, but Wehner’s comments suggest Quest 2 is behind the growth.

CEO Mark Zuckerberg told investors:

We’re going to keep investing heavily in building out the best [VR] experience this year, and this accounts for a major part of our overall R&D budget growth.

Quest 2 is doing better than we expected, even after the holiday season. We continue to see good engagement and we keep shipping updates that make it better.

At $299 Quest 2 is priced lower than previous Oculus headsets, with the exception of 2018’s Oculus Go – that headset started at $199 but lacked positional tracking so couldn’t play most VR content.

Compared to the original model, Quest 2 features a significantly upgraded processor, higher resolution screen, and 15% smaller/lighter design. It’s priced $100 less; using cheaper materials, LCD instead of OLED, and a less precise lens adjustment mechanism.

Last month, Facebook’s VP of AR/VR claimed it had already “outsold not just its predecessor, but all of its predecessors combined.

Non-advertising sources make up just 3% of Facebook’s Q1 revenue, with 97% coming from targeted digital advertising.

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