Business Engagement:
My Opportunity with Meta
SWOT analysis & My Strategy
by Steve Wu | GIXD 514 Writing for Interation | ACCD 2025 October 28

Annual Report
Revenue Trends, Projected Risks & Mitigations

First of all, Let's look at Meta's Revenue Annual Report from the last quarter of 2023 to the second quarter of 2025 and search for some trends or projected risks.

Table has been cropped for needed data. Original table from Meta Earnings Presentation Q2 2025

Family of Apps(FOA): Facebook, Instagram, Messenger, WhatsApp, and other services.

Reality Labs(RL): virtual, augmented, and mixed reality related consumer hardware, software, and content. e.g. Meta Quest XR headset

Looking at this report, the income of the FOA is clearly the greatest portion of Meta's revenue. On the other hand, the RL operations(the XR part) is still costing Meta. However, there are a few spikes of RL revenue at the launch of new products.

With that and additional data from the Balance Sheet or the Income Statement. We can see some trends in Meta's revenue:

• Meta's revenue is steadily growing from Q2 2023 to Q2 2025 — about a 48% increase over two years.

  • FOA drove all profits, over 95% of Meta's revenue comes from advertising in FOA.

  • RL operating losses presists since Q2 2023.

• Meanwhile, Meta's research and development investment in AI grew ~39%.

  • Investments including property, equipments, and Infrastructure etc.

  • Income from FOA operations increased more than double with integration of AI.

Looking at this situation from a different perspective, Meta's revenue is heavily depending the advertising in the FOA, and investing RL and AI keeps quite a bit cost. Potential risks are projected through these reports.

• Any downturn in advertising revenues could impact the entire company because of its heavy dependence.

• AI investment is really uncertained. The compatition of the market of AI is intense, results in unperdictable ROI while up-front cost is real high.

• This one concerns me the most. The RL continue losing revenue due to investments. Fund for research and development may drain if consumer don't adopt new products.

What will Meta do facing these challenges? Will the investment in AI bring fortune to Meta? Will XR be discontinued if AI takes too much? Before making any conclusion, let's look at Mark Zuckerberg's promise from 2021.

CEO's Letter to Stakeholders
Mark Zuckerberg's Vision (2021)read the letter

"Building social apps will always be important for us, and there's a lot more to build. But increasingly, it's not all we do. In our DNA, we build technology to bring people together. The metaverse is the next frontier in connecting people, just like social networking was when we got started."
Mark Zuckerberg, Founder's Letter, 2021 | Meta

4 years ago, when everyone is trapped inside because of the pandemic. Mark introduced metaverse, a brand new way of connecting people through technology like AR and VR. It planted the seed of XR industry in Meta and the whole company started to provide energy for it to grow. On October 28, 2021, "Facebook" officially became "Meta".

Mark and his metaverse avatar.

We all know Mark, the founder, chairman and CEO of Meta, potentially a cyborg. His innovate idea drives the direction of Meta and even influenced the entire tech industry. Besides changing the company identity, Mark announced a fundamental change in his letter to shareholders at 2021.

"We just announced that we're making a fundamental change to our company... From now on, we will be metaverse-first, not Facebook-first."
Mark Zuckerberg, Founder's Letter, 2021 | Meta

This change pin pointed the start of Meta's innovation in the XR field. Fast-forward to nowadays, Meta has successfully brought their brand and products into the metaverse with Apps like Horizon Worlds, and headsets like Meta Quests.

On top of that, the research of Meta AI digging for the potential of AI integration in XR, or the development of Orion glasses with more compact technology aiming for seamless XR wearable expereience. All of these operations reflects Meta's dedication to the metaverse is and will continue growing in the future.

"I'm proud of what we've built so far, and I'm excited about what comes next — as we move beyond what's possible today, beyond the constraints of screens, beyond the limits of distance and physics, and towards a future where everyone can be present with each other, create new opportunities and experience new things. It is a future that is beyond any one company and that will be made by all of us."
Mark Zuckerberg, Founder's Letter, 2021 | Meta

Earning Call
Meta's Focus areas & Plan (Q3 2025)read the Earning Call Trascript

"We had another strong quarter with more than 3.4 billion people using at least one of our apps each day -- and strong engagement across the board. Our business continues to perform very well, which enables us to invest heavily in our AI efforts"
Mark Zuckerberg, Second Quarter 2025 Results Conference Call July 30th, 2025 | Meta

The Earning Call between the director/Investor Reltaions Kennetch Dorell, the CEO Mark Zuckerberg and the CFO (Chief financial Officer) Susan Li presented the shareholders and interseted parties an inside perspective of the revenues of Meta.

During the call, Mark pointed out the good progress in advertising AI model development, reflected on AI for ad creative/recommendation that leads to average of ~4% more ad conversions and ~5% longer time spent on Facebook and Instagram. He then emphasized the practical potential and touched on the development of Meta AI and AI deviced, Ray-Ban Meta glasses. Lastly, He metioned the steady growth of the Quest ecosystem community.

Other than data and trends I analyzed in eariler sections. Susan provided more details on the business outlook.

• To keep the growing retension time of the FOA, AI models will be further scaled up to make more adaptive recommendation and accurate content discovery.

• To better meet consumer demand of the Ray-Ban Meta glasses, Meta is working on ramping the supply of the RL products.

• To provide more community engagement for advertisers, opening up more windows for ads feeds and building more powerful AI models to optimize ad production and performance.

The Earning Call reveals that the increasing revenue trend brought by AI supported advertising has influenced Meta's business outlook. The dedicated investment in the AI development does bring a significant profit and will continue to support Meta's advertising revenue for awhile.

A little word from me...

When I finished scanning through the annual report of Meta and Mark's Letter from 4 years ago. I feel that Meta's focus has shifted. Mark's announced Meta to be a "metaverse-first" company, and I'm a little disappointed seeing it becoming an "advertising-first" or "AI-first" company.

But giving it a second look, Meta has never given up metaverse. It's only been 4 years and Meta has already brought us to a state where average user can access and even building metaverse. It's still the most "meta" company in the market.

The advertising provides revenue for Meta to invest in research. The development of AI opens up potential for future integration. XR is not fadded in Meta, but is being prepared to bring the future to us.

The Metaverse Business
Challenges & Path for Growth

When it comes to the XR industry, challenges lies in both hardwares, softwares and services. For hardware, the portability of wearables has always been a big topic, and it will continue to last until a break through in the power supply and computatinal core. For software, the adaptibility for applications that runs within another dimention create a learning curve for both users and developers. For services, in a time where everything can be done on your phone or computer, finding an unique and practical function that only XR can achieve requires quite a bit of research. In terms of business, these challenegs causes obsticles in saling and user adoption.

From the observations on Meta, Ray-Ban Meta (especially Ray-Ban Display) and Orion are live examples to prove that Meta has been investing a lot in research and development of the hardwares. However, there hasn't been any news from the software or service sides. I believe there is a great opportunity to explore these areas.

Meta Horizon Worlds poster

This poster is for one of the most representative application in Meta's VR appstore, Meta Horizon Worlds. It's a social platform where you can explore the virtual worlds as your virtual avatar and meet other people. The virtual worlds are made by Meta or other users, each with various activities builtin for you to try.

It sounds just like what Mark described in his letter, a virtual world for people to connect in a brand new dimention right? Well, a obvious and inescapable truth is that the user have to a Meta Quest in order to access these world. While it's not that expensive for this level of technology, not a lot of people would spending $300 for another social media app. On top of that, although it's connected within Meta's ecosystem, there's not much you can do in Horizon Worlds to interact with other apps.

In summary, the Horizon Worlds has the foundations to introduce people to metaverse experience. However, it needs more content other than just social, features more practical such as ecommerce, virtual conferences or live events can bring users more reasons to join the XR community (This way there is also chance for advertising to step into the XR realm). Another way to expand the community could be opening up access points for the Horizon Worlds, letting users to explore or create worlds on their phones or computers (although it sounds like the opposite direction, but opening up more adaptive portals can help introduce new users, and seeing XR users with their unique features also attracts them to upgrade equipments. "VRChat" is a live example). Lastly, bridging more connection with other FOA products/services, creating a stronger ecosystem for user community to flow between platforms.

My Stradgy
What can I help

With my level of understand of XR software design and development. I'm capable and very motivated to participate in the design/development for new features of Horizon Worlds or other XR applications.

My specialties also lies in phone/website design. I could propose a redesign for the Meta Horizon App (The Horizon account dashboard for managing apps, tools and services on Meta Quest) to make it more than a dashboard but another access point for the Horizon Worlds.

Lastly, a very simple and straight forward way to bridge connections between the Horizon Worlds and other FOA platforms is creating social media campaigns, which I have professional experience of.

A little conclusion...

Although Meta is following the AI trend and XR seems a bit left out lately, but new products like Ray-Ban Display and Orion still excites us Meta fans a lot. Needless to say how much I'm looking forward for a future where XR becomes an essential for human connection. I will always keep an eye out for Meta's update and always willing for a chance to give my contribution to create such a future.