XREAL Challenges Hong Kong Stock Exchange to Lead the Global AR Glasses "First Stock"

Ask AI · How does XREAL achieve four consecutive global AR sales championships despite high losses?

XREAL breaks into the Hong Kong Stock Exchange, aiming to become the “First Stock” in global AR glasses

Reporter Qin Xiao from China Economic Journal, Beijing

On April 1, with the title “Global AR Glasses Sales Revenue Champion for 2022–2025,” XREAL (formerly Nreal) officially submitted its prospectus to the Hong Kong Stock Exchange, striving to become the world’s first AR glasses stock. The company’s revenue steadily grows, gross profit margin continues to rise, and its global layout leads the industry, but it has accumulated a total loss of 2.05B yuan over three years, with negative cash flow from operating activities, and faces liquidity pressure, as well as disputes over technological barriers, weak domestic markets, patent litigation risks, and full encirclement by tech giants. Industry insiders see this IPO more as a “lifesaving listing,” and a critical “exam” for Chinese AR hardware technology companies on the global stage.

However, XREAL stated in an interview with China Business Journal: “Our IPO application is based on a strategic proactive move to accelerate globalization and integrate top industry resources, rather than a ‘desperate act’ to solve survival problems.”

“Four-time Champion” Can’t Hide 2 Billion Loss

Founded in 2017 by Xu Chi, XREAL focuses on R&D, design, manufacturing, and sales of consumer-grade AR glasses, and is one of the earliest companies worldwide to achieve commercial mass production of AR glasses.

In terms of technology and products, XREAL has built a core moat of “self-developed optical machines + self-developed chips,” with its Air series and One series products widely recognized by global consumers. Facing market opportunities in 2026, XREAL announced a full product line matrix blueprint, including the popularization-type glasses “Project Helen” for the mass market, the professional esports glasses “R1” in cooperation with top esports brand ROG (Republic of Gamers), and the next-generation flagship XR product “Project Aura,” jointly developed with Google, with deep integration of spatial computing and multimodal AI capabilities.

According to iResearch, from 2022 to 2025, XREAL ranked first in global AR glasses sales for four consecutive years; by 2025, in the overall smart glasses market including AR glasses and non-display smart glasses, XREAL ranked second globally and first in China, leading the global AR track with a 27% market share.

Such impressive results are reflected in financial data, showing a trend of “increasing revenue, reducing losses, and improving gross margin.” From 2023 to 2025, XREAL’s revenue was 390 million yuan, 394 million yuan, and 516 million yuan respectively, with a 30.8% year-on-year growth rate in 2025, significantly accelerating growth. Gross profit margin increased from 18.8% in 2023 to 22.1% in 2024, further rising to 35.2% in 2025.

However, capital markets do not believe in industry stories and growth concepts alone; profitability and financial security are the core benchmarks. Behind the growth halo, ongoing losses, cash flow depletion, and high debt levels remain the “Damocles sword” hanging over XREAL.

First is persistent massive losses. From 2023 to 2025, XREAL’s three-year cumulative loss reached 2.05B yuan. Even after excluding non-cash items such as fair value changes of preferred shares and share-based payments, adjusted net loss still reached 1.06B yuan, indicating that core profitability has yet to be established. The prospectus clearly states that the company has incurred operating losses and net losses during the historical period, and may not achieve or maintain profitability in the future.

Even excluding non-cash items, XREAL’s main business remains unprofitable. In 2025, adjusted net loss was 250 million yuan, accounting for 48.4% of revenue; although operating expenses as a percentage of income decreased from 137.6% in 2023 to 82.7% in 2025, they still far exceed revenue, indicating that the “burn money for growth” model has not fundamentally changed.

Second is short-term liquidity risk. From 2023 to 2025, the net cash flow from operating activities was continuously negative, with net outflows of 472 million yuan, 174 million yuan, and 204 million yuan respectively.

In response, XREAL told reporters: “The trend of narrowing net losses in 2025 is very clear. We achieved a 35.2% audited gross margin in 2025, which is leading in the AR hardware industry, demonstrating the company’s strong brand influence and marginal contribution ability. Currently, our operating cash flow is negative mainly because we are making strategic high investments in spatial computing algorithms and self-developed core components (such as optical machines and chips). As our brand influence continues to grow, leading to optimized marketing expense ratios (which have fallen from 54.9% to 25.4%), and with the scale effects brought by the full product matrix in 2026, the company’s operating leverage will further manifest. We are at a critical point transitioning from ‘investment phase’ to ‘harvesting phase,’ and the path to breakeven is not only clear but also accelerating.”

Zhang Xiaorong, director of the Deep Research Institute, believes that current funds cannot cover the company’s huge short-term debts and ongoing expenses, posing certain short-term liquidity risks. The IPO fundraising is crucial for its “survival.” In the Hong Kong stock market, hardware tech companies that have not yet achieved full profitability are typical “bleeding listings.”

Angel investor and AI expert Guo Tao said that although XREAL’s cash on hand exceeds 3.08B yuan, seemingly enough for short-term operational needs, considering the high R&D investment, long production cycles typical of the AR industry, and the net current liabilities of 3.084 billion yuan, the company’s short-term debt repayment pressure is already very prominent. If this IPO does not meet expectations, it could directly lead to insufficient cash flow, delayed payments to suppliers, interruption of R&D projects, and other chain reactions; under ongoing losses, refinancing channels such as borrowing may tighten, and liquidity risks will significantly increase as the fundraising gap widens.

Encirclement by Giants

If internal financial risks are hidden dangers, then the worsening external competitive environment is a major challenge XREAL must face. Today’s AR glasses market is no longer a blue ocean for startups but a red sea heavily contested by tech giants, and XREAL finds itself under attack from both sides.

Globally, Apple, Meta, Microsoft, and other tech giants are deploying with billions in funding, full industry chain ecosystems, and massive user bases. Apple Vision Pro, though expensive, redefines spatial computing products, aiming to capture the high-end market; Meta leverages its social ecosystem and hardware scale to target cost-effective products for mass markets; Microsoft focuses on enterprise markets, building a commercial ecosystem.

Domestically, Huawei, Xiaomi, OPPO, and Leishen are all making aggressive moves, relying on local channel advantages, mobile ecosystem synergy, and price wars to rapidly gain market share.

XREAL believes: “The entry of giants proves the correctness of the AR glasses track. As a startup focused on AR glasses, our core competitiveness lies in long-term investment leading to technological superiority and product agility. Through product innovation and experience innovation, we ensure our competitive edge. Giants are working on full-ecosystem adaptation, while we pursue the ultimate breakthrough in AR experience. Our deep cooperation with Google on AndroidXR and cross-industry collaborations with ROG in gaming demonstrate that XREAL is an indispensable hardware expert within the global giants’ ecosystems. By self-developing chips and optical machines, we compete at the bottom layer in cost and performance, while leveraging the rapid iteration advantage of startups to stay half-generation to one-generation ahead in user experience.”

Guo Tao said that with Apple, Meta, Huawei, Xiaomi, and others fully entering, the AR glasses market has entered a “giant-killing” era, where “winner takes all” will be the final outcome. Giants, with their ecosystems, capital, and channels, will quickly complete market education and technological iteration, severely squeezing the survival space of small and medium brands. The future industry pattern will be highly concentrated, with only 3–5 main players remaining; among them, 1–2 ecosystem giants will monopolize the mass market, while 3–5 technically specialized companies will survive in vertical fields (such as industrial and medical), relying on differentiation barriers. The rest of the small players will face acquisition or elimination.

More severely, the timing of AR industry explosion remains uncertain. Although XREAL predicts a 130% surge in AR glasses sales by 2030 in its prospectus, current penetration rates are still very low, consumer acceptance is limited, wearing experience needs optimization, and essential use scenarios are lacking, making the industry’s breakout time uncertain.

Zhang Xiaorong believes that AR glasses are currently difficult to popularize on a large scale, and the market will not be entirely “winner takes all,” but players bleeding too much will gradually exit, leading to increased market concentration. In the future, fewer than three independent brands may survive.

"We judge that AR glasses are entering a 'dual-drive