Targeting the "World's First Smart Glasses Stock," XREAL Rushes for Hong Kong Stocks

Ask AI · Can XREAL’s Hong Kong Stock Listing Break Through the Profitability Challenges of AR Glasses?

XREAL has ranked first in the global AR glasses market for four consecutive years, but remains in a loss-making state, with a total loss of over 2 billion yuan in three years. Due to high R&D costs and expensive core components, when XREAL will emerge from the “money-burning cultivation period” remains uncertain.

In the past year, the smart glasses industry has bid farewell to “niche early adopters,” with market size and penetration rates both breaking through. Since the beginning of the year, signals such as “national subsidies” and integrated eSIMs have been continuously released, accelerating the transition of smart glasses—viewed as “the next-generation super terminal”—to the forefront.

Now, the capital market may welcome the “world’s first smart glasses stock”—recently, AR (augmented reality) glasses leader XREAL officially submitted its IPO prospectus to the Hong Kong Stock Exchange, with China International Capital Corporation and Citigroup serving as joint sponsors.

The prospectus shows that from 2022 to 2025, XREAL will rank first in the global AR glasses market for four consecutive years, with a market share exceeding 27% in 2025. The One series, with an average selling price of over 3,000 yuan, sold 110k units, becoming the absolute main product.

On the revenue side, in 2025, XREAL’s revenue reached 516 million yuan, a 30.8% increase year-over-year, with gross profit margin doubling to 35.2%.

However, behind these impressive figures remains the unavoidable reality of losses—despite maintaining the top position in the AR track, XREAL continues to lose money, with a cumulative loss of over 2 billion yuan over three years.

Revenue Growth, Continued Losses

XREAL is one of the earliest domestic startups in the AR glasses field, founded in 2017, headquartered in Beijing. The three main founders—Xu Chi, Xiao Bing, and Wu Kejian—are all alumni of Zhejiang University.

The company’s core business involves designing, developing, manufacturing, and selling AR glasses under its own brand, as well as providing related products and services. Currently, XREAL’s product lines can be categorized into three series: Air, One, and Light-Ultra-Aura, covering different price points, user needs, and product functions, ranging from entry-level spatial display products to next-generation spatial computing devices.

The prospectus indicates that since its establishment in 2017, XREAL has completed several rounds of financing. Key investors include Alibaba, Kuaishou, iQiyi, Luxshare Precision, NIO Capital, Pudong Venture Capital, and Sequoia Capital. After Series A and B funding, the company’s valuation reached $833 million.

In terms of shareholder structure, XREAL exhibits a “founder-controlled + well-known institutional shareholding” pattern. Founder Xu Chi holds approximately 27.98% of voting rights; major institutional shareholders include Taobao China Holdings (Alibaba) with 6.68%, Cosmic Blue (Kuaishou) with 6.66%, and Sequoia Capital (Lei Jun) with 4.33%.

As a leading enterprise in the smart glasses industry, XREAL cites data from iiMedia Research, stating that from 2022 to 2025, the company ranked first globally in AR glasses sales revenue for four consecutive years. In 2025, the top five brands in global AR glasses will account for 80.3% of sales, with XREAL leading at 27.0%; in terms of units sold, XREAL also leads with a 24.8% market share, with the top five companies holding 83.3% combined.

Specifically, from 2023 to 2025, XREAL’s sales were 137.2k, 124.9k, and 133.7k units respectively, with overall scale slowing down or slightly declining. However, on the revenue side, total income jumped from 390 million yuan to 516 million yuan; gross profit increased from 73.32 million to 181 million yuan; gross profit margin rose from 18.8% in 2023 to 22.1% in 2024, further climbing to 35.2% in 2025.

Breaking down the revenue, this contrast mainly results from product structure optimization. Over the past year, the mid-to-high-end One series, with an average price of 3,196 yuan, has become a core pillar. This series is nearly twice as expensive as the entry-level Air series, with shipments soaring eightfold to 111.4k units, contributing over 80% of sales.

However, the issue of losses remains an unavoidable “hard injury” for XREAL.

From 2023 to 2025, XREAL’s losses were 882 million, 709 million, and 456 million yuan respectively, totaling over 2 billion yuan in three years.

In the IPO prospectus, XREAL explains that its losses are mainly due to three reasons: first, non-cash fair value changes of preferred shares, warrants, and convertible notes; second, R&D expenses; third, sales and distribution expenses related to global marketing and channel development for AR glasses.

When Will the “Money-Burning Cultivation Period” End?

In fact, to narrow the loss gap, XREAL has been making efforts to “save money” over the past three years.

The prospectus discloses that R&D expenses from 2023 to 2025 were 216 million, 204 million, and 183 million yuan respectively; operating expense ratios—including sales, distribution, administrative, and R&D expenses—decreased from 137.6% in 2023 to 82.7% in 2025.

But it cannot be ignored that, as a hardware company driven by underlying technology, XREAL still needs continuous cash flow “transfusion” to support high R&D costs and market expansion.

According to the prospectus, nearly all of XREAL’s financing has been invested in optical, chip, and other smart manufacturing segments, such as the 54.44 million USD raised from Series A+ to B rounds, mainly used for self-developed 3D interaction system NebulaOS and self-built AR optical module manufacturing plants; the nearly 120 million USD from Series C+ to D rounds is also partly allocated to self-developed chips, including the X1 side-side co-processor.

Additionally, the BOM costs of AR glasses are also a significant pressure. Public data shows that, according to Bank of America estimates, the BOM cost of a single AI glasses unit is about $150, while a dual-eye AR glasses unit costs between $400 and $1,000—3 to 6 times higher. Meanwhile, core components such as optical waveguides, micro-displays, and smart chips are all high-cost elements that AR glasses cannot do without.

XREAL Booth Ma Yunfei / Photo

XREAL’s push for a Hong Kong listing is undoubtedly a milestone for the development of the smart glasses and AR industry, marking this emerging track’s official entry into the spotlight of capital markets. For a long time, smart glasses have been regarded as one of the most promising hot tracks, seen by many companies as the core carrier for “all-day wear and partial scene replacement of smartphones,” potentially becoming the next-generation smart terminal.

As a relatively certain track, the smart glasses industry has formed a preliminary layered competitive landscape after fierce competition over the past year: overseas, Meta leads the global consumer market with its Ray-Ban collaboration; domestically, companies like Thunder Bird, Rokid, XREAL, and Yingmu are deepening their presence in niche scenarios such as AR viewing, fitness, and medical assistance, building professional barriers.

Meanwhile, cross-industry players like Xiaomi, Baidu, and Alibaba are accelerating their entry, relying on content ecosystems, brand channels, or internet traffic advantages to reshape the competitive landscape from different dimensions.

With technological progress, supply chain improvements, and commercialization acceleration, the market generally believes that a scale-up inflection point is imminent. IDC predicts global shipments will surpass 110k units, with China’s smart glasses market expected to exceed 137.2k units.

But it is also important to recognize that behind these opportunities, a series of deep-rooted challenges are emerging: how to achieve product differentiation amid a continuously improving supply chain, how to balance multi-function integration with lightweight design for all-day wear, and how to rely on AI technology to truly define AR glasses as independent smart terminals… These issues will continue to influence when AR glasses will reach the true “iPhone moment.”

Now, with XREAL’s IPO prospectus, a deeper layer of challenges surfaces: when will smart glasses finally break free from the cycle of “burning money—raising funds—burning more money,” and what is their profitable path?

Reporter Qin Mingwei

Text Editor Ma Yunfei