The commercialization of AR glasses continues to face significant challenges. Recently, industry leader XREAL submitted its listing application to the Hong Kong Stock Exchange, revealing the current state of the sector—AR glasses remain in a pioneering phase, characterized by high research and development costs, low market penetration, and persistent company losses.
From 2023 to 2025, XREAL accumulated losses exceeding 2 billion yuan. However, with annual reductions in losses and steady growth in gross profit margin, the company may have passed its most difficult period.
As the first pure-play AR glasses company globally to seek a public listing, XREAL's move towards a Hong Kong IPO aims to open a larger financing window and leverage its technological and market advantages to narrate a new growth story in the global AR glasses arena.
XREAL was founded in 2017 by Xu Chi and others, focusing on AR glasses as its core product. At that time, AR glasses were a nascent category in the wearable device market. After nearly a decade of development, smart glasses have become a hot segment in consumer electronics, and the company has risen to a leading position in this field.
The submission of XREAL's prospectus to the exchange offers an external glimpse into the challenging journey of commercializing AR glasses from concept to reality. According to the prospectus, the company's revenues for 2023 to 2025 were approximately 390 million yuan, 394 million yuan, and 516 million yuan, respectively. Net losses attributable to owners were about 882 million yuan, 709 million yuan, and 456 million yuan, while adjusted net losses were approximately 437 million yuan, 375 million yuan, and 250 million yuan.
XREAL continues to operate at a loss, betting on the future of the smart glasses market. Data from iResearch indicates that the global smart glasses market was valued at around 2.3 billion U.S. dollars in 2025 and is projected to grow to approximately 24 billion U.S. dollars by 2030. AR glasses, which combine everyday wearability with immersive digital display capabilities, are expected to be a primary growth driver.
XREAL has solidified its position as the market leader, ranking first in the global AR glasses market for four consecutive years from 2022 to 2025, holding a 27% market share in 2025. The company focuses significantly on overseas markets, with international revenues for 2023 to 2025 amounting to approximately 255 million yuan, 260 million yuan, and 366 million yuan, accounting for 65.3%, 65.9%, and 71.0% of total revenue, respectively. The U.S. market contributes over half of this income.
Over the past decade, companies like Google, Meta, and Ray-Ban have driven two major waves in the smart glasses industry, positioning AR glasses as a key trend. XREAL has consistently attracted capital interest. Since its inception, the company has completed 12 funding rounds, raising a total of about 2.3 billion yuan. Prominent institutions and industrial investors, including Alibaba, Yunfeng Capital, Sequoia Capital China, and Hillhouse Capital, have participated. Fashion eyewear brand Gentle Monster and consumer electronics manufacturing giant Luxshare Precision also invested ahead of XREAL's capital market plans.
Due to the dual demands of technological R&D and market expansion, the AR glasses industry remains in a heavy investment phase. XREAL is no exception, with relatively weak self-sustaining capability. From 2023 to 2025, its cash and cash equivalents were approximately 181 million yuan, 205 million yuan, and 64 million yuan, primarily relying on financing to support daily operations. Net current liabilities during the reporting periods were about 1.932 billion yuan, 2.562 billion yuan, and 3.084 billion yuan, further increasing to 3.254 billion yuan as of February 28, 2026.
XREAL's primary revenue comes from sales of AR glasses hardware. From 2023 to 2025, hardware sales were approximately 303 million yuan, 308 million yuan, and 403 million yuan, consistently representing over 70% of total revenue. The Air series, targeting the mass consumer market, constitutes the bulk of the hardware business. Sales volumes for the Air series were 134,074 units, 103,991 units, and 17,403 units in 2023, 2024, and 2025, respectively, with average selling prices of 2,151 yuan, 2,325 yuan, and 1,656 yuan per unit.
The Air series boasts broad application scenarios, including immersive video viewing, console gaming, mobile office work, and offers a wearing experience close to regular glasses, with connectivity to smartphones, PCs, and game consoles. Building on the Air series' market foundation, the company enhanced product performance and interactivity in 2024 by launching the One series, priced slightly higher. From 2024 to 2025, the average selling price for the One series increased from 2,709 yuan to 3,196 yuan per unit, while sales volume surged from 13,512 units to 111,355 units, achieving growth in both volume and price.
Optimization and upgrades in the product mix have improved XREAL's profitability. According to the prospectus, the gross profit from AR glasses sales rose from 54 million yuan in 2023 to 67 million yuan in 2025, with the gross margin increasing from 19.3% to 21.8%.
Beyond these two main series, the company introduced the Light-Ultra-Aura product line targeting the ultra-high-end market, offering greater technological potential. This line features front-facing cameras and environmental sensors for intelligent perception of surroundings. During the reporting periods, the average selling price per unit for this product was 4,515 yuan, 4,014 yuan, and 3,665 yuan, with sales of 3,165 units, 7,368 units, and 4,973 units, respectively.
Currently, the core user base for AR glasses is largely limited to groups like gamers. Although there is strong consumer demand for AR products that combine immersive entertainment with portability, the industry requires a lengthy cultivation period before achieving explosive growth akin to smartphones.
From a hardware perspective, current AR glasses products on the market still have significant room for improvement in key areas such as battery life, device weight, and display quality, necessitating continued heavy investment in R&D. XREAL disclosed that from 2023 to 2025, its R&D expenditures were approximately 216 million yuan, 204 million yuan, and 183 million yuan, accounting for 55.3%, 51.8%, and 35.5% of total revenue, respectively. Future financing will focus on core technologies like optics and chips.
By the end of 2025, the company held 481 patents, with invention patents exceeding 50%. Core technologies include its self-developed X-Prism optical engine, customized edge-side co-processors, advanced algorithms, and a proprietary operating system. The core team members hail from top institutions like Zhejiang University, with several having held key R&D roles at leading global tech companies such as Magic Leap and Apple, and an average age around 40.
As a technology-driven enterprise deeply entrenched in the AR field, XREAL stands on the cusp of industry maturation. Google has become a key technical ally for its next-generation products, with joint development focused on lightweight optical technology and AI interaction to strengthen the company's leadership in Android-based AR devices. According to the prospectus, the two are co-developing the next-generation AR product, Project Aura, emphasizing lightweight design, cinema-grade experiences, and AI integration. This flagship product is slated for launch in 2026 and is expected to be crucial for penetrating the high-end market and achieving technological commercialization.
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