Breakout in the "Hundred Mirror Battle": XREAL lists on Hong Kong stocks, AR glasses face the "profitability litmus test"

Ask AI · How to Test the Commercial Viability of AR Glasses When XREAL Goes Public?

This image suspected to be AI-generated Author | Huang Yu

After a long period of underlying technology exploration and market enthusiasm, the smart glasses sector finally welcomes a “touchstone” to test its commercial viability.

On April 1st, leading AR glasses manufacturer XREAL (XREAL Ltd.) officially submitted its listing application to the Main Board of the Hong Kong Stock Exchange, with China International Capital Corporation and Citigroup serving as joint sponsors.

This is not only a performance report from this top AR glasses company but also a landmark moment marking the transition of the entire smart glasses industry from “concept hype” to “business closed-loop.”

If successful, XREAL may become the “world’s first stock in smart glasses.”

XREAL founder and CEO Xu Chi posted on social media that, in its tenth year, XREAL is entering a new beginning.

Founded in 2017, XREAL’s product lines can be summarized into three main series: the Air series, the One series, and the Light-Ultra-Aura product line, covering different price ranges, user needs, and product functions, from entry-level spatial display devices to next-generation spatial computing products.

The core concern of the capital market is the scale of product sales and the ability to generate revenue.

According to the data disclosed in XREAL’s prospectus, the company has demonstrated relatively stable growth over the past three years.

In 2023, 2024, and 2025, XREAL’s total revenue is projected to be 390 million yuan, 394 million yuan, and 516 million yuan respectively, with a year-over-year growth rate of 30.8% in 2025.

From a market structure perspective, in 2025, 71% of XREAL’s revenue will come from overseas, with the US and Japan being its core revenue sources, contributing 36.9% and 14.6% of total revenue respectively. Currently, its sales network covers 40 countries and regions worldwide.

In terms of shipment volume, XREAL has also achieved continuous growth.

Based on the prospectus estimates, from 2023 to 2025, the total sales of smart glasses under XREAL will amount to approximately 400k units.

According to iResearch data, XREAL’s global AR glasses revenue market share in 2025 is 27.0%, with a sales volume market share of 24.8%, ranking first in both metrics. Additionally, IDC data shows that XREAL has ranked first in global AR glasses market sales for four consecutive years.

In the prospectus, XREAL emphasizes its “full-stack” technological layout, including self-developed X-Prism optical engine, a dedicated edge-side co-processor (X1 chip) designed for AR glasses, and NebulaOS operating system. This vertical integration from underlying chips, optical modules to system software is a key strategy to build technological barriers amid fierce hardware competition.

In consumer electronics hardware, gross margin is a key indicator of a company’s supply chain management capability and product premium ability.

Data shows that XREAL’s gross margin increased slightly from 18.8% in 2023 to 22.1% in 2024, and then significantly rose to 35.2% in 2025.

This improvement reflects that, over the past year, as shipment volume increased, scale effects began to manifest in manufacturing costs. Meanwhile, the launch of high-value-added products and the ramp-up of self-owned production capacity also supported gross margin optimization.

However, in absolute profit terms, XREAL is still operating at a net loss.

From 2023 to 2025, the net losses are 882 million yuan, 709 million yuan, and 456 million yuan respectively.

Although the losses are narrowing each year and operating expense ratios have decreased from 137.6% in 2023 to 82.7% in 2025, objectively, as a hardware company driven by underlying technology, XREAL still bears high R&D and market expansion costs.

How to maintain technological iteration while further optimizing financial structure and quickly reaching breakeven will be a long-term challenge for management after going public.

It’s worth noting that Google appears as a heavyweight technological partner in this prospectus, supporting XREAL’s next-generation product evolution.

It is reported that XREAL is collaborating deeply with Google on the Android XR platform to jointly develop its next flagship AR product—codenamed “Project Aura.” This product is planned as the highest-tier in XREAL’s future product matrix (Light-Ultra-Aura series), expected to launch in 2026.

Project Aura is said to integrate lightweight design, ultra-wide field of view, cinema-grade immersive experience, and Gemini AI, potentially leading the AR industry into the “Android era.”

Xu Chi holds high expectations for Project Aura’s market debut.

With the boost from Project Aura, Xu Chi revealed to Wall Street Journal’s “Wenxue” last year that XREAL expects to achieve breakeven in 2026.

Driven by the wave of AI large models, the smart glasses sector is on the verge of explosive growth.

XREAL’s decision to list in Hong Kong now is not only a comprehensive test of its business model but also provides an operational and financial sample for external observers to gauge the commercialization process of spatial computing.

Broadening the view to the entire consumer electronics industry, the development logic of personal computing platforms has always revolved around improving interaction efficiency.

From keyboard and mouse interactions in the PC era to multi-touch in the smartphone era, the market generally expects the next-generation computing platform to be built on multimodal AI and spatial computing.

Under this trend, AR glasses with portability and environmental awareness are seen as crucial hardware gateways for the next wave of human-computer interaction.

In recent years, from Meta’s rapid growth of Ray-Ban Meta sales to the heated “hundred glasses battle” domestically, from startups to internet giants and mobile phone manufacturers, almost everyone is talking about AI/AR glasses. The influx of capital has rapidly brought this once-silent industry to the forefront.

However, behind the “hundred glasses battle,” few products can sustain continuous shipments and user retention.

In this context, shipment volume, channel capability, and technological accumulation are becoming the dividing lines, with capital and resources concentrating on a few leading companies.

Li Hongwei, founder and CEO of Thunderbird Innovation, told Wall Street Journal that the current stage of the smart glasses industry is still in its first phase, and the “iPhone moment” has not yet arrived. The core logic of this phase is who has the determination to make the next iPhone and enough resources—including money and talent—to do it quickly. Thunderbird Innovation also plans an IPO but has not yet disclosed a timetable.

Therefore, for XREAL, this Hong Kong listing undoubtedly has strategic defensive and expansion significance.

The smart glasses sector is fundamentally a capital-intensive industry with high trial-and-error costs. As the industry matures, the barriers to competition are rising sharply. The watchful eyes of overseas tech giants and domestic giants on the space all indicate that the final outcome of this race is still far from decided.