Breakout in the "Hundred Mirror Battle": XREAL files for Hong Kong listing, AR glasses face the "profitability litmus test"

Author | Huang Yu

After a long period of hands-on exploration of underlying technologies and a surge of market hype, the smart glasses sector has finally arrived at a “touchstone” to test its commercial quality.

On April 1, the leading AR glasses manufacturer XREAL (XREAL Ltd.) officially submitted its listing application to the Hong Kong Stock Exchange’s Main Board, with CICC and Citigroup serving as joint sponsors.

This is not only a scorecard delivered by this leading AR glasses company, but also a milestone for the entire smart glasses sector as it moves from “concept hype” to a “commercial closed loop.”

If the company successfully lists, XREAL could become the “first global smart glasses company.”

XREAL founder and CEO Xu Chi posted in his朋友圈, saying that in XREAL’s tenth year, it’s 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 tiers, user needs, and product functions—ranging from entry-level spatial display products to the next-generation spatial computing products.

In capital markets, the most core focus is product sales scale and its “blood-making” capacity.

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

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

From the market structure perspective, in 2025, 71% of XREAL’s revenue came from overseas, with the United States and Japan being its core revenue sources, contributing 36.9% and 14.6% of total revenue, respectively. At present, its sales network covers 40 countries and regions worldwide.

In terms of unit shipments, XREAL has also achieved continued growth.

According to calculations in the prospectus, from 2023 to 2025, the cumulative number of smart glasses sold by XREAL is approximately 400,000 units.

Based on IResearch data, in 2025 XREAL held a 27.0% share of global AR glasses revenue and a 24.8% share of unit sales, ranking first in both metrics. In addition, according to IDC data, XREAL has ranked first globally in AR glasses unit sales for four consecutive years.

In its prospectus, XREAL emphasizes its “full-stack” technological layout, including its independently developed X-Prism optical engine, an end-side coprocessor (X1 chip) designed specifically for AR glasses, and the NebulaOS operating system. This capability for vertical integration—from underlying chips and optical modules to system software—is its main approach to building technical barriers amid intense hardware competition.

In the consumer electronics hardware sector, gross margin is a key metric for measuring a company’s supply-chain management capability and its ability to command product premiums.

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

This improvement reflects that over the past year, as XREAL’s shipment volumes increased, economies of scale began to show up at the manufacturing cost end. At the same time, the launch of higher value-added products and the ramp-up of production capacity at its own manufacturing base have also provided support for optimizing gross margin.

However, in terms of absolute profitability, XREAL is still in a net loss position.

From 2023 to 2025, XREAL’s losses for the period were 882 million yuan, 709 million yuan, and 456 million yuan, respectively.

Although the loss amount has narrowed year by year, and the operating expense ratio has decreased from 137.6% in 2023 to 82.7% in 2025, objectively speaking, as a hardware company driven by underlying technologies, XREAL still needs to bear high R&D expenses and market expansion costs.

How to further optimize its financial structure while maintaining the pace of technological iteration, and to cross the break-even point as soon as possible—these will be long-term issues the management will need to address after listing.

Worth noting is that in this prospectus, Google appears as a heavyweight technical ally of XREAL in its roadmap for next-generation product evolution.

It is understood that XREAL is carrying out deep collaboration with Google on the Android XR platform, and jointly developing its next-generation flagship AR product—code-named “Project Aura.” This product is planned as the highest tier in XREAL’s future product matrix (the Light-Ultra-Aura product line), and is expected to be launched in 2026.

It is understood that Project Aura will integrate lightweight design, an ultra-wide field of view, a cinema-grade immersive experience, and Gemini AI. It is expected to help the AR industry officially enter an “Android moment.”

Xu Chi has very high expectations for how Project Aura will perform after its launch.

With the boost of Project Aura, Xu Chi previously told Wall Street Insights in mid-last year that XREAL expects to achieve break-even in 2026.

Driven by the wave of AI large models, the smart glasses sector is in the period just before a full-fledged explosion.

At a time like this, XREAL’s decision to list in Hong Kong is not only a comprehensive test of its own business model, but also provides the outside world with a concrete financial and operational sample for observing the commercialization progress of the entire spatial computing sector.

If we broaden the perspective to the entire consumer electronics industry, the development logic of personal computing platforms has always revolved around improving interaction efficiency.

From keyboard-and-mouse interaction in the PC era to multi-touch in the smartphone era, it is widely expected that the next-generation computing platform will be built on multimodal AI and spatial computing.

Against this trend, AR glasses—with portability and environmental awareness capabilities—are seen by the industry as an important hardware entry point for enabling the next wave of human-computer interaction.

In recent years, from Meta driving the rapid growth of Ray-Ban Meta sales, to the sudden escalation of China’s “Hundred Glasses Battle,” nearly everyone—from startups to internet giants and phone manufacturers—has been talking about AI/AR glasses. The rapid inflow of capital has quickly lifted this industry, which had once been quiet, onto the fast track.

However, behind the “Hundred Glasses Battle,” there are not many products that can form sustained shipments and user retention.

Against this backdrop, shipment volume, channel capability, and technological accumulation are becoming the dividing line, with capital and resources concentrating toward a small number of leading companies.

Li Hongwei, founder and CEO of Thunder Bird Innovation, told Wall Street Insights that the current development of the smart glasses industry is still in its first stage, and that the iPhone moment has not yet arrived. The core logic of this stage is to see who has the determination to build the next iPhone and has sufficient resources, including money and people—if you can run fast enough, you can make it. Thunder Bird Innovation also has an IPO plan, but currently there is no timetable that can be disclosed to the public.

Therefore, for XREAL, this listing in Hong Kong undoubtedly carries clear strategic defense and expansion significance.

The smart glasses sector is, in essence, a capital-intensive industry with extremely high trial-and-error costs. As the industry gradually matures, the competitive barriers are being raised significantly. With overseas tech giants and even domestic big companies eyeing the smart sector, the endgame of this war is certainly not here yet.

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