XREAL’s “global AR leader” pitch meets a harsh ledger: deep losses and a dwindling cash pile

IPO bid exposes a money-losing hardware reality

It has been reported that XREAL filed a prospectus with the Hong Kong Stock Exchange as it chases a headline-grabbing IPO to shore up cash. The company — led by founder Xu Chi (徐驰) — has been cast in China’s domestic press as a rare hardware unicorn that “went abroad” early: reportedly over 70% of its 2025 revenue came from the US, Japan and Europe. Sounds impressive. But the numbers in the prospectus tell a different, riskier story.

Big revenue claims, bigger losses

Reportedly XREAL’s revenues rose only modestly from RMB 390m in 2023 to RMB 516m in 2025, with three-year cumulative unit sales of roughly 400,000 devices. Over the same period it recorded losses of RMB 882m, RMB 709m and RMB 456m — a total paper and cash haemorrhage exceeding RMB 2.05bn. The company says nearly RMB 1bn of those losses relate to fair-value changes in preferred shares (a common early-stage accounting swing), but even stripping that out leaves substantial operational deficits. By the end of 2025 reported cash on hand was only about RMB 6.4m while current liabilities had swelled to RMB 3.815bn — hence the urgency to “go public and refill the tank.” Can an AR hardware maker survive on an IPO lifeline alone?

Tech ambition collides with commercial headwinds

XREAL prides itself on “full-stack” R&D — from spatial-computing chips to optics — and Xu has publicly warned that current AR products are immature, saying true maturity may not arrive until 2027. Yet R&D spending has declined in absolute terms, from RMB 216m in 2023 to RMB 183m in 2025, and the company has pared headcount to conserve cash. Revenue remains highly concentrated: 92.2% from AR glasses and accessories in 2025, with the mid‑to‑high‑end One series (avg. price RMB 3,196) driving volume. But core optics and microdisplay components are costly and largely sourced from third parties, leaving XREAL limited pricing power and exposed to supply-chain shocks.

Strategic and geopolitical context

Investors in XREAL range from early backers who likely enjoyed outsized returns to later strategic investors such as Alibaba (阿里巴巴), Kuaishou (快手), Shunwei Capital (顺为资本), NIO (蔚来) and Hillhouse (高瓴), and suppliers like Luxshare Precision (立讯精密). Reportedly, some later-stage investors have far more to lose if the IPO valuation cools. And there is an added geopolitical wrinkle: reliance on advanced components and overseas markets puts AR challengers in the crosshairs of US-China tech tensions and export controls, which could complicate supply and partnerships. In short: leadership in a niche metric is not the same as durable commercial dominance. For ordinary investors, the safest posture may be to watch and wait.