xReality Group Limited reported a 36.3% revenue increase to $13.96 million for FY2025, driven by strong Enterprise segment growth, while narrowing its net loss to $3.14 million. Despite challenges in Entertainment revenue and asset pressures, the company maintains a positive cash flow outlook.
- 36.3% revenue growth to $13.96 million in FY2025
- Net loss after tax reduced to $3.14 million from $4.11 million
- Enterprise segment revenue surged 610%, Entertainment declined 10%
- No dividends declared; net tangible assets per share down 19.4%
- Company maintains going concern status despite current asset deficiency
Revenue Growth Driven by Enterprise Segment
xReality Group Limited has posted a notable 36.3% increase in total revenue for the fiscal year ended 30 June 2025, reaching $13.96 million compared to $10.24 million the previous year. This growth was largely propelled by the Enterprise segment, which experienced a remarkable 610% surge in revenue to $5.11 million, reflecting the company’s expanding footprint in virtual reality solutions for enterprises.
Conversely, the Entertainment segment, encompassing the indoor skydiving and virtual reality entertainment operations under the iFLY and FREAK brands, saw a 10% decline in revenue to $7.59 million. This dip suggests ongoing challenges in consumer-facing activities, possibly linked to post-pandemic market dynamics or competitive pressures.
Narrowing Losses Amid Significant Expenses
Despite the revenue growth, xReality Group reported a net loss after tax of $3.14 million, an improvement from a $4.11 million loss in FY2024. The reduction in losses is a positive sign, though the company remains unprofitable. Key cost drivers included marketing and employment expenses, which together accounted for over $12 million, alongside depreciation, amortisation, and finance costs related to lease liabilities.
The company’s EBITDA was positive in both the Entertainment and Enterprise segments but was offset by substantial corporate overheads, including lease asset depreciation and interest expenses under accounting standards for leases.
Balance Sheet and Cash Flow Highlights
On the balance sheet, xReality Group’s net tangible assets per share declined by 19.4% to 0.6 cents, reflecting increased intangible assets and ongoing losses. The group reported a net deficiency in current assets, primarily due to deferred revenue liabilities totaling over $7.3 million, which management expects to realise as revenue in future periods.
Cash flow from operations remained positive at $3.32 million, supporting the company’s going concern status despite the current asset shortfall. Capital expenditure included $2.39 million invested in intangible assets, underscoring continued investment in product development and technology.
Outlook and Strategic Considerations
xReality Group’s financial results highlight a strategic pivot towards enterprise virtual reality solutions, which are gaining traction and driving revenue growth. However, the Entertainment segment’s revenue decline and persistent losses indicate ongoing operational challenges. The company’s ability to convert deferred revenue and manage costs will be critical in the coming year.
Investors will be watching closely how the company balances growth investments with profitability goals, especially as it navigates competitive pressures in both consumer entertainment and enterprise technology markets.
Bottom Line?
xReality’s revenue momentum in enterprise VR offers promise, but sustained profitability remains a key hurdle.
Questions in the middle?
- What specific drivers fueled the 610% growth in the Enterprise segment?
- How will xReality address the ongoing revenue decline in its Entertainment operations?
- When and how will the substantial deferred revenue be recognised as actual income?