XRG’s US Expansion Risks and Rewards Highlighted by Texas DPS Deal

Record Growth Driven by Operator XR

xReality Group (XRG) has delivered its strongest financial performance to date in FY25, posting a 36% increase in total revenue to $14 million. This surge is largely attributable to the rapid expansion of its core product, Operator XR, which now contributes 37% of total revenue, up from just 7% the previous year. The immersive Extended Reality (XR) training platform has become the company’s primary growth engine, outpacing legacy entertainment assets.

Operator XR’s momentum is underscored by a total contract value (TCV) of $11.3 million and an annual recurring revenue (ARR) of $4.7 million, reflecting a 114% year-on-year increase. With over 140 systems deployed across 29 US states and 67 global customers, XRG is cementing its position in the competitive XR training market, particularly within defence and law enforcement sectors.

Major US Contract Validates Market Strategy

A highlight of FY25 was the landmark $5.7 million contract awarded by the Texas Department of Public Safety (DPS), marking Operator XR’s largest order to date. This deal includes software licenses, system implementations, and multi-year support, with delivery scheduled for Q2 FY26. The contract not only provides near-term revenue visibility but also establishes a high-profile reference customer within one of the largest US law enforcement agencies, bolstering XRG’s credibility and growth prospects in North America.

Further US traction includes ongoing projects with the Department of Defense valued at $5.6 million and new customers such as the US Air Force and Space Force. These wins highlight XRG’s successful penetration into key government markets and the scalability of its training solutions.

Financial Health and Strategic Initiatives

Alongside revenue growth, XRG improved its net loss after tax by 24%, reducing it to $3.1 million. The company strengthened its balance sheet through three key initiatives – converting a $4.6 million shareholder loan into equity, refinancing debt with Causeway, and raising $2 million via a strategic placement to institutional investors. These moves reduced borrowings by 43% and increased cash reserves to $2.8 million, positioning XRG for sustainable growth.

Legacy entertainment assets, including the iFLY Indoor Skydiving facilities, continue to generate positive cash flow, supporting investment in Operator XR’s product development. However, XRG is actively reviewing options to streamline these assets and focus on its high-margin XR training business.

Looking Ahead – Innovation and Global Expansion

FY26 promises further acceleration as XRG plans ongoing software releases, including the OP-2 Heavy system tailored for larger agencies and a Counter Unmanned Aerial System (CUAS) training product aimed at defence markets. Integration of cloud technology and AI-driven adaptive learning is expected to enhance training effectiveness and operational scalability.

Internationally, XRG is expanding its distributor network across Europe, Asia, and the Middle East, aiming to unlock Tier 1 government contracts and whole-of-government opportunities. The company’s strategic focus on Operator XR, combined with a strengthened balance sheet and a growing US pipeline, sets the stage for continued momentum in the immersive training sector.