xReality Group Posts $10.4M Revenue, $2.6M EBITDA in Record Half-Year

Strong Half-Year Financial Performance

xReality Group Limited (ASX: XRG) has delivered its strongest half-year results to date for the period ending 31 December 2025, posting a 41% increase in revenue to $10.4 million. This growth was accompanied by a remarkable 190% jump in EBITDA to $2.6 million, signalling improved operational efficiency and profitability.

The company’s transition towards a software-led business model is clearly paying dividends, with the Operator XR platform emerging as the primary growth engine. Operator XR revenue, combined with related government grants, now represents 63% of total group revenue, reflecting strong market adoption of its immersive training solutions.

Operator XR Driving Global Expansion

Operator XR’s customer base expanded to 89 global agencies during the half, including federal, state, and city law enforcement and defence organisations, primarily in the United States. The platform’s appeal is further evidenced by a qualified sales pipeline of $63 million and new sales total contract value (TCV) of $7.8 million.

Annual Recurring Revenue (ARR) from multi-year enterprise agreements reached $6.2 million, underscoring the shift towards predictable, subscription-based income streams. The company also launched new product capabilities, including the OP-2 platform rollout and Counter-UAS simulation technology, broadening its addressable market within defence and security sectors.

Strategic Realignment and Legacy Business Transition

In line with its strategic realignment, xReality Group is streamlining its legacy entertainment operations, such as iFLY and FREAK Entertainment, to focus resources on scaling Operator XR. While the entertainment division continues to contribute stable revenue, the company plans to fully exit FREAK Entertainment by the end of FY2026.

This pivot aims to reduce operational complexity and capital intensity, allowing the Group to prioritise higher-margin, scalable software solutions. The Board and management remain committed to maximising long-term shareholder value through this transformation.

Financial Position and Cash Flow

Operating cash flow improved significantly, generating $3.1 million during the half, reflecting stronger collections and efficient working capital management. The Group also reduced its debt facility with Causeway by $500,000 post-period, funded entirely from operational cash flows.

Net tangible assets per share increased slightly to $0.006, supported by ongoing investment in intangible assets such as capitalised development expenditure and proprietary intellectual property linked to Operator XR.

Outlook and Market Position

With Operator XR now firmly established as the Group’s core business, xReality Group is well positioned to capitalise on the growing demand for immersive training technologies globally. The recent first commercial sale in Japan through an APAC distributor highlights the company’s expanding geographic footprint.

While no dividends were declared, the company’s improving financial metrics and positive cash generation provide a solid foundation for future growth. The independent auditor issued an unqualified review report, reinforcing confidence in the Group’s financial reporting and governance.