The archive · Hardware & Devices · Strategic decision · 2017–2026
XREAL: the AR-glasses leader Google picked, betting Hong Kong funds its climb
XREAL made AR glasses people actually bought and held the global No.1 spot, yet still burned cash — so Google became its partner and Hong Kong its next bet.
XREAL
What the business is
XREAL is a Beijing-based AR hardware maker that sells consumer glasses built on birdbath and flat-prism optics — displays cheap and bright enough to ship now, where waveguide technology is not. iResearch data cited in its prospectus ranks XREAL first in global AR-glasses sales by revenue from 2022 to 2025, and 71% of 2025 revenue came from overseas (36Kr English).
How it started
Chi Xu co-founded XREAL in Beijing in 2017, and the company has raised 12 rounds since, with Sequoia Capital China, Hillhouse Capital, Alibaba, Kuaishou and Shunwei Capital among the backers (36Kr English; Road to VR). By the time it filed in Hong Kong, iResearch data cited in the prospectus ranked it No.1 in global AR-glasses sales by revenue from 2022 to 2025.
What happened
XREAL's high-end One series launched in late 2024 and sold 111,400 units in 2025 at an average 3,196 yuan — nearly twice the Air series' 1,656 yuan — lifting gross margin from 18.8% in 2023 to 35.2% in 2025 (36Kr English). In May 2025 Google unveiled Project Aura, the first Android XR glasses, co-developed with XREAL; in January 2026 Google extended the multi-year partnership and named XREAL a lead hardware partner for Android XR (The Verge; 36Kr English). That same month XREAL closed a $100M Series D at a $1B valuation (Road to VR).
How it ended up
Behind the headlines the prospectus showed strain: total unit sales stayed roughly flat across 2023–2025 (137,200; 124,900; 133,700), cash on hand fell about 70% to ¥63.63M at the end of 2025, and operating cash flow was negative all three years (36Kr English). By April 2026 XREAL had filed its prospectus for a Hong Kong listing, still losing money and facing an AI-glasses boom — Omdia counted 8.7M shipments in 2025, up 322%, with Meta at 85.2% — that it has chosen not to chase (36Kr English).
Background
XREAL bet that consumers would buy AR glasses before the hardware got truly cheap: founder Chi Xu chose birdbath and flat-prism optics, which give a wide field of view at far lower cost than waveguides, and started selling to consumers in volume (Road to VR).
The bet held for years — iResearch data cited in its Hong Kong prospectus ranks XREAL No.1 in global AR-glasses sales by revenue from 2022 to 2025, and Google picked it to co-develop Project Aura, the first Android XR glasses (The Verge; 36Kr English).
Yet the prospectus told a harder story: total sales sat flat around 130,000 units a year, cash fell to ¥63.63M at end-2025 after three years of negative operating cash flow, and pre-tax losses only narrowed as XREAL cut spending, including R&D (36Kr English).
XREAL answered with a $100M Series D at a $1B valuation in January 2026 and a Hong Kong filing by April 2026 — betting that Google's platform backing and public capital would fund the climb before the AI-glasses wave (8.7M shipments in 2025, Meta at 85.2%) overtakes its category (Road to VR; 36Kr English).
What has to be true
- Cheap optics let XREAL ship consumer AR years before waveguide displays could hit a mainstream price, winning the No.1 spot by being first to sell.
- Google needed a hardware partner that had already proven AR glasses could be bought, which turned a niche leader into a platform pick.
- Three years of negative operating cash flow left no room for patience, forcing the Hong Kong filing and the urgency behind it.
- Staying in AR while the market chased AI glasses kept the lead narrow: unit sales stayed flat near 130,000 a year even as an adjacent category exploded.
What can be applied
No.1 in a niche is not growth: XREAL led AR glasses while selling ~130,000 units a year and burning cash — Google and a Hong Kong IPO extend the runway, they do not set the pace.
Aftermath
As of 2026-04-09 XREAL had filed its prospectus in Hong Kong, disclosing 2025 revenue of ¥516M (+30.8%), a 35.2% gross margin and a 27% share of global AR-glasses sales by revenue — but also cash of just ¥63.63M and a third straight year of negative operating cash flow (36Kr English). Google had extended its multi-year partnership and named XREAL a lead hardware partner for Android XR, with Project Aura expected in 2026, and 36Kr reported that people familiar with the matter said Google planned to complete an investment in XREAL that year (The Verge; 36Kr English).
Sources
- Google and Xreal extend hardware partnership for Android XR
- Google's Leading AR Glasses Partner XREAL Raises $100M
- Rushing to list in Hong Kong, why is XREAL in a hurry to go public?
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