Fund Manager Summary
The fund managers believe there is a significant opportunity in xReality Group Ltd (XRG), particularly due to its dual business segments: Entertainment and Enterprise. In their opinion, while the Entertainment segment generates stable revenue of approximately $7 million annually, it is the Enterprise segment that showcases remarkable growth potential. XRG's innovative Operator XR solution, which combines virtual reality with motion sensors for defence and law enforcement training, has gained traction, securing key contracts with the US Department of Defence and the Australian Federal Police. The recent announcement of a $4.3 million contract with the Texas Department of Public Safety underscores the product's validation and market appeal. The fund managers see XRG's trajectory as promising, bolstered by a 36% revenue growth and a shift to positive EBITDA and cash flow.
Source: Trading View
Commentary From The Managers
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Mereweather Capital
31 Oct 2025
$0.06
Summary
- Mereweather Capital notes that xReality Group Ltd (XRG) reported a 28% quarter on quarter recurring revenue growth.
- The growth is underpinned by the recent Texas Department of Safety contract.
- There was a substantial cash outflow of approximately $2 million for the quarter, attributed to investments in inventory and new product features.
- This cash outflow is expected to sharply reverse in the coming quarter as XRG anticipates payments for several large projects.
- Mereweather Capital continues to hold its position in XRG based on these growth indicators.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Mereweather Capital
31 Oct 2025
$0.06
- Mereweather Capital notes that xReality Group Ltd (XRG) reported a 28% quarter on quarter recurring revenue growth.
- The growth is underpinned by the recent Texas Department of Safety contract.
- There was a substantial cash outflow of approximately $2 million for the quarter, attributed to investments in inventory and new product features.
- This cash outflow is expected to sharply reverse in the coming quarter as XRG anticipates payments for several large projects.
- Mereweather Capital continues to hold its position in XRG based on these growth indicators.
Summary
Mereweather Capital
31 Aug 2025
$0.05
- Mereweather Capital initiated a position in XReality Group (XRG) during a recent capital raise.
- XRG operates in two segments: Entertainment and Enterprise.
- The Entertainment segment, focused on indoor sky diving wind tunnels, generates approximately $7m in revenue annually but is considered ex-growth.
- Free cash from the Entertainment segment was reinvested to develop Operator XR, a training solution combining virtual reality goggles and motion sensors.
- Operator XR targets defence and law enforcement sectors, providing cost-effective training solutions.
- The leadership of Wayne Jones, a former SAS Commander, enhances credibility in the defence sector.
- XRG has rapidly commercialized Operator XR, securing key contracts including those with the US Department of Defence and Australian Federal Police.
- Recent results showed a 36% revenue growth, with a shift to positive EBITDA and free cash flow.
- XRG's largest contract to date is a $4.3m deal with the Texas Department of Public Safety, validating product quality.
- This contract opens opportunities to sell Operator XR to the remaining 30 Departments of Safety in the US.
- Funding for additional positions came from exiting holdings where investment theses were challenged.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"With XReality Group's unique blend of entertainment and cutting-edge training solutions, it appears we may be witnessing the dawn of a new era in defense and law enforcement training. Their rapid traction and key contracts suggest they could be a game changer in this space."
Last Updated: 31 Oct 2025
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Frequently Asked Questions
Who is investing in xReality Group Ltd (ASX:XRG)?
Fund managers including Mereweather Capital have invested in xReality Group Ltd (ASX:XRG).
Why do fund managers invest in xReality Group Ltd?
Fund managers are investing in xReality Group Ltd (XRG) due to its dual business model, which includes a stable Entertainment segment and a rapidly growing Enterprise segment focused on extended reality training solutions for defense and law enforcement. The leadership of former SAS Commander Wayne Jones enhances credibility, while recent contracts with key clients like the US Department of Defense validate the product's effectiveness. The company's impressive revenue growth of 36%, alongside a shift to positive EBITDA and free cash flow, further supports its investment potential.
What happened to xReality Group Ltd (ASX:XRG)?
Fund managers are investing in xReality Group Ltd (XRG) due to its dual business model, which includes a stable Entertainment segment and a rapidly growing Enterprise segment focused on extended reality training solutions for defense and law enforcement. Led by a former SAS Commander, XRG has successfully commercialized its Operator XR technology, securing significant contracts, including a $4.3 million deal with the Texas Department of Public Safety. The company has demonstrated strong revenue growth, with a recent 36% increase and positive EBITDA, positioning it well for future profitability.