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XReality Group
Investor Insights
Serving the lucrative law enforcement market in the US, xReality Group’s Operator XR offers a unique value proposition that leverages a $3.37 billion global addressable market. If xReality Group’s impressive sales performance in the US to date is any indication, the company is definitely one to watch for investors.
Overview
xReality Group Limited (ASX:XRG) specializes in virtual reality (VR), augmented reality (AR) and physical simulation for the enterprise, defense and consumer markets. The company’s primary focus is to provide physical and digital simulations for military and law enforcement applications. XR stands for extended reality and is a catch-all term for VR, AR, and mixed reality (MR).
The company was co-founded by two Australian military veterans to build physical skydiving simulators for both military training and the tourist market. The company has since expanded its simulation portfolio from indoor skydiving to include out-of-home virtual reality entertainment, defense XR training, and XR software development. xReality targets both the entertainment and the enterprise markets, which include defense, law enforcement, and other government agencies.
The company was listed on the ASX on January 18, 2013, as Indoor Skydive Australia Group (ASX:IDZ) and was rebranded to xReality Group on December 8, 2021.
It operates four major brands, and the group’s portfolio companies include XR production company Red Cartel, Operator XR, two Australian indoor skydiving facilities, and FREAK Virtual Reality venues.
The global total addressable market for the Operator XR business in the law enforcement and military markets is valued at about $3.37 billion in annual recurring revenue (ARR). Of this, the United States accounts for $1.3 billion, or 40 percent of the total, while the rest of the world is $2 billion. xReality has rightly been focusing on increasing its presence in the US given its relatively high share in the global context.
The global military market is significantly higher than the law enforcement market. Overall, the military market is valued at $2.68 billion, and the law enforcement market is valued at $682.6 million. Here again, the US is a significant player accounting for the largest share of the global pie in both military and law enforcement.
Company Highlights
- Listed on the ASX, xReality Group is an Australia-based company that specializes in building and operating virtual reality (VR), augmented reality (AR) and physical simulation for the enterprise, defense and consumer leisure markets.
- The company serves both entertainment and enterprise segments that include defense and law enforcement agencies.
- xReality operates four major brands across the end markets which include - iFly Downunder and iFly Gold Coast (both entertainment and enterprise); Freak Entertainment (retail market); Red Cartel (both entertainment and enterprise); and Operator XR (enterprise), the most important segment for the company focused on defense and law enforcement agencies.
- The total addressable market for the Operator XR segment is valued at US$3.37 billion with the US accounting for nearly 40 percent of the total market.
- Operator XR continues to gain momentum in the US and Australia, with a year-to-date total contract value of $2.67 million, as of May 2024, and an annual recurring revenue of $1.27 million.
Key Business Units
Operator XR
Operator XR focuses on the enterprise segment, more specifically the defense and law enforcement sectors. Operator XR systems help military personnel and law enforcement officers train in operational tactics and procedures within a virtual reality environment. The VR system complements the existing training methods and helps its users to train more often, covering a broad range of scenarios centered on de-escalation tactics, use of force decision-making, and operational procedures.
The system was developed from the ground up, using the latest innovations in VR technology, with all IP owned by xReality. The company has invested a total of AU$2.5 million in the ongoing development of the Operator XR product. Operator XR offers several benefits: First, it provides a software platform that can be easily updated and configured. It offers significant cost savings and can simulate threats that cannot be replicated by other means. Second, it helps create the virtual environment at a fraction of the cost and time. Third, it creates an immersive environment allowing the use of live weapons and equipment leading to greater preparedness. Lastly, it can work offline enabling the training anytime and anywhere.
With offices in Sydney and Virginia, the segment focuses on two main markets – Australia and the US. The Australian operations were launched in 2021, followed by the US in 2023. With a go-to-market strategy focused on the ‘tier 3’ segment of the US law enforcement market, xReality made its first US law enforcement sale in August 2023. Tier 3 market includes nearly 3,000 police agencies with 40 to 500 officers.
As of May 2024, Operator XR has a year-to-date total contract value of $2.67 million, and an annual recurring revenue of $1.27 million. xReality now has existing contracts with a number of police departments in the US, including Oregon, Maryland, Alaska, Texas, Florida, Ohio, Arkansas, Indiana, and a training organisation based in California.
Operator XR is also making headway in Australia, with a recent purchase order from the Australian Defence Force for the delivery of two systems with a 3-year licence.
Further expansion efforts also include XReality Group’s partnership with a key technology partner in Mexico for the distribution of Operator XR’s VR technology for law enforcement and military markets.
iFly Downunder and iFly Gold Coast
xReality operates indoor skydiving facilities under the brands – iFly Downunder (located in Sydney) and iFly Gold Coast (located in Queensland). During FY 2023, xReality invested significantly in enhancing both iFly Downunder and iFly Gold Coast, resulting in upgrades to mechanical cooling systems, IT hardware and building works. This segment serves both the entertainment and enterprise markets. The first indoor skydiving tunnel was launched in 2014.
Since then, xReality has been serving about 200,000 visitors annually. iFly provides a steady, stable revenue cash flow, essential to fund the growth side of the business.
Freak Entertainment
Freak Entertainment is xReality’s virtual reality entertainment brand, established in 2019 to bring a market-leading VR experience to a retail footprint. The brand and IP are 100 percent owned by xReality, which includes cutting-edge technology and in-house-built games. It has served nearly 300,000 customers across its five locations in New South Wales and Queensland. Freak Entertainment venues offer various entertainment options such as VR arcade games, VR Escape Rooms, and VR Laser Tag among others.
Red Cartel
Red Cartel develops software products that cater to both the entertainment and enterprise markets. A leading expert in developing AR, VR, XR and enterprise software for the entertainment, oil and gas, healthcare, mining and government sectors, Red Cartel has more than 20 years of market track record. xReality acquired Red Cartel in August 2021 to deliver in-house development capability and support its other three businesses.
Management Team
John Diddams – Non-Executive Chairman
John Diddams holds a bachelor’s degree in commerce from the University of NSW, is a fellow of the Australian Society of CPAs, and is a fellow of the Australian Institute of Company Directors. He has more than 40 years of financial and management experience in Australia and overseas, with rich experience in the practical application of ASX listing rules, Australian corporations’ law, international accounting standards, and corporate governance principles. Diddams has a strong track record in driving business performance, mergers and acquisitions, due diligence and corporate governance.
Wayne Jones – Director and Chief Executive Officer
Wayne Jones has been the company's founder and CEO since November 2011. Before establishing xReality, he was a Commander with the Special Air Service Regiment (SASR) and was responsible for the development and performance of teams in complex and challenging environments. He holds formal qualifications in project management, business, security, and risk management, and financial management, and is a member of the Australian Institute of Company Directors. He has more than 25 years of experience in leading teams and delivering results. He is an experienced skydiver and maintains his involvement with the Australian Defense Force. He is also the president of the Australian Special Air Service Association (NSW Branch).
Danny Hogan – Non-Executive Director
Danny Hogan joined the Australian Regular Army in 1991 and, in 1997 was selected for further service within the Special Air Service Regiment. He has been recognized and awarded for his actions and leadership during his 21-year military career, including the Medal for Gallantry. He was selected for and completed a two-year military exchange in the US with two of the country’s elite Special Forces Commands. Hogan was a highly qualified senior dive instructor within the Special Air Service Regiment. He served as an executive director and the chief operations officer of xReality from the foundation of the company until November 2019, at which time he became a non-executive director. He is a member of the Australian Institute of Company Directors.
Kim Hopwood – Executive Director and Chief Technology and Products Officer
Kim Hopwood has more than 20 years of experience across technology, media, management, and operations. He started his career as a network engineer at Cisco, then co-founded digital agency Pusher in 2004. He has worked with xReality since 2012 as a supplier, and then as a freelance consultant before joining full-time in 2019. In his role as chief technology and products officer, he is responsible for all products along with the development of company strategy.
Mark Smethurst – Non-Executive Director
Mark Smethurst is an accomplished senior executive leader, with a highly successful track record commanding large and diverse teams both in Australia and overseas. He is a former Australian Military Brigadier General and has rich experience in dealing with Australian and international defense and supply chains. He was head of preparedness, and director of General Joint Force Analysis, responsible for developing futures concepts, experimentation, lessons, and preparedness.
Philip Copeland – Non-Executive Director
Philip Copeland is an experienced senior leader in the enterprise software-as-a-service (SaaS) sector and has a highly successful track record scaling enterprise SaaS businesses into global markets across highly regulated industries including government and financial services. He was the former CEO and founder of Avoka Software, a digital business enablement platform. He is the chairman of xReality’s International Growth Committee.
Stephen Tofler – Chief Financial Officer
Stephen Tofler was appointed CFO and company secretary in February 2019. He has more than 20 years of experience as a CFO in financial services, manufacturing and in public practice. He is formally qualified as a CPA, maintains a CPA Public Practice Certificate, and has a Bachelor of Business degree.
Streamplay Studio Enters into Agreement to Acquire North American Indie Gaming Leader, Noodlecake Studios
HIGHLIGHTS
- Streamplay expands global reach and direct-to-consumer gaming presence across North America with acquisition of Noodlecake.
- Established in 2011, Noodlecake boasts a proven track record with a variety of over 60 in-house and published games achieving over 270 million downloads.
- Noodlecake has over its history generated over ~A$42 million through primary monetisation channels, with additional revenue from other sources.
- Noodlecake averaged annual revenue of ~A$7.3 million and EBITDA of ~A$1.8 million over the 3 years ending 31 December 2023.
- Noodlecake’s lean, high-impact operating model, maximises publishing reach with a focused team and global collaborations.
- Established partnerships with leading Tier 1 brands such as Apple, Google, Xbox, PlayStation, Nintendo, Steam and more.
- Provides Streamplay with immediate product and geographic revenue diversification via Noodlecake’s flexible publishing and monetisation strategies (premium sales, in-app purchases, advertising, and subscription-based models).
- Strengthens global expansion opportunities, including continued collaborations with Zplay in the Chinese gaming market.
About Noodlecake
Founded in Canada in 2011, Noodlecake is an established, reputable and profitable indie game studio and publisher. With a diverse portfolio of over 60 games listed across more than 10 storefronts and available in over 45 countries, Noodlecake has engaged players worldwide with award-winning content, achieving over 270 million downloads to date.
Since incorporation, the studio has generated significant revenue through its multifaceted monetisation strategy, including over A$15 million in in-app purchases, over A$9 million in direct game sales, and over A$18 million in advertising revenue, alongside other significant sources.
These revenues are strategically driven by the studio’s presence on major digital storefronts such as the Apple App Store, Google Play, Steam, and Nintendo Switch. Noodlecake’s adaptability to emerging opportunities is evident in its recent expansions into Xbox and PlayStation, with future releases targeting premium storefronts and subscription platforms.
Noodlecake boasts an impressive track record of publishing award-winning titles that have captivated both players and critics alike. Among its successes, “Yes, Your Grace” recently won Best Indie Game on Google Play for 2024,1 showcasing their ability to support compelling and engaging indie experiences. “Golf Blitz”, an innovative multiplayer spin on the classic golf genre which was developed inhouse, earned critical acclaim and was featured as an Editor’s Choice by Apple in 2019.2 Additionally, “Alto’s Odyssey”, another title published by Noodlecake, received an Apple Design Award in 20183 for its exceptional artistry and gameplay.
Their games employ a range of revenue models tailored to each platform. Premium titles generate revenue through direct purchases, while free-to-play games monetise via in-app purchases and targeted ads.
Additionally, Noodlecake has a history of securing exclusive, curated partnerships with Apple Arcade, Google Play Pass, and Xbox Game Pass which provide consistent revenue through subscription-based engagement.
The studio’s upcoming game, “Winter Burrow”,4 set for release on Xbox Game Pass, Xbox storefront, Switch and Steam, early in 2025, is just one example of how Noodlecake leverages these partnerships to generate stable, upfront revenues.
Click here for the full ASX Release
This article includes content from Streamplay Studio, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
Next-generation Hadrian X® Completes US Site Acceptance Testing
Highlights
- FBR receives confirmation from CRH Ventures that first next-generation Hadrian X® successfully completes Site Acceptance Testing at Fort Myers facility in Florida
- Confirmation received from an independent structural engineer that the structure is consistent with design requirements and meets applicable building standards
- FBR to receive next tranche of non-refundable payment from CRH Ventures of US$600,000 under Demonstration Program agreement
- Construction of the first house in the Demonstration Program to commence shortly
An independent structural engineer provided confirmation that the walls of the test build were consistent with the design and met applicable building standards.
Completion of Site Acceptance Testing triggered a US$600,000 payment by CRH Ventures to FBR and the commencement of the Demonstration Program. The Demonstration Program requires FBR to construct the external walls of five to ten single-storey houses utilising the next-generation Hadrian X®. The Demonstration Program will commence shortly.
The Demonstration Program will be deemed complete when FBR completes construction of its five houses plus up to five houses added to the program by CRH Ventures, with all houses to be certified by an independent structural engineer. Upon completion of the Demonstration Program, FBR will receive a payment of US$400,000 from CRH Ventures under the Demonstration Program agreement. The completion of the Demonstration Program also marks the commencement of a 45-day period for CRH Ventures to exercise the option to form a joint venture for the delivery of Wall as a Service® in the United States.
This announcement has been authorised for release to the ASX by the FBR Board of Directors.
Click here for the full ASX Release
This article includes content from FBR Limited, licensed for the purpose of publishing on Investing News Australia. This article does not constitute financial product advice. It is your responsibility to perform proper due diligence before acting upon any information provided here. Please refer to our full disclaimer here.
XReality Group Investor Kit
- Corporate info
- Insights
- Growth strategies
- Upcoming projects