xReality Group lands $800,000 government contract for virtual reality training system

Technology company xReality Group (ASX: XRG) has continued its recent run of sales success by landing an $800,000 contract with a new Australian state government customer.

Multiple Operator XR virtual reality training systems are now set for delivery to the unnamed government body in the third quarter of 2025.

xReality Group develops enterprise software for mission-critical simulations for military and law enforcement, with Operator XR’s virtual reality police training and military simulation systems in demand globally for their ability to enhance human performance in high-risk situations.

Strong run of success

Chief executive officer Wayne Jones said the new contract signing follows a strong month of sales in June to new US law enforcement customers, with a 75% increase in Operator XR’s annual recurring revenue (ARR) during June from $1.26 million to $2.21m.

“Building off the recent success with the Australian Defence Force, we are excited to be broadening our user base across other agencies in Australia,” he said.

In the final month of the financial year, Operator XR added a further $1.43m overall in sales, increasing its ARR by 75% to $2.21m and has now achieved a year-to-date 54% contract value increase to $4.1m.

The June 2024 success included the signing of six new customers during the month and one renewal.

Large sales pipeline

“The company is pleased with the continued momentum of sales throughout the month of June,” Mr Jones said.

“A strong result over the final quarter of FY2024 has positioned the company well with a large pipeline of sales expected to materialise throughout Q1 of FY2025.”

The current sales success is being supported by an additional $500,000 in working capital the company acquired in mid-June through senior debt holder Causeway Financial.

The additional funds are being utilised to provide inventory for the increasing demand in the United States markets and to address the significant increase in Operator XR orders.

Mr Jones said maintaining a larger inventory of hardware in the US will expedite delivery times and streamline the logistics involved.

According to TechNavio, the global police and military simulation training market size is forecast to increase by around $8 billion between 2023 and 2028 at a compound annual growth rate of 6.78%.