Executive Summary / Key Takeaways

• Strategic Pivot to Spatial Core: The Glimpse Group has successfully executed a strategic shift, focusing on its AI- and cloud-driven Spatial Core platform, which integrates data into 3D environments for enterprise and Department of Defense (DoD) applications. This pivot has been instrumental in driving recent revenue growth and improving financial performance.
• Achieving Profitability and Strong Liquidity: Fiscal Year 2025 marked a significant turnaround, with the company achieving near cash flow neutrality and its first-ever positive EBITDA and net income as a public company in Q2 FY2025. Glimpse maintains a robust cash position of $6.83 million and a clean balance sheet with no debt.
• Robust Growth Outlook: Management forecasts continued revenue growth, with Q4 FY2025 expected to be the highest revenue quarter in two years, projecting full-year FY2025 revenues between $10 million and $11 million. Gross margins are anticipated to remain strong, ranging from 55% to 75%, driven by the Spatial Core and software license mix.
• Technological Leadership in a Nascent Market: Glimpse's Spatial Core offers a differentiated operating system for immersive technologies, enabling complex simulations and digital twins. This positions the company to capitalize on the rapidly expanding immersive technology market, projected to reach $152.73 billion by 2030, with a 27.90% CAGR.
• Shareholder Value Focus: Despite strong operational and financial progress, management identifies a "sharp disconnect" between the company's intrinsic value and its public market valuation. The company is actively exploring strategic options, including a potential spin-out of its Brightline Interactive entity, to unlock shareholder value.

The Immersive Technology Frontier and Glimpse's Strategic Pivot

The Glimpse Group, Inc. (NASDAQ:VRAR) operates at the forefront of the burgeoning immersive technology sector, providing enterprise-focused Virtual Reality (VR), Augmented Reality (AR), and Spatial Computing software and services. The broader immersive technologies market is an early-stage industry with nascent markets, yet it holds significant potential to fundamentally transform interactions across businesses and individuals. This market is projected to expand from $44.62 billion in 2025 to $152.73 billion by 2030, reflecting a robust 27.90% Compound Annual Growth Rate (CAGR). Key drivers include accelerated chipset innovation, maturing 5G edge networks, and enterprise demands to streamline training and collaboration, pushing immersive technologies beyond their traditional consumer-gaming origins.

Glimpse's overarching strategy centers on an ecosystem model, fostering collaboration among its diverse entities to achieve scale, operational efficiencies, and go-to-market synergies. The company primarily targets the business-to-business (B2B) and business-to-business-to-consumer (B2B2C) segments, maintaining a hardware-agnostic approach. A pivotal strategic shift occurred during fiscal year 2024, as Glimpse intensified its focus on immersive technology solutions driven by Spatial Computing, Cloud, and Artificial Intelligence (AI), collectively branded as "Spatial Core." This initiative is spearheaded by its subsidiary, Brightline Interactive, LLC (BLI).

Technological Differentiators: The Power of Spatial Core

At the heart of Glimpse's investment thesis is its Spatial Core technology. This platform functions as an operating system for spatial computing, seamlessly integrating data and AI into 3D environments. Spatial Core enables cloud computing and the creation of complex simulations, delivering actionable insights and valuable information presented in 3D form, all derived from real source-of-truth data. This technology has transformative applications across various sectors, including robotics, drones, and digital twins, effectively "supercharging big data" by converting 2D information into actionable 3D data that AI and humans can interact with.

The tangible benefits of Spatial Core are evident in its diverse applications. In military contexts, it assists the Department of Defense (DoD) in processing vast amounts of multi-source information (visual, data-driven, sensory) into a unified 3D environment for enhanced planning and execution. For commercial enterprises, Spatial Core's AI integration allows for sophisticated multi-person simulations. For example, it can simulate challenging sales scenarios, complex HR situations, or critical patient interactions for healthcare professionals, providing immersive training experiences before real-world application. This capability to create realistic, interactive simulations offers a significant competitive advantage by improving efficiency, productivity, and safety for enterprises. The company's ongoing research and development efforts are focused on further integrating AI across its product base, enhancing these immersive interactions.

Competitive Landscape and Strategic Positioning

The software segment of the immersive technology industry is highly fragmented, characterized by numerous early-stage and often underfunded companies. There is currently no dominant player in any specific immersive technology software segment. Glimpse believes its unique ecosystem structure and integrated capabilities provide significant competitive advantages over other software companies in this emerging space.

Glimpse views large infrastructure software providers like Google (GOOGL) (ARCore), Apple (AAPL) (ARKit), Unity Software Inc. (U), and Epic Games (Unreal) as complementary partners rather than direct competitors. These platforms facilitate Glimpse's ability to build industry-specific solutions more effectively, saving significant development costs. While Unity offers a broader development platform with a vast developer ecosystem, Glimpse differentiates itself through tailored, enterprise-grade solutions for niche sectors such as healthcare, education, and government/defense. This specialized focus allows Glimpse to offer more integrated and user-friendly tools for specific use cases, potentially leading to stronger customer loyalty.

Compared to industrial software giants like PTC Inc. (PTC) and Autodesk, Inc. (ADSK), which have comprehensive ecosystems for product lifecycle management and design workflows, Glimpse's Spatial Core offers more accessible, cloud-based AR presentations and immersive training. This could provide greater ease of use for specialized teams, though Glimpse may lag in the sheer breadth of industrial integration. Against consumer VR leader Meta Platforms, Inc. (META), Glimpse emphasizes software services over hardware, offering cost-effective, customizable tools for professional applications, which provides a strong differentiator in enterprise adaptability. Glimpse's partnerships with major technology companies, including NVIDIA (NVDA) and Microsoft (MSFT), while not exclusive, create a "technological moat" due to the unique nature of their collaborations and the success achieved together.

Glimpse's Evolution: From Diversification to Spatial Core Dominance

The Glimpse Group, incorporated in June 2016, began building its immersive technology ecosystem, including early acquisitions like QReal, LLC. The company went public on Nasdaq in July 2021 under the ticker VRAR. A significant step in its strategic evolution was the acquisition of Brightline Interactive, LLC (BLI) in August 2022, which subsequently became the spearhead for the Spatial Core initiative.

This strategic realignment involved a deliberate divestiture of non-core assets to streamline operations and sharpen focus. In December 2023, PulpoAR, LLC was divested due to poor revenue performance and non-strategic alignment, resulting in a $0.90 million write-off of goodwill and intangible assets. Effective October 1, 2024, QReal, LLC and its Turkey-based operating entity were divested through a management buyout. This move is expected to generate approximately $4 million in net cash value for Glimpse over two years, including $1.2 million to $1.5 million in annual cash savings, while Glimpse retains a revenue stream from QReal's largest customer, a $1.56 million senior secured convertible note, and a minority equity stake in the new independent entity. In August 2025, the company also agreed to sell its Pose With the Pros business.

Operational achievements underscore the success of the Spatial Core pivot. Brightline Interactive secured a $2 million Spatial Core contract on August 13, 2025, to be delivered over 12 months. It also successfully delivered its first full-motion immersive simulator system to the U.S. Navy, a significant milestone expected to pave the way for potential follow-on contracts. Additionally, Brightline delivered a scalable immersive solution to a global government service integrator, positioning Spatial Core as a leading middleware for processing and visualizing complex information in 3D space. Foretell Reality has secured several contracts for its AI-driven immersive training product, and Sector 5 Digital has entered into agreements with major enterprises like Halliburton (HAL), Ecolab (ECL), Galderma, Walmart (WMT), and AT&T (T).

Financial Performance: A Turn Towards Profitability

Glimpse Group's financial performance in fiscal year 2025 reflects the positive impact of its strategic shift and operational restructuring. The company reported total revenue of approximately $10.53 million for the fiscal year ended June 30, 2025, a 20% increase compared to $8.80 million in fiscal year 2024. This growth was primarily driven by the addition of new Spatial Core customers, although it was partially offset by the planned runoff of legacy VR/AR customers.

Software Services revenue, which includes immersive technology projects and consulting, increased by approximately 23% to $10.00 million in FY2025 from $8.13 million in FY2024. Conversely, Software License revenue decreased by 24% to $0.51 million in FY2025, primarily due to the divestiture of the QReal business. Gross profit margin for FY2025 stood at approximately 68%, a slight increase from 67% in FY2024, reflecting improved margins on Spatial Core revenue due to reduced reliance on third-party vendors.

Operating expenses saw a significant decrease of approximately 21% to $9.86 million in FY2025 from $12.47 million in FY2024. This reduction was a direct result of the Strategic Shift, the divestiture of QReal, and a reduction in non-core businesses. Consequently, the net loss for FY2025 improved substantially to approximately $2.55 million, compared to a net loss of $6.39 million in FY2024. Adjusted EBITDA loss also saw a marked improvement, narrowing to approximately $0.87 million in FY2025 from $4.63 million in FY2024.

A significant milestone was achieved in Q2 FY2025, when Glimpse reported positive EBITDA, positive cash flow, and positive net income for the first time as a public company. This momentum continued into Q3 FY2025, marking the second consecutive quarter of positive cash flow from operations. For the full fiscal year 2025, the company achieved near cash flow neutrality, with a net operating cash loss of just $0.27 million, a dramatic improvement from a $5.21 million loss in FY2024.

Glimpse maintains a strong liquidity position. As of June 30, 2025, cash and cash equivalents totaled $6.83 million, with no outstanding debt obligations, convertible debt, or preferred equity. The company's current ratio stands at a healthy 3.49. In December 2024 and January 2025, Glimpse bolstered its cash reserves by completing a Securities Purchase Agreement that generated $6.79 million in net proceeds. Management believes the company is sufficiently funded to meet its operational plan and future obligations for at least the next 12 months.

Outlook and Growth Drivers: Spatial Core's Expanding Horizon

The Glimpse Group's outlook is robust, driven by the continued expansion of its Spatial Core business and a disciplined approach to operations. Management anticipates Q4 fiscal year 2025 revenues (ending June 30, 2025) to be in the range of $3.2 million to $3.8 million and profitable, which would represent the highest revenue quarter for the company in the past two fiscal years. This is largely attributed to the expected delivery and recognition of the final stage of a significant Department of Defense contract for Spatial Core.

For the full fiscal year 2025, Glimpse expects aggregate revenues to be in the $10 million to $11 million range, representing a 15% to 25% increase over fiscal year 2024, despite the impact of divestitures and subsidiary consolidations. The company projects its going-forward gross margin to stabilize within the 55% to 75% range, an increase from previous guidance, primarily due to a larger proportion of revenue stemming from Spatial Core and software license sales. Q4 FY2025 EBITDA is expected to be positive, contributing to a projected slightly negative EBITDA for the full fiscal year 2025, a substantial improvement from the significant adjusted EBITDA loss in FY2024.

Glimpse expects to generate positive cash flow in each of the remaining quarters for fiscal year 2025, with a current cash operating expense base of less than $0.9 million per month. This strong operational efficiency, combined with a deep pipeline of Spatial Core opportunities, underpins the company's confidence in growing its cash balance without the need for additional capital raises in the foreseeable future. The company's long-term focus is on building Annual Recurring Revenue (ARR) by proving the value of its solutions within specific customer settings.

Risks and Valuation Disconnect

Despite significant operational and financial progress, Glimpse operates in an early-stage, dynamic industry with inherent risks. The immersive technology market, while promising, is subject to rapid technological change and evolving standards. The company has historically incurred net losses and anticipates continued losses for the foreseeable future as it invests in growth.

A material risk is customer concentration, with the five largest customers accounting for approximately 76% of revenues in fiscal year 2025. A significant reduction in revenue from any of these key customers could materially impact operations. The sales cycle for immersive technology solutions, particularly for DoD customers, can be lengthy, ranging from three to 18 months, due to extensive evaluation and budgeting processes. Furthermore, delays in government budget approvals, such as the U.S. government's continuing resolution in early 2025, can postpone the awarding of new contracts.

Management has consistently highlighted a "sharp disconnect" between Glimpse's intrinsic value and its current public company valuation. This perceived undervaluation, characterized by a low market capitalization, nominal trading volume, and persistent selling pressure, has negatively impacted the company's ability to execute its growth strategy. To address this, Glimpse is exploring various aggressive strategic options to unlock shareholder value, including the potential utilization of its untapped $2 million common share buyback plan and a possible spin-out of its Brightline Interactive entity as an independent public company.

Conclusion

The Glimpse Group stands at a pivotal juncture, having successfully executed a strategic pivot towards its AI- and cloud-driven Spatial Core platform. This transformation has not only repositioned the company within the rapidly expanding immersive technology market but has also delivered tangible financial improvements, including a return to revenue growth, significant operational expense reductions, and the achievement of near cash flow neutrality and positive EBITDA. Glimpse's robust balance sheet, devoid of debt, provides a solid foundation for future growth.

The core investment thesis for Glimpse centers on its differentiated Spatial Core technology, which offers unique capabilities in integrating AI and data into 3D environments for high-value enterprise and government applications. This technological leadership, coupled with a disciplined operational strategy and a strong pipeline of contracts, positions the company to capitalize on the immense potential of the immersive technology market. While challenges inherent in an early-stage industry and a persistent valuation disconnect remain, management's proactive exploration of strategic options underscores a commitment to unlocking the inherent value for shareholders, making Glimpse a compelling consideration for investors seeking exposure to the transformative power of spatial computing.