Company Interview / Small defence contractor gets big endorsement

Key points:

Strategic MoU between Operator xReality and Thales to offer integrated VR soldier training solutions Strong international expansion focus including the US, Europe, Asia, Sweden and Japan Growing investor interest in Australian defence tech, with EOS and DroneShield highlighted

Australia’s defence simulation sector is set for rapid growth, according to Kim Hopwood from xReality Group (ASX:XRG), who highlights a new strategic memorandum of understanding between Operator xReality and global defence company Thales. Hopwood states that Operator XR is a leading virtual reality tactical training system focused on dismounted soldier training, and that Thales brings complementary capabilities in areas such as marksmanship. The collaboration is framed as a way to present a broader, integrated training solution to militaries worldwide.

Hopwood describes the arrangement as an early‑stage, high‑level agreement without specific contracts yet attached, but points to strong underlying momentum. Operator xReality’s internal rate of return is said to rise from $4.7 million at the end of FY25 to $7.4 million currently, reflecting what Hopwood characterises as fast growth. Defence contracts are described as slow moving, yet the global reach of Thales is seen as a major long‑term revenue opportunity.

Expansion beyond Australia is a key focus. Hopwood notes recent wins with the Swedish military and a first customer in Japan, with growing appetite for defence training across NATO, Europe and Asia, alongside the core US market. On the ASX, Hopwood cites EOS (ASX:EOS) and DroneShield (ASX:DRO) as examples of Australian defence technology success stories.