Immersive Training And AI Simulation Will Drive Long-Term Upside In This Undervalued XR Pure Play

Catalysts

About Glimpse Group

The Glimpse Group builds and scales immersive and AI driven software and services for enterprises and government customers.

What are the underlying business or industry changes driving this perspective?

• Acceleration of immersive training and simulation needs within defense and large enterprises positions Brightline's spatial computing middleware to convert current multimillion dollar pilots into recurring contracts, supporting a rebound in revenue growth as government budget delays resolve.
• Rising adoption of AI powered roleplay and simulation tools in education and health care provides a growing addressable market for Foretell AI, where expanding license volumes and renewals can shift Glimpse's mix toward higher margin recurring software revenue and stronger net margins.
• Advancing the Brightline IPO spin off with a clean capital structure, no debt and no contingent liabilities creates a clearer sum of the parts valuation, which can unlock hidden equity value and improve perceived earnings power for both entities.
• Industry wide investment in digital twins, robotics, drones and autonomous systems increases demand for real time orchestration platforms, positioning Brightline's core offering to scale contract sizes and duration, which would support higher sustained revenues and operating leverage.
• Management's focus on rationalizing noncore entities and emphasizing scalable software products such as Foretell AI enhances operating efficiency, so that a return to fiscal year 2025 revenue levels around the breakeven point could translate incremental growth directly into improved EBITDA and earnings.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Glimpse Group's revenue will grow by 32.9% annually over the next 3 years.
• Analysts are not forecasting that Glimpse Group will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Glimpse Group's profit margin will increase from -27.1% to the average US IT industry of 7.0% in 3 years.
• If Glimpse Group's profit margin were to converge on the industry average, you could expect earnings to reach $1.6 million (and earnings per share of $0.07) by about December 2028, up from $-2.6 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 46.1x on those 2028 earnings, up from -8.7x today. This future PE is greater than the current PE for the US IT industry at 30.3x.
• Analysts expect the number of shares outstanding to grow by 0.16% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.93%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Heavy reliance on U.S. Department of War contracts and broader government budgets means prolonged shutdowns, continuing resolutions or shifting defense priorities could delay or shrink project pipelines and prevent expected multimillion dollar pilots from converting into long term programs, putting sustained pressure on revenue growth and earnings.
• The IPO spin off of Brightline is not guaranteed and, if market conditions or regulatory hurdles delay or derail the transaction, the anticipated unlocking of sum of the parts value and access to fresh capital may not materialize, limiting strategic flexibility and constraining improvements in net margins and earnings.
• Foretell AI is still early in commercialization and faces fast moving competition in AI simulation and immersive training, so slower than expected adoption in education and health care or higher churn in annual licenses could prevent it from becoming a fundamental base of the business, weakening recurring revenue growth and limiting gross margin expansion.
• The sharp 43 percent year over year revenue decline and increased adjusted EBITDA loss in Q1 fiscal 2026 highlight that the business remains sensitive to contract timing and lumpy project work, and if revenue does not quickly return to around the ten million dollar breakeven level, ongoing losses could erode cash reserves and weigh on future earnings.
• The broader immersive and spatial computing sector may experience investment cycles and hype driven volatility, and if long term adoption of digital twins, robotics and autonomous systems scales more slowly than management anticipates, demand for Brightline’s orchestration middleware and related services could underperform expectations, limiting long run revenue potential and operating leverage.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $2.62 for Glimpse Group based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $22.3 million, earnings will come to $1.6 million, and it would be trading on a PE ratio of 46.1x, assuming you use a discount rate of 8.9%.
  
• Given the current share price of $1.06, the analyst price target of $2.62 is 59.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.