Japanese extended reality company monoAI technology (5240) slashed its full-year revenue forecast by 26% as demand for metaverse events continues to weaken and key client relationships face scrutiny.
The Kobe-based firm cut its fiscal 2025 revenue projection to ¥1.06 billion ($7.2 million) from a previous estimate of ¥1.44 billion ($9.8 million), according to a Wednesday filing. Operating losses are now expected to nearly double to ¥352 million ($2.4 million) from an earlier forecast of ¥180 million ($1.2 million).
The downgrade reflects broader challenges facing smaller metaverse operators even as industry forecasts predict the global metaverse market will reach $936 billion by 2030. MonoAI’s struggles highlight the gap between ambitious market projections and the reality facing specialized XR service providers.
The company attributed the revision to several factors, including the June sale of subsidiary Morikatoron, which removed it from consolidated results. More concerning for investors, monoAI cited reduced orders from major clients due to relationship reviews and what it described as “a clear declining trend in metaverse event demand.”
Multiple XR peripheral service projects are also unlikely to receive orders during the current period, the company said. This suggests challenges extend beyond one-off client issues to broader market conditions affecting the XR CLOUD platform that forms the core of monoAI’s business.
Second-quarter results released simultaneously showed revenue fell 15.3% to ¥639 million ($4.3 million) from the prior year. While the company narrowed its operating loss to ¥109 million ($740,000) from ¥122 million ($830,000) a year earlier, the improvement appears insufficient to offset the deteriorating demand outlook.
The company’s financial strains are compounded by increased spending on governance and intellectual property strategy, which added ¥34 million ($230,000) in external consulting costs. These expenses, while potentially necessary for long-term growth, further pressure near-term profitability for a company already struggling with market headwinds.
Despite special gains of ¥83 million ($560,000) from the Morikatoron sale, monoAI expects a net loss of ¥304 million ($2.1 million) for the full year. The asset sale provides temporary relief but underscores the company’s need to find sustainable revenue sources as metaverse event demand proves more volatile than initially anticipated.
