On the evening of September 25, agricultural drone unicorn XAG Technology officially submitted its prospectus to the Hong Kong Stock Exchange, marking its second IPO attempt following the withdrawal of its STAR board application in 2021. According to the prospectus, XAG ranks second globally in the agricultural drone market, jointly commanding nearly 80% market share alongside industry giant DJI. In 2024, the company's revenue surpassed 1 billion yuan while achieving its first profitable year with net profits reaching 70.4 million yuan—a dramatically improved performance compared to its consecutive losses in 2021.

**From Losses to Profitability: A Difficult Transformation**

XAG Technology's financial data reflects its strategic shift from "cash-burning expansion" to "revenue generation and cost control." From 2018 to 2020, while revenue grew from 320 million yuan to 530 million yuan, net losses continued expanding from 6.717 million yuan to 60.846 million yuan. After withdrawing its STAR board IPO in 2021, XAG entered a period of deep restructuring.

Between 2022 and 2024, revenue jumped from 600 million yuan to 1.066 billion yuan, while losses narrowed from 250 million yuan to 130 million yuan, culminating in XAG's first profitable year in 2024 with net profits of 70.41 million yuan. In the first half of 2025, the company recorded revenue of 745 million yuan, up 2% year-over-year, with period profits of 130 million yuan, surging 49.1% year-over-year, and gross margin stabilizing at 34.3%.

This profitability turnaround stems from XAG's enhanced cost controls and sales volume improvements. The company reduced production costs through supply chain optimization and product standardization while expanding overseas sales channels to achieve economies of scale. However, the prospectus warns that future increases in R&D investment and operational expenses could potentially lead to renewed losses.

Cash flow data from 2022 to 2025 reveals a clear V-shaped recovery curve. In 2022, XAG's operating cash flow showed a net outflow of 240 million yuan, confirming the massive losses disclosed in previous filings. By 2024, this metric turned to a net inflow of 190 million yuan, corroborating the company's claimed "return to profitability" and demonstrating that core operations had begun generating cash independently.

However, first-half 2025 data exposes the fragility of this improvement. Operating cash flow reverted to a net outflow of 53.67 million yuan, breaking the sustained improvement trend. This volatility indicates the company's profit foundation remains unstable, potentially influenced by seasonal factors, intensified market competition, or cost control pressures.

The evolving cash flow structure deserves attention. Before 2024, investment activities consistently generated net inflows, suggesting asset disposals to recover funds. From 2024 onward, investment activities turned to net outflows, indicating renewed future investments. Meanwhile, financing activities maintained net outflows, reflecting constrained external funding channels and greater reliance on internal cash generation.

Cash reserves fluctuated from 377 million yuan at the start of 2022 to 345 million yuan by mid-2025, remaining relatively stable and providing necessary cushioning for business transformation. However, continued "triple negative" cash flow patterns would steadily deplete cash reserves, threatening financial health.

**Business Structure and Growth Prospects**

XAG's revenue heavily depends on agricultural drone operations. In 2024, agricultural drones contributed 87.8% of revenue, while newer businesses like unmanned vehicles and agricultural autopilot systems maintained relatively low proportions. This concentrated business structure exposes the company to product concentration risks.

Although XAG actively expands its agricultural robotics product portfolio—such as unmanned vehicles launched in 2023 for precision orchard spraying and autopilot systems targeting traditional tractor automation upgrades—commercialization of new businesses requires time.

The global agricultural robotics market provides growth opportunities for XAG. According to Frost & Sullivan reports, this market is projected to grow from 8.9 billion yuan in 2024 to 74.9 billion yuan by 2029, representing a compound annual growth rate of 53.3%. China's market alone is expected to reach 20 billion yuan. Driving factors include agricultural labor shortages, rising precision agriculture demands, and government policy support for "low-altitude economy" initiatives.

However, the industry remains in early commercialization stages, with technology maturity and user acceptance representing primary bottlenecks. XAG must continue substantial R&D investments to consolidate its technological advantages in intelligent spraying, seeding, and mapping applications.

**Differentiated Competition Against Industry Giants**

XAG Technology's greatest challenge comes from industry leader DJI. In 2024, DJI commanded over 50% global market share in agricultural drones, while XAG held only 17.1%. DJI leverages brand effects from consumer drones and supply chain advantages to create pricing and distribution pressures. For instance, DJI's T-series drones have established extensive distribution networks in China's rural areas, while XAG focuses more on premium markets with higher-priced units emphasizing precision and intelligence features.

To address competition, XAG pursues differentiation strategies: first, focusing on comprehensive unmanned solutions through "drone + unmanned vehicle + IoT" combinations to enhance customer stickiness; second, cultivating overseas markets to avoid domestic red ocean competition. The prospectus shows XAG's overseas revenue grew from 150 million yuan in 2022 to 370 million yuan in 2024, with the proportion rising to 34.8%. Markets like Japan and South Korea, with strong agricultural automation demands, became growth engines.

However, this strategy introduces new risks—international trade environment changes could directly impact operations. Future policy tightening could pressure XAG's profit margins.

**Investment Background and IPO Outlook**

XAG Technology has completed multiple funding rounds with investors including Hillhouse Capital, Baidu Capital, and SoftBank Vision Fund. Pre-IPO, founder Peng Bin holds 29.01%, SoftBank holds 12.86%, and Guangzhou Yuexiu Capital holds 1.43%. In July 2025, Hurun Research Institute valued XAG at 7.3 billion yuan.

This Hong Kong listing represents a crucial step in overcoming funding constraints. Agricultural technology requires long-term capital investment. XAG's R&D expenses exceeded 20% of revenue in both 2022 and 2023, primarily for core technology development in sensors and AI algorithms. IPO funding will support expanded production scale, accelerated overseas channel development, and preparation for potential price wars.

Investors should monitor two key issues: first, agricultural robotics involves long payback periods and high market education costs; second, whether XAG can balance short-term profitability with long-term strategic investments post-listing.

**Future Growth Variables**

XAG Technology's future growth depends on three key variables:

First, technology iteration speed—agricultural robotics is evolving from individual tools toward systematic solutions. XAG must maintain innovation in autonomous driving and AI decision-making or risk being overtaken by followers.

Second, scalability capabilities—agricultural robotics requires price reductions for mass adoption to achieve economies of scale. Without cost control, XAG could face "high investment, low return" cycles.

Third, policy environment—China's "Rural Revitalization" strategy and low-altitude economy policies provide industry tailwinds, but rising global trade protectionism could constrain overseas expansion.

In conclusion, XAG Technology's IPO represents an important test case for China's agricultural technology sector. Its return to profitability and global market potential create appeal, but concentrated business structure, competitive pressures from giants, and international trade risks remain concerns. After successful listing, XAG must prove it can not only "survive" but also continuously unleash growth momentum in the agricultural robotics race.