One of the client is having an XM license and they need to implement the virtual user concept of the Sitecore do they need to update the existing licence or this feature is already supported with the Sitecore XM?
Yes, you can use virtual users in XM:
Sitecore also supports Virtual Users, which is a transient user account system that you can use, for example, when integrating with custom authentication systems where an ASP.NET membership provider is not available or possible. A Virtual User is a user that Sitecore does not retrieve or store through an ASP.NET membership provider but rather creates transiently in the Private Session State Store by solution code through the Security API. This, of course, means that you must assign any roles or user profile information through code and that you cannot manage the user account with the user management tools.
Taken from documentation on XM authentication options: https://doc.sitecore.com/developers/91/platform-administration-and-architecture/en/authentication-and-authorization.html
The virtual user supported in XM licence but you can't use any Analytics functionality. For analytics XP licence required. Please find below some useful articles, which helps you in understanding the required topologies:. https://doc.sitecore.com/users/91/sitecore-experience-platform/en/cms-only-mode-compatibility.html https://doc.sitecore.com/developers/90/platform-administration-and-architecture/en/the-xdb-and-tracker-configuration-settings.html https://doc.sitecore.com/developers/90/sitecore-experience-management/en/sitecore-configurations-and-topology-for-azure.html