SAN JOSE, Calif., July 31, 2025 (GLOBE NEWSWIRE) -- zSpace (Nasdaq: ZSPC) (“zSpace” or the “Company”), a leader in immersive learning, announced today that it plans to release financial results for the second quarter ended June 30, 2025, on Thursday, August 14, 2025, after the close of market trading. In conjunction with reporting second quarter 2025 results, zSpace will host a conference call at 5:00 p.m. ET / 2:00 p.m. PT with the Company’s Chief Executive Officer, Paul Kellenberger, and the Company’s Chi ...

Core Insights - zSpace has been awarded the Future's Best of Show Award at ISTE 2025 for its headset-free AR/VR laptop solution, zSpace Imagine, in the Primary Education category, marking the second consecutive year of recognition [1] - The award highlights zSpace's commitment to providing transformative technology for K–12 education, higher education, and workforce development [1] Company Overview - zSpace, Inc. specializes in augmented and virtual reality (AR/VR) experiences aimed at enhancing learning in STEM, Career and Technical Education (CTE), and career readiness programs [5] - The company is trusted by over 3,500 educational institutions, including school districts, technical centers, community colleges, and universities [5] - zSpace holds over 70 patents and focuses on hands-on learning experiences that improve student engagement and test scores [5] Product Details - zSpace Imagine is the first AR/VR laptop designed specifically for primary education, offering immersive learning experiences without the need for headsets [3] - The device features a stylus-enabled, glasses-free 3D display, allowing students to engage with STEM and core subjects in interactive ways [3] Awards and Recognition - The Best of Show Awards are evaluated by industry experts based on innovation, feature set, reliability, and performance [2] - zSpace's previous award in 2024 recognized its innovative Career Readiness Solution, which includes Career Coach AI™ [1][4]

Core Insights - zSpace is launching the zSpace Career Explorer™ application, an AR/VR tool aimed at preparing students for high-demand careers starting in the 2025–2026 school year [1][2] - The application is designed for grades 5–8 and focuses on career exploration in skilled trades and other high-demand fields [2][3] - zSpace Career Coach™, an AI-powered assistant, provides personalized career guidance within the Career Explorer application [4][6] Features and Functionality - The Career Explorer application includes interactive simulations for various careers such as welding, vehicle maintenance, robotic programming, and basic medical procedures [3][8] - Each simulation is set in realistic environments and includes dynamic career profiles detailing skills, responsibilities, salary ranges, and educational pathways [3][8] - The AI-powered Career Coach allows students to ask questions, explore related careers, and export transcripts for review, offering tailored guidance based on user interactions [4][8] Company Background - zSpace, Inc. is a leader in AR/VR experiences, focusing on STEM, CTE, and career readiness programs, and is trusted by over 3,500 educational institutions [7][8] - The company holds over 70 patents and emphasizes hands-on learning experiences that enhance student engagement and knowledge retention [7][9]

Core Insights - zSpace is participating in the ISTE Live 25 Conference from June 30 to July 2, 2025, showcasing its latest educational solutions [1] - The company is debuting the Career Explorer app, designed to help students explore high-demand careers through immersive experiences [3] - Nicole Heaver has been recognized as the 2025 zSpace Educator of the Year for her innovative use of zSpace technology in her classroom [6] Product Highlights - The Career Explorer app will be available for the 2025-2026 school year, providing interactive career exploration tools [3] - zSpace is expanding its AR/VR content library with new lessons in STEM, CTE, and career exploration, along with success stories from educators [4] - The zSpace Imagine solution is designed for elementary education, offering an AR/VR experience without the need for headsets, featuring interactive 3D content and a precision stylus [5] Educational Impact - The featured session at the conference will discuss integrating design thinking and extended reality for sustainable educational models, particularly in rural areas [4] - zSpace's solutions are trusted by over 3,500 educational institutions, enhancing learning experiences that may be dangerous or impractical with traditional methods [8] - A study published in the Journal of Computer Assisted Learning indicates that zSpace's hands-on learning solutions can lead to higher student test scores [9]

Core Insights - zSpace has been recognized for its innovative AR/VR solutions in education, particularly at Upper Bucks County Technical School (UBCTS), which has been named a zSpace School of Distinction [1][7] - The initiative began in 2020 to address learning loss during the pandemic and has successfully integrated immersive technology into career and technical education (CTE) [2][3] Group 1: Implementation and Impact - UBCTS's Executive Director, Dr. Michael Herrera, introduced zSpace's platform to enhance student engagement and workforce readiness during the pandemic [2][3] - Instructor Patrick Chrinko transformed the automotive lab into an interactive environment, allowing students to engage with complex systems before working on physical vehicles [3][4] - The AR/VR teaching model has proven to be more efficient and engaging compared to traditional methods, enabling students to simulate tool use and diagnose virtual system malfunctions [4] Group 2: Recognition and Advocacy - UBCTS has become a model for integrating immersive technology in CTE, enhancing curriculum, improving safety, and supporting recruitment efforts [5][6] - The school showcases its technology to prospective students and policymakers, demonstrating the value of immersive learning in preparing future workforces [6] - The recognition of UBCTS and Mr. Chrinko serves as a blueprint for other educational institutions to embrace innovation in teaching [7] Group 3: Company Overview - zSpace, Inc. provides AR/VR experiences that enhance STEM and CTE programs, trusted by over 3,500 educational institutions [9] - The company holds over 70 patents and focuses on hands-on learning solutions that improve student outcomes, as evidenced by research published in 2021 [9]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $6.8 million, down 14% year-over-year, primarily due to hardware revenues declining by 26% [5][11] - Software and services revenue increased by 11% year-over-year, contributing to improved gross profit and margins [5][11] - Gross profit for the quarter was $3.2 million, up 19% year-over-year, with gross margins improving to 47.4%, up 13 percentage points from 34.5% in the prior year [12][13] Business Line Data and Key Metrics Changes - Hardware revenues decreased significantly, while software and services revenues showed growth, indicating a strategic shift towards higher-margin offerings [11][12] - Bookings for the quarter were $8.3 million, down 6% year-over-year, with a notable 78% decline in international bookings excluding China [12] Market Data and Key Metrics Changes - The U.S. market saw a 4% growth in bookings, contrasting with a significant decline in international markets [12] - The company ended the quarter with $9.7 million in unfulfilled orders, reflecting challenges in funding sources for end users [12] Company Strategy and Development Direction - The company is focusing on enhancing its digital platform through strategic acquisitions, including BlocksCAD and Second Avenue Learning, to improve content capabilities and software offerings [6][8][9] - The transition to the Inspire II laptop is aimed at driving cost efficiencies and protecting gross margins [6] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding future opportunities despite ongoing volatility in the education market and uncertainty around funding sources [10][19] - The company refrained from providing formal financial guidance for the year due to the unpredictable operating environment [20] Other Important Information - Operating expenses for the quarter were $7.6 million, an increase of 11% year-over-year, with stock-based compensation recorded at $1 million [17] - A $20 million convertible financing facility was closed, with $13 million funded, providing liquidity for acquisitions and corporate purposes [18] Q&A Session Summary Question: Update on sales cycle and funding uncertainty - Management confirmed that the sales cycle for K-12 has extended to 75-90 days, with ongoing high uncertainty in funding sources [24][26] Question: Impact of tariffs on BOM costs - Current tariffs are at 20%, with plans to pass these costs to customers, while the new Inspire II model has a lower BOM cost, improving hardware profitability [37][40] Question: Integration of recent acquisitions - The integration of BlocksCAD is complete, while Second Avenue Learning is in progress, with positive feedback on both [44][46] Question: Feedback on the Imagine product and CTE adoption - Initial feedback on the Imagine product has been positive, with strong adoption in advanced application areas within CTE [47][49] Question: Bookings pattern and backlog health - The company noted a non-linear bookings pattern, with strong performance in the U.S. market, and confirmed that the software backlog remains healthy [55][61]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $6.8 million, down 14% year-over-year, primarily due to a 26% decline in hardware revenues as K-12 customers faced funding challenges [4][10] - Software and services revenue increased by 11% year-over-year, contributing to improved gross profit and margins [4][10] - Gross profit for the quarter was $3.2 million, up 19% year-over-year, with gross margins improving to 47.4%, up 13 percentage points from the prior year [11][12] Business Line Data and Key Metrics Changes - Hardware revenues decreased significantly, while software and services revenues showed growth, indicating a strategic shift towards higher-margin offerings [10][12] - Bookings for the quarter were $8.3 million, down 6% year-over-year, with a notable 78% decline in international bookings excluding China [11] Market Data and Key Metrics Changes - The U.S. market saw a 4% growth in bookings, while international markets (excluding China) experienced a significant decline [11] - The company ended the quarter with $9.7 million in unfulfilled orders, reflecting the impact of funding source changes on customer behavior [11] Company Strategy and Development Direction - The company is focusing on enhancing its digital platform through strategic acquisitions, including BlocksCAD and Second Avenue Learning, to expand software capabilities and content offerings [5][6][7] - The transition to the Inspire II laptop is aimed at driving cost efficiencies and protecting gross margins [5] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about future opportunities despite ongoing volatility in the education market and uncertainty around funding sources [8][19] - The company refrained from providing formal financial guidance for the year due to the unpredictable operating environment [19] Other Important Information - The company closed a $20 million convertible financing facility, with $13 million funded, to support acquisitions and general corporate purposes [17] - Operating expenses for the quarter were $7.6 million, an increase of 11% year-over-year, reflecting ongoing investments in growth [15] Q&A Session Summary Question: Update on sales cycle and funding uncertainty - Management confirmed that the sales cycle for K-12 has increased to 75-90 days, with ongoing high uncertainty in funding sources [22][24][28] Question: Impact of tariffs on BOM costs - The company expects a 20% tariff impact in Q2, with no significant impact felt in Q1, and plans to pass these costs onto customers [33][35][38] Question: Integration of recent acquisitions - The integration of BlocksCAD is complete, while Second Avenue Learning is in progress, with positive feedback on both [41][44] Question: Feedback on the Imagine product and CTE adoption - Initial feedback on the Imagine product has been positive, with strong adoption in advanced application areas within CTE [45][47] Question: Bookings patterns and backlog - Management noted a non-linear bookings pattern, with strong demand in the U.S. market, and confirmed that the software backlog remains healthy [49][58]

Financial Performance - For the three months ended March 31, 2025, zSpace, Inc. reported revenue of $6.759 million, a decrease of 13.8% compared to $7.841 million in the same period of 2024[13]. - The cost of goods sold for the same period was $3.553 million, resulting in a gross profit of $3.206 million, which is an increase of 18.6% from $2.702 million in 2024[13]. - Total operating expenses decreased to $8.590 million in Q1 2025 from $14.091 million in Q1 2024, reflecting a reduction of 38.8%[13]. - The net loss for Q1 2025 was $5.832 million, significantly improved from a net loss of $12.247 million in Q1 2024, representing a reduction of 52.4%[13]. - Total revenues for the three months ended March 31, 2025, were $6,759 million, a decrease of 13.8% from $7,841 million in the same period of 2024[138]. - Gross profit increased to $3,206 million in Q1 2025, compared to $2,702 million in Q1 2024, reflecting a gross margin improvement[138]. - Total operating expenses decreased to $8,590 million in Q1 2025, down 38.8% from $14,091 million in Q1 2024[138]. - The segment net loss for Q1 2025 was $5,832 million, significantly improved from a net loss of $12,247 million in Q1 2024[138]. Cash Flow and Financial Position - Cash, cash equivalents, and restricted cash decreased to $1.129 million as of March 31, 2025, down from $4.864 million at the end of 2024[19]. - The company incurred negative cash flows from operations of $4.641 million in Q1 2025, compared to $5.414 million in Q1 2024, indicating a slight improvement[19]. - zSpace's accumulated deficit increased to $296.232 million as of March 31, 2025, from $290.400 million at the end of 2024[16]. - The Company completed its IPO on December 6, 2024, selling 2.2 million shares at $5.00 per share, resulting in net proceeds of $7.5 million after expenses[31]. - As of March 31, 2025, the Company reported total cash, cash equivalents, and restricted cash of $1.129 million, a decrease from $4.864 million as of December 31, 2024[35]. - The company is exploring additional financing options to address ongoing working capital shortfalls and improve its financial position[26]. Revenue Breakdown - Hardware revenue decreased to $3.829 million in Q1 2025 from $5.195 million in Q1 2024, reflecting a decline of 26.3%[55]. - Product revenue accounted for 57% of total revenue for the three months ended March 31, 2025, down from 66% in the same period of 2024[176]. - Software applications revenue increased to 29% of total revenue for the three months ended March 31, 2025, compared to 25% in the same period of 2024[178]. - Services revenue accounted for 14% of total revenue for the three months ended March 31, 2025, up from 9% in the same period of 2024[180]. - International sales accounted for $960,000 in Q1 2025, down from $1.172 million in Q1 2024, with China contributing $1.0 million in Q1 2025[55]. Debt and Financing - The Company entered into a senior secured convertible note financing agreement for $13,978,495, which closed on April 11, 2025[140]. - The gross proceeds from the convertible note financing were $13,000,000, intended for debt repayment and working capital[141]. - The note issued has an interest rate of 6.0% per annum and matures on April 11, 2027[143]. - The company fully repaid all outstanding loans totaling approximately $10.18 million using proceeds from the convertible note financing[154]. - The outstanding balance of other term loans as of March 31, 2025, was $5.8 million, with effective interest rates ranging from 14.2% to 25.0%[89]. Stock and Equity - The Company completed an IPO on December 6, 2024, issuing 2.2 million shares at $5.00 per share, resulting in net proceeds of $7.5 million after expenses[92]. - The IPO led to the conversion of 4.0 million shares of preferred stock into 18.7 million shares of common stock[92]. - As of March 31, 2025, the Company had 77,150,622 shares reserved for future issuance of common stock[91]. - The Company granted 724,646 Restricted Stock Units (RSUs) valued at $12.9 million to executives and directors in February 2025, with vesting periods of one to three years[110]. - The Company has authorized 5,000,000 shares of preferred stock, with no shares designated or outstanding as of March 31, 2025[93]. Operational Highlights - The company shipped approximately 19,400 units of its proprietary laptop product, Inspire, under a partnership with a major PC OEM as of March 31, 2025[199]. - The average term length of renewable software license agreements is increasing, indicating long-term adoption of products by customers[193]. - The company plans to focus on acquiring key software companies and intellectual property to drive future growth in the education market[201]. Market and Industry Outlook - The total addressable market (TAM) for the K-12 market is estimated at approximately $21.4 billion in the United States, $29.0 billion in EMEA, and $5.6 billion in APAC, with a global TAM exceeding $68 billion[165][166]. - Management's discussion indicates that historical results may not be indicative of future performance, highlighting the importance of assessing industry outlook and risk factors[160]. - The company is facing uncertainties due to new U.S. tariffs on imports, which could adversely impact its supply chain and financial condition[202]. Employee and Customer Metrics - The company emphasizes the importance of retaining key employees, as their departure could negatively affect operations and business performance[198]. - The net dollar revenue retention rate (NDRR) for customers with at least $50,000 of ACV was 97% for the trailing twelve-month period ended March 31, 2025, down from 112% in the previous year[192].

Financial Performance - Revenue for Q1 2025 was $6.8 million, down from $7.8 million in Q1 2024, reflecting a decline of approximately 12.8%[5] - Gross margin improved to 47.4% in Q1 2025, up from 34.5% in Q1 2024, an increase of about 13 percentage points[7] - Net loss narrowed to ($5.8) million in Q1 2025 compared to ($12.2) million in Q1 2024, representing a reduction of approximately 52.4%[10] - Bookings in Q1 2025 were $8.3 million, down 6% year-over-year, with a 78% decline in international geographies excluding China[9] - Operating expenses in Q1 2025 were $7.6 million, compared to $7.0 million in Q1 2024, reflecting a year-over-year increase[9] Contract Value and Acquisitions - Annualized Contract Value (ACV) of renewable software increased by 10% to $11.6 million as of March 31, 2025, compared to $10.6 million a year ago[8] - The company completed the acquisition of Second Avenue Learning on April 15, 2025, enhancing its educational technology offerings[5] Strategic Initiatives - zSpace transitioned fully to the Inspire 2 laptop, which aims to improve cost efficiencies while maintaining the immersive experience[5] - The company closed a $20 million convertible debt financing facility post-quarter, with $13 million funded at closing[3] - zSpace was included in the Russell 2000® and Russell 3000® Indexes effective March 24, 2025, marking a significant milestone[5]

Core Viewpoint - zSpace reported a revenue decline in Q1 2025 but highlighted growth in its higher-margin software and services business, which increased by 11% year-over-year. The company is optimistic about its strategic initiatives and long-term growth potential despite a challenging macro environment [2][3]. Financial Performance - Revenue for Q1 2025 was $6.8 million, down from $7.8 million in Q1 2024, primarily due to funding uncertainty and order delivery delays [5]. - Gross margin improved to 47.4% from 34.5% in the same period last year, attributed to a shift in revenue from hardware to software and services, and better hardware profitability from the Inspire 2 platform [6]. - Net loss for Q1 2025 was ($5.8) million, an improvement from a net loss of ($12.2) million in Q1 2024 [10]. Business Highlights - The company successfully transitioned to the next-generation Inspire 2 laptop and expanded its software capabilities through acquisitions of BlocksCAD and Second Avenue Learning [2]. - zSpace was included in the Russell 2000 and Russell 3000 Indexes, marking a significant milestone [8]. - The Annualized Contract Value (ACV) of renewable software increased to $11.6 million, a 10% rise from $10.6 million a year ago [7]. Operational Metrics - Bookings in Q1 2025 were $8.3 million, down 6% year-over-year, with a notable 78% decline in international bookings excluding China [9]. - Operating expenses, excluding stock-based compensation, were $7.6 million compared to $7.0 million in Q1 2024 [9]. Capital Structure - zSpace closed a $20 million convertible debt financing facility, with $13 million funded at closing, which will enhance its capital structure [3][8].