SAN JOSE, Calif., June 18, 2025 (GLOBE NEWSWIRE) -- zSpace (NASDAQ: ZSPC) (“”zSpace” or the “Company”), a leading provider of augmented and virtual reality solutions for education, today announced that Upper Bucks County Technical School (UBCTS) has been named a zSpace School of Distinction, and automotive instructor Patrick Chrinko recognized as a zSpace educator of Distinction for their leadership in integrating immersive technology into career and technical education (CTE). The honors reflect UBCTS’s inn ...

zSpace (ZSPC) Q1 2025 Earnings Call May 14, 2025 05:00 PM ET Company Participants Greg Robles - Investor Relations Senior AssociatePaul Kellenberger - CEO & ChairpersonErick DeOliveira - CFOAlexander Paris - President & SMDJared Osteen - Equity Research AssociateNehal Chokshi - Managing Director Operator Good day, everyone. Thank you for participating in today's conference call to discuss zSpace's financial results for the first quarter ending 03/31/2025. Joining us today are zSpace CEO, Paul Kellenberger C ...

zSpace (ZSPC) Q1 2025 Earnings Call May 14, 2025 05:00 PM ET Speaker0 Good day, everyone. Thank you for participating in today's conference call to discuss zSpace's financial results for the first quarter ending 03/31/2025. Joining us today are zSpace CEO, Paul Kellenberger CFO, Eric de Oliveira and Greg Robbles from Investor Relations. Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Rawls as he reads the company's safe harb ...

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]

SAN JOSE, Calif., May 14, 2025 (GLOBE NEWSWIRE) -- zSpace (NASDAQ: ZSPC) (“zSpace” or the “Company”), a leader in augmented and virtual reality solutions for education, is announcing its financial results for the three months ended March 31, 2025. “We are pleased with the strategic progress we made to start the year,” said Paul Kellenberger, CEO of zSpace. “We successfully transitioned to our next-generation Inspire 2 laptop, expanded our software capabilities through the acquisitions of BlocksCAD and Secon ...

Core Viewpoint - zSpace plans to release its financial results for the first quarter ended March 31, 2025, on May 14, 2025, after market close [1] Group 1: Financial Results Announcement - zSpace will host a conference call on the same day at 5:00 p.m. ET / 2:00 p.m. PT, featuring the CEO and CFO [2] - A live webcast of the call will be available on the investor relations website, and a replay will be accessible for a limited time [2] Group 2: Company Overview - zSpace, Inc. provides AR/VR solutions aimed at enhancing STEM, CTE, and career readiness programs, serving over 3,500 educational institutions [3] - The company is headquartered in San Jose, California, holds over 70 patents, and its solutions have been shown to improve learning outcomes [3]

Core Insights - zSpace, Inc. has acquired Second Avenue Learning, enhancing its position in the EdTech sector by combining AR/VR technology with interactive learning solutions [1][3][4] Company Overview - zSpace, founded in 2007, specializes in AR/VR solutions for education, focusing on immersive learning experiences without the need for head-mounted displays [2][9] - Second Avenue Learning, based in Rochester, NY, is known for its custom educational software and interactive learning experiences, founded by Tory Van Voorhis [2][7] Strategic Benefits of Acquisition - The acquisition is expected to enhance zSpace's content offerings by integrating Second Avenue Learning's expertise in creating interactive, standards-aligned learning modules [4] - The collaboration aims to accelerate innovation in AR/VR and blended learning applications, providing comprehensive experiential learning solutions [4][5] - The combined strengths of both companies will create tools that inspire student engagement and improve academic success [4][5] Leadership Perspectives - Paul Kellenberger, CEO of zSpace, emphasized the transformative potential of the acquisition for education, aiming to inspire a lifelong passion for discovery among students [5] - Tory Van Voorhis, Founder & CEO of Second Avenue Learning, expressed excitement about the partnership, highlighting the opportunity to blend technology with education for enhanced learning experiences [5] Market Position and Future Outlook - This acquisition marks a significant milestone for zSpace following its public listing on Nasdaq in December 2024, indicating a strong growth trajectory [6] - Financial terms of the deal were not disclosed, but both companies are committed to a smooth integration focused on innovation and customer success [6]

Financial Data and Key Metrics Changes - For the full year 2024, revenues were $38 million, down 13% year-on-year due to capital constraints prior to the IPO, which limited the ability to fulfill orders from backlog [28] - Gross margins for the year improved to 40.9% from 38.5% in the prior year, an increase of 240 basis points, primarily due to a shift in revenue mix from hardware to software and services [31] - Fourth quarter revenues were $8.5 million, down 29% year-on-year, attributed to similar capital constraints and backlog fulfillment issues [33] Business Line Data and Key Metrics Changes - The annualized contract value (ACV) of renewable software revenue was $11.3 million, up 6% compared to the previous year [29] - Bookings for the year were $41.5 million, up 1% year-on-year, with U.S. and rest of world bookings (excluding China) at $39.9 million, up 7% year-on-year [30] - In the fourth quarter, bookings were $5.3 million, down 3% year-on-year, but U.S. bookings were up 21% while international bookings (excluding China) saw a decline of 92% [34][30] Market Data and Key Metrics Changes - The K-12 education and career and technical education (CTE) markets exceed $69 billion globally, with the global ed tech market valued at over $142 billion in 2023, projected to grow at a CAGR of 13.6% through 2030 [11] - The AR VR education segment is expected to reach $14.2 billion by 2028, growing at a 30% CAGR [12] - The company is currently implemented in over 3,500 of the approximately 13,000 public school districts in the U.S., including over 80% of the largest 100 school districts [12] Company Strategy and Development Direction - The company aims to increase penetration within existing K-12 STEM and CTE markets, expand international presence through a network of over 25 resellers, and invest in R&D to enhance its platform [17][19] - The recent acquisition of BlocksCAD is intended to strengthen immersive learning solutions with a 3D design platform for STEM education [21] - The company plans to focus on acquiring complementary software solutions to accelerate software revenue growth [20] Management's Comments on Operating Environment and Future Outlook - Management noted uncertainty in the education market affecting decision-making among customers, leading to potential lengthening of sales cycles [38] - Despite the uncertainty, there is confidence in capturing demand for CTE solutions due to significant state-level funding announcements [39] - The company anticipates Q1 2025 revenues slightly above $5 million, with expectations of continued growth in the full year [39][40] Other Important Information - The company has over 80 issued patents, reinforcing its position in the education technology space [17] - Operating expenses for the year were $33.2 million, an increase of 30% year-on-year, but flat when normalized for stock-based compensation [32] Q&A Session Summary Question: Impact of IPO timing on bookings - Management explained that the timing of the IPO affected the availability of new products for sales launches, which in turn impacted bookings [44][46] Question: Inventory availability for sales demos - Inventory for the Inspire 2 product became available late in Q4, while the Imagine product inventory is available in Q1 [48] Question: Lengthening of sales cycles in K-12 - Management indicated that the average sales cycle has increased from 60-75 days to 75-90 days due to uncertainty in funding sources [82][83] Question: Gross margin trends - Management highlighted that gross margin improvements are expected from the new hardware mix and increased software content [66][70] Question: Recent debt instrument - The company took on a $2 million debt line to maintain liquidity amid market turbulence [118]

Market Overview - The total addressable market (TAM) for the K-12 market in the United States is approximately $21.4 billion, with a global TAM exceeding $68 billion[32]. - The global education technology market was valued at $142.4 billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 13.6% from 2023 to 2030[33]. - The global AR, VR, and mixed reality market is expected to grow at a 37% CAGR to $252 billion by 2028[33]. Revenue and Financial Performance - For the year ended December 31, 2023, revenue in the United States was $38.7 million, representing 88% of total revenue, while revenue outside the United States was $5.2 million, representing 12%[34]. - Consolidated revenue for the year ended December 31, 2023 increased over 22% compared to the year ended December 31, 2022, but decreased 13% for the year ended December 31, 2024 compared to 2023[75]. - The company reported a net loss of approximately $(20.8) million for the year ended December 31, 2024, and $(13.0) million for the year ended December 31, 2023, with an accumulated deficit of $(290.4) million as of December 31, 2024[92]. - A significant portion of the company's revenue is derived from K-12 schools, which are heavily dependent on federal, state, and local government funding, making them vulnerable to budget cuts and funding difficulties[125]. Product Development and Innovation - The Inspire 2 laptop, launched in late 2024, features a 20-22% boost in processing and graphics performance compared to its predecessor[42]. - The Imagine laptop, launched in early 2025, is 41% smaller and 30% lighter than the Inspire, designed specifically for young learners[42]. - The company has developed a scalable go-to-market strategy utilizing a multi-channel sales approach, combining direct sales and channel partners to reach potential customers effectively[54]. - The company has a large content library and pioneering AR/VR capabilities, which it intends to expand to meet the needs of current and future customers[54]. Customer Base and Market Strategy - The company has implemented its platform in over 3,500 of the approximately 13,000 public school districts in the United States, with K-12 solutions deployed in over 80% of the largest 100 districts[27]. - The CTE solutions have been deployed in approximately 73% of the public school districts served, and in about 2% of community and technical colleges in the United States[27]. - The company has partnered with over 25 resellers and expanded its customer network into over 50 countries, indicating significant international growth potential[27]. - The company expects to continue to drive growth by increasing marketing efforts and expanding use cases within the United States education market, particularly focusing on K-12 and CTE users[54]. Competition and Market Risks - The company faces significant competition in the education technology market, with potential buyers often evaluating funding for various educational products[55]. - The company faces increased competition from new entrants and established companies, which may pressure pricing and market share[82]. - The company relies on a limited number of significant customers, which poses a risk to revenue stability[93]. - The company may not achieve market acceptance for new products, which could adversely affect business and financial condition[100]. Operational Challenges - The company has experienced interruptions in platform performance, which could damage reputation and result in customer loss[88]. - The company relies on third-party suppliers for hardware production, including agreements with major PC OEMs for laptop manufacturing[53]. - The company relies on limited source suppliers for product components, and any disruptions in the supply chain could materially affect manufacturing and financial results[106]. - The company faces intense competition for qualified personnel, and failure to attract and retain skilled employees could adversely affect business operations[117]. Financial and Tax Considerations - The company has an accumulated deficit of approximately $(290.4) million as of December 31, 2024, raising substantial doubt about its ability to continue as a going concern[144]. - The company reported United States federal net operating loss (NOL) carryforwards of approximately $200.8 million and state NOL carryforwards of approximately $167.4 million as of December 31, 2024[150]. - The company has recorded a full valuation allowance related to its U.S. federal and state NOL carryforwards due to uncertainty in realizing future benefits[152]. - Changes in tax rates or new tax legislation could result in higher effective tax rates and reduced cash flows[153]. Legal and Compliance Issues - The company identified five material weaknesses in its internal control over financial reporting, which could lead to material misstatements in financial statements[140]. - The company is involved in litigation to protect its intellectual property rights, which may divert resources and management attention[174]. - The company is facing potential legal challenges regarding intellectual property claims, which could significantly increase operating expenses and harm business operations[178]. - The company is subject to various U.S. and international laws and regulations that could change and impact its business operations[169]. Cybersecurity and Data Privacy - Cybersecurity risks, including potential breaches and disruptions, could materially impact the company's reputation and financial condition[212]. - The company has experienced attempted cyber-attacks in the past, which could lead to operational disruptions and damage to its brand[215]. - Compliance with data privacy and security regulations is critical, and any failure could result in significant liabilities or penalties[172]. Stock Performance and Governance - The price of the company's common stock may be volatile due to fluctuations in user growth, revenue, and market conditions[219]. - dSpace Investments Limited currently controls a majority of the voting power of the company's outstanding common stock, classifying it as a "controlled company" under Nasdaq Listing Rules[222]. - The board of directors is not required to have a majority of independent directors due to its controlled company status[224]. - Key factors influencing stock performance include additional shares sold into the market, changes in capital structure, and user engagement levels[223].