Core Insights - zSpace, Inc. has launched "Precision Measurement," an immersive AR/VR training application aimed at enhancing Career and Technical Education (CTE) programs in manufacturing, machining, and quality assurance [1][5]. Group 1: Product Features - Precision Measurement allows learners to explore measurement concepts and interact with precision tools through hands-on simulations, revolutionizing student engagement with geometric tolerances and mechanical processing fundamentals [2][3]. - The application provides realistic 3D simulations where students can use virtual measuring instruments, evaluate tolerances, and detect errors in real time, creating a safe and engaging learning environment [3][6]. - It is designed for high school and postsecondary CTE programs, offering a scalable and cost-effective alternative to expensive physical equipment [5]. Group 2: Educational Impact - The application enables students to gain hands-on experience in geometric tolerances, precision tools, and error detection, building confidence and accuracy in real-world inspection tasks [6]. - Educators can utilize the application to reinforce lessons, assess student progress, and align learning outcomes with real-world technical standards and certifications [5][6]. Group 3: Market Position and Future Events - Precision Measurement is part of zSpace's expanding portfolio of immersive CTE applications that support pathways in Advanced Manufacturing, Automotive Technology, Health Science, and Engineering, helping schools meet industry demands [7]. - zSpace will showcase Precision Measurement and its full portfolio at ACTE's CareerTech VISION on December 10-11, 2025, in Nashville, Tennessee [8].

Core Insights - zSpace, Inc. has launched the zStylus One, an advanced AI-powered stylus designed for immersive augmented reality (AR) learning solutions in education [1][7] - The new stylus features embedded sensors and machine learning algorithms, eliminating the need for external sensor modules, thus simplifying classroom setup and enhancing usability [2][8] Product Features - The zStylus One connects via USB-C and is compatible with various zSpace systems, including Inspire and Imagine, with a requirement for Inspire V2 starting in November [3][8] - The stylus is designed to provide a natural user experience, allowing learners to interact with virtual content intuitively, mimicking real-world movements [4][8] - The embedded sensors enhance precision and responsiveness, making it suitable for instructional applications [8] Educational Impact - zSpace's approach to AR aims to simplify technology integration in classrooms, fostering confidence among educators [5][8] - The interactive nature of the zStylus One supports deeper understanding and improved retention of information through tactile engagement and active movement [5][8] Company Background - zSpace is recognized for its innovative AR/VR experiences, trusted by over 3,500 educational institutions, and holds more than 80 patents [8][9] - The company emphasizes a "learning by doing" philosophy, which has been validated by research showing the positive impact of 3D virtual reality technologies on student knowledge gains [9]

Financial Data and Key Metrics Changes - Year-to-date revenues were $23 million, down 22% year-over-year [7] - Q3 revenues of $8.8 million were down 38% year-over-year but represented an 18% sequential improvement over Q2 [11] - Gross profit was $10.9 million year-to-date, down 10% against the same period last year [9] - Gross margins for the nine-month period were 47.3%, up 6.4 percentage points versus the prior year period [10] - Adjusted EBITDA losses narrowed to below $2 million for the third quarter [15] Business Line Data and Key Metrics Changes - Software and services revenue comprised over 50% of total revenue, contributing to gross margin expansion of over 640 basis points [3] - Software and services revenues made up 57% of total revenues in Q3, an 11 percentage point mix shift [11] - Annualized contract value of renewable software was $10.2 million, down 10% compared to 12 months ago [8] - Net dollar revenue retention of customers with at least $50,000 of ACV was 77% [8] Market Data and Key Metrics Changes - The company has secured deployments in Italy, Bulgaria, Poland, and additional locations across the Middle East [5] - CTE customers drove 49% of bookings value, up from 41% in the prior year comparable period [12] Company Strategy and Development Direction - The company is focusing on advancing its strategy and controlling internal factors while navigating external headwinds [3] - AI is being leveraged to eliminate language barriers and expand global reach [4] - The company is cautiously optimistic about the long-term growth potential despite ongoing uncertainties in the U.S. education funding environment [6] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the fourth quarter due to ongoing uncertainties related to tariff impacts and education funding [6] - The government shutdown has created delays in purchasing and funding decisions for customers [19] - Management remains confident in the ability to improve the quality of both hardware and software revenues [16] Other Important Information - The integration of Second Avenue Learning has led to the launch of the Career Explorer application [4] - The company is managing stock-based compensation to a target burn rate of less than 7% for the full year [14] Q&A Session Summary Question: Impact of government shutdown on zSpace - The government shutdown has created obstacles for end users in making purchasing and funding decisions, leading to delays in accepting shipments and concluding purchase orders [19][20] Question: Recent wins and deployments - The deployment in Danbury School District is focused on middle and high schools, with potential for broader district-wide implementation [28] Question: Net dollar revenue retention and customer renewals - The decline in net dollar revenue retention is attributed to two large customers who could not fully renew their commitments due to budget constraints [32] Question: International segment contribution and tariff challenges - The international segment is seeing strong demand, with a focus on expanding partnerships in Italy, Bulgaria, and Poland [51] - Tariffs have had a modest impact on gross margins, primarily affecting the sales motion earlier in the year [53] Question: New hardware and margin trends - A new stylus is expected to enhance user experience and simplify logistics, contributing to future margin improvements [60]

Financial Performance - Revenue for Q3 2025 was $8.793 million, a decrease of 38.1% compared to $14.219 million in Q3 2024[17] - Gross profit for Q3 2025 was $4.499 million, down 29.2% from $6.362 million in Q3 2024[17] - Net loss for Q3 2025 was $6.169 million, compared to a net income of $43.370 million in Q3 2024[17] - For the nine months ended September 30, 2025, zSpace reported a net loss of $18,103,000, compared to a net loss of $17,197,000 for the same period in 2024[22] - For the three months ended September 30, 2025, the company reported a net loss of $6,169,000 compared to a net loss of $204,000 for the same period in 2024[134] - Total revenues for the three months ended September 30, 2025, were $8,793,000, a decrease of 38.1% from $14,219,000 in 2024[145] - The gross profit for the three months ended September 30, 2025, was $4,499,000, down from $6,362,000 in 2024, reflecting a gross margin decline[145] - The company incurred total operating expenses of $9,293,000 for the three months ended September 30, 2025, an increase of 46.3% compared to $6,338,000 in 2024[145] Operating Expenses - Total operating expenses increased to $9.293 million in Q3 2025, up 46.4% from $6.338 million in Q3 2024[17] - Selling and marketing expenses increased to $4.340 million in Q3 2025, compared to $3.265 million in Q3 2024[17] - Research and development expenses for Q3 2025 were $1.568 million, up 50.5% from $1.040 million in Q3 2024[17] - The company incurred total operating expenses of $9,293,000 for the three months ended September 30, 2025, an increase of 46.3% compared to $6,338,000 in 2024[145] Assets and Liabilities - Total current assets as of September 30, 2025, were $13.340 million, slightly down from $13.511 million as of December 31, 2024[14] - Total liabilities increased to $33.143 million as of September 30, 2025, compared to $28.220 million as of December 31, 2024[14] - The company reported a significant increase in accounts payable, which rose to $3.965 million from $5.656 million[14] - The company’s accumulated deficit reached $308.503 million as of September 30, 2025, compared to $290.400 million as of December 31, 2024[14] Cash Flow and Financing - The company experienced a net cash used in operating activities of $14,025,000 for the nine months ended September 30, 2025, significantly higher than $3,850,000 for the same period in 2024[22] - zSpace's cash, cash equivalents, and restricted cash at the end of the period were $4,271,000, an increase from $3,204,000 at the end of September 2024[22] - The company raised $13,000,000 from convertible debt in 2025, compared to $5,000,000 in 2024[22] - The company issued common stock under an equity line of credit, generating proceeds of $3,605,000 in 2025[22] - The company raised $13,000,000 from the Senior Secured Convertible Note Financing, which closed on April 11, 2025[81] Revenue Recognition - The Company recognized revenue using a five-step model in accordance with ASC Topic 606, which includes identifying contracts and performance obligations[43] - Revenue is recognized when the obligation under the terms of the Company's contract with its customer is satisfied, reflecting the consideration expected to be received[45] - The Company offers standard warranty coverage on substantially all products, which is accounted for as an assurance warranty and not considered a separate performance obligation[46] Market and Product Information - zSpace's primary product is a mixed reality hardware device aimed at K-12 education, generating revenue from both hardware sales and recurring software revenue[25] - 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[160][161] - The company has implemented its platform in over 3,500 U.S. public school districts, representing a significant market penetration[158] Stock and Equity - As of September 30, 2025, a total of 8,692,379 shares were authorized for issuance under the Stock Plans, with 7,473,415 shares granted or issued, leaving 1,218,964 shares available for future awards[121] - The Company granted 724,646 Restricted Stock Units (RSUs) to executive officers and Board members at a fair market value of $12.9 million on February 13, 2025[120] - The intrinsic value of RSUs as of September 30, 2025, was $1.3 million, with total unrecognized stock-based compensation cost for RSUs at approximately $13.4 million expected to be recognized over a weighted average period of 1.7 years[124] Challenges and Risks - The Company has incurred operating losses and negative cash flows from operations since inception, raising substantial doubt about its ability to continue as a going concern for at least twelve months[30] - The company faces potential adverse impacts from U.S. tariffs on imports, particularly from China, which could affect supply chain, pricing, and gross margin[187] Bookings and Retention - Bookings for the three months ended September 30, 2025, were $7.436 million, a decrease from $11.736 million in the same period of 2024; for the nine months ended September 30, 2025, bookings were $35.173 million compared to $22.746 million in 2024[169] - The net dollar revenue retention rate (NDRR) for customers with at least $50,000 of ACV was 77% for the trailing twelve-month period ended September 30, 2025, compared to 102% in 2024[177]

Financial Performance - Revenue for Q3 2025 was $8.8 million, down 38% from $14.2 million in Q3 2024[4] - Net loss for Q3 2025 was ($6.2) million, compared to a net loss of ($0.2) million in Q3 2024[4] - Bookings in Q3 2025 were $7.4 million, a decrease of 37% year-over-year[7] Revenue Composition - Software and services accounted for 57% of total revenue, up from 46% year-over-year[4] - Annualized Contract Value (ACV) of renewable software decreased by 10% year-over-year to $10.2 million[6] - Net Dollar Revenue Retention (NDRR) was 77% for customers with over $50,000 of ACV, down from the previous year[7] Product and Technology Initiatives - zSpace deployed its Career Coach AI and STEM learning technology in Danbury Public Schools, serving over 12,000 students[4] - The company partnered with GEMS Education to expand its AR/VR learning solutions in Dubai[4] - zSpace launched zKnow™, an AI-assistant for educators, enhancing classroom efficiency[12] Profitability Metrics - Gross margin increased to 51% from 45% in the same quarter last year, reflecting a 640 basis point improvement[4]

Core Insights - zSpace, Inc. reported financial results for Q3 2025, highlighting a focus on strategic priorities and revenue growth in software and services despite macroeconomic challenges [2][4]. Financial Performance - Revenue for Q3 2025 was $8.8 million, a decrease from $14.2 million in Q3 2024, attributed to an unusually large customer order in the previous year that did not repeat [4][6]. - Software and services accounted for 57% of total revenue, up from 46% year-over-year [6]. - Gross margin improved to 51% from 45% in the same quarter last year, reflecting a 642 basis point increase due to better hardware cost profiles and more company-owned software content [5][6]. - The net loss for Q3 2025 was ($6.2) million, compared to a net loss of ($0.2) million in Q3 2024 [6][8]. - Adjusted EBITDA for the quarter was ($2.0) million, down from $0.4 million in the prior year [6]. Business Highlights - zSpace launched the Career Explorer application, developed by the acquired Second Avenue Learning team, which has generated strong customer interest [2]. - The company partnered with GEMS Education to deploy AR/VR learning solutions in Dubai, marking a significant expansion in its international presence [6]. - Danbury Public Schools in Connecticut fully deployed zSpace's Career Coach AI and STEM learning technology across its middle and high schools, serving over 12,000 students [6]. - zSpace introduced several new training solutions, including the Heavy Machine & Vehicle Inspection Virtual Trainer and the Medical Assisting Skills Virtual Trainer, enhancing its product offerings [6]. Key Metrics - Annualized Contract Value (ACV) for renewable software was $10.2 million as of September 30, 2025, a 10% decrease from the previous year [7]. - Net Dollar Revenue Retention (NDRR) was 77% for customers with over $50,000 of ACV, down from the previous year [7]. - Bookings in Q3 2025 were $7.4 million, a decline of 37% year-over-year, with a backlog of unfulfilled orders amounting to $6.4 million [7]. Balance Sheet - As of September 30, 2025, zSpace had approximately $4.3 million in cash and cash equivalents, an increase from $3.2 million a year earlier [9][20]. - Total liabilities stood at $33.1 million, down from $42.5 million in the previous year [21].

Core Insights - zSpace, Inc. has announced the international launch of the zSpace Inspire 2 Laptop at the GESS Dubai 2025 Conference, showcasing its commitment to making immersive learning accessible without the need for headsets [1][5] - The zSpace Inspire 2 Laptop integrates augmented and virtual reality, allowing students to engage in hands-on, 3D interactive experiences across various subjects [2][4] - The company is leveraging AI to enhance language accessibility, providing support in over 50 languages to eliminate language barriers in education [3] Product Features - The zSpace Inspire 2 Laptop combines AR and VR in a portable format, enabling exploration of science, engineering, health, and career concepts through interactive experiences [2] - It features a patented stereoscopic display and stylus-based interaction, allowing users to manipulate virtual objects realistically [2][4] - The device is designed for both classroom and individual learning, with a powerful graphics system and an expansive software ecosystem [4] Market Presence - zSpace has been a pioneer in AR/VR learning experiences for over a decade, with systems used in more than 3,500 K–12 schools, technical centers, and universities globally [4][7] - The launch of the Inspire 2 Laptop represents a significant milestone in zSpace's mission to enhance global access to immersive learning [5] Strategic Initiatives - The company is focusing on global expansion by integrating advanced AI models for language support, ensuring that educational content is accessible to a diverse audience [3] - zSpace is inviting educators and training providers at GESS Dubai to explore partnership opportunities and implementation support [5]

Core Insights - Danbury Public Schools has integrated zSpace's AR/VR learning platform across its district, enhancing STEM education and career exploration for over 12,000 students [1][2][8] - The implementation includes the award-winning Career Coach AI, which provides localized career information and exploration opportunities [3][4] zSpace Technology Implementation - zSpace technology is deployed in Danbury High School West and three middle schools, focusing on hands-on STEM experiences and intelligent career guidance [1][2][4] - The Career Coach AI offers geo-located insights into career paths, utilizing data from authoritative sources like the Department of Labor [3][4] Educational Transformation - The integration of immersive AR/VR technology is aimed at preparing students for future careers, making complex concepts more accessible and engaging [4][5] - Students can explore various careers through virtual dissections, mechanical simulations, and 3D modeling, all within their classroom environment [5][6] Commitment to Career Readiness - Danbury Public Schools has introduced a district-wide 9th grade Career Exploration course, featuring customized zSpace activities aligned with the curriculum [6] - This foundational experience helps students understand diverse career paths and develop long-term educational visions [6] Company Overview - zSpace, Inc. is a leader in AR/VR educational solutions, trusted by over 3,500 educational institutions [9] - The company holds over 70 patents and focuses on enhancing learning through immersive experiences that improve student outcomes [9]

Core Viewpoint - zSpace, a leader in immersive augmented reality learning solutions, is set to release its third quarter financial results on November 13, 2025, after market close [1]. Company Overview - zSpace, Inc. (NASDAQ: ZSPC) specializes in augmented and virtual reality experiences aimed at enhancing STEM, CTE, and career readiness programs [3]. - The company is trusted by over 3,500 educational institutions, including school districts, technical centers, community colleges, and universities, promoting hands-on learning experiences that improve student engagement and outcomes [3]. - zSpace holds more than 70 patents and has research published in the Journal of Computer Assisted Learning, which validates the effectiveness of 3D virtual reality technologies in enhancing student knowledge [3]. Upcoming Events - In conjunction with the financial results announcement, zSpace will host a conference call on November 13, 2025, 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 section of zSpace's website, and a replay will be accessible for a limited time [2].

Group 1: Virtual Reality Stocks Overview - Seven Virtual Reality stocks to watch include Meta Platforms, zSpace, DIH Holding US, and The Glimpse Group, identified by MarketBeat's stock screener tool [2] - Virtual reality stocks are shares of companies involved in developing, manufacturing, or supporting VR hardware, software, and content, with performance driven by adoption rates and technological advances [2] Group 2: Meta Platforms (META) - Meta Platforms, Inc. develops products for connecting people through mobile devices, PCs, VR headsets, and wearables, operating in two segments: Family of Apps and Reality Labs [3] - The Family of Apps segment includes Facebook, Instagram, Messenger, and WhatsApp, facilitating sharing, messaging, and community engagement [3] Group 3: zSpace (ZSPC) - zSpace Technologies, Inc. provides augmented and virtual reality technology primarily for the education market, offering hardware and software for K-12 STEM applications and career education [4] Group 4: DIH Holding US (DHAI) - DIH Holding US, Inc. operates as a robotics and VR technology provider in the rehabilitation industry across multiple regions, offering products like ArmeoPower and ArmeoSpring for arm and hand therapy [5][8] Group 5: The Glimpse Group (VRAR) - The Glimpse Group, Inc. is a VR and AR platform company providing enterprise-focused software and solutions, including QReal for 3D interactive models and Immersive Health Group for healthcare solutions [6]