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].
zSpace Inc(ZSPC) - 2025 Q1 - Quarterly Report