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]
zSpace Inc(ZSPC) - 2025 Q3 - Quarterly Report