Financial Data and Key Metrics Changes - Total revenues for 2025 were $27.9 million, down 27% year-over-year [11] - Software and services revenues were down only 15%, comprising 49% of total revenue, up from 42% in 2024 [11] - Gross profit was $13.3 million, down 15% year-over-year, with gross margins at 47.6%, up 6.7 percentage points from 2024 [13] - Q4 revenues were $4.8 million, down 43% year-over-year, with gross margins at 49.1%, up 8.4 percentage points from Q4 2024 [15][16] Business Line Data and Key Metrics Changes - Software and services revenue continued to represent over 50% of total revenue in Q4, indicating a significant shift in revenue mix [3][15] - The annualized contract value of renewable software was $9.9 million, down 12% compared to the previous year [12] - Bookings for the twelve-month period ending December 31 were $26.1 million, down 34% year-over-year [12] Market Data and Key Metrics Changes - CTE customers drove 56% of bookings value in Q4, down from 58% in Q4 2024 [15] - The company noted that federal funding for K-12 education, which constitutes about 10% of its revenue, was impacted by macroeconomic uncertainties [23][25] Company Strategy and Development Direction - The company is focusing on expanding its software offerings and improving customer engagement across K-12, CTE, and workforce pathways [4] - zSpace launched the zStylus One, an AI-enabled stylus aimed at enhancing AR deployment and precision [4][5] - The company is leveraging AI for global expansion and accessibility, enabling translation across its platform in over 50 languages [8] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, despite ongoing macroeconomic uncertainties and the impact of the war in Iran on opportunities in the Middle East [9][20] - The company aims for breakeven adjusted EBITDA performance in 2026, assuming revenue remains similar to 2025 [32] Other Important Information - The company undertook significant restructuring in December 2025, reducing FTE positions by approximately half and cutting board size from 7 to 5 [18] - zSpace had approximately $1 million in cash equivalents as of December 31, 2025, down from $4.9 million a year prior [17] Q&A Session Summary Question: What does the funding outlook look like for 2026? - Management noted that while federal funding for K-12 education was uncertain, there is cautious optimism as things appear to be settling [25][27] Question: Can you discuss the significance of recent customer wins? - Management indicated that recent deals, including those with Greater Altoona and Atlanta Public Schools, are substantial and could contribute significantly to revenue in 2026 [41] Question: How is the CTE segment performing? - CTE is growing and now represents over 50% of the business, benefiting from federal funding [46]

Financial Data and Key Metrics Changes - Total revenues for 2025 were $27.9 million, down 27% year-over-year, with software and services revenues down only 15%, making up 49% of the revenue portfolio, up from 42% in 2024 [11][3] - Gross profit was $13.3 million, down 15% compared to the previous year, with gross margins at 47.6%, up 6.7 percentage points from 2024 [14][11] - Q4 revenues were $4.8 million, down 43% year-over-year, with gross margins at 49.1%, up 8.4 percentage points compared to Q4 2024 [16][14] Business Line Data and Key Metrics Changes - Software and services revenue continued to comprise over 50% of total revenue in Q4, contributing to gross margin expansion [3][16] - The annualized contract value of renewable software was $9.9 million, down 12% year-over-year, with net dollar revenue retention at 71% for customers with at least $50,000 of annual contract value [12][11] - Bookings for the twelve-month period ending December 31 were $26.1 million, down 34% year-over-year [12] Market Data and Key Metrics Changes - CTE customers drove 56% of bookings value in Q4, down from 58% in Q4 2024, indicating a slight shift in customer engagement [16][12] - The company highlighted significant customer wins in various regions, including Pennsylvania and California, showcasing the demand for immersive AR/VR technology in education [5][6] Company Strategy and Development Direction - The company made structural changes to align with macroeconomic headwinds and announced additional capital via Planet One and Itria [4][3] - The launch of zStylus One, an AI-enabled stylus, aims to enhance precision and simplify AR deployment, indicating a focus on product innovation [5][4] - The company is leveraging AI for global expansion and accessibility, enabling quick translation across platforms to broaden its reach [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2026, citing ongoing macroeconomic uncertainty and delays in opportunities due to geopolitical issues [9][20] - The company aims for adjusted EBITDA performance close to breakeven in 2026, contingent on revenue growth and cost reductions [20][33] - Management noted that the funding outlook for K-12 education remains uncertain but is showing signs of stabilization [28][27] Other Important Information - The company undertook significant restructuring in December 2025, eliminating approximately half of its FTE positions and reducing board size [19][20] - The company reported approximately $1 million in cash equivalents as of December 31, 2025, down from $4.9 million a year prior [18] Q&A Session Summary Question: What does the funding outlook look like for 2026? - Management acknowledged that about 10% of K-12 funding comes from federal sources and noted that funding disruptions made school districts hesitant to order or renew [24][26] Question: How has Q1 gone so far? - Management indicated that Q1 is back-end loaded, with encouraging signs in January and February, but mixed results in March due to geopolitical issues affecting customer opportunities [29][30] Question: Can you frame the significance of recent customer wins? - Management categorized recent deals as significant, with potential contributions to revenue, particularly from established customers like Atlanta Public Schools [41][42] Question: Is CTE growing compared to other business segments? - Management confirmed that CTE is growing, now representing over 50% of the business, driven by federal funding [46][48] Question: What is the outlook for achieving breakeven EBITDA in 2026? - Management expressed that with continued margin expansion and reduced operating expenses, breakeven adjusted EBITDA is within reach [49][33]

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]

zSpace (ZSPC) 2025 Conference Summary Company Overview - zSpace delivers innovative augmented reality and AI-powered immersive learning experiences aimed at improving educational outcomes and preparing students for future careers [12][21] - The company operates primarily in the U.S. education market, focusing on K-12 and career and technical education (CTE) [21][22] Key Points Market Position and Financials - zSpace's primary market is the U.S., accounting for approximately 85% of its revenue, which is around $40 million [22] - The company is present in 3,500 out of 13,000 public school districts in the U.S., indicating significant room for expansion [22] - zSpace went public in late 2024, and the company has a strong retention rate with a net dollar revenue retention (NDR) of 135% in the last reported quarter [33][42] Product Offering - zSpace offers a headset-free augmented and virtual reality solution that includes hardware, software, and professional learning support [12] - The average cost for a classroom set is approximately $100,000, which includes 20 laptops and core software bundles [23] - The company has developed a full suite of applications from K to 12, focusing on sciences and career technical education [24][50] Growth Initiatives - zSpace has acquired smaller software companies to enhance its software control and has invested in AI solutions, such as the Career Coach product [32][28] - The company is focused on expanding its presence in both K-12 and CTE markets, with a revenue split of roughly 50% from new sales and 50% from existing customers [45] Funding Landscape - The funding landscape for K-12 education has shifted towards block grants, which is beneficial for zSpace as it allows more flexibility for school districts [35] - The CTE sector benefits from Perkins Funding, a $1.5 billion annual allocation for career and technical education programs [38] Competitive Landscape - zSpace's unique offering positions it well against competitors in the education market, which have struggled to engage students effectively [31] - The company emphasizes the importance of collaborative learning, which is a key differentiator from other VR/AR solutions [31] Future Outlook - zSpace plans to continue investing in AI and personalized learning experiences, aiming to improve student engagement and academic performance [30][28] - The company sees significant growth potential in both domestic and international markets, particularly through reseller partnerships [33][27] Additional Insights - The company has a strong focus on STEM education, with applications in health, transportation, and advanced manufacturing [52] - zSpace's technology is designed to enhance understanding of abstract concepts, which is crucial in science education [50] This summary encapsulates the key points discussed during the zSpace conference, highlighting the company's market position, product offerings, growth strategies, and future outlook.