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.