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%, making up 49% of total revenue, up from 42% in 2024 [11] - 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 [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 comprise over 50% of total revenue in Q4, reflecting a significant shift in revenue mix [3][15] - The annualized contract value of renewable software was $9.9 million, down 12% year-over-year [11] - Net dollar revenue retention for customers with at least $50,000 of annual contract value was 71% [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 their 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 [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 delays in opportunities due to geopolitical issues [9][20] - The company aims for adjusted EBITDA performance close to breakeven in 2026, assuming revenue remains similar to 2025 [32] Other Important Information - The company undertook significant restructuring in December 2025, reducing operating expenses and board size to align costs with revenues [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 is 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 mix of CTE growing compared to other business segments? - CTE is growing and now represents over 50% of the business, supported by federal funding [44][47] Question: What are the expectations for operating expenses and EBITDA in 2026? - Management believes that with reduced operating expenses and continued margin expansion, breakeven adjusted EBITDA is achievable [49]

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]

Core Insights - zSpace, Inc. has enhanced the Dental Assistant Program at the Greater Altoona Career & Technology Center (GACTC) through its AR/VR technology, improving students' understanding of dental anatomy and clinical readiness [1][11] The Challenge - Dental Assisting students at GACTC required a more effective method to comprehend complex dental anatomy beyond what traditional typodonts and textbooks could offer [2] - Traditional tools failed to reveal internal structures such as roots and layers, limiting students' understanding [2] The Solution: zSpace AR/VR for Dental Assisting - GACTC implemented the zSpace Inspire 2, a headset-free AR/VR laptop, enabling students to explore realistic 3D dental models and examine structures not accessible through physical tools [4] A New Level of Understanding - Students reported that zSpace significantly improved their comprehension of dental anatomy, allowing them to visualize and interact with structures like roots that typodonts could not provide [5][6] Support for All Learners - zSpace technology supports diverse learners by allowing them to practice at their own pace, repeat exercises as needed, and build confidence before entering clinical settings [7] Stronger Engagement and Skill Readiness - The use of zSpace has led to increased student engagement and interest, with students eager to explore content more deeply than traditional methods allowed [9][11] - The technology has improved retention and confidence, enabling students to practice skills independently and efficiently [10][11] Results - GACTC students are gaining a clearer understanding of dental structures, practicing skills more independently, and entering clinical environments with increased confidence due to the immersive technology [11]