zSpace Earnings Call Transcripts
Fiscal Year 2025
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Software and services drove gross margin expansion despite a 27% revenue decline in 2025. Cost reductions and restructuring position the company for potential adjusted EBITDA breakeven in 2026, with CTE and software segments showing resilience amid ongoing macroeconomic headwinds.
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Q3 saw sequential revenue growth and significant gross margin expansion, driven by a shift to software and services and international deployments. Despite year-over-year declines in revenue and bookings, profitability improved, and new product launches and global expansion support a cautiously optimistic outlook.
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Headset-free AR/VR solutions drive immersive, collaborative learning in K-12 and CTE, with strong U.S. market presence and expanding software revenues. Funding shifts and skilled trades shortages accelerate growth, while AI-powered personalization boosts student outcomes.
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Revenue for the first half of 2025 declined 7% year-on-year, with software and services up 2% and hardware down 13%. Gross margins expanded to 44.9% amid a challenging funding environment, while bookings and backlog declined. Cautious optimism remains as federal funds begin to flow.
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Q1 revenue declined 14% year-over-year to $6.8 million, but software/services grew 11% and gross margin rose to 47.4%. Acquisitions and new product launches strengthened the digital platform, while market uncertainty and tariffs continue to impact K-12 sales cycles.
Fiscal Year 2024
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Revenue for 2024 declined 13% to $38M due to capital constraints, but software ACV grew 6% and gross margin improved to 40.9%. IPO proceeds fueled new product launches and sales force expansion, while CTE demand remains strong despite K-12 funding uncertainty.