zSpace Reports Q2 Loss of $6.1M, Revenue Down 0.5% Y/Y, ACV Up 11%

zSpace reports Q2 results with a net loss of $6.1 million, a 30% increase from last year. Revenue was $7.46 million, a 0.5% decrease YoY. Annualized Contract Value (ACV) increased 11% to $10.9 million, while Net Dollar Revenue Retention for customers with over $50,000 ACV was 131%. Bookings in Q2 were $7.2 million, a 54% YoY decrease, excluding China, US, and rest-of-world.

zSpace (NASDAQ: ZSPC), a leading provider of augmented and virtual reality (AR/VR) education solutions, reported its second quarter (Q2) 2025 financial results on August 14, 2025. The company reported a net loss of $6.1 million, a 30% increase from the $4.75 million net loss recorded in Q2 2024 [1]. GAAP revenue for the quarter was $7.46 million, a 0.5% decrease year-over-year (YoY) from $7.503 million in Q2 2024 [1].

Key highlights from the report include a 54% year-over-year (YoY) decline in bookings to $7.2 million, excluding China, US, and rest-of-world [1]. Despite this decline, Annualized Contract Value (ACV) increased by 11% to $10.9 million, indicating strong customer retention and expansion. Net dollar revenue retention for customers with over $50,000 ACV was 131%, suggesting a high level of customer loyalty and stickiness [1].

Gross margin (GAAP) improved to 42.6% from 40.4% in Q2 2024, driven by better hardware cost management and a higher proportion of company-owned software content [1]. However, operating expenses (excluding stock-based compensation) rose 18% to $7.7 million, offsetting the gross margin improvement and contributing to the widening net loss.

The quarter saw several product launches and strategic milestones, including the Career Explorer application and Career Coach AI, which were well-received by the market [2]. The zSpace Imagine AR/VR laptop also won the Future’s Best of Show Award at ISTELive 25, further cementing the company's position as an innovation leader in the education technology market [2].

Looking forward, zSpace management did not provide specific financial guidance for the coming quarter or the full fiscal year. They expressed confidence in their ability to drive growth and deliver long-term value, despite ongoing challenges from macroeconomic conditions and shifting U.S. education funding policies [2].

Investors should closely monitor bookings trends, software contract value, and further product launches as indicators of a potential return to revenue growth. The low cash balance and ongoing net losses put liquidity under pressure, and continued strategic execution will be crucial for zSpace's future success.

References:
[1] https://www.nasdaq.com/articles/zspace-posts-flat-revenue-fiscal-q2
[2] https://www.globenewswire.com/news-release/2025/08/14/3133864/0/en/zSpace-Reports-Second-Quarter-2025-Financial-Results.html