- **Software-Driven Growth**: Q4 2025 software/services revenue at 57% of total, driving 850bps gross margin expansion to 49.1%. New zStylus One and AI translation tools accelerate adoption.
- **Customer Wins**: 36-station AR/VR lab at Mayfair HS, dental program upgrade in PA, and 10-year partnership with Atlanta Public Schools highlight K-12/Career Ed demand.
- **Cost Restructuring**: 2026 OpEx target of $19M (down 33% from 2025) and 7% gross margin expansion target to achieve breakeven EBITDA if revenue mirrors 2025 levels.
- **Risks & Opportunities**: Middle East expansion paused due to conflict, but Planet One investment and AI-driven global reach offer long-term growth paths.

**【CEO Summary Section】**
- Software and services revenue comprised 57% of total Q4 2025 revenue, driving an 850 basis point gross margin expansion to 49.1%. This reflects strong customer renewals and adoption of AI-enabled tools like zStylus One, which eliminates external sensors for AR deployment.
- Key wins include a 36-station AR/VR lab at Mayfair High School, a dental program upgrade at Greater Altoona Career & Technical Center, and a decade-long partnership with Atlanta Public Schools. These highlight demand for immersive learning solutions across K-12 and CTE.
- The company launched zStylus One, featuring embedded AI sensors, and expanded AI-driven language translation to over 50 languages, broadening global reach despite Middle East delays due to regional conflict.
- 2026 outlook: Cautious optimism amid U.S. education funding uncertainty and $1 million cash position, with focus on software-driven margin expansion and cost control.

**【CFO Financial Commentary】**
- FY2025 revenue: $27.9M (-27% YoY), with software/services down 15% but comprising 49% of total (vs. 42% in 2024). Gross margin improved 6.7pts to 47.6%, driven by software mix, hardware cost reductions, and first-party content.
- Q4 2025: $4.8M revenue (-43% YoY), 49.1% gross margin. Operating expenses reduced 11% YoY to $28.3M (excluding stock-based comp), with Q4 run rate now $19M post-December restructuring.
- 2026 outlook: Target breakeven adjusted EBITDA if revenue mirrors 2025 levels, via 7% gross margin expansion and $19M OpEx. Cash position: $1M as of Q4 2025.

**【Q&A Highlights】**
- **Funding Outlook (2026):** Federal K-12 funding uncertainty persists, but 10% of zSpace's K-12 revenue comes from federal sources. Q1 2026 bookings show mixed progress, with Middle East deals delayed by conflict.
- **Cost Structure:** CFO Erick DeOliveira notes 2026 OpEx target of $19M (excluding stock-based comp), down from $28.3M in 2025. Restructuring reduced FTEs by 50% and Board size from 7 to 5.
- **Planet One Investment:** $3M convertible preferred round in January 2026, with potential for international expansion via joint ventures. Progress on Middle East deals paused due to regional conflict.
- **EBITDA Breakeven:** If 2026 revenue mirrors 2025 ($27.9M), zSpace expects to achieve breakeven adjusted EBITDA via margin expansion and cost control. 2025 gross margin expansion of 6.7pts and 2026 target of 7pts are key levers.


ZSPC(Delisted)

ZSPC(Delisted)

zSpace (ZSPC) Financials Overview

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