zSpace, Inc. (ZSPC) Earnings
zSpace, Inc. is expected to report next earnings on August 13, 2026 (in NaN days), with a consensus EPS estimate of $-0.13. ZSPC has beaten EPS estimates in 0 of its last 6 reported quarters (average surprise -3966796.8% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| May 14, 2026 | $-1.00 | $-2.82 | -182.0% | $5M | -9.3% |
| Mar 30, 2026 | $-0.00 | $-253.87 | -15866906.3% | $5M | -21.8% |
| Nov 13, 2025 | $-0.20 | $-0.26 | -30.0% | $9M | +41.9% |
| Aug 14, 2025 | $-0.16 | $-0.27 | -68.8% | $7M | -46.3% |
| May 14, 2025 | $-0.17 | $-0.26 | -52.9% | $7M | -11.0% |
| Mar 27, 2025 | $-0.09 | $-0.57 | -531.5% | $9M | -11.2% |
| Sep 30, 2024 | — | $-0.01 | — | $14M | — |
| Jun 30, 2024 | — | $-27.26 | — | $8M | — |
| Mar 31, 2024 | — | $-70.35 | — | $8M | — |
| Dec 31, 2023 | — | $-23.72 | — | $12M | — |
| Sep 30, 2023 | — | $-7.43 | — | $14M | — |
| Jun 30, 2023 | — | $-25.06 | — | $11M | — |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q1 FY2026 · May 14, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
• Market Environment Update - After a challenging 2025 driven by uncertainty in U.S. federal education policy and reduced school district purchasing, Q1 2026 shows early signs of market stabilization. - Significant external headwinds have moderated, but the K-12 and workforce education funding environment remains uneven, and visibility into district purchasing cycles is still limited. - Early positive indicators include a rebuilt sales pipeline, stronger customer engagement, steady software renewal rates, and expanded customer deployments despite ongoing budget pressures. • Strategic Announcement - The Board of Directors initiated a formal review of strategic alternatives to address the company's current undervalued market valuation, which does not reflect the value of zSpace's business or recent progress. - Potential alternatives include strategic partnerships, business combinations, or other transactions to maximize shareholder value; no assurance of a specific transaction is provided, and no further commentary will be shared until a definitive action is approved or disclosure is required. • Product Development Milestones - Began commercial shipping of Z Stylus 1, the company's next-generation stylus with embedded sensors and machine learning that eliminates the need for external tracking modules and display markers required by prior generations. Z Stylus 1 is standard on new Inspire V2 and Inspire V2 Pro, and is compatible with older Inspire and Inspire Pro platforms. The product holds a U.S. patent with additional patents pending, and customer deployments are underway via zSpace and authorized partners. - Released an updated version of zSpace Studio, the company's proprietary 3D modeling and creation application exclusive to Inspire devices. The update adds expanded curriculum-aligned model libraries for science and career and technical education (CTE), enhanced student-led design capabilities, and streamlined workflows for educators and students, and was made available free to all existing Inspire customers. • Key Customer Deployments - Danbury Public Schools expanded its immersive learning deployment from a pilot to a full 30-device classroom set per school, extending access to alternative programs with a focus on equitable STEM and career-connected learning, plus integration of AI-driven career insights. - Partnership with Kansas Workforce One expanded immersive career exploration and workforce development across nearly all 96 Kansas counties, deploying mobile zSpace Inspire laptops for K-12 students and adult learners to support hands-on career awareness, reskilling, and job transition. - Launched a branded mobile CTE learning lab in Western Colorado in partnership with Colorado River BOCES and Briggs & Stratton, bringing industry-aligned career exploration in mechanics, power equipment, agriculture, and industrial technologies to regional students via an AR/VR-powered trailer. • Operational Efficiency - Completed a restructuring in December 2025 that reduced the company's workforce to a leaner size, resulting in significant operating expense reductions: people-related costs (54% of Q1 OPEX) decreased 43% year-over-year (excluding stock-based compensation).
Guidance
- zSpace is not providing formal full-year 2026 guidance due to ongoing unpredictable macro and market volatility, but management shared a base scenario for the year. - If 2026 full-year revenue repeats 2025's level of approximately $30 million, management expects typical quarterly seasonality: 20% of demand in Q1, 30% in Q2, 30% in Q3, and 20% in Q4, though quarter-to-quarter volatility remains common for the business. - Building on Q1 2026's gross margin expansion to 53%, management expects modest sequential gross margin growth in coming quarters. Combined with current operating expense levels from the end-2025 cost reduction, management believes the company is on track to reach EBITDA breakeven by the end of 2026. - Management has tentative optimism based on Q1 2026 results, including strong sequential bookings growth, recurring software ACV over $10 million, a growing share of higher-margin software revenue, and proven cost reduction efficiency.
Segment performance
zSpace reports total Q1 2026 revenue of $5.3 million, a 22% year-over-year decrease, but an 8% sequential increase from Q4 2025. The company operates two primary product segments: hardware and software & services. Software and services revenue outperformed hardware, declining only 15% year-over-year. As a result, software and services accounted for 47% of total Q1 2026 revenue, up from 43% in Q1 2025. Total gross profit for Q1 2026 was $2.8 million, a 13% year-over-year decrease, but a 17% sequential increase from Q4 2025. Gross margin reached 53%, up 5.6 percentage points year-over-year and 3.9 percentage points sequentially. Operating expenses (excluding stock-based compensation) totaled $4.9 million, a 35% year-over-year decrease, with an annual run rate of approximately $19 million (excluding stock-based compensation). As of March 31, 2026, annualized contract value (ACV) of renewable software was $10.1 million, down 13% year-over-year but up 2% sequentially. Net dollar revenue retention (NDRR) for customers with at least $50,000 ACV was 65% year-over-year; after adjusting for two non-renewing large customers, adjusted NDRR was 82% and adjusted ACV was $11.2 million (down only 4% year-over-year). Q1 2026 total bookings were $6.1 million, down 8% year-over-year but up 81% sequentially.
Risks & headwinds
- Uncertainty in U.S. federal education policy and uneven K-12 and workforce education funding continue to impact customer purchasing, with limited visibility into school district buying cycles. - Quarter-to-quarter revenue volatility is amplified by zSpace's revenue recognition policy, which recognizes full multi-year software license revenue at the time of fulfillment, exaggerating underlying seasonality. - Global geopolitical volatility disrupted Q1 2026 orders: orders from Qatar and Dubai were delayed amid the Iran war, and one order from Bahrain could not be delivered due to regional logistics disruptions. - Two large customers that expanded their zSpace footprint in 2024 did not fully renew their contracts in Q1 2026 due to macro factors, pulling down annualized contract value and net dollar retention metrics; this impact will be lapped starting in Q3 2026. - The timing and pace of market recovery after 2025's slowdown depends on factors outside of zSpace's control. - There is no assurance that the ongoing review of strategic alternatives will result in any specific transaction or value creation for shareholders.