Q4 2025 zSpace, Inc. Earnings Call Transcript
Key Points
- Software and Services revenue comprised over 50% of total revenue, contributing to a gross margin expansion of nearly 850 basis points.
- The launch of zStylus One, an AI-enabled stylus, is expected to support broader adoption of next-generation platforms.
- ZSPACE Inc (ZSPC) achieved meaningful customer wins across several regions, including Pennsylvania and California, enhancing educational programs with AR/VR technology.
- The Career Explorer powered by Career Coach AI received Tech & Learning's Best of 2025 Award of Excellence, highlighting the value of immersive career exploration tools.
- Strategic use of AI for language translation is expanding global reach, ensuring accessibility across various educational geographies.
- Revenues for 2025 were $27.9 million, down 27% year-over-year, with significant declines in bookings and gross profit.
- The annualized contract value of renewable software decreased by 12%, and net dollar revenue retention was only 71%.
- The company faced external headwinds from tariff policies, education funding freezes, and the longest federal government shutdown in US history.
- Q4 revenues were down 43% year-over-year, reflecting a freeze in orders and shipments during the US federal government shutdown.
- Significant restructuring in December 2025 resulted in eliminating approximately half the FTE positions and reducing the Board of Directors from seven seats to five.
Hello, and thank you for participating in today's conference call to discuss zSpace's financial results for the fourth quarter and full year ended December 31, 2025. Joining us today are zSpace Chief Executive Officer; Paul Kellenberger; Chief Financial Officer, Erick DeOliveira; and Greg Robles from Investor Relations. Following their remarks, we'll open the call for analyst questions.
Before we go further, I would like to turn the call over to Mr. Robles as he reads the company's Safe Harbor statement. Greg, please go ahead.
Thanks, operator. Good afternoon, and thank you for joining our conference call to discuss our fourth-quarter and full-year 2025 financial results.
Before we begin, I'd like to remind everyone that certain statements made on this call may be considered forward-look statements. These statements are based on our current expectations and beliefs and uncertainties that cause actual results to differ materially. Additionally, we may discuss certain key business matters which
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