Q1 2026 zSpace, Inc. Earnings Call Transcript
Key Points
- ZSPACE Inc (ZSPC) showed early signs of stabilization in Q1 2026 after a challenging 2025, with a pipeline rebuild and stronger customer engagement.
- The launch of zStylus One and continued investment in AI roadmap positions the company for potential growth as market conditions improve.
- New customer additions and steady software renewal rates indicate that customers view ZSPACE Inc (ZSPC) as an important part of their instructional technology strategy.
- The company has expanded deployments with partners like Danbury Public Schools and Kansas WorkforceONE, indicating successful scaling even in a constrained spending environment.
- Gross margins improved to 53% in Q1 2026, up 5.6 percentage points from Q1 2025, driven by revenue mix and new product rollouts.
- First quarter revenues were $5.3 million, down 22% year-over-year, with hardware revenues particularly underperforming.
- The broader funding environment for K-12 and workforce education remains uneven, with limited visibility into district purchasing cycles.
- The annualized contract value of renewable software was down 13% compared to 12 months ago, indicating challenges in maintaining recurring revenue.
- Significant deceleration in orders was experienced in March due to geopolitical issues, affecting international sales.
- Operating expenses, excluding stock-based compensation, were down 35%, reflecting cost-cutting measures following restructuring, which may impact future growth potential.
Hello, and thank you for participating in today's conference call to discuss zSpace's financial results for the first quarter ended March 31, 2026.
Joining us today are zSpace Chief Executive Officer, Paul Kellenberger; Chief Financial Officer, Erick Deoliveira; and Greg Robles from Investor Relations.
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.
Thank you, Carmen. Before we begin, I'd like to remind everyone that certain statements made on this call may be considered forward-looking statements. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results.
Additionally, we may discuss certain key business metrics, which are non-GAAP financial measures. A description of these non-GAAP measures and any comparison to the most directly comparable GAAP measures can be found in our earnings release on the
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