zSpace Reports Second Quarter 2026 Financial Results
Rhea-AI Summary
zSpace (OTC: ZSPC) reported second quarter 2026 revenue of $5.4 million, down from $7.5 million a year earlier, as EMEA orders were delayed and returned due to the Iran war. Gross margin expanded to 56% from 43%, reflecting a higher mix of software and services, more company-owned content and lower hardware costs.
According to zSpace, net income was $0.3 million versus a $6.1 million net loss, aided by a $4.1 million gain on extinguishment of debt. Adjusted EBITDA loss narrowed to $0.9 million. The company eliminated over $12 million of debt, ended the quarter with $0.9 million in cash, and continues a formal review of strategic alternatives.
Positive
- Gross margin expanded to 56.4% from 42.6% year-over-year
- Net income of $0.3 million vs. $6.1 million net loss prior year
- Adjusted EBITDA loss improved to $(0.9) million from $(4.5) million
- Operating expenses ex-SBC fell to $4.0 million from $7.7 million
- Over $12 million of debt eliminated via conversion to equity
- Stockholders’ deficit reduced to $(13.2) million from $(22.3) million
Negative
- Revenue declined to $5.4 million from $7.5 million year-over-year
- Annualized Contract Value of $9.4 million, down 13% year-over-year
- Net Dollar Revenue Retention at 66% for larger customers; 83% normalized
- Bookings of $6.0 million, down 14% year-over-year
- Cash of $0.9 million vs. $1.4 million a year earlier
- Total liabilities of $21.5 million and stockholders’ deficit of $(13.2) million
News Explained
Debt conversion reduced obligations and transferred equity to lenders, with potential dilution for existing holders not quantified in the release.
zSpace reports that agreements with lenders converted
The release gives no share count or resulting ownership percentages, leaving the transaction’s ownership effect unquantified.
Key Figures
Previous Earnings Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| May 14 | 1Q26 earnings report | Negative | -15.2% | Revenue declined while margin improved and strategic alternatives review began |
| Mar 30 | 4Q25 earnings report | Negative | +0.3% | Revenue and full-year results declined despite margin improvement and financing actions |
| Nov 13 | 3Q25 earnings report | Negative | +3.3% | Revenue and net loss worsened despite gross-margin expansion and new product launches |
| Aug 14 | 2Q25 earnings report | Negative | -11.8% | Bookings and cash declined while gross margin improved and net loss widened |
| May 14 | 1Q25 earnings report | Negative | -10.1% | Revenue declined and losses remained despite improved margins and software growth |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Across five tag-matched earnings events, reactions averaged -6.69%, with two aligned negative outcomes and three divergences.
Key Terms
augmented reality technical
net dollar revenue retention financial
adjusted ebitda financial
convertible debt financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
Margin Expansion Drives Profitability; Strategic Alternatives Review Remains Ongoing
SAN JOSE, Calif., Aug. 13, 2026 (GLOBE NEWSWIRE) -- zSpace, Inc. (OTC: ZSPC) (“zSpace” or the “Company”), a leading provider of augmented and virtual reality (AR/VR) solutions for education and workforce development, is announcing its financial results for the three and six months ended June 30, 2026.
“Our second quarter results reflect the impact of the actions our management team has taken across the business, which drove net income of
Second Quarter 2026 Financial Summary vs. Same Year-Ago Period
- Revenue of
$5.4 million vs.$7.5 million - Software and services comprised
47% of revenue vs.42% - Gross margin of
56% vs.43% - Net income of
$0.3 million vs. net loss of ($6.1) million - Adjusted EBITDA of (
$0.9) million vs. ($4.5) million
Recent Business Highlights
- zSpace announced that its technology powered breakthrough 3D thyroid reconstruction research in Italy, with partner L’ABCD Edutainment using the zSpace platform to visualize AI-generated 3D anatomical models from 2D ultrasound images.
- zSpace appointed VR Expert as its first master reseller in Europe, expanding distribution of its AI-enhanced immersive learning platform to schools and institutions across the continent and accelerating adoption in STEM, CTE and workforce preparation.
- zSpace eliminated over
$12 million in debt through agreements with its lenders, converting outstanding principal and interest into equity to strengthen the Company’s balance sheet and support long-term growth. - zSpace highlighted its partnership with the Challenger Learning Center of Northeast Alabama, marking the opening of an immersive STEM facility featuring NASA-style mission simulations and zSpace laptops across a 12-county region.
Second Quarter 2026 Financial Results
Revenue in the second quarter of 2026 was
Gross margins increased 1,380 basis points to
Annualized Contract Value (“ACV”) of renewable software at June 30, 2026, was
Net Dollar Revenue Retention (NDRR) at June 30, 2026, was
Bookings in the second quarter of 2026 were
Operating expenses, excluding stock-based compensation expense, in the second quarter of 2026 were
Net income in the second quarter of 2026 was
Adjusted EBITDA loss was (
Balance Sheet
As of June 30, 2026, zSpace had approximately
About zSpace
zSpace, Inc. (OTC: ZSPC) delivers innovative augmented and virtual reality (AR/VR) experiences that drive achievement in STEM, CTE, and career readiness programs. Trusted by over 3,500 school districts, technical centers, community colleges, and universities, zSpace enables hands-on "learning by doing" experiences proven to improve engagement and student outcomes. Headquartered in San Jose, California, zSpace holds more than 80 patents, with research published in the Journal of Computer Assisted Learning (2021) validating the impact of 3D virtual reality technologies on student knowledge gains.
Key Metric Definitions
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans and make strategic decisions. The calculation of the key metrics discussed below may differ significantly from other similarly titled metrics used by other companies, analysts, investors and other industry participants.
We reference bookings in this press release, which is an internal operational measure of the business. Bookings represent customer orders that have hardware, software and service components. Bookings indicate future revenue, which lags based on product shipping date, monthly recognition of certain subscription revenue and service delivery completion.
We reference Annualized Contract Value (ACV) in this press release, which is an internal operational measure of the business. To monitor our ability to retain and grow our customer base for our software we monitor the annualized contract value of active renewable software licenses.
We reference Net Dollar Revenue Retention (NDRR) in this press release, which is an internal operational measure of the business. We calculate our NDRR as of a given period end by starting with the ACV from all customers with contracts of at least
We reference Adjusted EBITDA in this press release, which we calculate Adjusted EBITDA as GAAP net income (loss) adjusted for interest expense, depreciation and amortization expense, income tax expense, offering costs related to financing activities, stock-based compensation, gain on extinguishment of debt, change in fair value of convertible debt, and the change in fair value of Series P and P 2 Preferred Stock liability. We believe this measure provides our management and investors with consistency and comparability with our past financial performance and is an important indicator of the performance and profitability of our business.
Bookings, ACV, NDRR, and Adjusted EBITDA are non-GAAP financial measures (U.S. generally accepted accounting principles). These non-GAAP measures may not be comparable to similarly titled measures being disclosed by other companies. Management believes that presenting these non-GAAP financial measures provide investors with additional analytical tools which are useful in evaluating our operating results and the ongoing performance of our underlying businesses because they (i) provide meaningful supplemental information regarding financial performance by excluding impact of one-time items and other items affecting comparability between periods, (ii) permit investors to view performance using the same tools that management uses to budget, make operating and strategic decisions, and evaluate our core operating performance across periods, and (iii) otherwise provide supplemental information that may be useful to investors in evaluating our financial results. We do not, nor do we suggest that investors, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Forward-Looking Statements
Certain statements contained in this press release about future expectations, plans and prospects, as well as any other statements regarding matters that are not historical facts, may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements relating to the stabilization of the education market, the long-term potential of our business, and ability to execute with discipline. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the uncertainties related to market conditions and other factors discussed in the "Risk Factors" section of the Company's filings with the SEC. For these reasons, among others, investors are cautioned not to place undue reliance upon any forward-looking statements in this press release. Any forward-looking statements contained in this press release speak only as of the date hereof, and zSpace, Inc. specifically disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
| FINANCIAL TABLES – INCOME STATEMENT, BALANCE SHEET AND EBITDA | ||||||||||||||||
| 3 Months Ended June 30, | 6 Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | 5,396 | $ | 7,459 | $ | 10,647 | $ | 14,218 | ||||||||
| Cost of goods sold | 2,352 | 4,285 | 4,816 | 7,838 | ||||||||||||
| Gross profit | 3,044 | 3,174 | 5,831 | 6,380 | ||||||||||||
| Gross profit % | 56.4 | % | 42.6 | % | 54.8 | % | 44.9 | % | ||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 814 | 1,274 | 1,806 | 2,369 | ||||||||||||
| Selling and marketing | 2,161 | 3,948 | 4,575 | 7,950 | ||||||||||||
| General and administrative | 3,804 | 4,281 | 7,118 | 7,774 | ||||||||||||
| Gain from settlement of vendor claims | (1,198 | ) | — | (1,198 | ) | — | ||||||||||
| Total operating expenses | 5,581 | 9,503 | 12,301 | 18,093 | ||||||||||||
| Loss from operations | (2,537 | ) | (6,329 | ) | (6,470 | ) | (11,713 | ) | ||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense | (241 | ) | (301 | ) | (585 | ) | (803 | ) | ||||||||
| Other income, net | 63 | 14 | 169 | 70 | ||||||||||||
| Gain on extinguishment of convertible and other debt | 4,052 | — | 4,052 | — | ||||||||||||
| (Loss) gain on change in fair value of Series P Preferred Stock Liability | (34 | ) | — | 207 | — | |||||||||||
| (Loss) gain on change in fair value of convertible debt | (1,006 | ) | 525 | (3,634 | ) | 525 | ||||||||||
| Net income (loss) before income taxes | 297 | (6,091 | ) | (6,261 | ) | (11,921 | ) | |||||||||
| Income tax expense | 9 | 11 | 9 | 13 | ||||||||||||
| Net income (loss) | $ | 288 | $ | (6,102 | ) | $ | (6,270 | ) | $ | (11,934 | ) | |||||
| BALANCE SHEET | ||||||||||||
| June 30, | June 30, | December 31, | ||||||||||
| 2026 | 2025 | 2025 | ||||||||||
| Selected Balance Sheet Information: | ||||||||||||
| Cash, cash equivalents and restricted cash | $ | 856 | $ | 1,390 | $ | 1,021 | ||||||
| Accounts receivable, net | $ | 2,609 | $ | 4,643 | $ | 1,438 | ||||||
| Inventory, net | $ | 1,996 | $ | 2,596 | $ | 2,404 | ||||||
| Total Assets | $ | 8,282 | $ | 12,137 | $ | 7,586 | ||||||
| Accounts payable & accrued expenses | $ | 6,288 | $ | 10,575 | $ | 7,784 | ||||||
| Convertible, Series P and P 2, other debt and accrued interest | $ | 12,091 | $ | 19,963 | $ | 20,079 | ||||||
| Total liabilities | $ | 21,467 | $ | 34,433 | $ | 30,094 | ||||||
| Stockholders' deficit | $ | (13,185 | ) | $ | (22,296 | ) | $ | (22,508 | ) | |||
| Total Liabilities and Stockholders' Deficit | $ | 8,282 | $ | 12,137 | $ | 7,586 | ||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| GAAP Net Income (Loss) | $ | 288 | $ | (6,102 | ) | $ | (6,270 | ) | $ | (11,934 | ) | |||||
| Add back (deduct): | ||||||||||||||||
| Interest expense | 241 | 301 | 585 | 803 | ||||||||||||
| Depreciation and amortization | 3 | 2 | 6 | 3 | ||||||||||||
| Income tax expense | 9 | 11 | 9 | 13 | ||||||||||||
| Offering costs | — | — | 146 | |||||||||||||
| Stock-based compensation | 1,592 | 1,855 | 3,143 | 2,828 | ||||||||||||
| Gain on extinguishment of convertible and other debt | (4,052 | ) | — | (4,052 | ) | — | ||||||||||
| Loss (gain) on change in fair value of convertible debt | 1,006 | (525 | ) | 3,634 | (525 | ) | ||||||||||
| Loss (gain) on change in fair value of Series P and P 2 Preferred Stock liability | 34 | — | (207 | ) | — | |||||||||||
| Adjusted EBITDA | $ | (879 | ) | $ | (4,458 | ) | $ | (3,006 | ) | $ | (8,812 | ) | ||||
Contacts
Press Contact:
Amanda Austin
press@zspace.com
408-498-4050
Investor Relations Contact:
Gateway Group
Cody Slach, Greg Robles
949.574.3860
ZSPC@gateway-grp.com
