AI-extracted from the 10-Q filed 2026-08-14 — Q2 FY2026 (quarter ended June 30, 2026). Every figure is machine-verified against the filing text on SEC EDGAR.
zSpace reported Q2 revenue of $5.4M, down 28% YoY, with net income of $288K driven by $4.1M debt extinguishment gain; material weaknesses in internal controls disclosed.
Biggest Revenue Drivers
Hardware$2.9M-34% YoY
Decrease in units shipped due to K-12 market uncertainty and funding disruptions causing longer sales cycles
Software$2.2M-10% YoY
Decreased sales of third-party point-in-time software and overall software application sales
Biggest Revenue Drivers
Total revenue: $5.4M-28% YoY
Hardware$2.9M-34% YoY
Decrease in units shipped due to K-12 market uncertainty and funding disruptions causing longer sales cycles
Software$2.2M-10% YoY
Decreased sales of third-party point-in-time software and overall software application sales
Services$0.4M-49% YoY
Decreased sales of extended warranty and technology support services; revenue recognition of expiring contracts
Largest Expense Items
General and administrative$3.8M-11% YoY
Lower compensation, lower consulting and audit costs, and reduced fees for debt issuance
Selling and marketing$2.2M-45% YoY
Lower compensation and commission expenses from reduced sales team, less travel and fewer performance-based incentives
Research and development$0.8M-36% YoY
Decrease in compensation costs resulting from lower headcount
Cost of goods sold$2.4M-45% YoY
Reduced hardware costs due to fewer units sold; decreased software and services costs
Margins: Gross margin improved to 56% in Q2 2026 from 43% in Q2 2025, driven by lower hardware unit volumes and favorable product mix shift toward higher-margin software (72% margin). Operating expenses decreased 41% YoY as the company reduced headcount and discretionary spending.
Watch Items from the Filing
Company raised substantial doubt about ability to continue as going concern; negative operating cash flow of $5.0M YTD with only $0.9M cash on hand as of June 30, 2026.
Nasdaq delisting effective August 6, 2026; common stock trading OTC since April 28, 2026 at $0.21/share, down from $13.25 at Series P issuance in January 2026.
Material weaknesses in internal controls identified: lack of segregation of duties, account reconciliation deficiencies, and absence of formal risk assessment policy.
Share dilution: 37.1M common shares outstanding as of June 30, 2026 vs. 1.3M at year-end 2025; 6.3M conversion shares held in abeyance; limited authorized share capacity for future conversions.
Net Dollar Retention Rate (NDRR) of 66% for trailing twelve-month period ended June 30, 2026; ACV declined 13% YoY to $9.4M, indicating customer contraction.
AI-extracted and verified against SEC EDGAR filing text. Not investment advice.
About zSpace, Inc. (ZSPC): stock profile, AI score and financials
zSpace, Inc. (ZSPC) stock profile, AI quality score, and SEC EDGAR financial data, a Technology sector company. 13F Pro's AI-powered ranking engine scores ZSPC at 6.9/100 on a composite quality score built from its SEC filings, placing it at rank #2,911 of 2,925 stocks — the bottom half of the AI-ranked universe. Areas of concern include balance sheet strength (0.3) and revenue scale (4.4), which score below median versus the broader universe. Shareholder dilution risk is elevated at 6.9/100, reflecting ongoing share issuance or stock-based compensation. Based on the latest XBRL financial filings (Q2 2026), zSpace, Inc. reports quarterly revenue of $5.4M, net income of $288.0K, an operating margin of -47.0%. ZSPC trades on the Nasdaq exchange and files with the SEC under CIK 1637147. 13F Pro's AI research platform runs 10 specialized AI analysts — value, growth, momentum, macro, and activist specialists — that debate ZSPC daily and publish AI-generated analysis with cited SEC sources. The platform aggregates historical XBRL financial facts, 10-Q and 10-K filings, insider Form 4 transactions, and institutional 13-F holdings for zSpace, Inc. directly from SEC EDGAR.