10-Q · May 15, 2026
ZSPACE, INC. reported disappointing Q1 2026 financial results marked by a 22% decline in revenue to $5.3 million and an expanded net loss of $6.6 million compared to the previous year's net loss of $5.8 million.…
Earnings analysis · 10-Q
ZSPC earnings analysis
Filed August 14, 2026 · Our reading of the company's report
The latest report
zSpace reported $5.396 million of second-quarter revenue, down 22.9% from $7 million in 2025 Q2, while gross margin improved to 56.4% from 42.5%. Approximately $0.3 million of GAAP net income was supported by a…
Read full summary
zSpace reported $5.396 million of second-quarter revenue, down 22.9% from $7 million in 2025 Q2, while gross margin improved to 56.4% from 42.5%. Approximately $0.3 million of GAAP net income was supported by a nonrecurring $4.052 million debt-extinguishment gain. The filing adds material control weaknesses, Nasdaq delisting risk and substantial dilution, while providing no quantitative forward guidance.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Gross margin
- 56.4%
What stood out
-
Revenue Down 22.9% Year Over Year
Second-quarter revenue was $5.396 million, down from $7 million in 2025 Q2 but up from $5 million in 2026 Q1, indicating a 22.9% year-over-year decline and 7.9% sequential increase.
-
Gross Margin Expanded to 56.4%
Gross margin expanded to 56.4%, up from 42.5% in 2025 Q2 and 53.1% in 2026 Q1, an increase of 1,390 basis points year over year and 330 basis points sequentially.
-
Net Income Benefited From Debt Gain
GAAP net income was approximately $0.3 million, but results included a nonrecurring $4.052 million debt-extinguishment gain, limiting the quality of reported profitability.
-
Debt Conversion Improved Capital Structure
Common shares issued and outstanding increased from 1,294,142 to 37,058,212 during the six months ended June 30, 2026, primarily through debt conversion.
What to watch
-
Material Weaknesses in Internal Controls
Management concluded disclosure controls were ineffective as of June 30, 2026 and identified 3 material weakness areas: segregation of duties, account reconciliation and cutoff, and entity-level risk assessment.
-
Nasdaq Delisting Reduces Liquidity
Nasdaq suspended trading on April 28, 2026, and the Nasdaq Hearings Panel decided to delist the stock on August 6, 2026. OTC trading may involve wider spreads, lower volume and greater volatility than exchange trading.
-
Severe Dilution and Limited Share Capacity
The company issued 30,195,786 shares on May 28, 2026 at a fixed conversion price of $0.2385 per share. With 37,058,212 shares outstanding as of June 30, 2026 and 100,000,000 shares authorized, remaining capacity is constrained by other conversion and equity obligations.
-
Convertible Debt May Require Cash Settlement
If the company cannot deliver shares under the Amended Note, it may need to settle obligations in cash or obtain stockholder approval to increase authorized shares; failure could trigger an event of default and redemption at a premium.
Management's outlook
No quantitative revenue or EPS guidance was provided. The strategic alternatives review remains ongoing.
Earlier filings 3
10-K · March 30, 2026
zSpace describes a platform-led strategy focused on K-12 and CTE education with hardware, software and services and plans to grow software via acquisitions. FY2025 showed material revenue weakness (Q4 revenue…
10-Q · May 14, 2025
zSpace reported revenue of $6.759 million for the quarter ended March 31, 2025, down from $7.841 million a year earlier. Gross profit increased to $3.206 million (gross margin ~47.4%) and operating expenses fell by…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.