ZSPC earnings analysis
What we found in ZSPC's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
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.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- 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.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- 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.
What they reported.
What the company itself reported, taken out of the document.
- Gross margin
- 56.4%
What they said about what is next.
No quantitative revenue or EPS guidance was provided. The strategic alternatives review remains ongoing.
The filing reads worse than the one before it.
What came before.
- 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.…
- 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. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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