zSpace (ZSPC) investor relations material

Product innovation and market positioning

• Delivers headset-free AR/VR solutions combining hardware, software, and standards-aligned content for immersive, collaborative learning experiences.

• Focuses on K-12 and career/technical education, with applications in STEM, health, transportation, and advanced manufacturing.

• Holds a strong patent portfolio and differentiates through unique, collaborative classroom experiences.

• Expanded content from sciences and middle school to full K-12 and workforce development, leveraging Unity 3D for applications.

• Recent AI-powered products like Career Coach and Career Explorer personalize learning and improve student outcomes.

Financial performance and growth strategy

• Generates about $40 million in revenue, with 85% from the U.S. and presence in 3,500 of 13,000 public school districts.

• Revenue split is roughly 50% new sales and 50% expansion within existing customers, with overall penetration at about 1% in top districts.

• Annualized contract value of active software licenses grew from $6 million to $11.5 million in 2.5 years.

• Net dollar revenue retention exceeded 100% in 10 of the last 12 quarters, reaching 135% in the most recent quarter.

• Gross margin expanded by 8 percentage points in the first half of the year, driven by software renewals.

Funding environment and market dynamics

• K-12 funding shifted from federal programs to state block grants, creating short-term disruption but long-term growth opportunities.

• Career and technical education benefits from stable $1.5 billion annual Perkins funding, supporting innovative programs.

• Hardware revenues are more affected by market disruptions, while software ecosystem growth remains strong.

• International business is limited but identified as a future growth area.

• COVID and skilled trades shortages accelerated focus on CTE, with programs now starting as early as grade six.