zSpace, Inc. Q2 FY26 Results

Our second quarter results reflect the impact of the actions our management team has taken across the business, which drove net income of $0.3 million this quarter compared to a net loss of $6.1 million a year ago — even as our core K-12 markets continue to work through funding and macro disruption. Revenue was $5.4 million, compared to $7.5 million in the prior year, though we are encouraged by early signs that demand is beginning to normalize as customers resume purchasing decisions that were paused earlier in the year. Underlying this improvement in profitability is a structural shift in our business: gross margin expanded 1,380 basis points year-over-year to 56%, driven by the continued move toward higher-margin software and services revenue, growth in Company-owned software content, and a leaner hardware cost profile. These are efforts our team has been driving for some time and that we believe should continue to support margins as they take fuller effect. Results this quarter also benefited from actions to strengthen our balance sheet, including a one-time gain recognized in connection with converting a portion of outstanding debt to equity, which will not recur in future periods. Taken together, we believe these results demonstrate our ability to execute with discipline and control what we can control, even in a K-12 environment that remains uneven. At the same time, we recognize that our current valuation does not fully reflect the strength of our platform, which is why the Board continues its ongoing formal review of strategic alternatives to ensure we are doing everything we can to maximize long-term value for our shareholders.