zSpace (ZSPC) Q4 2024 earnings summary

Executive summary

• Completed IPO in December 2024, raising over $10 million and listing on NASDAQ, enabling acceleration of growth strategy, product launches, and sales expansion, though late-quarter order fulfillment was limited.

• Focused on K-12 and CTE markets, with a presence in over 3,500 U.S. school districts and installations in 80% of the largest 100 districts.

• Launched Inspire 2 and Imagine products, expanded content with a career readiness solution featuring an AI Career Coach, and won Best of Show Award at ISTELive 24.

• Acquired BlocksCAD in Q1 2025 to strengthen STEM offerings and integrated it into core bundles.

• Achieved largest customer win with a $5 million deal with St. Louis Public Schools.

Financial highlights

• 2024 revenues were $38.1 million, down 13% year-over-year due to capital constraints delaying order fulfillment.

• Ended 2024 with $9.2 million in unfulfilled backlog, indicating strong demand for 2025.

• Annualized contract value (ACV) of renewable software was $11.3 million as of December 2024, up 6% year-over-year.

• Net dollar revenue retention (NDRR) for large customers was 92% as of December 2024.

• Gross margin for 2024 was 40.9%, up from 38.5% in 2023, driven by a shift toward software and services.

• Q4 2024 revenues were $8.5 million, down 29% year-over-year; gross margin for the quarter was 40.7%, up 597 basis points.

• Q4 net loss was $(3.6) million, improved from $(4.1) million; full year net loss widened to $(20.8) million from $(13.0) million.

• Bookings for 2024 were $41.5 million, up 1% year-over-year; Q4 bookings were $5.3 million, down 3%.

• Cash and cash equivalents at year-end were $4.9 million, up from $3.1 million a year ago.

Outlook and guidance

• Q1 2025 revenues expected to be slightly above $5 million, reflecting ongoing market uncertainty and timing of deal closings.

• Management expects strong demand in 2025, driven by backlog and market opportunities in K-12 STEM and CTE.

• Focus remains on international expansion, R&D, and software acquisitions to drive growth.

• Operating expense growth for 2025 expected to be less than half the rate of revenue growth, excluding stock-based compensation.

• Expects margin expansion from new hardware platforms and ongoing software ecosystem growth.