zSpace, Inc. (ZSPC) AI Stock Analysis

• Market Cap: $12.74M
• Dividend Yield: N/A
• Average Volume (3M): 909.43K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.19
• Revenue Growth: -24.20%
• EPS Growth: 1.31%
• Country: US
• Employees: 78
• Sector: Technology
• Sector Strength: 88
• Industry: Computer Hardware
• EPS (TTM): -0.21
• Shares Outstanding: 29,050,068
• 10 Day Avg. Volume: 517,754
• 30 Day Avg. Volume: 909,428
• PEG Ratio: 0.02
• Price to Book (P/B): -3.55
• Price to Sales (P/S): 1.37
• P/FCF Ratio: -5.86
• Enterprise Value/Market Cap: 1.34
• Enterprise Value/Revenue: 0.54
• Enterprise Value/Gross Profit: 1.19
• Enterprise Value/Ebitda: -0.85
• 1Y Price Target: $2.30
• Price Target Upside: 422.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): -0.85
• Revenue Forecast (FY): $41.40M

• Rating: 42 Neutral
• Price Target: $0.40 ▼(-9.09% Downside)

The score is weighed down primarily by weak financial performance (declining revenue, very large losses, negative equity, and significant cash burn). Technicals also remain pressured with the stock below key longer-term moving averages and negative MACD. Offsetting these risks, the latest earnings call showed improving mix toward software/services and higher gross margins with sequential growth, but year-over-year declines and the absence of formal guidance keep confidence limited.

Positive Factors

Shift to higher‑margin software & services

The company’s revenue mix moving to majority software/services increases recurring, contractable revenue (annualized renewable software ACV noted at $10.2M). This durable shift supports higher margin revenue, smoother cash conversion, and scalability of content and subscription economics versus one‑time hardware sales.

Improving gross margins

Material gross margin expansion (Q3 51.2%; TTM ~45.5%) reflects better unit economics driven by software mix and pricing. Higher gross margins are a durable operational lever that can cushion operating losses, improve cash flow potential per sale, and provide more headroom for reinvestment into content and international expansion.

Geographic diversification and partnerships

Expansions and institutional partnerships across Europe and the Middle East materially diversify end markets away from U.S. K‑12 funding cycles. This structural geographic diversification reduces single‑market concentration, opens larger addressable contract markets, and supports multi‑year revenue channels through regional deployments and renewals.

Negative Factors

Declining revenue and persistent losses

Sustained revenue declines and deep operating/net losses indicate a scale shortfall versus fixed costs. Persistent negative margins erode equity and cash reserves, impede reinvestment in product and sales, and make it difficult to build profitable scale absent durable demand recovery or materially higher recurring revenue retention.

Negative equity and fragile balance sheet

A material negative equity position and limited assets constrain financing alternatives, increase counterparty and covenant risk, and raise dilution likelihood for common shareholders. This structural capital deficit reduces flexibility to pursue product development or absorb further operating volatility without external recapitalization.

Heavy cash burn and negative free cash flow

Sustained negative operating and free cash flow requires frequent external funding to sustain operations. Over time this increases dependency on dilutive or restrictive financings, diverts management focus to liquidity management, and can limit the company’s ability to execute multi‑period sales, content, and international expansion plans.

zSpace, Inc. Business Overview & Revenue Model

Company Description

zSpace, Inc. provides augmented and virtual reality educational technology solutions for K-12 schools, and career and technical education markets in the United States and internationally. The company provides StudioA3, an application that allows teachers to build lessons for various subject using pre-made models; hardware products comprising stylus, eyewear, laptop, and power adapter products; and installation and/or training services. Its platform offers a range of educational tools designed for K-12 science, technology, engineering, and math lessons, as well as training skilled trades in areas, such as health sciences, automotive engineering/repair, and software programming and advanced manufacturing. The company was formerly known as Infinite Z, Inc. and changed its name to zSpace, Inc. in February 2013. The company was incorporated in 2006 and is based in San Jose, California.

How the Company Makes Money

zSpace generates revenue through several key streams, primarily by selling its zSpace systems, including hardware and software packages, to educational institutions and training organizations. They also monetize through licensing of their software applications and educational content, often in partnership with curriculum developers and educational publishers. Additionally, zSpace may engage in service agreements for installation, support, and training, further contributing to their earnings. Strategic partnerships with schools, universities, and corporations enhance their market reach and drive sales, while ongoing maintenance contracts provide a steady stream of recurring income.

zSpace, Inc. Financial Statement Overview

Summary

Weak fundamentals: TTM revenue declined (~-14.7%) with very large operating and net losses (TTM operating margin ~-44.9%, net margin ~-68.9%). Balance sheet risk is elevated due to persistent negative equity (~-$19.7M TTM) and small asset base, while cash burn remains heavy (TTM FCF about -$19.1M). Positives include higher gross margin (~45.5% TTM) and materially reduced debt versus 2022.

Income Statement

TTM (Trailing-Twelve-Months) revenue fell to about $31.5M (down ~14.7%), extending a multi-year trend of volatility (growth in 2023, followed by flat-to-down in 2024 and TTM). Gross margin improved to ~45.5% in TTM from ~40.9% in 2024, showing better unit economics. However, profitability remains weak: operating losses are sizable (TTM operating margin ~-44.9%) and net losses are deep (TTM net margin ~-68.9%), indicating the cost structure is still far ahead of current scale.

Balance Sheet

The balance sheet shows high financial risk due to negative stockholders’ equity in every period (TTM equity about -$19.7M), which limits flexibility and can constrain financing options. Debt has come down meaningfully from 2022 (~$44.5M) to TTM (~$11.0M), a clear positive, but leverage remains a concern given the negative equity base. Total assets are relatively small (~$13.5M TTM), which further reduces balance-sheet cushioning against ongoing losses.

Cash Flow

Cash generation remains a key weakness: TTM operating cash flow is about -$19.0M and free cash flow about -$19.1M, reflecting continued cash burn. Versus 2024, cash burn accelerated (operating cash flow moved from roughly -$8.9M to -$19.0M). A positive signal is that TTM free cash flow improved versus the prior comparison period (growth ~29.1%), but the company is still materially funding operations externally until it can narrow losses and stabilize revenues.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022
Income Statement
Total Revenue	31.55M	38.10M	43.92M	35.78M
Gross Profit	14.35M	15.57M	16.89M	13.13M
EBITDA	-19.96M	-17.96M	-10.10M	-11.38M
Net Income	-21.73M	-20.82M	-13.04M	-15.17M
Balance Sheet
Total Assets	13.46M	13.53M	13.85M	18.21M
Cash, Cash Equivalents and Short-Term Investments	4.27M	4.86M	2.82M	4.06M
Total Debt	10.96M	11.96M	19.07M	44.50M
Total Liabilities	33.14M	28.22M	144.32M	65.68M
Stockholders Equity	-19.68M	-14.69M	-130.47M	-47.47M
Cash Flow
Free Cash Flow	-19.07M	-8.89M	-6.42M	-8.91M
Operating Cash Flow	-19.05M	-8.87M	-6.41M	-8.90M
Investing Cash Flow	-26.00K	-13.00K	-5.00K	-11.00K
Financing Cash Flow	20.16M	10.48M	5.59M	6.94M

zSpace, Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 0.44
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ZSPC, the sentiment is Negative. The current price of 0.44 is below the 20-day moving average (MA) of 0.50, below the 50-day MA of 0.48, and below the 200-day MA of 2.50, indicating a bearish trend. The MACD of -0.02 indicates Positive momentum. The RSI at 40.80 is Neutral, neither overbought nor oversold. The STOCH value of 20.38 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ZSPC.

zSpace, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
KTCC	52 Neutral	$31.38M	-2.68	-9.78%	―	-20.03%	-485.19%
TACT	51 Neutral	$35.50M	-4.49	-23.00%	―	8.27%	-308.63%
SCKT	47 Neutral	$9.49M	-3.02	-17.53%	―	-13.01%	-65.20%
EBON	46 Neutral	$19.17M	-0.98	-7.04%	―	154.52%	47.31%
UAVS	45 Neutral	$45.73M	-0.28	-110.92%	―	-6.34%	98.60%
ZSPC	42 Neutral	$12.74M	-0.46	―	―	-24.20%	1.31%

zSpace, Inc. Corporate Events

zSpace Raises Preferred Equity, Reshapes Capital Structure

On January 23, 2026, zSpace, Inc. entered into a securities purchase agreement with an institutional investor to issue Series P Convertible Preferred Stock and five-year warrants for its common stock in one or more closings, with an initial closing on January 27, 2026 raising $3 million from the sale of 1.5 million preferred shares and warrants for 1 million common shares at a preferred share price of $2 and warrant exercise price of $3, with capacity for up to $10 million in total financing under the agreement. Also on January 27, 2026, the company filed a Certificate of Designations in Delaware creating up to 5 million shares of Series P Convertible Preferred Stock carrying an 18% cumulative, paid-in-kind dividend, liquidation preference over junior securities, voting rights on an as-converted basis, significant protective provisions over future corporate actions, and a structured conversion feature into common stock beginning in year three and automatically in year five at the lower of the $2 conversion price or 80% of the 90-day VWAP, subject to ownership caps and an exchange cap tied to trading market rules, which together materially reshape zSpace’s capital structure and governance dynamics for preferred holders and common shareholders.

The most recent analyst rating on (ZSPC) stock is a Sell with a $0.47 price target. To see the full list of analyst forecasts on zSpace, Inc. stock, see the ZSPC Stock Forecast page.

zSpace Amends Convertible Note Terms to Increase Flexibility

On January 8, 2026, zSpace, Inc. amended the terms of a senior secured convertible note originally issued on April 11, 2025 to an institutional investor, reducing the note’s “Floor Price” for conversion from $0.60 to $0.22 per share of common stock, subject to customary adjustments, and easing certain equity-related conditions that govern the company’s ability to make installment payments in stock. Specifically, the company lowered the minimum required volume-weighted average price of its common stock over the prior 20 trading days for satisfying “Equity Conditions” from $0.75 to $0.30, while leaving all other terms of the note in place, a move that provides the company more flexibility to service the note with equity at lower share prices and may increase potential dilution for existing shareholders.

The most recent analyst rating on (ZSPC) stock is a Sell with a $0.47 price target. To see the full list of analyst forecasts on zSpace, Inc. stock, see the ZSPC Stock Forecast page.

zSpace, Inc. Faces Nasdaq Non-Compliance Notice

On December 11, 2025, zSpace, Inc. received a notice from Nasdaq indicating non-compliance with the minimum bid price requirement, as its stock price had fallen below $1.00 for 30 consecutive business days. The company has until June 9, 2026, to regain compliance or face potential delisting, and it is actively monitoring its stock price while evaluating options to meet Nasdaq’s criteria. Additionally, as part of a restructuring initiative, zSpace reduced its board size from seven to five directors, with Angela Prince and Pankaj Gupta stepping down on December 9, 2025, without any disputes. The board also adjusted its committee sizes and leadership roles accordingly.

The most recent analyst rating on (ZSPC) stock is a Hold with a $0.51 price target. To see the full list of analyst forecasts on zSpace, Inc. stock, see the ZSPC Stock Forecast page.

zSpace, Inc. Faces Nasdaq Non-Compliance Notice

On November 25, 2025, zSpace, Inc. received a notice from Nasdaq indicating non-compliance with the requirement to maintain a minimum market value of listed securities of $35 million. The company has until May 26, 2026, to regain compliance by achieving a market value of $35 million or more for at least 10 consecutive business days. Failure to comply may lead to delisting, although the company can appeal. zSpace, Inc. is actively monitoring its market value and evaluating options to meet Nasdaq’s listing criteria.

The most recent analyst rating on (ZSPC) stock is a Hold with a $0.37 price target. To see the full list of analyst forecasts on zSpace, Inc. stock, see the ZSPC Stock Forecast page.

zSpace, Inc. Reports Q3 2025 Financial Results

zSpace, Inc. reported its financial results for the third quarter of 2025, highlighting a focus on strategic priorities and software revenue growth, which now comprises over 50% of total revenue. Despite a decrease in total revenue to $8.8 million from $14.2 million in the previous year, the company saw a gross margin expansion of over 640 basis points. Key developments include the deployment of AR/VR learning platforms in Danbury Public Schools and a partnership with GEMS Education in Dubai, expanding zSpace’s global reach. The company continues to face macroeconomic challenges and funding uncertainty but remains committed to delivering innovative learning solutions and long-term shareholder value.

The most recent analyst rating on (ZSPC) stock is a Buy with a $3.00 price target. To see the full list of analyst forecasts on zSpace, Inc. stock, see the ZSPC Stock Forecast page.