zSpace Reports Challenging Q4 and Full Year 2025 Results

Augmented reality company sees revenue decline, but expands software and services mix amid macroeconomic headwinds

Mar. 30, 2026 at 8:05pm

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A photorealistic studio still life featuring a sleek, modern AR/VR headset and stylus floating on a clean, monochromatic grey background, conceptually representing the abstract ideas of innovation, technology, and the future of immersive learning.As zSpace navigates macroeconomic headwinds, its focus on software and services positions the company to deliver innovative AR/VR solutions for the future of education.San Jose Today

zSpace, a leading provider of augmented and virtual reality (AR/VR) solutions for education, reported its financial results for the fourth quarter and full year 2025. The company saw revenue decline compared to the prior year, but increased its software and services mix to 53% of total revenue, driving gross margin expansion. zSpace took structural actions to align the company to the market environment, including strengthening its balance sheet and continuing to invest in innovation.

Why it matters

zSpace's results reflect the broader challenges facing the education technology sector, with macroeconomic and funding uncertainties impacting hardware sales. However, the company's focus on expanding its software and services offerings, as well as its strategic restructuring, position it to navigate the current environment and capitalize on long-term growth opportunities as the market stabilizes.

The details

In the fourth quarter of 2025, zSpace reported revenue of $4.8 million, down from $8.5 million in the same period the prior year. For the full year, revenue was $27.9 million compared to $38.1 million in 2024. The declines were driven by a freeze in orders and shipments during the U.S. Federal Government shutdown. Despite the revenue drop, zSpace was able to increase its software and services mix to 53% of total revenue, up from 43% a year ago, contributing to a 840 basis point improvement in gross margin to 49%. The company also took steps to align its cost structure, reducing operating expenses by more than 30% through a strategic restructuring initiative.

  • zSpace reported its Q4 and full year 2025 financial results on March 30, 2026.
  • The company completed a strategic restructuring initiative on December 11, 2025, reducing run-rate operating expenses by more than 30%.
  • On January 29, 2026, zSpace announced a $3 million strategic investment from Planet One Education.
  • On March 17, 2026, zSpace announced an additional $4.3 million senior secured convertible note.
  • On March 18, 2026, Bellflower Unified School District expanded its use of zSpace AR/VR technology at Mayfair High School.

The players

Paul Kellenberger

Chief Executive Officer of zSpace.

Erick DeOliveira

Chief Financial Officer of zSpace.

zSpace, Inc.

A leading provider of augmented and virtual reality (AR/VR) solutions for education, headquartered in San Jose, California.

Planet One Education

An education technology company that made a $3 million strategic investment in zSpace.

Bellflower Unified School District

A school district in California that expanded its use of zSpace AR/VR technology at Mayfair High School.

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What they’re saying

“Our fourth quarter results reflect continued progress against our strategic priorities and our focus on controlling what we can control.”

— Paul Kellenberger, CEO of zSpace

“We remain confident in the long-term potential of our business and our ability to execute with discipline, despite persistent macroeconomic and funding uncertainties.”

— Paul Kellenberger, CEO of zSpace

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

zSpace's results highlight the challenges facing the education technology sector, with macroeconomic headwinds and funding uncertainties impacting hardware sales. However, the company's focus on expanding its software and services offerings, as well as its strategic restructuring, position it to navigate the current environment and capitalize on long-term growth opportunities as the market stabilizes.