zSpace, Inc. Segments Disclosure
13. | SEGMENT REPORTING |
The Company’s chief operating decision maker is its chief executive officer who reviews financial information presented on a consolidated basis for the purposes of making operating decisions, assessing financial performance, and allocating resources. The Company’s chief operating decision maker reviews segment performance and allocates resources based upon revenues and expenses. As the Company has only one reportable segment, revenues and expenses are reported only on a consolidated basis. The measure of segment assets is reported in the consolidated balance sheet as total consolidated assets.
The following table presents selected financial information about revenues, expenses and net loss for the years ended December 31, 2025 and 2024 for the Company’s one reportable segment:
| Year Ended December 31, | ||||||
2025 | | 2024 | |||||
Revenues: | |||||||
Hardware | $ | 14,208 | $ | 21,991 | |||
Software | 10,558 | 12,857 | |||||
Services | 3,092 | 3,250 | |||||
Total revenues | 27,858 | 38,098 | |||||
Cost of goods sold | |||||||
Hardware | 9,374 | 15,950 | |||||
Software | 3,097 | 5,025 | |||||
Services | 1,944 | 1,152 | |||||
Excess and obsolete | 182 | 402 | |||||
Total cost of goods sold | 14,597 | 22,529 | |||||
Gross profit |
| 13,261 |
| 15,569 | |||
Operating expenses: |
| |
| | |||
Research and development |
| 804 |
| 849 | |||
Software engineering | 1,540 | 1,158 | |||||
Platform engineering | 2,955 | 2,886 | |||||
Sales |
| 7,375 |
| 8,370 | |||
General and administrative |
| 13,871 |
| 12,419 | |||
Marketing and business development |
| 8,367 |
| 6,712 | |||
International sales | 490 | 833 | |||||
Total operating expenses |
| 35,402 |
| 33,227 | |||
Loss from operations |
| (22,141) |
| (17,658) | |||
Other (expense) income: |
| |
| | |||
Interest expense |
| (1,478) |
| (2,815) | |||
Other income (expense), net |
| 190 |
| 43 | |||
Loss on change in fair value of convertible debt | (1,945) | — | |||||
Loss on extinguishment of debt |
| — |
| (359) | |||
Loss before income taxes |
| (25,374) |
| (20,789) | |||
Income tax expense (benefit) |
| 14 |
| 34 | |||
Segment net loss | $ | (25,388) | $ | (20,823) | |||
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.