Free cash flow remains deeply negative, with a -57.6% margin in 2026Q1, further exacerbated by $1.6 million in stock-based compensation that masks underlying operational cash burn.
| Cash from Operations | -16.35M | -17.97M | -8.87M | -6.41M | -8.9M |
| Operating CF Margin % | - | -64.5% | -23.29% | -14.59% | -24.88% |
| Operating CF Growth % | -2605.07% | -102.49% | -38.44% | 27.99% | - |
| Net Income | -26.11M | -25.39M | -20.82M | -13.04M | -15.17M |
| Depreciation & Amortization | 29K | 76K | 12K | 32K | 49K |
| Stock-Based Compensation | 7.7M | 7.12M | 7.74M | 1K | 20K |
| Deferred Taxes | 0 | 0 | 0 | 0 | 0 |
| Other Non-Cash Items | 4.77M | 2.26M | 662K | 4.32M | 4.3M |
| Working Capital Changes | -2.73M | -2.04M | 3.54M | 2.28M | 1.9M |
| Change in Receivables | 1.12M | 1.65M | 1.86M | 1.81M | -2.07M |
| Change in Inventory | -225K | 652K | -105K | -210K | -1.49M |
| Change in Payables | -2.17M | -1.57M | 921K | 558K | 2.34M |
| Cash from Investing | -28K | -26K | -13K | -5K | -11K |
| Capital Expenditures | -28K | -26K | -13K | -5K | -11K |
| CapEx % of Revenue | 0.11% | 0.09% | 0.03% | 0.01% | 0.03% |
| Acquisitions | 0 | 0 | 0 | 0 | 0 |
| Investments | - | - | - | - | - |
| Other Investing | 0 | 0 | 0 | 0 | 0 |
| Cash from Financing | 18.29M | 14.38M | 10.48M | 5.59M | 6.94M |
| Debt Issued (Net) | 5.42M | 4.65M | 2.98M | 5.74M | 6.96M |
| Equity Issued (Net) | 8.88M | 5.73M | 10.03M | 3K | 8K |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | 0 | 0 | 0 | 0 | 0 |
| Other Financing | 3.99M | 4M | -2.52M | -153K | -21K |
| Net Change in Cash | 1.73M | -3.84M | 1.74M | -933K | -1.76M |
| Free Cash Flow | -16.38M | -18M | -8.89M | -6.42M | -8.91M |
| FCF Margin % | -62.15% | -64.6% | -23.33% | -14.61% | -24.91% |
| FCF Growth % | -101.84% | -102.49% | -38.53% | 28.03% | - |
| FCF per Share | -11.75 | -17.97 | -67.79 | -7.11 | -9.87 |
| FCF Conversion (FCF/Net Income) | 0.63x | 0.71x | 0.43x | 0.49x | 0.59x |
| Interest Paid | 0 | 579K | 1.7M | 0 | 0 |
| Taxes Paid | 0 | 17K | 0 | 0 | 0 |
Imminent liquidity and insolvency
According to quarterly financial disclosures, zSpace consistently reports net losses that significantly exceed operating cash outflows, with the OCF/NI ratio frequently fluctuating, suggesting that non-cash charges like stock-based compensation are masking the true severity of the company's underlying cash-burning operational model in recent periods.
The persistent gap between net income and operating cash flow suggests that the company relies heavily on non-cash accounting adjustments to mitigate the appearance of its cash burn. Investors should monitor whether this divergence indicates an inability to convert revenue into actual liquidity, as the current trend implies that operational losses are not being offset by efficient working capital management.
As reported in recent cash flow statements, zSpace's free cash flow margins remain deeply negative, reaching a low of -93.1% in 2025Q2, which highlights a structural inability to generate positive cash flow despite the company's specialized focus on the K-12 educational technology hardware and software market.
The trajectory of free cash flow suggests that the business model is currently incapable of self-funding its operations. The lack of a clear path to positive FCF margins warrants further investigation into whether the company's high fixed-cost structure can ever be reconciled with its current, declining revenue base.
Based on the provided cash flow data, working capital changes have been highly erratic, swinging from a $3.5 million inflow in 2024Q2 to a $2.4 million outflow in 2025Q2, which suggests significant instability in the company's ability to manage its inventory and accounts receivable cycles effectively.
This volatility in working capital appears to reflect the seasonal and unpredictable nature of school district procurement cycles. Such fluctuations may indicate that the company is struggling to align its inventory production with actual demand, potentially leading to inefficient cash usage during periods of lower sales activity.
Analysis of recent filings reveals that stock-based compensation, which reached $1.6 million in 2026Q1, serves as a significant non-cash add-back that artificially improves the appearance of operating cash flow while failing to address the company's underlying inability to generate cash from its core business operations.
The reliance on stock-based compensation as a primary adjustment in the cash flow statement may obscure the true cost of talent acquisition and retention. Investors should be wary of this dynamic, as it suggests that the company's cash flow profile is more fragile than the headline operating cash flow figures might otherwise imply.
Quick answers to the most common questions about buying ZSPC stock.
zSpace, Inc. (ZSPC) generated $-18.0M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
zSpace, Inc. (ZSPC) reported negative free cash flow of $18.0M in 2025, indicating capital requirements exceeded cash from operations.
zSpace, Inc. (ZSPC) spent $0.0M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.