Q1 2025 ZSpace Inc Earnings Call
Yeah.
Okay.
Operator: Good day, everyone. Thank you for participating in today's conference call to discuss ZSpace's financial results for the first quarter and in March 31st, 2025.
Good day, everyone. Thank you for participating in today's conference call to discuss these spaces financial results for the first quarter ended March 31, 2025 drilling yesterday RSV space deal, Paul Kellenberger, CFO, Eric Dey, Olivera and Greg Wobbles from Investor Relations phone there.
Operator: Joining us today are ZSpace CEO, Paul Kellenberger, CFO, Erick DeOliveira, and Greg Robles from Invest Relations. Following their remarks, we'll open the call for analyst questions.
Marks we will open the call for analyst questions.
Greg Robles: Before we go further, I would like to turn the call over to Mr. Robles as he reads the company's safe harbor statement.
Speaker Change: Before we go further I would like to turn the call over to Mr. Roberts as he reads the Companys Safe Harbor statements.
Greg Robles: Thanks, operator.
Greg Robles: Good afternoon. And thank you for joining our conference call to discuss our first quarter 2025 Before we begin, I'd like to remind everyone that certain statements made on this call may be considered forward-looking. These statements are based on our current expectations and beliefs and are subject to risks and uncertainties that could cause actual results to differ. Additionally, we may discuss certain key business metrics which are non-GAAP financial.
Roberts: Thanks, operator, good afternoon, and thank you for joining our conference call to discuss our first quarter 2025 financial results before we begin I'd like to remind everyone that certain statements made on this call maybe considered forward looking statements. These statements are based on our current expectations and beliefs and are subject to risks.
Roberts: And uncertainties that could cause actual results to differ materially. Additionally, we may discuss certain key business metrics, which are non-GAAP financial measures.
Paul Kellenberger: Description of these non-GAP measures and any comparison to the most directly comparable GAP Now I would like to turn the call over to the CEO of ZSpace, Paul Kellenberger. Thank you, and good afternoon, everyone. Thank you for joining us for our first quarter earnings I am Paul Kellenberger, CEO of ZSpace. And with me is Erick DeOliveira, our Chief Financial Officer. We're both excited to be here with you to discuss ZSpace, our Q1 performance and our plan to drive growth. We are pleased with our first quarter results, which came in ahead of our expectations, despite continued turbulence in the broader education market.
Roberts: Ascription of these non-GAAP measures and any comparison to the most directly comparable GAAP measures can be found in our earnings release on the Investor Relations section of our website now I would like to turn the call over to the CEO of these space Paul Kellenberger Paul.
Paul Kellenberger: Thank you and good afternoon, everyone.
Paul Kellenberger: Thank you for joining us for our first quarter earnings call.
Paul Kellenberger: I am Paul Kellenberger CEO of these case and with me is Eric <unk>, our Chief Financial Officer.
Paul Kellenberger: We're both excited to be here with you to discuss these space, our Q1 performance and our plan to drive growth.
Paul Kellenberger: We are pleased with our first quarter results, which came in ahead of our expectations. Despite continued turbulence in the broader education market.
Paul Kellenberger: Revenue for the quarter was $6.8 million, down 14% compared to a year ago. As many of you know, school districts are still navigating funding challenges and delays, which impacted the timing of committed orders and hardware deliveries during the pandemic. Despite the year over year decline, we are encouraged by the continued growth in our higher margin software and services business, which increased 11% year over This is a critical part of our strategy as we scale our platform with recurring, stickier revenue.
Paul Kellenberger: Revenue for the quarter was $6 8 million down 14% compared to a year ago.
Paul Kellenberger: As many of you know school districts are still navigating funding challenges and delays, which impacted the timing of committed orders and hardware deliveries during the quarter.
Paul Kellenberger: Despite the year over year decline, we are encouraged by the continued growth in our higher margin software and services business, which increased 11% year over year.
Paul Kellenberger: This is a critical part of our strategy as we scale our platform with recurring stickier revenue streams.
Paul Kellenberger: Erick will walk you through the full financials in more detail shortly. on the product front and consistent with what we previously communicated. We've now fully transitioned into shipping our Inspire2 lab. which replaces the original Inspire 1. Inspire2 delivers the same high impact ZSpace experience while driving cost efficient. helping to protect gross margins, even as hardware volumes fluctuate.
Paul Kellenberger: Eric will walk you through the full financials in more detail shortly.
Paul Kellenberger: On the product front and consistent with what we previously communicated we've now fully transitioned into shipping our inspire to laptop, which replaces the original inspire one.
Paul Kellenberger: Inspire two delivers the same high impact this space experience.
Paul Kellenberger: While driving cost efficiencies for us.
Paul Kellenberger: <unk> to protect gross margins, even as hardware volumes fluctuate.
Paul Kellenberger: We also made meaningful progress on expanding our software capabilities through two strategic acquisitions we made in recent years.
Paul Kellenberger: We also made meaningful progress on expanding our software capabilities through two strategic acquisitions, we made in recent months.
Paul Kellenberger: In March, we announced the completion of our acquisition of blocks Cutting Edge Platform Specializing in 3D Design and Modeling for STEM Education. BlocksCAD empowers students to engage with math, coding, and engineering concepts. to Browser-Based 3D Modeling.
Paul Kellenberger: In March we announced the completion of our acquisition of blocks CAD.
Paul Kellenberger: A cutting edge platform specializing in three D design and modeling for stem education.
Paul Kellenberger: <unk> cat empowers students to engage with nap coding and engineering concepts to a browser based three D modeling.
Paul Kellenberger: The platform has strong alignment with our mission to promote hands on project based learning, and is already generating meaningful interest across CTE and workforce development programs. by integrating BloxCAD into our immersive ecosystem. we're creating more dynamic tools that bring abstract concepts to life.
Paul Kellenberger: The platform has strong alignment with our mission to promote hands on project based learning and is already generating meaningful interest across Cte and workforce development programs.
By integrating blocks CAD into our immersive ecosystem, we're creating more dynamic tools that bring abstract concepts to life and spark creativity in the classroom.
Paul Kellenberger: Also in April, we announced our acquisition of Second Avenue Learning. A Rochester-based edtech innovator known for its custom software development and interactive learning experience. Second Avenue expands our content capability and brings deep expertise in curriculum aligned digital tools for K-12 and higher ed Importantly, their founder and CEO, Tori Ben-Hurris, has joined ZSpace as our Senior Vice President of Product Strategy. Tori and her team share our commitment to meaningful education. and their approach to user-centered design will help accelerate our roadmap for immersive and standards-aligned software.
Paul Kellenberger: Also in April we announced our acquisition of second Avenue learning.
Paul Kellenberger: A Rochester based Ed Tech innovator known for its custom software development and interactive learning experiences.
Paul Kellenberger: Second Avenue expands our content capability and brings deep expertise in curriculum aligned digital tools for K 12, and higher education.
Speaker Change: Importantly, they are founder and CEO tour event Harris has joined Z space as our senior Vice President of product strategy.
Speaker Change: Corie and her team share our commitment to meaningful education outcomes.
Speaker Change: And their approach to user centered design will help accelerate our roadmap for immersive and standards aligned software experiences.
Paul Kellenberger: Together, these acquisitions reflect our continued focus on enhancing our digital platform.
Speaker Change: Together these acquisitions reflect our continued focus on enhancing our digital platform, an important long term growth and profitability lever for the business.
Unknown Executive: Unknown Executive, Erick DeOliveira, Paul Kellenberger, ZSpace In summary, we had a solid quarter amidst a challenging macro back. The first quarter was marked by elevated uncertainty, particularly around federal and state funding programs, as well as ongoing volatility tied to tariffs and policy decisions. While we are starting to see some stabilization as we move through Q2, the environment remains dynamic, and we're staying close to our partners to mitigate any potential disruption. Despite these challenges, we remain confident in the opportunity ahead, and our solutions continue to gain traction. both in the U.S. and internationally.
Speaker Change: In summary, we had a solid quarter amidst a challenging macro backdrop.
Speaker Change: The first quarter was marked by elevated uncertainty, particularly around federal and state funding programs as well as the ongoing volatility tied to tariffs and policy decisions.
Speaker Change: While we are starting to see some stabilization as we move through Q2, the environment remains dynamic and we are staying close to our partners to mitigate any potential disruptions.
Speaker Change: Despite these challenges we remain confident in the opportunity ahead, and our solutions continue to gain traction.
Speaker Change: Both in the U S and internationally.
Erick DeOliveira: With that, I'll turn the call over to Erick to walk us through our financial results in more detail. Thank you, Paul. As you consider our results, a reminder that our revenues are substantially recognized upon shipment of laptop units or fulfillment of software licenses. This includes recognizing the full value of multi-year software licenses in the period in which they are fulfilled. Only a small portion of our revenue is rapidly As a result of this revenue recognition treatment, our financial results can exhibit quarter-to-quarter variability that exaggerates the underlying seasonality of the business.
Eric: With that I'll turn the call over to Eric to walk us through our financial results in more detail.
Speaker Change: Eric.
Eric: Thank you Paul.
Eric: As you consider our results a reminder, that our revenues are substantially recognized upon shipment of laptop units for fulfillment of software license keys.
This includes recognizing the full value of multiyear software licenses in the period in which they are fulfilled.
Eric: Only a small portion of our revenue is rapidly recognized.
Eric: As a result of this revenue recognition treatment or financial results can exhibit quarter to quarter variability that exaggerates the underlying seasonality of the business.
Erick DeOliveira: and now diving into our Q1. As Paul mentioned, first quarter revenues were $6.8 million, down 14% year on year. This was driven by hardware revenues down 26% as customers in our K-12 end market. Experience Turbulence and Their Funding Sources. and Delayed Delivery of Committed Orders. However, this was offset by 11% year-on-year growth in our software and services revenue. which drove significant improvements in gross profit and margin. As we continue to scale our platform organically and through M&A, we widen this recurring revenue and this quarter's results are illustrative of the benefit. Bookings for the quarter were $8.3 million.
Eric: And now diving into our Q1 performance.
Eric: As Paul mentioned first quarter revenues were $6 $8 million down 14% year on year.
Eric: This was driven by hardware revenues down 26% as.
Eric: As customers in our K 12, and markets experienced turbulence in their funding sources and delayed delivery of committed orders.
Eric: However, this was offset by 11% year on year growth in our software and services revenues, which drove significant improvements in gross profit and margins.
Eric: As we continue to scale, our platform organically and through M&A. We widen this recurring revenue stream and this quarter's results are illustrative of the benefits.
Eric: Bookings for the quarter were $8 3 million.
Erick DeOliveira: down 6% year on year.
Eric: Down 6% year on year.
Erick DeOliveira: Excluding China. U.S. and rest of world bookings were $6.7 million. down 8% year-on-year. This reflects growth of 4% in the U.S. market.
Eric: Excluding China.
U S and rest of world bookings were $6 7 million.
Eric: Down 8% year on year.
Eric: This reflects growth of 4% in the U S market.
Erick DeOliveira: 78% decline in international geographies other than China relative to the comparable prior year period. We concluded the quarter with $9.7 million of unfulfilled orders in the backlog as end-users reacted to changes in their funding stream. Gross profit for the quarter was $3.2 million. up 19% year-on-year.
Eric: And 78% decline in international geographies other than China relative to the comparable prior year period.
We concluded the quarter with $9 $7 million of unfulfilled orders in the backlog as end users reacted to changes in their funding sources.
Eric: Gross profit for the quarter was $3 2 million.
Eric: Up 19% year on year, despite revenue headwinds and reflecting improvements in the quality of revenue across the board.
Erick DeOliveira: Spike Revenue Headware. and Reflecting Improvements in the Quality of Revenue across the Board. Gross margins for the quarter were 47.4%. up 13 percentage points compared to 34.5%. in the comparable quarter of the prior year. Despite the headwinds constraining business volume. Strong execution across a number of fronts was behind this improvement in profitability. And we are pleased that efforts reaching back several quarters are now bearing fruit. Firstly, 9% Mixed Shift of Revenue out of Hardware and into Software and Services. was responsible for approximately three percentage points of this margin expansion. and Strong Retention of Renewable Software was a contributing factor.
Eric: Gross margins for the quarter were 47, 4%.
Eric: Up 13 percentage points compared to 34, 5% in the comparable quarter of the prior year.
Eric: Despite the headwinds constraining business volume.
Eric: <unk> execution across a number of fronts was behind this improvement and profitability.
Eric: And we are pleased that efforts, reaching back several quarters are now bearing fruit.
Eric: Firstly.
Eric: A 9% mix shift of revenue out of hardware and into software and services was responsible for approximately three percentage points of this margin expansion.
Eric: And stronger retention of renewable software was a contributing factor here.
Erick DeOliveira: of which our NDRR and ACD metrics are.
Eric: Of which our <unk> and ACD metrics are evidence.
Erick DeOliveira: more on that shortly.
Eric: More on that shortly.
Erick DeOliveira: Secondly, the new Inspire 2 model, which began shipping in Q4 and made up 100% of Q1 shipping. improved hardware margins as we'd hoped.
Eric: Secondly, the new inspire two model, which began shipping in Q4 and made up 100% of Q1 shipments improved hardware margins as we'd hoped.
Erick DeOliveira: In the second half of this year, release of the new orb tracking will be expected to improve the user experience. further reduce costs in the peripheral hardware ecosystem.
Eric: In the second half of this year.
Eric: Release of the new orbit tracking systems will be expected to improve the user experience and further reduce costs in the peripheral hardware ecosystem.
Erick DeOliveira: Thirdly, delivering against our intention to own more software. We brought more applications in-house. through the BloxCat acquisition. and Purchase and Development of Other Apps. This protected revenue, while reducing third-party revenue. which we recognize as cause.
Thirdly.
Eric: Delivering against our intention to own more software content, we brought more applications in house through the blocks Cat acquisition.
Eric: And purchase and development of other apps.
Eric: This protected revenue, while reducing third party revenue share, which we recognize is cogs.
Erick DeOliveira: The recently announced acquisition of Second Avenue further strengthens our ability to develop and efficiently deliver and maintain content for you. All of the above factors are structural aspects of our business strategy and are expected to persist. expanding impact in coming quarters.
Eric: The recently announced acquisition of second Avenue further strengthens our ability to develop and efficiently deliver and maintain content for our users.
Eric: All of the above factors are structural aspects of our business strategy and are expected to persist and expand and impact in coming quarters.
Erick DeOliveira: As previously discussed, our P&L reflect multi-year software license revenue in period. To help better characterize the one rate health of the business, we offer two software operating As of March 31st, 2025. Annualized Contract Value of Renewable Software. was $11.6 million. up 10% compared with 12 months ago. Also, as of March 31st, 2025. The Net Dollar Revenue Returns. customers with at least $50,000 of ACV was 97%. for those customers present as of March 31st, 2024.
Eric: As previously discussed our P&L reflect multiyear software license revenue in period.
Eric: To help better characterize the run rate health of the business, we offer two software operating metrics.
Eric: As of March 31, 2025, the annualized contract value of renewable software with $11 $6 million.
Eric: Up 10% compared with 12 months ago.
Eric: Also as of March 31, 2025.
Eric: Net dollar revenue retention of customers with at least $50000 of ACB was 97%.
Eric: Those customers present as of March 31, 2024.
Erick DeOliveira: We're very pleased that our efforts to focus on the importance of our software content in driving student outcomes. has generated continued growth in the ACV metric. amid such a challenging environment for our end.
Eric: We're very pleased that our efforts to focus on the importance of our software content in driving student outcomes has generated continued growth in the ACB metric and high retention rates.
Speaker Change: <unk>, such a challenging environment for end users.
Erick DeOliveira: Operating expenses. excluding stock-based compensation for the quarter was $7.6 million. compared with $6.8 million in the comparable prior year period. and increase of 11. In the first quarter, we recorded stock-based compensation of $1 million. issued grants for 1.3 million restricted stock units to employees and non-employee directors. 2025 Restricted Stock Units Granted Year-to-Date. correspond to a year-to-date burn 5.9%. relative to the 22.8 million shares issued and outstanding at the start of the year. We continue to target an overall burn rate of less than 7% for the full year.
Speaker Change: Operating expenses.
Speaker Change: Excluding stock based compensation for the quarter were $7 6 million compared with $6 8 million in the comparable prior year period, an increase of 11%.
Speaker Change: In the first quarter, we recorded stock based compensation of $1 million and issued grants for $1 3 million restricted stock units to employees and non employee directors.
Speaker Change: 2025 restricted stock units granted year to date chorus.
Speaker Change: Correspond to a year to date burn rate.
Speaker Change: Five 9%.
Speaker Change: Relative to the $22 8 million shares issued and outstanding at the start of the year.
Speaker Change: We continue to target an overall burn rate of less than 7% for the full year.
Erick DeOliveira: Now turning to some recent developments. Subsequent to the quarter.
Speaker Change: Now turning to some recent developments.
Speaker Change: Subsequent to the quarter.
Erick DeOliveira: We closed a $20 million convertible financing facility. of which $13 million was funded. We used approximately $6 million to pay down debt. with $7 million in dry powder for acquisitions and general corporate purposes. The note carries a variable conversion price. And we may issue an additional $7 million of gross proceeds at a later date.
Speaker Change: We closed a $20 million convertible.
Speaker Change: Financing facility.
Of which $13 million was funded.
Speaker Change: We used approximately $6 million to pay down debt.
Speaker Change: With $7 million in dry powder for acquisitions and general corporate purposes.
Speaker Change: The note carries a variable conversion price and.
Speaker Change: And we May issue, an additional $7 million of gross proceeds at a later date.
Erick DeOliveira: Now moving on to our outlook for the rest of the year. 2025 continues to bring significant uncertainty in our market. as we see some education customers taking longer to identify funding sources for ZSpace's K-12, AR, and VR classroom solutions. while others accelerate their purchases to lock in pricing and availability for Q2 and the coming school year. The overall impact for ZSpace remains unclear at this time.
Speaker Change: Now moving onto our outlook for the rest of the year.
Speaker Change: 2025 continues to bring significant uncertainty in our markets as we see some education customers taking longer to identify funding sources for these spaces K 12.
Speaker Change: Dr classroom solutions.
Speaker Change: While others accelerate their purchases to lock in pricing and availability for Q2, and the coming school year.
Speaker Change: The overall impact for the space remains unclear at this time.
Erick DeOliveira: same time, workforce development and CTE solutions continue to be in favor. Specifically for our second quarter, the uncertainty stems from the timing of deals closing in our end markets, given the broader turbulence in the education.
Speaker Change: At the same time workforce development and Cte solutions continue to be in favor.
Speaker Change: Specifically for our second quarter, the uncertainty stems from the timing of deals closing in our end markets given the broader turbulence in the education market.
Erick DeOliveira: As discussed last quarter, uncertainty is likely to persist for the remainder of the year. We remain comfortable in our ability to improve the quality of both our hardware and software revenue. and Renew Business across the K-12 and CTE content segment. but cannot credibly project business volume under current circumstances.
Speaker Change: As discussed last quarter uncertainty is likely to persist for the remainder of the year.
Speaker Change: We remain comfortable in our ability to improve the quality of both our hardware and software revenues and renew business across the K 12, and Cte content segments.
Speaker Change: But cannot credibly projected business volume under current circumstances.
Erick DeOliveira: Given this landscape, we are going to refrain from formal financial guidance. Regarding our capital allocation and the management of operating expenses in particular, we continue to control spending strictly. On an ongoing basis, we will evaluate levels of spend. You can see that we constrained OPEX growth this quarter to a rate below that of gross profit growth. excluding stock based.
Speaker Change: Given this landscape, we are going to refrain from formal financial guidance.
Regarding our capital allocation and the management of operating expenses in particular, we continue to control spending strictly.
Speaker Change: On an ongoing basis, we will evaluate levels of spend in particular regarding sales and marketing.
Speaker Change: You can see that we constrained opex growth this quarter to a rate below that of gross profit growth.
Speaker Change: Excluding stock based comp.
Operator: Now I will turn the time back to the operator for Q&A. at this time. who will do the Q&A.
Speaker Change: Now I will turn the time back to the operator for Q&A.
Speaker Change: Thanks.
Speaker Change: At this time.
Operator: To ask a question, please press star 1 1. To remove yourself from the queue, please press star 101. One moment for our first question.
Speaker Change: We will do the Q&A to ask a question. Please press star one.
Speaker Change: Take yourself to remove yourself from the queue. Please press star one again.
Speaker Change: One moment for our first question.
Alex Paris: Our first question will come from the line of Alex Paris from Barrington Research. Your line is open. Hi guys, thanks for taking my question. So revenues, while down 14% year over year, we're ahead of your expectations and ahead of Consensus Expectations. So, congrats on that.
Alex Paris: Our first question comes from the line of Alex Paris from Barrington Research. Your line is open.
Alex Paris: Hey, guys. Thanks for taking my questions.
Speaker Change: So revenues were down 14% year over year were ahead of your expectations and ahead of.
Speaker Change: Consensus expectations, so congrats on that.
Alex Paris: I just wanted to talk a little bit about this uncertainty, both on the funding side and then global trade side, i.e. tariffs. I think last quarter on the conference call, in speaking about sales cycle, I think you said that the sales cycle had expanded from 60 to 75 days in K-12s to something more along the lines of 75 to 90. And you also said that there was no significant difference in CTE maybe a couple of weeks. So, wondering if we can get an update there and what has been the trend in that so far in Q-2 as well.
Speaker Change: Just wanted to talk a little bit about this uncertainty both on the funding side and then global trade side Ie tariffs.
Speaker Change: I think last quarter on the conference call and in speaking about sales cycle I think you said that.
Speaker Change: The sales cycle had expanded from 60 to 75 days in K 12 to something more along the lines of 75 to 90.
Speaker Change: And you also said that there was no significant difference in Cte maybe a couple of weeks. So wondering if we can get an update there.
Speaker Change: And.
And what has been the trend in that so far in Q2 as well.
Paul Kellenberger: Hello? Oh, sorry. Hi, Alex. Sorry. Alex, my apologies there.
Speaker Change: Hello.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Hi, Alex sorry, sorry.
Paul Kellenberger: This is Paul. Let me take that one. I was muted there. Talking to myself. It was good afternoon. It was me who gave the sales cycle increasing from the 60 to 75. Previously, the 75 to 90 in the last call, and no significant changes in CT and workforce I would say that continues, and I'm going to give you a specific example without being specific to the state. I was meeting with one of the larger states. in the last three. And I would say, you know, the uncertainty remains high in the K-12 side of things vis-a-vis sales cycle and ultimately people spending money.
Paul Kellenberger: I don't know Pal My apologies there. This is Paul let me take that one I was muted there.
Speaker Change: To myself.
Speaker Change: Yes.
Speaker Change: Good afternoon.
Speaker Change: It was a major gave the sales cycle, increasing from 60 to 75 previously the 75 to 90 in the last call.
Speaker Change: No significant changes in <unk> and workforce.
Speaker Change: I would say that continues and let me give you a specific.
Speaker Change: Example, without being specific to the state.
Speaker Change: I was meeting with one of the largest states.
Speaker Change: In the last three weeks.
Speaker Change: And I would say the uncertainty remains.
Speaker Change: In the.
Speaker Change: K 12 side of things vis vis sales cycle.
Paul Kellenberger: I think that remains consistent. I would say as it relates to CTE. And again, there's a whole pool of different funds, including Perkins, which is one of the bigger ones, and workforce development that tends to be a little more focused at the state level. Those dollars are flowing. So I would say nothing has changed vis-a-vis our business on the sales cycle side of it. So I'd say a consistent message. Somebody I was speaking to used the phrase deep volatility. Now, that was a week ago, two weeks ago. It seems every week or every couple of days, something different happens in the macro world.
Speaker Change: And ultimately people spending money I think that remains consistent.
I would say as it relates to Cte and again, there is a whole pool of different funds, including Perkins, which is one of the bigger ones.
Speaker Change: And workforce development tends to be a little more focused at the state level. Those dollars are flowing so I would say nothing has changed vis vis our business on the sales cycle side of it so I'd say a consistent message.
Somebody I was speaking to use the phrase deep volatility now that was.
Speaker Change: A week ago, two weeks ago seems every week or every couple of days something different happens in the macro world.
Paul Kellenberger: But, you know, I think it's going to take a little longer here for things to really settle in, but the trends we discussed You know, in the last call, I would say our remaining pretty consistent, but we're going to say we're cautiously optimistic. about where things are heading. That's good to hear.
Speaker Change: But.
Speaker Change: I think it's going to take a little longer here for things to really settle in but the trends we discussed.
Speaker Change: On the last call I would say are remaining pretty consistent but we are.
Speaker Change: I wouldn't say, we're cautiously optimistic here.
Speaker Change: About where things are headed.
Speaker Change: That's good to hear.
Erick DeOliveira: And Erick, do you want to add anything to that? Maybe just one illustrative point. So to Paul's discussion of the deep volatility here, this group will recall that in our last earnings call, we gave guidance on Q1 in the waning days of the quarter. And we were characterizing one aspect of the volatility as being the trade-off between two opposing forces. Customers looking to accelerate their receipt of shipments while they had visibility into funding, and another group of customers who were delaying taking receipt of orders and placing new orders, also because of uncertainty in their funding.
Speaker Change: Eric do you want to add anything to that.
Eric: Maybe just one.
Speaker Change: I'll sort of point, so to Pauls discussion of a deep volatility here.
Recall that in our last earnings call. We gave guidance on Q1 in the waning days of the quarter and we were characterizing one aspect of the volatility as being the tradeoff between two opposing forces customers looking to accelerate their receipt of shipments while they had visibility.
Speaker Change: The funding.
Speaker Change: And another group of customers, who were delaying taking receipt of.
Speaker Change: Orders in placing new orders.
Speaker Change: Also because of the uncertainty in their funding.
Erick DeOliveira: In our Q1 results here, you can see that where we guided to $5 million, again, in the waning days of the quarter, we delivered considerably more than that. And so in that period, we saw, you know, a significant surge in late orders go out the door. The uncertainty and the volatility really combine to create a picture that's difficult to forecast, but still preserves the view that the ZSpace product is in high demand in schools, and our end customers are really just trying to figure out what the timing and the specific funding sources now apply to ZSpace will be.
Speaker Change: Our Q1 results here, you can see that where we guided to $5 million again in the waning days of the quarter, we delivered considerably more than that.
Speaker Change: And so in that period.
Speaker Change: We saw a significant surge in late orders go out the door the uncertainty and the volatility really combine to create a picture that's difficult to forecast.
Speaker Change: But still preserves the view that the Z space product is in high demand in schools and our end customers are really just trying to figure out what the.
Speaker Change: Timing and the specific funding sources now apply disease space.
Alex Paris: Does that help, Alex? Absolutely.
Speaker Change: We will be.
Paul Kellenberger: And I would just ask a follow-on question to that point, then. The surge late in the quarter, you know, versus the point at which you gave guidance, which explains the outperformance in revenue. Did that continue into April, or is it sort of an end-of-the-quarter phenomenon? I wouldn't say it's necessarily end of quarter, and I don't want to characterize any performance quarter date so far, only because the ebbs and flows don't seem to exist in a straight line. We do absolutely see some significant deadline-driven decision-making, both in Q2 and in Q3. June 30th, September 30th are significant dates in the funding, the fiscal year for K-12 segments in particular.
Alex Paris: Does that help Alex.
Speaker Change: Absolutely and I would just ask a follow on question to that point then.
Speaker Change: The surge late in the quarter versus the point at which you gave guidance.
Speaker Change: Which explains the outperformance in revenue did that continue into April or is it sort of an end of the quarter phenomenon.
Speaker Change: I wouldn't say, it's necessarily and the foraker.
Speaker Change: And I don't want to characterize performance quarter to date, so far only because the ebbs and flows.
Don.
Speaker Change: Exist in a straight line, we do absolutely see some significant deadline driven decision, making both in Q2 ending Q3.
Speaker Change: June 30 at September 30th are significant.
Speaker Change: In the.
Speaker Change: Funding DB fiscal year for our K 12 segment in particular and so as we approach 630, we do expect to see.
Paul Kellenberger: And so as we approach 630, we do expect to see a lot of fissure cut date behavior as those loom as forcing functions. Great. That's helpful.
Speaker Change: A lot of fish or cut bait behavior.
Speaker Change: Luminous, forcing functions.
Alex Paris: And then I wanted to follow up, ask a similar question that I did last quarter about tariffs. You refer to them in the press release and in the prepared comments as adding to uncertainty. But I was curious about specifics, the impact on your your bomb costs. There's been a lot of changes. in the tariffs since April 2. The Chinese tariffs hit a high of 145%, at least proposed. And this past weekend, we've had some changes there. What are your thoughts with regard to the China tariffs, at least what we know now, given that your hardware primarily comes out of China?
Speaker Change: Great. That's helpful. And then I wanted to follow up ask a similar question that I did last quarter about tariffs you refer to them in the.
Speaker Change: The press release and in the prepared comments is adding to a certain day.
Speaker Change: But I was curious about is specific.
Speaker Change: Specifics the impact on your.
Speaker Change: Your bond costs.
Speaker Change: There's been a lot of changes.
Speaker Change: And the tariffs since April 2nd.
Speaker Change: The Chinese tariffs hit a high of 145% at least proposed and this past weekend, we've had some changes there.
What are your thoughts with regard to the China tariffs at least what we know now given that you are you.
Speaker Change: Your hardware primarily comes out of China.
Paul Kellenberger: Paul, let me take the story and then I'll. Okay, go ahead. You want to go ahead? Go ahead, Paul. Well, I was just going to say, so what we know today, and I'm going to stress today, Alex, because it's a never seems to be changing a lot, is our products are subject to 20% And quite frankly, just as we did back in 2018, our plans are to pass those tariffs through to our That said, we think that's what it's going to be for this quarter. You know, there's another now there's a 90 day hiatus. And by the way, we were fortunate to fall under the exemption that was put in place for laptops and other, you know, products.
Speaker Change: Paul landscape.
Speaker Change: Okay. Go ahead go ahead go ahead Paul.
Paul Kellenberger: Well I was just going to say, so what we know today and I'm going to stress today, Alex because it never seems to be changing a lot is our products are subject to 20% tariffs.
Paul Kellenberger: And quite frankly, just as we did back in 2018.
Paul Kellenberger: Our plans are to pass those tariffs through to our customers.
That said.
Paul Kellenberger: We think that's what it's going to be for this quarter. There's another there's a 90 day hiatus out there.
Paul Kellenberger: We.
Paul Kellenberger: We are fortunate to fall under the exemption that.
Paul Kellenberger: Was put in place.
Paul Kellenberger: Laptops and other.
Erick DeOliveira: back whenever that was two or three weeks. So the tariffs for this quarter, we're expecting to be. There are plans being made by our OEM partners to move production to other locations. In the event, and the location they're planning to move to has a 10% tariff today. So that is well in motion.
Paul Kellenberger: Products.
Paul Kellenberger: Back whenever that was two or three weeks ago.
Paul Kellenberger: So the tariffs for this quarter, we're expecting to be 20%.
Paul Kellenberger: There are plans being made by our OEM partners to move production to other locations.
Paul Kellenberger: In the event and the location and are planning to move to has a 10% tariff today.
Paul Kellenberger: So.
Paul Kellenberger: That is well in motion.
Erick DeOliveira: Erick, do you want to provide any of the color on the numbers? Now, I think that's it on numbers. As far as the time horizon, Paul called out the lull that we're in here under the 90-day hiatus. That creates a little bit of an eye of the storm calm in that we have a stable, not necessarily a favorable scenario, but a stable tariff scenario for a short time window. The longer-term view still leaves open what ultimate tariffs will be and how long it will take to find that. For as long as we have a tariff rate of approximately this level, we anticipate passing that through.
Eric: Eric you want to provide any other color on the numbers.
Speaker Change: Not much at all in numbers as far as the time horizon.
Speaker Change: All called out the loans that were in here under the 90 day.
Speaker Change: What creates a little bit of an eye of the storm com and that we have a.
Speaker Change: Stable, Terry not necessarily a favorable scenario, but its stable tariff scenario.
Speaker Change: Sure.
Speaker Change: Short time window.
Speaker Change: Longer term do you still leaves open what ultimate tariffs will be and how long it will take to find that.
Speaker Change: For as long as we have a tariff rate of approximately this level, we anticipate passing that through.
Erick DeOliveira: And a consequence of that is the underlying product, the new Inspire 2, has a sufficiently lower bomb cost than its predecessor. And so in this kind of a stable tariff regime, you will notice improvements to hardware profitability that reflect the improvement in the underlying product or ship. Gotcha. And just to be clear, there was essentially no impact from tariffs in the first quarter, and you're expecting a 20% impact from tariffs in the second quarter. roughly correct at least as far as cost. So the impact in the first quarter overwhelmingly was felt as a demand signal as the end-users in K-12 in particular were reacting to a range of factors buffeting them both our pricing as it shows up on quotes and just churn in updating sales collateral to keep track of changes in tariffs but also our K-12 customers are reflecting or reacting to impacts and uncertainty in the sources of funding particularly at the federal but also the state level.
Speaker Change: And a consequence of that is the underlying product the new inspire too.
Speaker Change: Efficiently lower bom cost than its predecessor.
Speaker Change: And so in this kind of a stable tariff.
Speaker Change: Regime, you will notice improvements to hardware profitability that reflects the improvement in the underlying products are shipping.
Speaker Change: Gotcha, and then just to be clear.
Speaker Change: There was essentially no impact from tariffs in the first quarter and you're expecting a 20% impact from tariffs in the second quarter.
Speaker Change: Roughly correct at least as far as cost so the impact in the first quarter overwhelmingly was felt.
Speaker Change: As a demand signal.
Speaker Change: Yes.
Speaker Change: The end users in K 12 in particular, we're reacting to a range of factors about putting them both our pricing as it shows up on quotes and just turn in updating sales collateral to keep track of.
Speaker Change: Changes in tariffs, but also our key 12 customers are reflecting are reacting to.
Speaker Change: Impacts and uncertainty in the sources of funding, particularly at the federal but also the state levels.
Alex Paris: Great.
Unknown Executive: I appreciate the additional color, and I'll turn it over to the others to ask questions and get back in the queue. Thank you.
Speaker Change: Great I appreciate the additional color and I'll turn it over to the other SaaS questions I'll get back in the queue. Thank you.
Jared Osteen: One moment for our next question. Our next question will come flying to Rohit Kulkarni from Roth Capital Partners. Your line is open. Hi, Paul. Hi, Erick.
Speaker Change: Thank you one moment for our next question.
Speaker Change: Our next question will come from the line of Rohit Kulkarni from Roth Capital Partners. Your line is open.
Jared Osteen: This is Jared Osteen on for Rohit. A few questions, if I may. So in March, you acquired BloxCAD in April 2nd Avenue. How have those integrations gone? And how are you thinking about future M&A? Erick, do you want me to start on that? Please go ahead, Paul. Okay. So, WoxCAD is fully integrated. In fact, I think, Jared, we, in the previous call, we were talking about specifically them. We have been reselling their application. It's now part of our standard bundle. And that one was pretty straightforward. Second Avenue is a little bit different and very unique.
Terry: Hey, Paul Hi, Eric This is Terry I was seen on for Rohit, a few questions if I may.
Terry: In March you acquired blocks cabin in April 2nd Avenue have those integration has gone and how are you thinking about future M&A.
Terry: Okay.
Eric: Eric do you want me to start on that.
Terry: Yes.
Paul Kellenberger: Please go ahead Paul.
Terry: Okay.
Speaker Change: So what Ken is fully integrated in fact, I think Jared.
Speaker Change: In the previous call we were talking about.
Speaker Change: Specifically then we have been reselling your application. It's now part of our standard bundle and that one was pretty straightforward.
Speaker Change: Second Avenue is a little bit different and very unique.
Paul Kellenberger: We brought on board all of their key team members, including, as I mentioned in the earlier preamble, Tori Van Guris, who was their CEO, and she stepped in to help us lead our product strategy. There is some very specific work that the team is doing, and it's in the Career Explorer, which is really in the CTE Workforce Development focused area. It's not exclusively. It also rolls into the K-12 side of it. But there's some very specific work, product work, that's, I'll say, well underway. And we expect to see some early releases soon. And they'll be rolled out back for back to school in the August-September timeframe, which we feel really positive about.
Speaker Change: Got onboard all of there.
Speaker Change: Key team members, including as I mentioned in the in the earlier preamble.
Speaker Change: Tori vigorous as there was their CEO and he's stepped in to help us lead our product strategy.
Speaker Change: There is some very specific work that the team is doing.
Speaker Change: And it's in the career explorer, which is really in the Cte workforce development focused area. It's not exclusively it also rolls into the K 12 side of it but there is some very specific work product worked its.
Speaker Change: I will say well underway.
Speaker Change: And we expect to see some early releases steam and that'll be rolled out back for back to school in the August September timeframe, which we feel really positive about.
Paul Kellenberger: I think in terms of the integration, I would say we're probably right in the middle. I think everybody feels really good about it. And that'd be a good question to ask in another 90 days-ish. But I'd say right now, things are looking extremely positive.
Speaker Change: I think in terms of the integration I would say.
Speaker Change: We're probably right in the middle I think everybody feels really good about it.
Speaker Change: And that would be a good question to ask in another 90 days ish, but I'd say right now things are looking extremely positive.
Paul Kellenberger: Your last question there, but go forward. You know, I'm just going to say we continue to look at the landscape of potential companies to acquire. And there's a little bit of ingestation we're doing here with the two that we worked our way through. But we're continuing to move forward the other ones.
Speaker Change: Your last question there about go forward.
Speaker Change: I'm just going to say, we continue to look at the landscape of potential.
Speaker Change: Companies to acquire.
Speaker Change: And there's a little bit of Ingestation, we're doing here with the two that we worked our way through.
Speaker Change: But we're continuing to move forward the other ones so stay tuned on that.
Paul Kellenberger: So stay tuned.
Jared Osteen: Great, thank you. And then.
Great. Thank you and then.
Jared Osteen: On my second question, how has feedback been from elementary schools after you launched Imagine earlier this year?
Speaker Change: And my second question, how has feedback been from elementary schools. After you launched imagine earlier this year and then maybe following that up within Cte kind of back to your point before Paul are there specific pockets or sectors, where you're currently have greater adoption or elevated interest levels that youre seeing today.
Paul Kellenberger: And then maybe following that up within CTE, kind of back to your point before Paul, are there specific pockets or sectors where you're currently have greater adoption or elevated interest levels that you're seeing today? Yeah, so let me those are two different questions. Imagine, which, as you know, is really the bundle that we created was really focused on elementary schools, I would say has been extremely well received. We are shipping orders against shipping products against those orders today. I would say it's still probably early stages, given the timing of the difference, because, you know, the heavier usage tends to happen more in back to school.
Speaker Change: Yes, So let me those are two different questions.
Speaker Change: Imagine, which as you know is really the bundle that we created was really focused on.
Speaker Change: Elementary schools I would say has been extremely well received.
Speaker Change: Our shipping orders against shipping products against those orders today.
Speaker Change: I would say, it's still probably early stages, given the timing of the.
Speaker Change: Because.
Speaker Change: The heavier usage.
Speaker Change: Tends to happen more in back to school.
Paul Kellenberger: So I think timing wise, you know, the real feedback is going to come. But all the initial feedback has been, I'll say, very positive. And we continue to refine our estimates and forecasts in terms of where that goes. And again, it's a different product in terms of the specifications, but the bundle we put together we feel has really hit the mark for the elementary schools.
Speaker Change: I think timing wise.
Speaker Change: The real feedback is going to come.
Speaker Change: But all the initial feedback has been I'll say very positive.
Speaker Change: And we continue to refine our.
Speaker Change: Estimates and forecasts in terms of where that goes and again.
It's a different product in terms of the.
Speaker Change: Specifications, but but the bundle we put together we feel has it really hit the mark for the elementary schools schools.
Paul Kellenberger: On the CTE, right now I would say everywhere in what I would call the advanced application areas and everything from Advanced Manufacturing, Advanced Pneumatics, AI Robotics, I would say we have a really good level of both interest and adoption. And, you know, as I'm repeating what I said previously, it's both CTE in high schools, it's CTE in community colleges, and it's also CTE moving more and more into what I'll call workforce development. And that tends to be a little bit more even adult learning or worker retraining. So, I would say the adopting continues to be very strong, as I mentioned earlier, when Alex asked the question about, you know, how things are going, if you will, the funding seems to be continuing to flow in that area, pretty freely with I'll say without the same hesitation in the K-12 or K-12 STEM side of it, so continues to look very positive.
Speaker Change: Cte.
Speaker Change: Right now I would say.
Speaker Change: Everywhere in what I would call the advanced application areas and everything from.
Speaker Change: Advanced manufacturing advanced Pneumatics.
Speaker Change: IRA about robotics I would say we have a really good.
Speaker Change: Level of both interest and adoption.
Speaker Change: And repeating what I said previously it's both.
Speaker Change: In high schools.
Speaker Change: Cte in community colleges.
Speaker Change: And it's also Cte.
Speaker Change: Moving more and more into what I'll call workforce development and that tends to be a little bit more even adult learning or worker retraining, So I would say.
Speaker Change: The adoption continues to be very strong as I mentioned earlier when Alex asked the question about.
Speaker Change: How things are going if you will.
Speaker Change: The funding seems to be continuing to flow in that area.
Speaker Change: Pretty freely with.
Speaker Change: I will say without the same hesitation in the K 12, or K 12 stem side of it so.
Speaker Change: It continues to look very positive.
Jared Osteen: Great, thank you.
Speaker Change: Great. Thank you.
Unknown Executive: Thank you.
Operator: And as a reminder to ask a question, that's star 11, star 11 for questions.
Speaker Change: Thank you.
Speaker Change: Remind me to ask a question Thats Star one one star one for questions.
Nehal Chokshi: Our next question will come from Nehal Chokshi from Northland Capital Markets. Your line is open. Yeah, thank you. So the bookings in the March quarter was actually stronger than what our expectations were following the December quarter report. So It sounds like you did have some pretty non-linear bookings pattern as the March quarter closed out, is that correct?
Speaker Change: Our next question will come from the line of Noah <unk> from Northland Capital markets. Your line is open.
Yes. Thank you.
Speaker Change: Okay.
Speaker Change: The bookings in the March quarter was actually.
Speaker Change: Stronger.
Speaker Change: What our expectations were following the December quarter report.
Speaker Change: <unk>.
Speaker Change: So.
Speaker Change: It sounds like you did have some pretty non linear bookings pattern as the March quarter close that is that correct.
Erick DeOliveira: I can take that. Yeah, go ahead. Yeah. So thanks. Thanks for the question, Nehal. You're right. When you peel back the numbers, there are areas of strength that Frankly, we're encouraging given how the quarter felt as we move through it. In particular, we actually did see year-on-year growth in the U.S. once you back out China and once you back out other international geographies. The the key area of year-on-year decline that you saw here was in other international geographies where there was a significant decline. Now, in our last quarter, we noted how international over a full year basis has been a significant source of growth over the last several years.
Speaker Change: Yeah.
Speaker Change: I can take that Paul I'll take that Yeah go ahead yeah.
Hall: Yes. So thanks, thanks for the question the Hall.
Hall: You are right when you Peel back the numbers there are areas of strength that.
Hall: Frankly, we're encouraging given how the quarter felt as we move through it and particular, we absolutely did see year on year growth in the U S. Once you back out China once you back out other international geographies.
Hall: The.
A key area of year on year decline that you saw here was in other international geographies, where there was a significant decline now in our last quarter. We noted how international over a full year basis. There has been a significant source of growth over the last several years.
Erick DeOliveira: It is a small number, though, so it plays its volatility, plays an outsized role in the quarter to quarter surges in bookings. We're very encouraged that the new orders and renewals propped up the U.S.
Hall: It is a small number though so it plays on its volatility plays a outsized bow.
Hall: In the quarter to quarter surges in bookings, we're very encouraged that both new orders and renewals propped up the U S and again were hopeful that as we move through the year, we will see a resumption of volume to go along with the margin expansion that we enjoyed in Q1.
Erick DeOliveira: And again, we're hopeful that as we move through the year, we'll see a resumption of volume to go along with the margin expansion that we enjoyed in Q1.
Erick DeOliveira: Okay, and how would you characterize linearity in the quarter? In terms of booking. In a normal year, we typically see booking seasonality that are light in Q1 and Q4, or shoulder periods. And you can think of those as maybe being 20% each of full year bookings, with Q2 and Q3 being larger bookings periods, and having approximately 30% of the full year business in each. That's an average over many periods, and we've seen in some of our recent filings how the timing of large deals in particular can skew that seasonality.
Speaker Change: Okay, and how would you characterize linearity in the quarter.
Hall: In terms of bookings.
Hall: Okay.
Hall: In a normal year, we typically see bookings seasonality that are light in Q1, and Q4, our shoulder periods and you can think of those as maybe being 20% each of full year bookings with Q2, and Q3 being larger bookings period.
Hall: And having approximately 30% of the full year business in each.
Hall: That's an average over many periods and we've seen in some of our recent filing how all the timing of large deals in particular can skew that seasonality.
Erick DeOliveira: Okay. And then sounds like you did have more left and backlog than anticipated when you had your December quarter earnings call. Accretion partially due to better than expected software. Is your software backlog? What's your software backlog relative to overall backlog? Is it lower than usual in terms of the mix?
Hall: Okay.
Hall: And then it sounds like you did have more left in backlog than anticipated. When you had your December quarter earnings call.
Hall: Given the.
Hall: Margin.
Hall: Accretion, partially due to better than expected software.
Hall: Is your staff for backlog, what's your SaaS software backlog relative to overall backlog.
Hall: The lower than usual in terms of the mix.
Erick DeOliveira: Yeah, I don't have a split on the mix in the backlog, right here. However, your question actually gets to an interesting dynamic that's at play here in the quarter, which is, we've demonstrated how we can actually grow gross profit, despite declines in hardware revenues. So, what I'd say about the mix of our orders is the mix of hardware to software in a new deployment, where Inspire laptops are going out the door with the software load. That has not changed dramatically. We're yeah, that has not changed dramatically. And where we see the pattern going, however, is increasing software growth from two sources, and as a mix of revenue.
Hall: Yes, I don't have the split on the backlog the mix in the backlog.
Hall: Right here however, the.
Speaker Change: Your question actually gets to an interesting dynamic that's at play here in the quarter, which is we've demonstrated how we can actually grow gross profit.
Hall: Despite declines in hardware revenues.
Hall: What I'd say about the mix of our orders is the mix of hardware to software and a new deployment.
Hall: Inspire laptops are going out the door with the software load that has not changed dramatically.
Hall: Where.
Speaker Change: Yes, but that has not changed dramatically and where we see the pattern going however is increasing software growth from two sources and as the mix of revenue.
Erick DeOliveira: potentially a third. So we continue to see prior customers renew without new hardware orders. That's that's the first factor, which is just the layer of renewals. The second is, as we ship new orders, we have been seeing improvements in the software load. We discussed that in the year-end results, and we continue to see that in Q1 here. The third factor, and this is on the heels of the earlier question on this call regarding Imagine, is you can contemplate that as Imagine, which has a lower price point on the hardware. It is a smaller form factor.
Speaker Change: Potentially a third so we continue to see prior customers with new.
Speaker Change: Without new hardware orders.
Speaker Change: That's the first.
Speaker Change: Factor, which is just the layer of renewals.
Speaker Change: The second is as we ship new orders, we have been seeing improvements in the software load we discussed that in the year end results and we continue to see that in Q1 here.
Speaker Change: The third factor and this is on the heels of the.
Speaker Change: <unk>.
Speaker Change: Earlier question on this call regarding imagine is you can contemplate that as margin, which has a lower price point on the hardware. It has a smaller form factor in many cases carries similar software loads.
Erick DeOliveira: In many cases, carries similar software loads. We can imagine a dynamic where the cost to the customer, meaning our hardware revenues, decline while still bringing significant, if not more software load. So a tradeoff here between the hardware platform on which the software runs and our ability to grow a renewing software business with higher margins.
Speaker Change: We can imagine a dynamic where the.
Speaker Change: Cost to the customer, meaning our hardware revenues.
Speaker Change: Klein, while still bringing significant.
Speaker Change: If not more software loads. So a tradeoff here between the hardware platform on which the software runs on our ability to grow a renewing software business with higher margins.
Erick DeOliveira: Is that helpful insight? Yep, yep.
Speaker Change: Okay. That's helpful.
Speaker Change: Yes, yes.
Erick DeOliveira: Just to be clear, um... I'm concerned that while you had a backlogged build. That's largely hardware backlog build as opposed to a commensurate software backlog build. So I'm just looking for verification that that is whether or not that is or is not. No, that's not the case. In fact, the appetite for software continues to be strong, and the mix in the backlog is representative of the health of the software offerings that we've seen in recent quarters. Put another way, if you look at the mix of hardware to software and services in our Q1 portfolio, we saw 10 percentage points of mix shift out of hardware and into software and services this past quarter.
Speaker Change: Just to be clear.
Speaker Change: Yeah.
Concern.
Speaker Change: While you had a backlog build.
Speaker Change: That's largely hardware backlog build as opposed to <unk>.
Speaker Change: Im not sure its software backlog build so I'm just looking for clarification.
Speaker Change: Whether or not that is not the case.
Speaker Change: No that's not the case in fact, the appetite for software continues to be strong and the mix in the backlog is representative of the health of the software offerings that we've seen in <unk>.
Speaker Change: In recent quarters put another way if you look at the mix.
Speaker Change: Hardware to software and services in our Q1 portfolio. We saw 10 percentage points of mix shift out of hardware and into software and services. This past quarter that continues a trend that we've seen for successful quarters, it's not reflective of any lack of health in the backlog the backlog itself.
Erick DeOliveira: That continues a trend that we've seen for successive quarters. It's not reflective of any lack of health in the backlog. The backlog itself continues to be rich in terms of software content.
Speaker Change: <unk>.
Speaker Change: Continues to be rich in terms of software content.
Erick DeOliveira: Great, thank you.
Erick DeOliveira: And then as far as bookings mix, can you give the split between Inspire versus Imagine Bookings and then also CTE versus K-12 bookings? CTE through K-12 bookings. We, one moment here.
Speaker Change: Great. Thank you.
Speaker Change: And then as far as bookings mix can you give the split between inspire versus in management bookings and then also Cte versus K 12 bookings.
Speaker Change: Cte <unk> K 12 bookings.
Speaker Change: One moment here.
Speaker Change: Okay.
Erick DeOliveira: So for Inspire and Imagine, we're not going to make that, we're not going to read that out. On K-12 versus CTE bookings, I believe we had a split reported that was 71% K-12 and 29% CTE for the quarter just ended.
Speaker Change: So the four four inspiring imagine we're not going to make that.
Speaker Change: We're not going to read that out.
Speaker Change: On K 12 versus Cte bookings.
Speaker Change: But we have a split reported that was 71%.
Speaker Change: At 12 and 29%.
Speaker Change: For the quarter just ended.
Speaker Change: Yeah, Eric I'm going to make a comment, though I'm not going to answer the specific inspire versus imagine but.
Speaker Change: Inspire is a product that has been around for a few years from inspire one inspire to everybody knows it is continuing to grow imagine continues to be that newer product as you know we're targeting into elementary.
Speaker Change: And I think that questions can be more relevant to the other.
Erick DeOliveira: Pick another quarter. Okay, great.
Speaker Change: Take another quarter or two.
Okay.
Erick DeOliveira: Thank you.
Speaker Change: Okay, great. Thank you.
Unknown Executive: At this time, this concludes our question and answer session.
Speaker Change: Thank you at this time. This concludes our question answer session I would now like to turn the call back over to Mr. Cohen Berger for closing remarks.
Paul Kellenberger: I would like to turn the call back over to Mr. Kellenberger for closing remarks. Okay, thank you, Victor. Just a quick thank you to everyone for listening to today's call. And we look forward to speaking you with again, when we report our second quarter results. Thanks again for joining us. Have a great evening, everyone.
Speaker Change: Okay. Thank you Victor.
Just a quick thank you to everyone for listening to today's call.
Speaker Change: And we look forward to speaking you with again, when we reported our second quarter results.
Speaker Change: Thanks, again for joining us have a great evening everyone.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, everyone. Have a great day.
Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation everyone have a great day.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: [music].