zSpace, Inc. · OTC:ZSPC
zSpace — SPAC Merger (August 2022)
45 slides from zSpace's SPAC merger presentation, Aug 11, 2022
Slide 1: Investor Presentation August 2022
Pr i v a t e & C o n f i d e n t i a l Investor Presentation A u g u s t 202 2
Slide 2: Disclaimer
Disclaimer 2 This Presentation (together with oral statements made in connection herewith, the “Presentation”) is for informational purposes only to assist prospective purchasers in a private placement in making their own evaluation with respect to the proposed business combination (the “Business Co
Slide 3: Forward Looking Information
Forward Looking Information 3 Certain statements in this Presentation may be considered “forward - looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward - looking statements herein generally relate to future event
Slide 4: Additional Information: Use of Projections
Additional Information 4 Us e o f P r o jec t i o n s This Presentation contains projected financial information with respect to zSpace. Such projected financial information constitutes forward - looking information, is for illustrative purposes only and should not be relied upon as being predictive
Slide 5: Additional Information: Participants in the Solicitation
Additional Information 5 Pa r t i c i p a n ts i n t h e S o li c i tat i o n EdtechX, zSpace and their respective directors and executive officers may be deemed participants in the solicitation of proxies from EdtechX’s stockholders with respect to the proposed Business Combination. A list of the n
Slide 6: EdtechX Holdings Acquisition Corp. II: Edtech & Future of Work-Focused SPAC
EdtechX Holdings Acquisition Corp. II: Edtech & Future of Work - Focused SPAC With a “SPAC for Good” Impact Mandate 1. R e a c h & A f f o r d a b i l i t y 2. Q u a l i t y o f E d u c a t i o n / T r a i n i n g & G a i n f u l o f S k i ll s & E m p l o y m e n t 3. E f f i c a c y & S u s t a i
Slide 7: zSpace: Pioneering the "Eduverse"
zSpace: Pioneering the “Eduverse” z S pa c e ’s i m m e r s i v e A R / V R t e c h n o l o g y unites education with the metaverse, p r o v i d i n g st u d e n t s w i t h eq u i t a b l e access to innovative, engaging learning experiences. Gl o b a l A R , V R , an d m i x e d r e a l i t y ( M
Slide 8: Transaction Overview
Transaction Overview – ($millions, except share price) (1) See Illustrative Transaction Summary – Includes redemptions post June 2, 2022 extension vote. Assumes no further redemption. (2) Anchor PIPE from GII, Kuwait Investment Authority. Comprised of the cancellation of $25M of indebtedness owed by
Slide 9: Illustrative Transaction Summary
Illustrative Transaction Summary - ($millions, except share price) Note: Illustrative Transaction Summary Includes redemptions post June 2, 2022 extension vote. Assumes no further redemption. (1) Pre - earnout enterprise value. Excludes potential acquisitions. (2) Comprises: cash in trust of $24M, a
Slide 10: zSpace Vision: expanding across the entire learning spectrum
zSpace Vision: expanding across the entire learning spectrum 10
Slide 11: Investment Highlights
Investment Highlights Rapid growth in bookings, revenue and gross margins, and penetration in top 10 US school districts Leading provider of AR/VR technology in the education market 11 Pipeline and existing book of business provides strong visibility Differentiated and proprietary immersive and trac
Slide 12: zSpace Introductory Video
z S p a c e I n t r o d u c t o r y V i d e o 12
Slide 13: Company Snapshot
13 Company Snapshot A Customer Base with the Largest US School Districts*** US z S p ac e Cust o mer Students**** US R an k N e w Y o r k C it y 984k #1 L o s Ange l e s Un ifi e d 634k #2 C h i ca g o P u b l i c S c h oo l s 378k #3 M i a m i - D a d e C o u n t y 357k #4 C l a r k C ou n t y 327k
Slide 14: zSpace Education Market Offers a Large Opportunity
zSpace Education Market Offers a Large Opportunity* ( > $200B) Source: National Center for Education Statistics, Ministries of Education in various countries. * 5 y e a r T A M r e v e nu e , a v e r a g e " 1 l a b " p e r s c h oo l . ** APAC excludes China. India included in K12, but not included
Slide 15: US Market Opportunity is Bolstered by US Federal Stimulus
US Market Opportunity is Bolstered by US Federal Stimulus >$280B Covid - 19 legislation has added funding to K - 12 education, adding growth potential 15 https:// www.future - ed.org/what - congressional - covid - funding - means - for - k - 12 - schools/ C A RE S Ac t S i g ne d i n t o L a w M a r
Slide 16: Validated Efficacy with AR/VR in Education and Workforce Training
Validated Efficacy with AR/VR in Education and Workforce Training 16
Slide 17: Hardware
Hardware Continuously developing new products for existing and new markets O r i g i n a l V e r s i o n s Ne w G e n e ra t i o n Classroom Lab Model One - to - One Model AIO Professional H i g h - P e r f o r m a n ce Laptop Ed u c a t i o n / K1 2 S t ra t e g i c Di r e c t i o n K e y P a r t n
Slide 18: Technology Differentiation
Technology Differentiation zSpace’s differentiated, easy - to - use and affordable technology has contributed to its success T e c hn o l o g y By end - user units shipped. U n i q u e F e a t u r e s Ab i l i t y t o L ook A r o u n d K i n e s t h e t i c R e a l i s m P e r c e p t i o n o f D e
Slide 19: Proven solution with real evidence and customers
Proven solution with real evidence and customers… Every time I visit a zSpace class, the kids are 100 percent engaged, they absolutely love it and they can’t wait to get a visitor’s attention and share what they are doing. S A R A H E D W A R D S District Supervisor of Instructional Technology Bu ff
Slide 20: Software Ecosystem Content Driving Highly-Recurring Revenue
Software Ecosystem Content Driving Highly - Recurring Revenue Broad application offering (both zSpace and 3rd party), including hundreds of activities* aligned with NGSS and state standards Curriculum Areas Covered K - 12 CT E M a t h H e a l t h Automotive P h y s i ca l Science AI/ P r o g r a mm
Slide 21: Select K12 and Workforce Experiential Learning Applications
Select K12 and Workforce Experiential Learning Applications 21
Slide 22: Immersive and engaging zSpace and 3rd party content
Immersive and engaging zSpace and 3rd party content 22
Slide 23: Competitive Landscape: Technology Differentiation
U n i q u e F e a t u r e s C o m p e t i t i v e L a n d s c a p e * Technology Differentiation zSpace’s differentiated, easy - to - use and affordable technology has contributed to its success T e c hn o l o g y • Significant Customer Installed Base • Robust software content • 3 rd Party Developer
Slide 24: The recent metaverse excitement about immersive virtual experiences
The recent metaverse excitement about immersive virtual experiences... 24
Slide 25: Our focus on immersive experiences has made us a leading education technology in the metaverse
Our focus on immersive experiences has made us a leading education technology in the metaverse The Missing Link In A Metaverse - For - All Vision “ G i v e n t he f un d a m e n t al t e c h n o l o g y zSpa c e h a s d e m o n s tr a t e d I b e l i e v e that the PC and laptop can be modified to a
Slide 26: Key Strategic Growth Pillars
Key Strategic Growth Pillars Continued US o r g a n i c g r o w t h I n t e r n a t i o n a l Expansion Software Ac q ui s i t i o ns Our execution plan includes multiple avenues for continued growth over the next several years 26
Slide 27: Sales & Marketing Growth Plans
Sales & Marketing Growth Plans ▪ New Customer Acquisition ▪ Existing Customer Expansion through zSpace Inspire ▪ Continued Virtual/Hybrid selling model ▪ eSports Initiative ▪ US Channel Strategy ▪ U S S t i m u l u s F un d i n g F o c u s – ES SE R a n d C A RE S i m p l e m e n t a t i o n s U S K
Slide 28: International Reseller Footprint
International Reseller Footprint Strong and growing position in leading markets across the world 28 I n t e r n a t i o n a l c u st o m e r s i n over 50 countries through over 25 major resellers Success in US education driving demand Major projects in 2021 is expected to set up 2022 well ▪ Argenti
Slide 29: Software Acquisitions: Key Criteria and Pipeline
• Prioritized focus on top 5 targets • Could add $6m in Potential Revenue in 2023 (1) • Improved overall gross margins • Facilitates additional international growth • Focus on key software applications within K12/STEM & CTE/Workforce • S t a b l e r e v e nu e s , h i g h e r m a r g i n s , scalabl
Slide 30: Near-Term Priorities
N e a r - T e r m P r i o r i t i es Execute on software M&A pipeline Continue US organic growth Go public I n t e r n a t i o n a l Expansion 1 4 2 3 30
Slide 31: Sales Results – Best Q1 in Company History with Strong Pipeline
S a l e s R e s u l t s – Be s t Q 1 i n C o m p a n y H i s t o r y w i t h s t r o n g P i p e l i n e 1 Driven by US Growth… (despite supply chain delays impacting revenue recognition) 59 % B ook i n g s G r o w t h Y - o - Y Bookings R e v e n u e s ( $ mm ) 5.6m 8.9m 4.7m 6.0m + 59 % + 28 % Cu
Slide 32: 2022E–2024E Financial Projection Metrics – Bookings and Revenue Estimates
32 $26.4 $33.4 $44.8 $63.0 $9.9 $4.6 $11.2 $21.0 2 0 2 4 e ( $ mm ) $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 $26. 7 $34. 6 $51. 8 $77. 8 $80 $70 $60 $50 $40 $30 $20 $10 $0 2 0 21 2 0 2 3 e Low 2 0 2 4 e 2022e High B o o k i n g s : U S D r i v e s G r o w t h 2022E – 2024E Financial Projection Metrics
Slide 33: 2021–2024E Financial Projection Metrics – Profitability
33 2021 – 2024E Financial Projection Metrics – Profitability (Mid Points) $35.2 $22.9 $13.9 $12.0 ( $ mm ) $4 0 . 0 $3 5 . 0 $3 0 . 0 $2 5 . 0 $2 0 . 0 $1 5 . 0 $1 0 . 0 $5.0 $0.0 2 0 21 2 0 2 2 e 2 0 2 3 e 2 0 2 4 e G r o s s M a r g i n Op e ra t i n g P r o f i t ( $ mm ) Note: Estimates are subj
Slide 34: 2022E–2024E Financial Metrics – Revenue Mix
34 R e v e nu e s b y R e g i o n R e v e nu e s b y C a t e g o r y 2022E – 2024E Financial Metrics – Revenue Mix (Mid Points) $26.7 $34.5 $51.8 $77.8 $ - $ 10 .0 $ 20 .0 $ 30 .0 $ 40 .0 $ 50 .0 $ 80 .0 $ 90 .0 20 2 1 20 2 2e 20 2 3e 20 2 4e U S A P A C / E M E A C h i n a $ 70 .0 ($mm) $ 60 .0 14.
Slide 35: Strong bookings expected to convert to revenues in 2022/2023
35 11 11 6 3 3 34 (US$ mm) 0 5 10 15 20 25 30 35 40 3 - 8 8 - 12 5 9 10 14 New Business 12 4 7 - 56 51 (US$ mm) 0 10 20 30 40 50 60 Strong bookings expected to convert to revenues in 2022/2023 (Mid point) 2022 Forecasted revenue growth supported by Fulfillment of Booked Orders , ARR and Targeted Pro
Slide 36: Peer Group Analysis and Operational Benchmarking
36 Peer Group Analysis and Operational Benchmarking
Slide 37: Peer Valuation Metrics
(1) Median Median V a l ua t i o n M etr i c s M ar ke t C a p $219 $2,806 $2,444 $3,491 $4,095 $1,976 $1,125 $1,154 $1,737 - $455,254 $13,432 $1,351 - EV 188 3,315 3,693 3,913 3,550 1,214 916 1,081 1,244 - 426,022 13,448 952 - Revenue Multiples T E V / C Y 22 E Revenue 5.7x 4.4x 5.9x 8.4x 10.0x 2.2
Slide 38: Peer Benchmarking – Financial Metrics
P e e r B e n c h m a r k i n g – F i n a n c i a l M e t r i c s Source: Company Filings, CapitalIQ. Market data as of 08/03/2022 1) Based on mid point of revenue and gross margin estimates. Metaverse/AR/VR ($millions) Ed T e c h ( s u b s c r i p t i o n K 1 2 / W or k f or c e ) (1) Median Median
Slide 39: Management Team
P r i o r t o zS p a c e , P a u l w a s C E O f o r C h a n c e ry S o f t w a r e , a n E n t e r p r i s e S I S p r o v i d e r. P a u l b u i l t a s u cc e ss f u l t e a m a n d profitably grew the business, r e s u l t i n g i n a sa l e t o P e a r s o n . F o r m e r s e n i o r e x e c u
Slide 40: Appendix
Appendix zSpace sx 40
Slide 41: Illustrative Use of Funds
I l l u s tr a t i v e Us e o f F un d s * P o s t M e r g e r Acquisitions 54% Product Development (NRE) 21% Capital Expenditures 1% Operating Activities 7% Repayment of Bank Line 17% * Assumes $24M minimum cash from EDTX trust after payment of EdtechX expenses (est $6m) and net of debt retirement
Slide 42: Illustrative Proforma zSpace Balance Sheet
Illustrative Proforma zSpace Balance Sheet (a) ( P r i o r t o B u s i n e s s C o m b i n a ti o n W i t h E d t e c h X ) ( a ) No t e s a n d A ss u m p t i o n s 1) z S p a c e I n c . - M a r c h 31 , 202 2 e n di n g bal a n c e s h ee t . ( u n a u d i t e d ) + 2) z S p a c e r e m a i n i n
Slide 43: Risk Factors
Risk Factors 43 Risks Related to zSpace’s Business and Industry Following the Business Combination • zSpace has a limited operating history at the current scale of its business and is still scaling up its monetization efforts, which makes it difficult to evaluate its current business and future pros
Slide 44: Risk Factors (Cont.)
Risk Factors (Cont.) 44 Risks Related to Financial and Accounting Matters • zSpace’s operating results may fluctuate significantly, which makes its future results difficult to predict. • Certain of zSpace’s market opportunity estimates, growth forecasts and key metrics could prove to be inaccurate,
Slide 45: Risk Factors (Cont.)
Risk Factors (Cont.) 45 R i s k s Re l at e d t o t h e B u s i n e s s C o m b i n at i o n • Public stockholders, together with any affiliates of theirs or any other person with whom they are acting in concert or as a “group,” will be restricted from seeking redemption r i g h t s w i t h re s p e