Financial Data and Key Metrics Changes - The company reported a subscription revenue mix of 99%, up from 88% in the same quarter last year, indicating a strong transition towards a pure SaaS model [47] - Gross margin improved to 89%, compared to 88% in Q3 of the previous year and 86% in the previous quarter, reflecting better cloud cost management and infrastructure scaling [48] - Earnings per share improved to negative $0.13, a significant gain from negative $0.34 in the same quarter last year, signaling effective cost controls and a recurring revenue model [50] Business Line Data and Key Metrics Changes - The company experienced a modest revenue decline to $1.1 million from $1.2 million in Q2, attributed to lower hardware-related sales as part of a strategy to phase out non-core components [50] - Operating expenses decreased to $4.8 million from $5.2 million in Q2, an 8% reduction, demonstrating operational efficiency while still investing in innovation [51] Market Data and Key Metrics Changes - The company operates in over 200 cities across 50 countries, serving over a million users, indicating a broad market presence [6] - Gartner recognized the company as a representative vendor in the 2025 market guide for workplace experience applications, highlighting its growing market influence [14] Company Strategy and Development Direction - The company aims to expand within its current customer base, particularly among Fortune 500 clients, by offering additional modules that can multiply ARR potential [62] - Strategic collaborations, such as with Noro and Google Cloud, are intended to extend the company's reach into immersive and agentic experiences [62] - The company is focused on maintaining cost discipline while investing in AI leadership, balancing growth with responsibility [63] Management's Comments on Operating Environment and Future Outlook - Management noted that AI in the workplace is now a board-level imperative, with a strong push for return-to-office mandates despite employee burnout [12][17] - The company is optimistic about the future, emphasizing that it is not just riding the AI wave but architecting it, aiming to define a new category in the enterprise platform space [63][64] Other Important Information - The company launched its Sky1.0 platform, which saw major performance gains, cutting space booking time by over 50% and enhancing colleague visibility [22] - A significant deployment at 30 Rock was highlighted, with 6,000 users on day one and a focus on dining features, which were particularly well-received [28][31] Q&A Session Summary Question: Update on kiosks, customer feedback, and deployment status - The company launched a kiosk product with a client in Silicon Valley, which is performing well and is set for global deployment across 14 campuses [67][68] - Three additional clients are in pilot phases, showing genuine interest in the kiosk's real-time engagement capabilities [70] - The deployment at 30 Rock was critical, with successful launches in multiple locations, and the client is eager to expand the kiosk trials [72][73]

Revenue Performance - For the nine months ended September 30, 2025, total revenue was $3,561 thousand, a decrease of approximately 35% compared to $5,481 thousand for the same period in 2024[202]. - Recurring SaaS revenue accounted for 99.46% of total revenue in Q3 2025, highlighting the effectiveness of the subscription-based model[185]. - Subscription-based revenue comprised approximately 98.12% of total revenue for the nine months ended September 30, 2025, up from 86.70% in the same period of 2024[204]. Profitability - Gross profit for Q3 2025 totaled $991 thousand, with a gross margin of 88.96%, up from 80.39% in Q3 2024[186][191]. - The gross profit margin improved to 87.53% for the nine months ended September 30, 2025, compared to 80.81% for the same period in 2024[205]. - The company reported a net loss of $7,912 thousand for the nine months ended September 30, 2025, compared to a net loss of $16,072 thousand for the same period in 2024[201]. - For the nine months ended September 30, 2025, the company reported a net loss of approximately $7,912 thousand, compared to a net loss of $16,072 thousand for the same period in 2024, indicating a 50% improvement year-over-year[225]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $(7,344) thousand, compared to $(6,105) thousand for the same period in 2024, reflecting a decline in operational performance[224]. Cash and Liquidity - Cash and cash equivalents were $5,088 thousand as of September 30, 2025, providing a strategic buffer for continued investment[189]. - The company had cash and cash equivalents of approximately $5,088 thousand as of September 30, 2025, an increase from $4,880 thousand as of December 31, 2024[224]. - Net cash used in operating activities during the nine months ended September 30, 2025, was $6,750 thousand, compared to $4,629 thousand for the same period in 2024, representing a 46% increase in cash outflow[224]. - The company reported a net increase in cash and cash equivalents of $208 thousand for the nine months ended September 30, 2025, compared to a decrease of $1,193 thousand in the same period in 2024[224]. Operating Expenses - Operating expenses for the nine months ended September 30, 2025, were $14,798 thousand, a decrease of $553 thousand compared to $15,351 thousand for the same period in 2024[206]. - The company incurred depreciation and amortization expenses of $2,084 thousand for the nine months ended September 30, 2025, slightly down from $2,113 thousand in the same period in 2024[224]. Financing Activities - The company received net proceeds of $3,000 thousand from the Avondale convertible Pre-Paid Purchase 2 on August 7, 2025[196]. - The company raised approximately $6,990 thousand in financing activities during the nine months ended September 30, 2025, primarily from the issuance of convertible debt, compared to $3,480 thousand in the same period in 2024[227]. - The company entered into a Securities Purchase Agreement allowing for the issuance of up to $20,000 thousand in exchange for shares of common stock, with approximately $12,650 thousand remaining available as of September 30, 2025[219]. Working Capital and Obligations - As of September 30, 2025, the company had a working capital deficiency of approximately $711 thousand, an improvement from a deficiency of $4,496 thousand in the previous year[223]. - The total obligation for operating leases as of September 30, 2025, was approximately $324 thousand, with $274 thousand expected to be paid in the next twelve months[229]. Regulatory and Accounting Matters - CXApp will be classified as an "emerging growth company" under the JOBS Act, allowing it to utilize certain reporting exemptions[235]. - The company has not yet decided whether to take advantage of the exemptions available to emerging growth companies, which may affect stock attractiveness[235]. - CXApp has elected to use the extended transition period for complying with new or revised accounting standards, potentially impacting financial statement comparability[236]. - The decision to utilize the extended transition period is irrevocable, meaning the company cannot opt out once chosen[236]. - There have been no significant changes to critical accounting estimates during the three months ended September 30, 2025[234].

Core Insights - CXApp Inc. has been named a Representative Vendor in the Gartner Market Guide for Workplace Experience Applications 2025, highlighting its position in the industry [1] - The company announced a strategic collaboration with Noro aimed at transforming hybrid work through Agentic AI and immersive presence technology [1] - CXApp Inc. reported significant enterprise client expansion, including the launch of the iconic 30 Rock campus and various platform migration initiatives [1] - Financial results for Q3 2025 showed continued margin improvement, strong customer renewals, and growing industry recognition as the company expands its leadership in enterprise-scale agentic AI and spatial intelligence [1]

Core Insights - CXApp Inc. and Noro are entering a strategic collaboration to enhance hybrid work environments through advanced technology [1] - The partnership combines CXAI's Agentic AI-powered workplace experience platform with Noro's immersive live-presence portal technology [1] - This collaboration aims to create more connected, adaptive, and human-centered work environments by integrating intelligent automation and spatial analytics [1] Company Overview - CXApp Inc. is focused on transforming workplace experiences using AI technology [1] - Noro specializes in immersive technology that facilitates full-body live-presence interactions [1] Industry Impact - The collaboration is expected to reshape the future of hybrid work by leveraging innovative technologies [1] - The integration of intelligent automation and immersive connection is anticipated to enhance enterprise adaptability and connectivity [1]

Core Insights - CXApp Inc. is hosting an exclusive event titled "The Future of Work: Employee Experience, AI, and the Hybrid Revolution" during San Francisco Tech Week [1] - The event is scheduled for October 7th in San Francisco and will gather CIOs, CTOs, CHROs, and workplace experience leaders [1] - The focus of the event is on the evolving role of AI in modern enterprises [1]

Group 1 - CXApp Inc. is actively engaging executives and clients through various conferences and exclusive events to promote thought leadership in the AI-driven employee experience market [1] - The company has announced its schedule for October, which includes industry conferences and networking events aimed at showcasing its agentic-AI based employee experience platform [1] - The focus is on demonstrating real-world applications of AI to key decision-makers and industry leaders [1]

Group 1 - CXApp Inc. (Nasdaq:CXAI) has been recognized as a Representative Vendor in Gartner's 2025 Market Guide for Workplace Experience (WEX) Applications [1] - The recognition highlights CXAI's impact on how global enterprises manage real estate, IT, HR, and workforce strategies [1] - CXAI utilizes agentic AI to deliver measurable value for the C-suite [1]

[Part I. FINANCIAL INFORMATION](index=4&type=section&id=Part%20I.%20FINANCIAL%20INFORMATION) [Item 1. Interim Financial Statements](index=4&type=section&id=Item%201.%20Interim%20Financial%20Statements) This section presents CXApp Inc.'s unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and statements of cash flows, along with detailed notes explaining the company's organization, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a decrease in total assets and stockholders' equity from December 31, 2024, to June 30, 2025, primarily driven by a reduction in current assets and an increase in convertible debt, while current liabilities decreased significantly due to the settlement of a promissory note and a decrease in warrant liability | Metric | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Total Assets | $29,568 thousand | $31,803 thousand | | Total Liabilities | $15,258 thousand | $16,211 thousand | | Total Stockholders' Equity | $14,310 thousand | $15,592 thousand | | Current Assets | $6,238 thousand | $7,080 thousand | | Current Liabilities | $7,653 thousand | $11,576 thousand | | Working Capital Deficiency | $(1,415) thousand | $(4,496) thousand | - The company's working capital deficiency improved from **$(4,496) thousand** as of December 31, 2024, to **$(1,415) thousand** as of June 30, 2025[22](index=22&type=chunk)[222](index=222&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the three and six months ended June 30, 2025, CXApp reported reduced revenues and gross profit compared to the prior year, but also significantly decreased net losses, primarily due to a substantial positive change in the fair value of derivative liability and lower interest expenses | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $1,223 | $1,766 | $2,447 | $3,584 | | Gross Profit | $1,052 | $1,413 | $2,126 | $2,904 | | Loss from Operations | $(4,111) | $(3,650) | $(7,856) | $(7,237) | | Total Other Income (Expense) | $973 | $(1,765) | $3,102 | $(3,555) | | Net Loss | $(3,139) | $(5,256) | $(4,755) | $(10,426) | | Basic and Diluted Net Loss Per Share | $(0.16) | $(0.34) | $(0.23) | $(0.68) | - Net loss significantly decreased for both the three-month and six-month periods ended June 30, 2025, compared to the same periods in 2024, driven by a positive change in fair value of derivative liability and reduced interest expense[11](index=11&type=chunk)[210](index=210&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) The statements of stockholders' equity show a decrease in total equity from January 1, 2025, to June 30, 2025, primarily due to net losses and cumulative translation adjustments, partially offset by stock-based compensation and common shares issued for debt extinguishment and commitment shares | Metric (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $15,592 | $14,310 | | Net Loss (Q1 2025) | - | $(1,616) | | Net Loss (Q2 2025) | - | $(3,139) | | Stock-based Compensation (Q1 2025) | - | $624 | | Stock-based Compensation (Q2 2025) | - | $754 | | Common Shares Issued for Debt Extinguishment | - | $1,003 | | Common Shares Issued for Repayment of Debt | - | $1,328 | | Common Shares Issued for Commitment Shares | - | $89 | | Cumulative Translation Adjustment (Q1 2025) | - | $(1) | | Cumulative Translation Adjustment (Q2 2025) | - | $(301) | - As of August 12, 2025, there were **23,435,234 shares** of Class A common stock issued and outstanding[4](index=4&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, CXApp experienced a net decrease in cash and cash equivalents, with significant cash usage in operating activities partially offset by proceeds from financing activities, primarily through the issuance of convertible debt | Metric (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net Cash Used in Operating Activities | $(3,991) | $(2,560) | | Net Cash Used in Investing Activities | $(16) | $(26) | | Net Cash Provided by Financing Activities | $3,990 | $2,480 | | Net Decrease in Cash and Cash Equivalents | $(26) | $(115) | | Cash and Cash Equivalents, End of Period | $4,854 | $6,160 | - Non-cash financing activities for the six months ended June 30, 2025, included **$2,331 thousand** for common shares issued for debt extinguishment and **$89 thousand** for commitment shares[16](index=16&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial position, operations, and cash flows, including significant accounting policies, revenue disaggregation, asset valuations, debt instruments, stock-based compensation, and recent events, offering crucial context for the condensed consolidated financial statements [NOTE 1 – Organization, Nature of Business and Basis of Presentation](index=8&type=section&id=NOTE%201%20%E2%80%93%20Organization%2C%20Nature%20of%20Business%20and%20Basis%20of%20Presentation) CXApp Inc. delivers intelligent enterprise workplace experiences through its AI-powered SaaS platform, which offers digital transformation solutions for hybrid workplaces, including employee applications, indoor mapping, and generative AI analytics. The company was formed through a business combination in March 2023, where KINS acquired Inpixon's enterprise apps business and changed its name to CXApp Inc. - CXApp's SaaS platform focuses on AI-powered solutions for enterprise workplace experiences, including indoor mapping, on-device positioning, augmented reality, and generative AI applications[17](index=17&type=chunk)[18](index=18&type=chunk) - The company was formed on March 14, 2023, through a Business Combination where KINS Technology Group Inc. acquired Inpixon's enterprise apps business and subsequently changed its name to CXApp Inc[19](index=19&type=chunk)[21](index=21&type=chunk) [NOTE 2 – Summary of Significant Accounting Policies](index=8&type=section&id=NOTE%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines CXApp's critical accounting policies, including its going concern assessment, revenue recognition methods for SaaS, professional services, and hardware, and valuation methodologies for complex financial instruments like convertible debt and derivative warrant liabilities. It also details the company's status as an emerging growth company and its election regarding new accounting standards - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and incurred net losses of **$3,139 thousand** and **$4,755 thousand** for the three and six months ended June 30, 2025, respectively, indicating substantial doubt about its ability to continue as a going concern[22](index=22&type=chunk) - To mitigate going concern indicators, CXApp entered into a Securities Purchase Agreement with Avondale Capital, LLC, for up to **$20,000 thousand**, with **$15,800 thousand** remaining available as of June 30, 2025, and also has **$3,520 thousand** remaining from a prior agreement with Streeterville Capital, LLC[23](index=23&type=chunk)[24](index=24&type=chunk) - The Company recognizes revenue from SaaS licenses ratably over the service term, professional services using the percentage of completion or time-based methods, and hardware sales at the point of shipment[50](index=50&type=chunk)[52](index=52&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - CXApp accounts for convertible debt using the fair value option (Level 3 inputs) and derivative warrant liabilities at fair value (Level 1 inputs), with changes recognized in the consolidated statements of operations[46](index=46&type=chunk)[74](index=74&type=chunk)[81](index=81&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) - The Company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards[32](index=32&type=chunk)[33](index=33&type=chunk)[233](index=233&type=chunk)[234](index=234&type=chunk) [NOTE 3 – Disaggregation of Revenue](index=21&type=section&id=NOTE%203%20%E2%80%93%20Disaggregation%20of%20Revenue) CXApp's revenue primarily consists of subscription-based software licenses and maintenance contracts, with a significant shift towards these recurring streams and a reduction in non-subscription professional services and hardware sales for the periods presented | Revenue Type (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Software Subscription | $0 | $1,504 | $0 | $3,092 | | License & Maintenance Contracts | $1,175 | $0 | $2,386 | $0 | | Total Subscription Revenue | $1,175 | $1,504 | $2,386 | $3,092 | | Professional Services | $20 | $262 | $33 | $492 | | Hardware | $28 | $0 | $28 | $0 | | Total Non-Subscription Revenue | $48 | $262 | $61 | $492 | | Total Revenue | $1,223 | $1,766 | $2,447 | $3,584 | - For the three months ended June 30, 2025, subscription revenue accounted for approximately **96%** of total revenue, an increase from **85%** in the same period of 2024, reflecting a strategic shift to a full SaaS delivery model[97](index=97&type=chunk)[204](index=204&type=chunk) [NOTE 4 – Property and Equipment, net](index=22&type=section&id=NOTE%204%20%E2%80%93%20Property%20and%20Equipment%2C%20net) CXApp's net property and equipment decreased from $64 thousand at December 31, 2024, to $57 thousand at June 30, 2025, primarily due to depreciation and amortization expenses, despite minor additions to computer and office equipment | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Computer and office equipment | $212 | $177 | | Furniture and fixtures | $13 | $11 | | Leasehold improvements | $5 | $4 | | Software | $1 | $0 | | Total Gross Property and Equipment | $231 | $192 | | Less: Accumulated depreciation and amortization | $(174) | $(128) | | Total Property and Equipment, Net | $57 | $64 | - Depreciation and amortization expense for property and equipment was **$24 thousand** for the six months ended June 30, 2025, compared to **$44 thousand** for the same period in 2024[99](index=99&type=chunk) [NOTE 5 – Goodwill and Intangible Assets](index=22&type=section&id=NOTE%205%20%E2%80%93%20Goodwill%20and%20Intangible%20Assets) CXApp's goodwill remained constant at $8,737 thousand, with no impairment recognized, while net intangible assets decreased due to ongoing amortization, primarily affecting customer relationships and developed technology - Goodwill remained at **$8,737 thousand** as of June 30, 2025, and December 31, 2024, with no impairment recognized after a qualitative assessment[100](index=100&type=chunk)[102](index=102&type=chunk) | Intangible Asset (in thousands) | Weighted Average Remaining Useful Life (Years) | Net Carrying Amount (June 30, 2025) | Net Carrying Amount (December 31, 2024) | | :-------------------------------- | :--------------------------------------------- | :---------------------------------- | :------------------------------------ | | Trade Name/Trademarks | 4.67 | $2,216 | $2,451 | | Customer Relationships | 2.67 | $3,034 | $3,596 | | Developed Technology | 7.67 | $6,704 | $7,139 | | Patents and Intellectual Property | 7.67 | $2,084 | $2,218 | | Totals | - | $14,038 | $15,404 | | Future Amortization Expense (in thousands) | Amount | | :----------------------------------------- | :----- | | 2025 (remainder of year) | $1,365 | | 2026 | $2,731 | | 2027 | $2,731 | | 2028 | $1,844 | | 2029 | $1,611 | | Thereafter | $3,756 | | Total | $14,038 | [NOTE 6 – Deferred Revenue](index=23&type=section&id=NOTE%206%20%E2%80%93%20Deferred%20Revenue) Deferred revenue decreased slightly from $2,683 thousand at December 31, 2024, to $2,532 thousand at June 30, 2025, as recognized revenue from license agreements and professional services exceeded new deferred revenue and advances from customers | Deferred Revenue (in thousands) | January 1, 2025 | June 30, 2025 | | :-------------------------------- | :-------------- | :------------ | | Deferred Revenue – January 1, 2025 | $2,683 | - | | Revenue recognized | $(2,447) | - | | Revenue deferred | $2,240 | - | | Advance from customer | $56 | - | | Deferred Revenue – June 30, 2025 | - | $2,532 | - The Company expects to satisfy its remaining performance obligations for deferred revenue, primarily related to license agreements and professional services, over the next twelve months[107](index=107&type=chunk) [NOTE 7 – Accrued Liabilities](index=24&type=section&id=NOTE%207%20%E2%80%93%20Accrued%20Liabilities) Accrued liabilities remained stable, decreasing slightly from $2,383 thousand at December 31, 2024, to $2,373 thousand at June 30, 2025, with accrued expenses and reimbursements being the largest component | Accrued Liability (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accrued expenses and reimbursements | $1,468 | $1,690 | | Accrued compensation and benefits | $412 | $382 | | Accrued insurance premium and interest | $168 | $23 | | Accrued bonus and commissions | $159 | $134 | | Accrued sales and other indirect taxes payable | $106 | $95 | | Income tax payables | $47 | $46 | | Accrued transaction costs | $13 | $13 | | Total Accrued Liabilities | $2,373 | $2,383 | - The Company owed **$168 thousand** on its Directors & Officers (D&O) insurance policy as of June 30, 2025, an increase from **$23 thousand** at December 31, 2024[109](index=109&type=chunk) [NOTE 8 – Promissory Note](index=24&type=section&id=NOTE%208%20%E2%80%93%20Promissory%20Note) The Streeterville promissory note, with an initial principal of $3,885 thousand, was fully paid down by January 17, 2025, through a combination of cash payments and exchanges for Class A Common Stock, resulting in a significant reduction in interest expense for the current period - The Streeterville promissory note, with an initial principal of **$3,885 thousand**, was fully paid down by January 17, 2025[110](index=110&type=chunk)[119](index=119&type=chunk) - During the period from July 15, 2024, to December 26, 2024, **$3,428 thousand** of the note's outstanding balance was exchanged for approximately **2,012,107 shares** of Class A Common Stock[117](index=117&type=chunk) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Principal amount | $0 | $3,885 | | Interest | $0 | $372 | | Accrued monitoring fee | $0 | $273 | | Total | $0 | $4,530 | | Less: Extinguishment | $0 | $3,927 | | Net Promissory Note | $0 | $603 | - Interest expense on the promissory note was **$0** for the three and six months ended June 30, 2025, a significant decrease from **$322 thousand** and **$642 thousand** for the same periods in 2024[119](index=119&type=chunk) [NOTE 9 – Warrants](index=25&type=section&id=NOTE%209%20%E2%80%93%20Warrants) CXApp had 10,751,862 Public Warrants and 10,280,000 Private Placement Warrants outstanding as of June 30, 2025, with no exercises or exchanges occurring during the periods presented. These warrants are classified as derivative liabilities and are remeasured at fair value each reporting period - As of June 30, 2025, there were **10,751,862 Public Warrants** and **10,280,000 Private Placement Warrants** outstanding[120](index=120&type=chunk)[122](index=122&type=chunk) - Each whole warrant entitles the holder to purchase one share of Class A common stock at **$11.50 per share**, expiring on March 15, 2028[120](index=120&type=chunk)[121](index=121&type=chunk) - The Private Placement Warrants are identical to Public Warrants but are exercisable on a cashless basis and non-redeemable as long as held by initial purchasers or permitted transferees[123](index=123&type=chunk) - Changes in the fair value of derivative warrant liabilities resulted in a non-cash gain of **$1,262 thousand** and **$3,576 thousand** for the three and six months ended June 30, 2025, respectively, compared to losses of **$1,051 thousand** and **$2,523 thousand** for the same periods in 2024[75](index=75&type=chunk) [NOTE 10 – Stock Option Plan and Stock-Based Compensation](index=26&type=section&id=NOTE%2010%20%E2%80%93%20Stock%20Option%20Plan%20and%20Stock-Based%20Compensation) CXApp's 2023 Equity Incentive Plan had 2,149,550 stock options outstanding and 1,597,435 restricted stock units (RSUs) outstanding as of June 30, 2025. The company recognized significant non-cash stock-based compensation expenses for both options and RSUs, with a remaining unrecognized expense of $545 thousand for options and $914 thousand for RSUs - As of June 30, 2025, **2,149,550 stock options** were outstanding with a weighted average exercise price of **$1.44**, and **979,547 options** were exercisable[132](index=132&type=chunk) - Non-cash stock-based compensation expense related to stock options was **$51 thousand** for the three months and **$310 thousand** for the six months ended June 30, 2025[132](index=132&type=chunk) - As of June 30, 2025, **1,597,435 restricted stock units (RSUs)** were outstanding[136](index=136&type=chunk) - Non-cash stock-based compensation expense related to RSUs was **$703 thousand** for the three months and **$1,068 thousand** for the six months ended June 30, 2025[137](index=137&type=chunk) - Remaining unrecognized stock compensation expense totaled approximately **$545 thousand** for options (over 2.53 years) and **$914 thousand** for RSUs (over 0.86 year) as of June 30, 2025[132](index=132&type=chunk)[137](index=137&type=chunk) [NOTE 11 – Convertible Debt](index=29&type=section&id=NOTE%2011%20%E2%80%93%20Convertible%20Debt) CXApp's convertible debt increased to $7,534 thousand as of June 30, 2025, primarily due to new Pre-Paid Purchase agreements with Avondale Capital, LLC, and Streeterville Capital, LLC. The company recognized unrealized losses on changes in fair value for these instruments and settled portions of the debt by issuing Class A Common Stock - On March 26, 2025, CXApp entered into a Securities Purchase Agreement with Avondale Capital, LLC, for up to **$20,000 thousand** in Pre-Paid Purchase agreements, receiving **$3,990 thousand** net proceeds from the initial **$4,200 thousand** Pre-Paid Purchase 1[138](index=138&type=chunk) - As of June 30, 2025, Avondale Pre-Paid Purchase 1 was recorded at a fair value of **$4,388 thousand**, and Streeterville Pre-Paid Purchase 3 was recorded at **$3,139 thousand**, both classified as convertible debt[141](index=141&type=chunk)[147](index=147&type=chunk) - For the six months ended June 30, 2025, the Company recognized an unrealized loss of **$500 thousand** on changes in the fair value of convertible debt[46](index=46&type=chunk)[149](index=149&type=chunk) - During the six months ended June 30, 2025, CXApp issued **1,797,869 shares** of Class A Common Stock to settle **$1,677,755 thousand** of convertible debt obligations[149](index=149&type=chunk) [NOTE 12 – Common Stock](index=31&type=section&id=NOTE%2012%20%E2%80%93%20Common%20Stock) During the six months ended June 30, 2025, CXApp issued a total of 2,109,652 shares of Class A Common Stock to satisfy obligations related to promissory notes, convertible debt, and commitment shares, reflecting ongoing financing and debt management activities - On March 31, 2025, **554,274 shares** of Class A Common Stock were issued to satisfy promissory note and convertible debt obligations[153](index=153&type=chunk) - In April 2025, **971,213 shares** of Class A Common Stock were issued to satisfy convertible debt obligations[153](index=153&type=chunk) - On May 8, 2025, **80,000 shares** of Class A Common Stock were issued as commitment shares for the Security Purchase Agreement with Avondale[154](index=154&type=chunk) - In June 2025, **471,973 shares** of Class A Common Stock were issued to satisfy convertible debt obligations[155](index=155&type=chunk) - Total Class A Common Stock issued during the six months ended June 30, 2025, to satisfy debt obligations was **2,109,652 shares**[156](index=156&type=chunk) [NOTE 13 – Income Taxes](index=32&type=section&id=NOTE%2013%20%E2%80%93%20Income%20Taxes) CXApp recorded a minimal income tax expense of $1 thousand for the three and six months ended June 30, 2025, compared to tax benefits in the prior year, maintaining a valuation allowance against deferred tax assets due to recurring losses and significant permanent differences | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income Tax Expense (Benefit) | $(1) | $159 | $(1) | $366 | - The effective tax rate for the three and six months ended June 30, 2025, was **(0.03%)** and **(0.02%)**, respectively, differing from the U.S. Federal statutory rate due to a valuation allowance against deferred tax assets and permanent differences[160](index=160&type=chunk) - The Company continues to maintain a valuation allowance on its deferred tax assets as of June 30, 2025, due to uncertainty regarding their realizability[161](index=161&type=chunk) [NOTE 14 – Credit Risk and Concentrations](index=32&type=section&id=NOTE%2014%20%E2%80%93%20Credit%20Risk%20and%20Concentrations) CXApp's primary credit risks are concentrated in trade accounts receivable and cash/cash equivalents, with cash deposits held in high-credit-quality financial institutions, including foreign subsidiaries. The company assesses customer financial strength and has not experienced significant credit losses - Financial instruments subject to credit risk include trade accounts receivable and cash and cash equivalents[162](index=162&type=chunk) - Cash deposits are held with high-credit-quality financial institutions, with foreign cash balances of **$127 thousand** as of June 30, 2025[163](index=163&type=chunk) - The Company has not experienced any significant credit losses from cash or accounts receivable for the six months ended June 30, 2025[163](index=163&type=chunk)[164](index=164&type=chunk) [NOTE 15 – Segment Information](index=33&type=section&id=NOTE%2015%20%E2%80%93%20Segment%20Information) CXApp operates as a single operating segment, focusing on its vertical software-as-a-service (SaaS) platform, the CXAI Platform, for enterprise workplace management. The CEO, as CODM, evaluates performance based on consolidated net income, with a focus on cash-based operating expenses - CXApp operates as a single operating segment, offering the CXAI Platform for enterprise workplace management[165](index=165&type=chunk)[166](index=166&type=chunk) - The Chief Executive Officer (CODM) manages the business based on consolidated net income, prioritizing cash-based operating expenses over non-cash adjustments like stock-based compensation and intangible amortization[165](index=165&type=chunk)[166](index=166&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenue - Licenses | $1,175 | $1,504 | $2,386 | $3,092 | | Revenue - Professional Services | $20 | $262 | $33 | $492 | | Revenue - Hardware | $28 | $0 | $28 | $0 | | Cost of revenue | $171 | $353 | $321 | $680 | | Research and development (cash) | $1,904 | $1,410 | $3,266 | $2,907 | | Sales and marketing (cash) | $449 | $714 | $955 | $1,745 | | General and administrative (cash) | $1,373 | $1,421 | $3,017 | $2,687 | | Total loss without non-cash | $(1,702) | $(3,738) | $(2,011) | $(7,624) | | Net loss | $(3,139) | $(5,256) | $(4,755) | $(10,426) | [NOTE 16 – Foreign Operations](index=34&type=section&id=NOTE%2016%20%E2%80%93%20Foreign%20Operations) CXApp operates in the United States, Canada, and the Philippines, with the United States generating the majority of revenue and assets, while Canada and the Philippines contribute smaller portions and show varying profitability | Metric (in thousands) | United States | Canada | Philippines | Eliminations | Total | | :-------------------------------- | :------------ | :----- | :---------- | :----------- | :---- | | **For the Three Months Ended June 30, 2025:** | | | | | | | Revenues by geographic area | $1,199 | $1,023 | $183 | $(1,182) | $1,223 | | Operating income (loss) by geographic area | $(4,717) | $599 | $7 | $0 | $(4,111) | | Net income (loss) by geographic area | $(4,036) | $893 | $5 | $0 | $(3,139) | | **As of June 30, 2025:** | | | | | | | Identifiable assets by geographic area | $29,021 | $249 | $298 | $0 | $29,568 | | Long lived assets by geographic area | $14,249 | $120 | $150 | $0 | $14,519 | | Goodwill by geographic area | $8,737 | $0 | $0 | $0 | $8,737 | - For the three months ended June 30, 2025, the United States generated **$1,199 thousand** in revenue, while Canada generated **$1,023 thousand** and the Philippines **$183 thousand**, before eliminations[169](index=169&type=chunk) - As of June 30, 2025, the United States held **$29,021 thousand** in identifiable assets, representing the vast majority of the company's total assets[169](index=169&type=chunk) [NOTE 17 – Leases](index=35&type=section&id=NOTE%2017%20%E2%80%93%20Leases) CXApp has operating leases for administrative offices in the United States, Canada, and the Philippines, with a weighted average remaining lease term of 1.2 years and a discount rate of 8.0% as of June 30, 2025. Total lease payments are projected to be $449 thousand - Operating lease expenses for the three and six months ended June 30, 2025, were approximately **$106 thousand** and **$213 thousand**, respectively[171](index=171&type=chunk) - As of June 30, 2025, the weighted average remaining lease term is **1.2 years**, and the weighted average discount rate used for operating lease liabilities is **8.0%**[172](index=172&type=chunk) | Operating Leases (in thousands) | Amount | | :-------------------------------- | :----- | | Year 2025 | $208 | | Year 2026 | $208 | | Year 2027 | $33 | | Total lease payments | $449 | | Less: Imputed interest | $(27) | | Present value of lease liabilities | $422 | [NOTE 18 – Commitments and Contingencies](index=35&type=section&id=NOTE%2018%20%E2%80%93%20Commitments%20and%20Contingencies) CXApp faces risks and uncertainties from global social and political circumstances, including conflicts and trade tensions, which could negatively impact its financial position. The company assesses contingent liabilities, accruing material probable losses and disclosing reasonably possible ones, with no current material litigation - Global social and political circumstances, such as wars, conflicts, and trade tensions, could adversely affect the Company's financial position and operations[174](index=174&type=chunk)[175](index=175&type=chunk) - The Company assesses contingent liabilities, accruing estimated material losses that are probable and disclosing reasonably possible material losses[176](index=176&type=chunk)[177](index=177&type=chunk) - There is no material litigation, arbitration, or governmental proceeding currently pending against CXApp or its management team[241](index=241&type=chunk) [NOTE 19 – Subsequent Events](index=36&type=section&id=NOTE%2019%20%E2%80%93%20Subsequent%20Events) Subsequent to June 30, 2025, CXApp converted a portion of its Streeterville Convertible Notes into 1,994,072 shares of Class A common stock, received $3,000 thousand in net cash proceeds from Avondale's second tranche Pre-Paid Purchase, and filed a shelf registration statement on Form S-3 for up to $150,000 thousand of various securities - On July 4, 2025, the One Big Beautiful Bill (OBBB) was enacted, reinstating full expensing for R&D expenditures, which is expected to reverse a previously recognized deferred tax asset and increase net operating loss carryforwards[179](index=179&type=chunk) - Following June 30, 2025, CXApp converted a portion of its Streeterville Pre-Paid Purchase 3 Convertible Notes into approximately **1,994,072 shares** of Class A common stock[180](index=180&type=chunk)[181](index=181&type=chunk) - On August 7, 2025, the Company received net cash proceeds of **$3,000 thousand** from the second tranche of the Pre-Paid Purchase Agreement with Avondale[182](index=182&type=chunk) - After June 30, 2025, CXApp filed a shelf registration statement on Form S-3, authorizing the future offering and sale of up to **$150,000 thousand** of various securities, including up to **$7,959 thousand** of common stock[183](index=183&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on CXApp's financial condition and operational results for the three months ended June 30, 2025, highlighting strategic shifts towards an AI-first SaaS model, efforts in cost management, and liquidity position, alongside a detailed comparison of revenues, expenses, and non-GAAP financial measures [Special Note Regarding Forward-Looking Statements](index=37&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions readers that the report contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially from expectations. It advises referring to the Risk Factors section of the Annual Report on Form 10-K for important factors that could impact future performance - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[186](index=186&type=chunk) - Readers are advised to refer to the Risk Factors section in the Company's Annual Report on Form 10-K for important factors affecting future performance[186](index=186&type=chunk) [Overview of Our Business](index=37&type=section&id=Overview%20of%20Our%20Business) CXApp is transforming the modern workplace with AI-powered solutions, focusing on AI-first product innovation, enterprise penetration, and margin expansion through cost discipline. The company aims for sustainable growth by scaling its enterprise customer base and optimizing operational efficiency - CXApp's strategic pillars for fiscal year 2025 include AI-First Product Innovation, Enterprise Penetration and Revenue Quality Expansion, and Margin Expansion through Cost Discipline[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) - Enhancements to the Generative AI analytics platform improved data ingestion, real-time behavioral insights, and predictive modeling capabilities[188](index=188&type=chunk) - Recurring SaaS revenue accounted for **99%** of total revenue in Q2 2025, demonstrating the effectiveness of the 'land-and-expand' strategy[188](index=188&type=chunk) - Gross profit for Q2 2025 was **$1,052 thousand**, with gross margin improving to **87%** due to the shift to high-margin SaaS offerings[189](index=189&type=chunk) [Executive Overview](index=37&type=section&id=Executive%20Overview) CXApp is focused on transforming the modern workplace with AI-powered solutions, prioritizing AI-first product innovation, expanding its enterprise customer base, and achieving margin expansion through disciplined cost management. The company's strategy emphasizes sustainable growth and operational efficiency in the hybrid workplace market - CXApp aims to enhance employee experience, operational efficiency, and workplace intelligence through AI-powered solutions[187](index=187&type=chunk) - Key strategic pillars include developing AI-native workplace intelligence tools, expanding high-value enterprise accounts, and streamlining SG&A to improve gross margin[188](index=188&type=chunk)[189](index=189&type=chunk) [Financial Performance Summary](index=38&type=section&id=Financial%20Performance%20Summary) CXApp's financial performance summary highlights an increased gross margin of 86% in Q2 2025, driven by a shift to a SaaS-based model, continued customer expansion in key industries, and strategic investments in R&D despite an overall increase in operating expenses - Gross margin increased to **86%** in Q2 2025, up from **80%** in Q2 2024, due to the shift to an AI-enabled SaaS model[194](index=194&type=chunk) - Operating expenses increased to **$5,163 thousand** in Q2 2025, compared to **$5,063 thousand** in Q2 2024, reflecting strategic investments in R&D[194](index=194&type=chunk) - Cash and cash equivalents stood at **$4,854 thousand** for the three months ended June 30, 2025, providing a strategic buffer for investments[192](index=192&type=chunk) [Strategic Growth Initiatives](index=38&type=section&id=Strategic%20Growth%20Initiatives) CXApp's strategic growth initiatives focus on expanding AI-native capabilities, targeting new market verticals, strengthening partnerships, and maintaining operational excellence through cost optimization and customer retention to enhance profitability and market share - Product innovation includes integrating agentic AI for desk booking and advanced analytics, and developing seamless integrations with enterprise platforms[195](index=195&type=chunk) - Market expansion targets new verticals and strengthens partnerships with cloud providers and technology platforms to increase market share[195](index=195&type=chunk) - Operational excellence focuses on cost optimization, customer retention, and sales efficiency to enhance profitability[195](index=195&type=chunk) [Competitive Positioning and Market Outlook](index=39&type=section&id=Competitive%20Positioning%20and%20Market%20Outlook) CXApp is positioned in a rapidly growing global employee experience and workplace technology market, expected to exceed 20% CAGR. Its AI-driven platform offers differentiated capabilities for hybrid workplace management, aligning with strong enterprise demand despite macroeconomic uncertainties - The global employee experience and workplace technology market is projected to grow at a CAGR exceeding **20%** in the coming years[201](index=201&type=chunk) - CXApp's AI-driven platform differentiates itself with real-time analytics, behavioral insights, and predictive modeling for agile decision-making in hybrid workplaces[201](index=201&type=chunk) - The Company observes strong interest from enterprise clients for intelligent, flexible workplace infrastructure, aligning with its strategy to scale AI-enabled solutions[201](index=201&type=chunk) [Recent Events](index=39&type=section&id=Recent%20Events) On April 8, 2025, CXApp received proceeds from the Avondale convertible Pre-Paid Purchase 1, a key financing event for the company - On April 8, 2025, the Company received proceeds from the Avondale convertible Pre-Paid Purchase 1[198](index=198&type=chunk) [RESULTS OF OPERATIONS](index=39&type=section&id=RESULTS%20OF%20OPERATIONS) CXApp's results of operations for the three months ended June 30, 2025, show a decrease in total revenue and gross profit compared to the prior year, but a significant reduction in net loss, driven by a positive change in other income/expense and lower interest expense, despite an increase in operating expenses due to R&D investments | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Revenues | $1,223 | $1,766 | | Cost of revenues | $(171) | $(353) | | Gross profit | $1,052 | $1,413 | | Operating expenses | $(5,163) | $(5,063) | | Loss from operations | $(4,111) | $(3,650) | | Other expense, net | $973 | $(1,765) | | Income tax benefit, provision (expense) | $(1) | $159 | | Net loss | $(3,139) | $(5,256) | [Revenues](index=40&type=section&id=Revenues) Total revenue for the three months ended June 30, 2025, decreased by 31% to $1,223 thousand, primarily due to a strategic decline in non-recurring Professional Services revenue. Subscription-based revenue increased its share to 96% of total revenue, aligning with the company's focus on recurring, high-margin streams - Total revenue for the three months ended June 30, 2025, was **$1,223 thousand**, a **31% decrease** from **$1,766 thousand** in the prior year[202](index=202&type=chunk) - The decrease was primarily attributable to a decline in non-recurring Professional Services revenue, reflecting a strategic transition to a full SaaS delivery model[202](index=202&type=chunk)[203](index=203&type=chunk) - Subscription-based revenue comprised approximately **96%** of total revenue for the three months ended June 30, 2025, up from **85%** in the same period of 2024[204](index=204&type=chunk) [Gross Margin](index=40&type=section&id=Gross%20Margin) Gross profit margin improved to 86% for the three months ended June 30, 2025, up from 80% in the prior year, despite a decrease in gross profit. This improvement was driven by a 51.55% reduction in cost of revenues, primarily from lower professional services-related costs and reduced hosting expenses - Gross profit margin was **86%** for the three months ended June 30, 2025, compared to **80%** for the same period in 2024[205](index=205&type=chunk) - Cost of revenues decreased by approximately **$182 thousand**, or **51.55%**, due to reductions in professional services-related costs and lower hosting/infrastructure expenses[205](index=205&type=chunk) [Operating Expenses](index=40&type=section&id=Operating%20Expenses) Total operating expenses increased by $100 thousand to $5,163 thousand for the three months ended June 30, 2025, primarily due to a $462 thousand rise in R&D expenses for platform enhancements and Google integration. This increase was partially offset by decreases in sales and marketing and G&A expenses - Total operating expenses increased by **$100 thousand** to **$5,163 thousand** for the three months ended June 30, 2025[206](index=206&type=chunk) - Research and development (R&D) expenses rose by **$462 thousand**, reflecting investments in platform enhancements and strategic integration with Google[207](index=207&type=chunk) - Sales and marketing expenses decreased by **$279 thousand**, and G&A expenses decreased by **$83 thousand** due to cost control measures[208](index=208&type=chunk) [Other Income/Expense](index=40&type=section&id=Other%20Income%2FExpense) Other income/expense shifted from an expense of $1,765 thousand in Q2 2024 to an income of $973 thousand in Q2 2025, a $2,738 thousand increase. This was primarily driven by a $1,931 thousand increase in the change in fair value of derivative warrant liabilities and a $521 thousand decrease in interest expense - Other income/expense was an income of **$973 thousand** for the three months ended June 30, 2025, compared to an expense of **$1,765 thousand** for the same period in 2024[210](index=210&type=chunk) - The **$2,738 thousand** increase in other income was mainly due to a **$1,931 thousand** increase in the change in fair value of derivative warrant liabilities and a **$521 thousand** decrease in interest expense[210](index=210&type=chunk) [Provision for Income Taxes](index=40&type=section&id=Provision%20for%20Income%20Taxes) CXApp recorded a $1 thousand income tax expense for the three months ended June 30, 2025, a change from a $159 thousand tax benefit in the prior year. The prior year's benefit was mainly due to the release of a valuation allowance related to acquired intangible assets - Income tax expense was **$1 thousand** for the three months ended June 30, 2025, compared to a **$159 thousand** tax benefit for the three months ended June 30, 2024[211](index=211&type=chunk) - The prior year's tax benefit resulted primarily from the release of a valuation allowance attributable to acquired intangible assets from the Business Combination[211](index=211&type=chunk) [Non-GAAP Financial information](index=41&type=section&id=Non-GAAP%20Financial%20information) CXApp presents Adjusted EBITDA as a non-GAAP measure to supplement its GAAP results, providing insights into core operating performance by excluding interest, taxes, depreciation, amortization, and other non-cash items. While useful for internal evaluation and industry comparison, it has limitations and should not be considered a substitute for GAAP net income - Adjusted EBITDA is a non-GAAP measure used by management to assess core operating results, allocate resources, evaluate economic outcomes, and compare performance[212](index=212&type=chunk)[215](index=215&type=chunk) | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,139) | $(4,755) | $(5,256) | $(10,426) | | EBITDA | $(2,282) | $(3,172) | $(4,026) | $(8,436) | | Adjusted EBITDA | $(2,678) | $(5,088) | $(2,110) | $(4,391) | - Adjusted EBITDA excludes non-cash items such as changes in fair value of warrant liabilities, loss on debt extinguishment, unrealized gains/losses, loss on contract to issue common stock, and stock-based compensation[215](index=215&type=chunk) - Limitations of Adjusted EBITDA include not reflecting cash expenditures, working capital needs, interest/principal payments on debt, or cash requirements for asset replacements[217](index=217&type=chunk) [EBITDA](index=41&type=section&id=EBITDA) EBITDA for the three and six months ended June 30, 2025, was $(2,282) thousand and $(3,172) thousand, respectively. Adjusted EBITDA, which further excludes non-cash items like changes in fair value of warrant liabilities and stock-based compensation, was $(2,678) thousand and $(5,088) thousand for the same periods | Metric (in thousands) | 3 Months Ended June 30, 2025 | 6 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net loss | $(3,139) | $(4,755) | $(5,256) | $(10,426) | | Interest and other income | $163 | $194 | $684 | $946 | | Income tax (benefit)/provision | $1 | $1 | $(159) | $(366) | | Depreciation and amortization | $695 | $1,390 | $705 | $1,410 | | EBITDA | $(2,282) | $(3,172) | $(4,026) | $(8,436) | | Changes in fair value of warrant liabilities | $(880) | $(3,076) | $1,051 | $2,523 | | Loss on debt extinguishment | $0 | $48 | $0 | $0 | | Unrealized (gain) loss | $(291) | $(287) | $30 | $86 | | Loss on contract to issue common stock | $21 | $21 | $0 | $0 | | Stock-based compensation | $754 | $1,378 | $835 | $1,436 | | Adjusted EBITDA | $(2,678) | $(5,088) | $(2,110) | $(4,391) | [Financing Obligations and Requirements](index=42&type=section&id=Financing%20Obligations%20and%20Requirements) CXApp used $3,012 thousand in cash for operating activities during the three months ended June 30, 2025. The company secured $20,000 thousand in potential funding from Avondale Capital, LLC, with $15,800 thousand remaining, and $3,520 thousand remaining from Streeterville Capital, LLC, which management believes is sufficient for liquidity needs for the next 12 months - Net cash used in operating activities was **$3,012 thousand** for the three months ended June 30, 2025[218](index=218&type=chunk) - The Company has access to up to **$20,000 thousand** in funding from Avondale Capital, LLC, with **$15,800 thousand** remaining available as of June 30, 2025[218](index=218&type=chunk) - An additional **$3,520 thousand** in funding remained available under the agreement with Streeterville Capital, LLC, as of June 30, 2025[218](index=218&type=chunk) - Management believes these funds are sufficient to satisfy working capital, capital asset purchases, debt repayments, and other liquidity requirements for at least the next 12 months[218](index=218&type=chunk) [Liquidity and Capital Resources as of June 30, 2025 Compared with June 30, 2024](index=43&type=section&id=Liquidity%20and%20Capital%20Resources%20as%20of%20June%2030%2C%202025%20Compared%20with%20June%2030%2C%202024) CXApp's liquidity position as of June 30, 2025, shows a working capital deficiency of $1,415 thousand and cash of $4,854 thousand. While net cash used in operating activities increased, financing activities provided substantial cash, leading to a net increase in cash and cash equivalents for the three months ended June 30, 2025, compared to the prior year - As of June 30, 2025, the Company had a working capital deficiency of approximately **$1,415 thousand** and cash of approximately **$4,854 thousand**[221](index=221&type=chunk)[222](index=222&type=chunk) | Cash Flows (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(3,012) | $(1,910) | | Net cash provided by (used in) investing activities | $(11) | $(8) | | Net cash provided by (used in) financing activities | $3,990 | $2,480 | | Net increase (decrease) in cash and cash equivalents | $961 | $557 | [Operating Activities for the three months ended June 30, 2025 and June 30, 2024](index=43&type=section&id=Operating%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash used in operating activities increased to $3,012 thousand for the three months ended June 30, 2025, from $1,910 thousand in the prior year. This was primarily due to a net loss of $3,139 thousand, partially offset by non-cash income and expenses, and a negative change in operating assets and liabilities | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net income (loss) | $(3,139) | $(5,256) | | Non-cash income and expenses | $596 | $3,302 | | Net change in operating assets and liabilities | $(469) | $44 | | Net cash used in operating activities | $(3,012) | $(1,910) | [Cash Flows from Investing Activities for the three months ended June 30, 2025 and June 30, 2024](index=43&type=section&id=Cash%20Flows%20from%20Investing%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash used in investing activities remained minimal, at approximately $11 thousand for the three months ended June 30, 2025, and $8 thousand for the same period in 2024, primarily for the purchase of property and equipment - Net cash used in investing activities was approximately **$11 thousand** for the three months ended June 30, 2025, and **$8 thousand** for the three months ended June 30, 2024[224](index=224&type=chunk) - These amounts were primarily used for the purchase of property and equipment[224](index=224&type=chunk) [Cash Flows from Financing Activities for the three months ended June 30, 2025 and June 30, 2024](index=44&type=section&id=Cash%20Flows%20from%20Financing%20Activities%20for%20the%20three%20months%20ended%20June%2030%2C%202025%20and%20June%2030%2C%202024) Net cash provided by financing activities significantly increased to $3,990 thousand for the three months ended June 30, 2025, compared to $2,480 thousand in the prior year, primarily driven by proceeds from the issuance of convertible debt - Net cash provided by financing activities was approximately **$3,990 thousand** for the three months ended June 30, 2025[225](index=225&type=chunk) - This was primarily due to **$3,990 thousand** in net proceeds received from the issuance of convertible debt on April 8, 2025[225](index=225&type=chunk) [Off-Balance Sheet Arrangements](index=44&type=section&id=Off-Balance%20Sheet%20Arrangements) CXApp does not have any off-balance sheet guarantees, interest rate swap transactions, foreign currency contracts, or engage in trading activities involving non-exchange traded contracts - The Company does not have any off-balance sheet guarantees, interest rate swap transactions, or foreign currency contracts[226](index=226&type=chunk) - CXApp does not engage in trading activities involving non-exchange traded contracts[226](index=226&type=chunk) [Contractual Obligations and Commitments](index=44&type=section&id=Contractual%20Obligations%20and%20Commitments) CXApp's contractual obligations primarily consist of operating lease liabilities, totaling approximately $422 thousand as of June 30, 2025, with $208 thousand expected to be paid within the next twelve months - As of June 30, 2025, total operating lease obligations are approximately **$422 thousand**[227](index=227&type=chunk) - Approximately **$208 thousand** of these operating lease obligations are expected to be paid within the next twelve months[227](index=227&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no applicable quantitative and qualitative disclosures about market risk for CXApp - This section is not applicable for CXApp[228](index=228&type=chunk) [Critical Accounting Policies and Estimates](index=44&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) CXApp's financial statements are prepared under U.S. GAAP, requiring management to make significant assumptions and estimates. The company regularly reviews these policies and estimates, and there have been no significant changes to critical accounting estimates disclosed in the 2024 Annual Report on Form 10-K for the three months ended June 30, 2025 - Financial statements are prepared in accordance with U.S. GAAP, requiring management to make assumptions and estimates[229](index=229&type=chunk) - No significant changes to critical accounting estimates were disclosed for the three months ended June 30, 2025, compared to the 2024 Annual Report on Form 10-K[232](index=232&type=chunk) [Critical Accounting Policies](index=44&type=section&id=Critical%20Accounting%20Policies) CXApp's significant accounting policies are detailed in Note 2 of the unaudited condensed consolidated financial statements - Significant accounting policies are discussed in Note 2 of the unaudited condensed consolidated financial statements[230](index=230&type=chunk) [Critical Accounting Estimates](index=44&type=section&id=Critical%20Accounting%20Estimates) Critical accounting estimates involve complex judgments and assumptions that could materially impact financial statements. Management believes there have been no significant changes to these estimates during the three months ended June 30, 2025, as compared to the 2024 Annual Report - Critical accounting estimates are those that are complex, require a high degree of judgment, and could materially impact financial statements if different assumptions were used[231](index=231&type=chunk) - No significant changes to critical accounting estimates were identified for the three months ended June 30, 2025, compared to the 2024 Annual Report[232](index=232&type=chunk) [JOBS Act Accounting Election](index=45&type=section&id=JOBS%20Act%20Accounting%20Election) As an 'emerging growth company' under the JOBS Act, CXApp is eligible for certain exemptions from reporting requirements and has irrevocably elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other companies - CXApp is an 'emerging growth company' as defined in the JOBS Act[233](index=233&type=chunk) - The Company has irrevocably elected to take advantage of the extended transition period for complying with new or revised accounting standards, potentially affecting comparability with other companies[234](index=234&type=chunk) [Part II. OTHER INFORMATION](index=46&type=section&id=Part%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) There are no material legal proceedings, arbitrations, or governmental proceedings currently pending against CXApp or its management team - No material litigation, arbitration, or governmental proceeding is currently pending against CXApp or its management[241](index=241&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) As of the reporting date, there have been no material changes to the risk factors previously disclosed in CXApp's Annual Report on Form 10-K - No material changes to the risk factors disclosed in the Annual Report on Form 10-K have occurred as of the date of this Quarterly Report[242](index=242&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) CXApp reports no unregistered sales of equity securities or use of proceeds for the period - There were no unregistered sales of equity securities and use of proceeds during the period[243](index=243&type=chunk) [Item 3. Defaults Upon Senior Securities](index=46&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) CXApp reports no defaults upon senior securities for the period - There were no defaults upon senior securities during the period[244](index=244&type=chunk) [Item 4. Mine Safety Disclosures](index=46&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to CXApp - This section is not applicable[245](index=245&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section includes information on insider trading arrangements and a correction to the definitive proxy statement regarding audit and other service fees for fiscal year 2024 [Insider Trading Arrangements and Policies](index=46&type=section&id=Insider%20Trading%20Arrangements%20and%20Policies) During the three months ended June 30, 2025, no director or officer of CXApp notified the company of the adoption or termination of any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No director or officer notified CXApp of the adoption or termination of Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[246](index=246&type=chunk) [Definitive Proxy Statement Correction](index=46&type=section&id=Definitive%20Proxy%20Statement%20Correction) CXApp corrected an inadvertent misstatement in its April 17, 2025, definitive proxy statement regarding audit and other service fees provided by Withum for fiscal year 2024, clarifying the total fees to $382,000 - The Company corrected an inadvertent misstatement in its definitive proxy statement regarding fees for audit and other services provided by Withum for fiscal year 2024[247](index=247&type=chunk) | Fees | 2024 | 2023 | | :---------------- | :----- | :----- | | Audit Fees | $319,000 | $235,000 | | Audit-Related fees | $0 | $0 | | Tax Fees | $38,000 | $9,000 | | All Other Fees | $25,000 | $0 | | Total | $382,000 | $244,000 | [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q, including merger agreements, organizational documents, warrant agreements, and certifications - The section lists various exhibits, including the Agreement and Plan of Merger, Amended and Restated Bylaws, Warrant Agreement, Securities Purchase Agreements, and certifications[251](index=251&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director (Principal Executive Officer), and Joy Mbanugo, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), on August 12, 2025 - The report is signed by Khurram Sheikh, Chairman, Chief Executive Officer and Director, and Joy Mbanugo, Chief Financial Officer, on August 12, 2025[253](index=253&type=chunk)[254](index=254&type=chunk)

Financial Data and Key Metrics Changes - Subscription revenue constituted 96% of total revenue, up from 87% a year ago, indicating a shift towards a higher margin recurring model [56] - Gross margin improved to 86% from 80% year-over-year, despite significant investments in R&D [56][58] - EPS increased to negative 16 per share, showing improvement quarter-over-quarter and year-over-year [57] Business Line Data and Key Metrics Changes - The company experienced a meaningful ARR expansion driven by two large Fortune 1,000 renewals, reflecting customer trust and the critical role of the platform [56] - The Sky platform's usage surged by over 150% at some client sites, primarily due to return-to-office mandates [31] Market Data and Key Metrics Changes - The corporate real estate market is experiencing a contraction, with the U.S. set to lose more office space than it builds for the first time in modern history [21] - The trend towards structured hybrid work is increasing, with many companies mandating employees to return to the office for at least three days a week [22][24] Company Strategy and Development Direction - The company aims to redefine employee experiences through its AI-driven Sky platform, focusing on enhancing workplace engagement and operational efficiency [30][34] - Strategic partnerships with major cloud providers like Google, Azure, and AWS are crucial for delivering end-to-end solutions [13][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the increasing demand for solutions that facilitate employee engagement and collaboration in hybrid work environments [30][29] - The company is positioned to capture a growing share of the employee experience market, which is currently under-penetrated [61] Other Important Information - The company has been awarded a new patent related to 3D mapping and augmented reality, enhancing its multidimensional mapping strategy [44] - The Sky platform is being deployed globally, with significant interest from clients seeking solutions for space optimization and employee engagement [30][25] Q&A Session Summary Question: How is Sky differentiating itself from larger AI competitors in the enterprise engagement space? - Sky delivers enterprise-scale AI solutions validated in complex workplace environments, with a focus on behavior analytics and intelligent employee experience orchestration [71] - The continuous feedback loop from enterprise clients ensures that innovations directly address market needs [72] Question: Are there any strategic partnerships or integrations in the pipeline that could accelerate market penetration? - The company is partnering with design-build firms and business process automation providers to embed its solutions into workplace projects [77] - Existing clients, particularly at the C-level, are key references for new business opportunities, enhancing market penetration [79]

Financial Data and Key Metrics Changes - Subscription revenue increased significantly from 87% in Q1 2024 to 99% in Q1 2025, indicating a strong commitment to recurring revenue [64] - Gross margin improved to 88% from 82% in Q1 2024, reflecting better cost discipline [64] - Earnings per share improved from negative $0.34 to negative $0.08 year-over-year [64] Business Line Data and Key Metrics Changes - Three large Fortune 500 customers expanded their contracts, pushing annual recurring revenue (ARR) up by 130% of their original contract value [63] - The company reported a decline in revenue due to the timing of renewals from two large customers, which were pushed to Q4 instead of Q1 [65] Market Data and Key Metrics Changes - The company is deployed in over 200 cities across 50 countries, indicating a strong global presence [15] - The focus on employee experience solutions is becoming increasingly relevant as companies navigate the return to office (RTO) challenges [5][28] Company Strategy and Development Direction - The company aims to enhance customer success by focusing on user engagement and adoption of its Sky platform [18] - The strategic priorities for 2025 include customer success, deeper AI adoption, and analytics usage [70] - The company is positioning itself as a leader in the employee experience software category, leveraging its AI capabilities [76] Management's Comments on Operating Environment and Future Outlook - Management noted that the workplace is undergoing significant transformation, with hybrid work becoming the new operating model [6] - There is a strong belief that organizations that rethink workplace experiences will thrive in the current environment [8] - The company is optimistic about its growth potential, citing a fragmented competitive landscape and a singular vision to create the best employee experience [81] Other Important Information - The company has filed for S3 eligibility, enhancing its liquidity position [70] - The partnership with Google Cloud is expected to drive cost efficiencies and innovation [80] Q&A Session Summary Question: What is the current shares outstanding? - The current shares outstanding are approximately 19,800,000 [82] Question: How much total debt is currently outstanding? - The total debt, including the recent $4,000,000 drawn, is about 10,000,000 [82] Question: Will the company share who its clients are? - The company has case studies available, but confidentiality agreements limit the disclosure of client details [83] Question: After soft Q1 revenue results, do you expect total revenue growth or subscription revenue growth year over year in '25 versus '24? - The company is not providing official guidance but aims for ARR growth as a main initiative [87] Question: Do the three large customer renewals include the six renewals mentioned in 2024? - No, these are three new renewals in addition to the six mentioned previously [91]