UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (MARK ONE) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39642 CXApp Inc. (Exact name of Registrant as Specified in Its Charter) (State or other jurisdiction of incorporation or organization) Delaw ...

CXApp (CXAI) Q2 2025 Earnings Call August 12, 2025 05:00 PM ET Speaker0Greetings. Welcome to the CXAI second quarter two thousand twenty five earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded.Now I would like to turn the call over to your host, Karam Sheikh, chairman and CEO of CXAI. Please go ahead.Speaker1Thank you, operator. Good afternoon, everybody. I'm joined ...

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]

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 [63] - Gross margin improved from 82% to 88% year-over-year, reflecting better cost discipline [63] - Earnings per share improved from negative $0.34 to negative $0.08, showing progress in financial performance [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 [62] - The company successfully deployed the SkyView Analytics platform across all clients, enhancing data insights and analytics capabilities [57] Market Data and Key Metrics Changes - The company is deployed in over 200 cities across 50 countries, indicating a strong global presence [14] - The demand for hybrid work solutions has increased, with many organizations seeking to improve employee engagement and collaboration [5][27] Company Strategy and Development Direction - The company is focused on customer success, deeper AI adoption, and enhancing analytics usage as part of its strategic priorities for 2025 [70] - The introduction of the AgenTeq AI solution aims to provide collaborative AI agents that enhance user experiences and streamline workflows [48][49] - The company is positioning itself as a leader in the employee experience software category, leveraging its technological advancements and partnerships [80] Management's Comments on Operating Environment and Future Outlook - Management noted that the decline in revenue was timing-related due to the shift of two large customer renewals from Q1 to Q4, rather than a structural decline [64] - The management expressed confidence in the company's ability to navigate current economic challenges and emphasized the importance of providing cost-effective solutions to clients [77] Other Important Information - The company has filed for S3 eligibility, enhancing its liquidity position and access to capital [69] - The partnership with Google Cloud is expected to drive further improvements in cost efficiency and scalability [75] 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 on its website, but some clients prefer confidentiality [83][84] 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 at the moment but is focused on ARR growth [86][88] 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 [92]

Revenue Performance - Revenue for the three months ended March 31, 2025, was $1,224 thousand, a decrease of $594 thousand compared to $1,818 thousand for the same period in 2024[189]. - Subscription-based revenue represented 99% of total revenue for the three months ended March 31, 2025, up from 87% in the same period in 2024, indicating a 12% increase in revenue mix[190]. Profitability and Expenses - Gross profit margin improved to 88% for the three months ended March 31, 2025, compared to 82% for the same period in 2024, driven by higher-margin AI-enabled services[181]. - Operating expenses decreased to $4,819 thousand for the three months ended March 31, 2025, down from $5,078 thousand in the same period in 2024, reflecting cost management initiatives[192]. - Net loss for the three months ended March 31, 2025, was $1,616 thousand, an improvement from a net loss of $5,170 thousand for the same period in 2024[187]. Cash Flow and Liquidity - Cash and cash equivalents were $3,893 thousand as of March 31, 2025, with an additional $3,990 thousand available from a Securities Purchase Agreement[179]. - The company has a working capital deficiency of approximately $4,017 thousand and cash of approximately $3,893 thousand as of March 31, 2025[212]. - Net cash used in operating activities for the three months ended March 31, 2025, was $979 thousand, with a net loss of $1,611 thousand[212]. - The company incurred net cash flows used in investing activities of approximately $5 thousand for the three months ended March 31, 2025, compared to $18 thousand in 2024[215]. - The company has a net cash decrease of $987 thousand for the three months ended March 31, 2025, compared to a decrease of $672 thousand in 2024[213]. - The company believes that the funds from the Pre-Paid Purchase agreements are sufficient to meet its working capital needs for the next 12 months[202]. Strategic Focus and Market Outlook - The global employee experience market is projected to grow at a 20% CAGR, presenting significant opportunities for the company to expand its market presence[188]. - The company is focused on AI-driven innovation, market expansion, and financial discipline to ensure long-term profitability and growth[176]. Financing and Agreements - The company entered into a SPA with Avondale to issue and sell up to $20,000 thousand of Pre-Paid Purchase agreements, with the initial tranche of $4,200 thousand received on April 8, 2025[202]. - The company has not provided any cash flows from financing activities during the three months ended March 31, 2025[216]. Accounting and Compliance - CXApp is classified as an emerging growth company and has elected to take advantage of the extended transition period for complying with new or revised accounting standards[225]. - The financial statements of CXApp may not be comparable to those of companies that comply with new or revised accounting standards due to the extended transition period[225]. - The decision to not opt out of the extended transition period for accounting standards compliance is irrevocable[225].

Product and Technology - CXApp's flagship product, the CXAI Platform, integrates AI-driven tools to enhance employee productivity and engagement [25] - CXApp has filed 37 patents, with 17 granted, to protect its innovative technologies in employee experience solutions [36] - CXApp's platform aims to create a seamless and engaging workplace experience, leveraging AI-driven personalization and real-time insights [39] - The company plans to integrate AI capabilities into its product offerings, which may incur substantial costs and present competitive risks [150] - The company is expanding its AI-driven capabilities with a generative AI analytics platform to enhance workplace decision-making [214] Market Trends - The digital workplace market was valued at $27.4 billion in 2022 and is projected to grow to $90.5 billion by 2030, reflecting a compound annual growth rate (CAGR) of 21.4% [40] - The global virtual events market is projected to expand at a CAGR of 21.4% from 2022 to 2030, indicating a growing demand for collaboration tools [41] - The occupancy analytics market in commercial office space is expected to rise from $2.17 billion in 2019 to $5.73 billion by 2024, growing at a CAGR of 21.5% [43] - The global employee experience market is projected to grow at a 20% CAGR, providing strong growth opportunities for the company [218] Financial Performance - The company incurred recurring net losses of approximately $19.4 million and $53.6 million for the fiscal years ended 2024 and 2023, respectively [80] - Revenue growth is dependent on increasing sales to existing customers and acquiring new customers, which may be limited by competition and market conditions [88] - Recurring revenue increased to 87% from 78%, reflecting a successful transition to a recurring revenue model [214] - Total operating expenses decreased to $19,598 thousand from $58,204 thousand, indicating effective cost optimization initiatives [214] - Cash and cash equivalents at year-end were $4,880 thousand, with an additional $3,500 thousand available from a Securities Purchase Agreement [213] Customer Base and Competition - CXApp's customer base includes Fortune 1000 enterprises across various industries, enhancing its market presence and revenue potential [50] - The company faces competition from specialized SaaS providers and large technology-driven entrants like Microsoft and Cisco, which are integrating employee experience offerings [45] - The top three customers accounted for approximately 25% and 22% of gross revenue during the years ended December 31, 2024 and the period from March 15, 2023 to December 31, 2023, respectively [77] - The company relies on a limited number of key customers, with one customer accounting for 10% of gross revenue in 2024 and another for 12% in 2023 [77] Risks and Challenges - The company is subject to risks associated with early-stage and emerging growth companies, including potential difficulties in obtaining financing and integrating acquisitions [60] - The company may require additional cash financing to support growth, and failure to secure such financing could limit operational capabilities [90] - Delays in collecting receivables could adversely affect cash flow and working capital, impacting overall business operations [91] - The company faces significant price competition, which may force it to reduce prices and impact profitability [156] - The company faces risks related to cybersecurity threats that could disrupt operations and adversely affect revenues and profitability [144] Regulatory and Compliance - The company is required to comply with SEC and Nasdaq regulations, which increases operational costs and may affect its ability to attract qualified board members [129] - The evolving regulatory landscape regarding data practices may impose burdens on the company's operations and profitability [174] - The company is subject to data protection regulations such as GDPR and CCPA, which could impose fines up to $7,500 per violation, potentially affecting service demand [176] - The uncertain regulatory environment may inhibit customer data sharing, affecting the company's service utilization [178] Corporate Strategy and Governance - The company’s corporate strategy includes potential future acquisitions, which may require effective planning and management processes to integrate new operations [82] - The company has never declared or paid cash dividends and does not intend to do so in the foreseeable future, focusing on retaining funds for operations [204] - The Board of Directors actively oversees the company's information security program and evaluates current cybersecurity policies [195] - The company has implemented a risk management program aligned with ISO 27001 and SOC 2 frameworks to address cybersecurity risks [186] Stock and Market Performance - The market price of the company's common stock may be volatile, influenced by various factors including operational results and strategic actions by competitors [108] - The company has experienced a sustained depression in its stock price from October to December 2023, which could impact its market capitalization and financial condition [123] - Future sales of common stock may cause substantial dilution to existing shareholders, potentially harming the market price [117] - The trading market for the company's common stock relies on research and reports from analysts, and any negative evaluations could lead to a decline in stock price [116]

Financial Results - The company announced its financial results for Q4 2024 and the fiscal year ended December 31, 2024 during a conference call on April 3, 2025[6]. - The earnings press release and presentation are attached as exhibits to the current report, providing detailed financial results[16]. Restatement and Accounting Deficiencies - The company identified technical accounting deficiencies in previously issued financial statements for the quarters ended June 30, 2024, and September 30, 2024, leading to a restatement of those financials[7]. - The restatement does not reflect changes in business performance, revenue recognition, or operational execution, indicating core financial results remain unchanged[7]. - A deficiency was identified in the accounting for a convertible debt instrument, which was not in accordance with ASC 815, necessitating a revision of its accounting treatment[9]. - The restated financial statements did not impact the company's liquidity, cash flows, or operating expenses for the affected periods[13]. - The company plans to provide further specifics on deficiencies in internal control over financial reporting and its remediation plan in the upcoming Restatement Filing[14]. Internal Control and Compliance - The company has acknowledged a material weakness in its internal control over financial reporting[12]. - The company is classified as an emerging growth company under the Securities Act[3]. Legal and Financial Adjustments - The company recorded an accrual for legal expenses that was subsequently adjusted to reflect the actual amount due, indicating a prior understatement[8].

Financial Data and Key Metrics Changes - The company achieved double-digit ARR growth, supported by six major logo renewals in Q4, indicating strong customer satisfaction and product value [51] - Subscription revenue accounted for 87% of total revenue, up from 78% in 2023, driving a gross margin of 82% compared to 78% last year [52] - The net retention rate reached 100%, significantly up from 73% in 2023, showing reduced churn and expansion within the existing customer base [52] - Q4 revenue was $1.66 million, down slightly compared to Q4 of 2023, while gross profit increased to $1.43 million [53] - Full-year revenue slightly declined year over year, but subscription revenue grew 10% year-over-year, totaling over $6.2 million [58] Business Line Data and Key Metrics Changes - The company completed the transformation to a single code base with Sky 1.0%, enabling feature upgrades and stability across all applications [44] - A significant expansion customer achieved over 100% increase in their ARR, indicating strong growth potential [45] - The Sky Kiosk product has been deployed with a large technology company in Silicon Valley, enhancing the return-to-office experience [47] Market Data and Key Metrics Changes - There was a 34 basis points increase in return-to-office across industries from 2023 to 2024, reflecting a growing trend in in-office usage [21] - Employee satisfaction and productivity rates are relatively lower across working models, highlighting the need for improved employee experiences [23] Company Strategy and Development Direction - The company is focused on investing in Agentech AI to reshape the market for employee experiences, positioning itself as a pioneer in this new software category [11] - The strategy includes enhancing AI capabilities for deeper product stickiness and maintaining tight cost discipline while investing in long-term growth [63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, anticipating significant expansion demand from existing customers and new enterprise clients in 2025 [72] - The company aims to leverage cutting-edge AI technology to enhance productivity, engagement, and efficiency in the enterprise [71] Other Important Information - The company has filed an extension for its 10K and plans to file before the extension deadline [4] - The company is preparing for an annual investor day in May 2025 to provide further details on new product offerings and customer case studies [73] Q&A Session Summary Question: Insights on strategic initiatives and partnerships - Management indicated a focus on building AI capabilities and investing in tools, with a positive outlook for the company [75] Question: Why wait until earnings to post updates - Management acknowledged the need for improved communication and plans to provide more updates leading up to the investor meeting in May [77] Question: Future challenges and opportunities - Management highlighted competition from large companies but emphasized their unique differentiation in user experience and partnership approach with clients [79][80]

Financial Data and Key Metrics Changes - The company achieved double-digit ARR growth, supported by six major logo renewals in Q4, indicating strong customer satisfaction and product value [51] - Subscription revenue accounted for 87% of total revenue, up from 78% in 2023, driving a gross margin of 82% compared to 78% last year [52] - The net retention rate reached 100%, significantly up from 73% in 2023, showing reduced churn and expansion within the existing customer base [52] - Q4 revenue was $1.66 million, down slightly compared to Q4 of 2023, while gross profit increased to $1.43 million [53] - Full-year revenue slightly declined year over year, but subscription revenue grew 10% year-over-year, totaling over $6.2 million [58] Business Line Data and Key Metrics Changes - The company completed the transformation to a single code base with Sky 1.0%, enabling feature upgrades and stability across all applications [44] - A significant expansion customer achieved over 100% increase in their ARR, indicating strong growth potential [45] - The Sky Kiosk product has been deployed with a large technology company in Silicon Valley, enhancing the return-to-office experience [47] Market Data and Key Metrics Changes - There was a 34 basis points increase in return-to-office across industries from 2023 to 2024, reflecting a growing trend in in-office usage [21] - Employee satisfaction rates across working models remain relatively low, indicating a need for improved employee experiences [23] Company Strategy and Development Direction - The company is focused on investing in Agentech AI to reshape the market for employee experiences, positioning itself as a pioneer in this new software category [11][12] - The strategy includes enhancing AI capabilities for deeper product stickiness and maintaining tight cost discipline while investing in long-term growth [63] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2025 being a banner year, anticipating significant expansion demand from existing customers and new enterprise clients [72] - The company is well-prepared to deliver on commitments to shareholders and clients as the era of agentic AI for employee experiences is realized [72] Other Important Information - The company has filed an extension for its 10K and plans to file before the extension deadline [4] - The company is collaborating with Gartner on thought leadership regarding the evolution of human interaction with AI [30] Q&A Session Summary Question: Insights on strategic initiatives and partnerships - The company will continue to build out AI capabilities and invest in tools, with a positive outlook for the market of employee experiences [75] Question: Why wait until earnings to post updates - Management acknowledged the need for improved communication and plans to provide more updates leading up to the investor shareholder meeting in May [77] Question: Future challenges and opportunities - The company competes with large enterprises but differentiates itself through engaging UI and full-stack solutions, emphasizing the importance of partnerships with clients [79][80]

Financial Data and Key Metrics Changes - The company reported revenue of $1.9 million for Q3 2024, marking an 8% increase from $1.77 million in Q3 2023 [43][50] - The net retention rate stands at over 106%, indicating strong client retention and upselling success, a 43% increase year-over-year [51] - The company achieved a gross margin of 80% and an 18% growth in recurring revenue [43][44] Business Line Data and Key Metrics Changes - The company has transitioned to a subscription-based revenue model, with recurring revenue increasing to 88% from 80% year-over-year [50] - The first paid customer for the Skyview analytics platform was secured this quarter, indicating traction in new product offerings [45][59] Market Data and Key Metrics Changes - The return to office (RTO) mandates have increased, yet employee engagement remains low, with Gallup reporting significant productivity losses due to disengaged employees [11][13] - The company is positioned to address the challenges of hybrid work environments through its AI-driven solutions [19][24] Company Strategy and Development Direction - The company is focused on becoming an AI-first organization, leveraging Agentic AI to enhance workplace experiences [20][22] - Partnerships with major cloud providers like AWS, Google Cloud, and Microsoft Azure are crucial for scaling operations and enhancing service delivery [29][62] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of employee engagement and the need for innovative tools to improve workplace experiences [12][18] - The company is optimistic about its growth trajectory, driven by advancements in AI and cloud partnerships [60][74] Other Important Information - The company has successfully launched its platform on the AWS Marketplace, following a previous launch on Google Cloud [44][61] - A new product, Sky Kiosk, was introduced to enhance real-time space availability and booking capabilities [38][39] Q&A Session Summary Question: How has new management impacted growth at SKY? - Management noted that new leadership has positively influenced growth, particularly through financial strategy and partnerships [67][68] Question: Could you partner with Palantir to implement AIP? - Management acknowledged the suggestion but emphasized a focus on commercial solutions rather than government contracts [69] Question: Can you detail how your partnership with Google Cloud is progressing? - Management reported strong collaboration with Google Cloud, leading to enhanced product offerings and market engagement [71][72]