10-Q: CXApp Inc. Reports Q1 2025 Results: Revenue Declines Amid Shift to SaaS Model, Cost Optimization Efforts Underway

Sentiment:

Quarterly Report 20 May 2025 4:54 PM

CXApp Inc. experienced a decrease in revenue for Q1 2025, driven by a decline in professional services revenue, while strategically focusing on a transition to a full SaaS model and implementing cost optimization initiatives.

Capital raiseOn March 26, 2025, the company entered into a Securities Purchase Agreement (SPA) with Avondale Capital, LLC (Avondale), pursuant to which the Company may issue and sell up to $20,000 thousand of Pre-Paid Purchase agreements (Pre-Paid Purchases) in tranches over time.The initial Pre-Paid Purchase (Pre-Paid Purchase #1) included a $ 4,200 thousand Pre-Paid Purchase, structured with a $ 200 thousand original issue discount (OID) and $ 10 thousand in transaction-related fees, resulting in net proceeds of $ 3,990 thousand, received on April 8, 2025.

Worse than expectedRevenue decreased by $594 thousand year-over-year, totaling $1.224 million.The company reported a net loss of $1.616 million for the quarter.

Summary

CXApp Inc. reported a net loss of $1.616 million for the three months ended March 31, 2025.
Revenue decreased to $1.224 million, compared to $1.818 million for the same period in 2024, primarily due to a decline in professional services revenue.
The company's gross profit margin increased to 88% from 82% in the prior year, driven by higher-margin AI-enabled services.
Operating expenses decreased to $4.819 million from $5.078 million, reflecting cost management initiatives.
The company has access to an additional $3.990 million from a Securities Purchase Agreement entered into on March 26, 2025.
CXApp is focused on AI-driven innovation, market expansion, and financial discipline to drive sustainable growth.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While cost optimization and a shift to SaaS are positive, declining revenue and a net loss temper the outlook. The secured funding provides some reassurance.

Positives

Gross profit margin increased to 88% from 82% due to higher-margin AI-enabled services.
Operating expenses decreased by $259 thousand due to cost management initiatives.
Subscription-based revenue increased to 99% of total revenue, indicating a successful transition to a SaaS model.
The company secured additional funding of $3.990 million through a Securities Purchase Agreement.

Negatives

Revenue decreased by $594 thousand due to a decline in professional services revenue.
The company reported a net loss of $1.616 million for the quarter.
The company had a working capital deficiency of approximately $4.017 thousand as of March 31, 2025.
Disclosure controls and procedures were not effective as of March 31, 2025.

Risks

The company's ability to continue as a going concern is dependent on its ability to further implement its business plan.
Macroeconomic uncertainties could impact enterprise demand for hybrid workplace solutions.
The company's disclosure controls and procedures were not effective as of March 31, 2025.
The company has a working capital deficiency of approximately $4.017 thousand as of March 31, 2025.

Future Outlook

CXApp aims to deliver scalable, data-driven solutions that address the evolving needs of hybrid workplaces by leveraging its AI-driven platform and expanding its enterprise footprint.

Management Comments

At CXApp, we are at the forefront of transforming the modern workplace through AI-powered solutions that enhance employee experience, operational efficiency, and workplace intelligence.
Our strategic focus is to drive sustainable growth, scale our enterprise customer base, and deliver innovative solutions that leverage data and artificial intelligence to optimize workplace experiences.
Our leadership team remains committed to balancing innovation with financial discipline, ensuring that CXApp is positioned for long-term profitability and strategic growth.

Industry Context

The global employee experience market is projected to grow at a 20% CAGR, creating substantial opportunities for CXApp to expand its footprint in the enterprise workplace solutions market.

Comparison to Industry Standards

The document does not contain specific comparisons to industry standards or benchmarks.
Without specific data points, it's challenging to assess CXApp's performance against industry peers like Microsoft (Teams, Viva), Zoom, WeWork, or other workplace experience platform providers.
A detailed competitive analysis would require comparing metrics such as customer acquisition cost, churn rate, average revenue per user (ARPU), and market share growth against these industry players.

Stakeholder Impact

Shareholders may be concerned about the revenue decline and net loss.
Employees may be affected by strategic workforce realignments.
Customers may benefit from the focus on AI-driven innovation and improved services.
Suppliers and creditors may be impacted by the company's cost optimization efforts.

Next Steps

Expanding AI-native capabilities and integrating advanced analytics.
Targeting new verticals and strengthening partnerships with cloud providers.
Ongoing cost optimization, customer retention strategies, and sales efficiency initiatives.

Key Dates

Date	Description
2022-09-25	Agreement and Plan of Merger entered into by Inpixon, KINS, CXApp, and KINS Merger Sub Inc.
2023-03-10	KINS stockholders approved the Incentive Plan.
2023-03-14	Transaction closed and KINS changed their name to CXApp Inc.
2023-12-15	Entered into a note purchase agreement with Streeterville Capital, LLC.
2024-02-06	Granted 705,000 stock options to employees and consultants.
2024-03-14	Directors & Officers (D&O) insurance agreement with Oakwood D&O Insurance became effective.
2024-05-22	Entered into a Securities Purchase Agreement with Streeterville Capital, LLC.
2024-08-26	Approved the award of 230,000 options to purchase common stock to Joy Mbanugo.
2024-08-29	Granted 473,935 restricted stock units to directors of the Company.
2024-09-30	Issued an unsecured convertible Pre-Paid Purchase #2 to Streeterville.
2024-12-09	Issued an unsecured convertible Pre-Paid Purchase #3 to Streeterville.
2025-01-17	The Company paid down the entire Streeterville note.
2025-03-26	Entered into a Securities Purchase Agreement with Avondale Capital, LLC.
2025-03-31	End of the quarter for which financial results are reported.
2025-04-08	Received net cash proceeds of $3.990 thousand from the initial tranche of the Pre-Paid Purchase Agreement with Avondale.
2025-05-15	Date as of which there were 20,776,997 shares of Class A common stock issued and outstanding.
2025-05-20	Date of report filing.

Keywords

CXApp, SaaS, AI, revenue, profit, operating expenses, Securities Purchase Agreement, Avondale Capital, subscription, workplace, financial results

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