CXApp Inc. — Form 10-Q Summary
Business context and reporting period
For the quarter ended June 30, 2023, CXApp reported on its workplace-experience software business, including SaaS, indoor mapping, employee applications, augmented reality and analytics. The March 14, 2023 business combination created a new accounting basis: the successor period began March 15, 2023, so comparisons with predecessor periods are not fully comparable.
Financial results and liquidity
Amounts below are in thousands of dollars, except per-share data. Second-quarter 2023 results are compared with second-quarter 2022 predecessor results.
| Metric | Q2 2023 | Q2 2022 |
|---|---|---|
| Revenue | $1,915 | $2,149 |
| Gross profit / margin | $1,435 / 75% | $1,609 / 75% |
| Operating expenses | $5,118 | $12,455 |
| Operating loss | $(3,683) | $(10,846) |
| Net loss | $(14,730) | $(11,034) |
| Basic and diluted loss per share | $(1.05) | Not clearly provided for this period |
| Adjusted EBITDA, non-GAAP | $(2,859) | $(4,047) |
- Management attributed the 11% revenue decline to sales timing and booking levels. Operating expenses fell by $7,337, reflecting cost reductions and the prior-year $5,540 goodwill impairment.
- Q2 other expense was $12,028, principally a noncash $12,040 loss from revaluing warrant liabilities. This substantially contributed to the larger net loss despite lower operating expenses.
- For March 15–June 30, 2023, operating cash use was $6,598; investing cash inflow was $9,977, including $10,003 of cash acquired in the business combination; financing cash use was $328. The filing does not provide a separate Q2 cash-flow figure.
- June 30 cash was $4,543, versus $6,308 at December 31, 2022; the reporting-basis change limits direct comparison. Working capital was in deficit by $12,126. Current liabilities included $13,003 of warrant liabilities; lease obligations totaled $706. No conventional borrowing balance is clearly identified on the balance sheet.
- Total assets were $72,289, including $44,200 of acquisition goodwill and $20,056 of net intangible assets. Total liabilities were $21,409.
Material changes, outlook and risks
- The March 2023 business combination was recorded using acquisition accounting, with approximately $69,928 of consideration and preliminary goodwill of $44,200. Purchase-price allocations remained subject to measurement-period adjustments.
- Management reported reducing costs after the combination. No numeric revenue, earnings or cash-flow guidance is provided.
- The company reported recurring losses and operating cash use that raise substantial doubt about its ability to continue as a going concern. Management said its plans, liquidity and potential access to capital markets were expected to support operations for at least 12 months from issuance, but cautioned that there is no assurance it will generate sufficient revenue or obtain financing.
- Subsequent to quarter-end, 435,000 warrants were exercised at $11.50, producing approximately $5,003 of proceeds; the company also reported cash of approximately $8,490 as of August 1, 2023. On July 14, it agreed to exchange 2 million public warrants for 600,000 common shares.
- Key risks include continued losses, liquidity and financing needs, customer booking and project timing, and macroeconomic conditions affecting customer investment. The filing reports no material litigation and no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether recurring revenue and bookings improve after the reported sales-timing-related decline.
- Cash burn, working-capital needs and the availability and terms of any additional financing.
- The scale and potential dilution from outstanding warrants, including the post-quarter exercises and warrant exchange, and the resulting warrant-liability remeasurement volatility.
- Final acquisition accounting estimates, including goodwill and acquired intangible-asset valuations, and the assumptions supporting management’s going-concern assessment.