Cxapp Inc. (CXAI) 2025 Annual Report (10-K) Summary
Business Context and Reporting Period
Company: Cxapp Inc. (CXAI)
Reporting Period: Fiscal Year Ended December 31, 2025
Business Overview: CXApp provides an AI-powered, mobile-first SaaS platform (CXAI Platform) designed to enhance employee experience, optimize hybrid workplace management, and streamline operations through location intelligence and analytics. The company serves Fortune 1000 enterprises across technology, financial services, healthcare, and corporate real estate sectors.
Operational Status: The company is a non-accelerated filer and smaller reporting company. It operates as a single reporting unit with headquarters in Palo Alto, CA, and subsidiaries in Canada and the Philippines.
Key Financial Metrics (Year Ended Dec 31, 2025)
| Metric | 2025 (in thousands) | 2024 (in thousands) |
|---|---|---|
| Total Revenue | $4,583 | $7,142 |
| Gross Profit | $4,005 | $5,857 |
| Gross Margin | 87.4% | 82.0% |
| Operating Loss | $(17,577) | $(13,741) |
| Net Loss | $(13,473) | $(19,408) |
| Cash and Cash Equivalents | $11,101 | $4,880 |
| Working Capital Surplus | $7,075 | $(4,496) |
| Convertible Debt (Fair Value) | $12,659 | $4,512 |
Revenue Composition (2025): 98% of revenue was derived from recurring SaaS subscriptions, up from 87% in 2024. Professional services revenue declined 91% year-over-year as the company shifted to a pure SaaS model.
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 36% to $4.6 million, primarily driven by a 28% drop in subscription revenue due to customer churn in healthcare and retail verticals, and a 91% drop in professional services revenue.
- Margin Expansion: Despite lower revenue, gross margin improved by 500 basis points to 87.4% due to the elimination of lower-margin professional services and hardware sales, alongside infrastructure cost optimization.
- Goodwill Impairment: The company recorded a non-cash goodwill impairment charge of $2.1 million in 2025, compared to none in 2024, triggered by a decline in market capitalization and share price.
- Net Loss Improvement: Net loss narrowed by approximately $5.9 million year-over-year. This improvement was largely driven by a $7.7 million reduction in the change in fair value of derivative liabilities (a non-cash gain) and lower interest expenses, partially offset by higher operating expenses.
- Liquidity Position: Cash balances increased significantly from $4.9 million to $11.1 million, supported by financing activities including convertible debt issuances and an at-the-market equity offering.
Guidance, Outlook, Risks, and Unusual Items
Management Commentary & Outlook: Management emphasizes a strategic pivot to a high-margin, recurring revenue SaaS model. Future growth is expected to be driven by AI-native product innovations (Agentic AI), expansion into new verticals, and strategic partnerships (e.g., TouchSource announced in Feb 2026). Management believes current liquidity is sufficient for the next 12 months.
Key Risks:
- Nasdaq Delisting Risk: The company received notice from Nasdaq regarding non-compliance with the $1.00 minimum bid price requirement. It has been granted an extension until September 7, 2026, to regain compliance. Failure to do so could result in delisting.
- Liquidity & Going Concern: The company has a history of operating losses and negative operating cash flows. While management has plans to address this, continued losses raise substantial doubt about the ability to continue as a going concern without additional financing.
- Customer Concentration: The top three customers accounted for 40% of gross revenue in 2025, up from 24% in 2024.
- Internal Controls: Material weaknesses in internal controls identified in 2024 (tax accounting, expense accruals, derivative valuation) were remediated as of December 31, 2025.
Unusual Items:
- Derivative Liability Gains: Significant non-cash gains ($4.5 million) from the change in fair value of derivative liabilities (warrants and convertible debt) materially impacted the net loss calculation.
- Convertible Debt: The company entered into multiple Securities Purchase Agreements (SPAs) with Avondale Capital and Streeterville Capital, issuing convertible debt that is measured at fair value, leading to volatility in "Other Income/Expense."
Investor Verification Checklist
- Nasdaq Compliance: Verify the current stock price and the company's progress toward meeting the $1.00 minimum bid price requirement by the September 7, 2026 deadline.
- Revenue Quality: Assess the sustainability of the 98% recurring revenue mix and investigate the specific causes of customer churn in healthcare and retail sectors.
- Liquidity Runway: Review the terms of the Avondale and Streeterville SPAs to understand conversion triggers, dilution risks, and the remaining capacity for future funding.
- Goodwill Valuation: Scrutinize the assumptions used in the goodwill impairment test (discount rates, growth projections) given the sensitivity of the valuation to market conditions.
- Internal Controls: Confirm that the remediation of 2024 material weaknesses remains effective and that no new control deficiencies have emerged.