Cxapp Inc. (CXAI) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended March 31, 2026. Cxapp Inc. operates a SaaS platform focused on intelligent enterprise workplace experiences, leveraging AI for digital transformation in hybrid work environments. The company is classified as a non-accelerated filer and a smaller reporting company.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $950,000 | $1,224,000 |
| Gross Profit | $790,000 | $1,074,000 |
| Gross Margin | 83.2% | 87.7% |
| Net Loss | $(4,003,000) | $(1,616,000) |
| Operating Cash Flow | $(2,210,000) | $(979,000) |
| Cash and Equivalents (End of Period) | $12,342,000 | $3,893,000 |
| Convertible Debt | $10,825,000 | $12,659,000 |
| Warrant Liability | $673,000 | $1,051,000 |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased by 22.4% ($274,000) primarily due to a strategic shift away from non-recurring professional services toward a recurring SaaS model. Subscription revenue now represents 98% of total revenue.
- Increased Net Loss: Net loss widened to $4.0 million from $1.6 million. This was driven by a significant reduction in "Other Income" (specifically a $2.0 million decrease in gains from the change in fair value of derivative warrant liabilities) and higher operating expenses.
- Capital Structure Changes: The company issued 15.8 million shares to extinguish $3.1 million of convertible debt and raised $2.5 million via an At-The-Market (ATM) offering. Additionally, a new $40 million Securities Purchase Agreement (SPA) with Avondale Capital was entered into, with $1.05 million drawn in the quarter.
- Liquidity Improvement: Despite negative operating cash flow, cash balances increased by $1.2 million due to financing activities.
Outlook, Risks, and Management Commentary
- Going Concern: Management notes that recurring losses and negative operating cash flows raise substantial doubt about the company's ability to continue as a going concern. However, they believe existing liquidity, cost reduction plans, and access to external financing (including the new SPA and ATM program) will meet obligations for at least 12 months.
- Strategic Focus: Management is prioritizing AI-first product innovation, expanding high-value enterprise subscriptions, and enforcing cost discipline to improve margins.
- Risks: Key risks include dependence on external financing sources subject to market conditions (stock price, trading volume), potential impairment of goodwill (though none was recorded in Q1 2026), and macroeconomic uncertainties affecting enterprise spending.
- Subsequent Events: Following the quarter end, the company converted a portion of Avondale Prepaid Purchase #2 notes into approximately 11.4 million shares of Class A common stock.
Investor Verification Checklist
- Financing Runway: Verify the remaining capacity under the new $40 million Avondale SPA and the effectiveness of the S-3 shelf registration for future ATM sales.
- Debt Conversion Terms: Review the specific conversion prices and floor prices for the Avondale Pre-Paid Purchases, as these significantly impact potential dilution.
- Revenue Quality: Confirm the sustainability of the 98% subscription revenue mix and monitor churn rates among Fortune 1000 clients.
- Warrant Liability Volatility: Monitor the fair value of warrant liabilities, as fluctuations create significant non-cash volatility in the net loss figure.
- Going Concern Mitigation: Assess the execution of cost-cutting measures and the actual timing of future capital raises to ensure the 12-month liquidity projection holds.