CxApp Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; filed May 31, 2024. CXApp provides SaaS workplace-experience software, including employee applications, indoor mapping, augmented reality and AI-based analytics. Amounts below are in U.S. dollars; financial-statement amounts are in thousands unless noted.
Financial performance and position
| Metric | Q1 2024 | Prior-period context |
|---|---|---|
| Revenue | $1.818 million | $1.962 million pro forma Q1 2023; down $144,000 (about 7%). The reported 2023 statements split results between predecessor and successor periods after the March 2023 business combination. |
| Subscription revenue | $1.588 million; 87% of revenue | Subscription mix was 74% in the filing’s stated prior comparison. |
| Gross profit / margin | $1.491 million / 82% | Margin was 75% for the short 2023 successor period and 70% for the 2023 predecessor period; these periods are not directly comparable. |
| Operating expenses / operating loss | $5.078 million / $(3.587) million | Management reports operating expenses down $1.182 million against its combined 2023 comparison, primarily from lower G&A and amortization. |
| Net loss / diluted loss per share | $(5.170) million / $(0.34) | 2023 reported periods are not directly comparable; the filing’s unaudited pro forma Q1 2023 net loss was $6.365 million. |
| Adjusted EBITDA | $(2.281) million | Non-GAAP measure; not a substitute for GAAP results or cash flow. |
| Cash and cash equivalents | $5.603 million | Down from $6.275 million at December 31, 2023. |
| Operating cash flow | $(0.650) million | Capital expenditures were $18,000; investing cash use was $18,000. |
| Liquidity | Current assets $7.805 million; current liabilities $13.085 million; working-capital deficit $5.280 million | Working-capital deficit was $1.287 million at year-end 2023. |
| Debt | Note payable carrying amount $3.373 million; principal $3.885 million | Unsecured note bears 10% interest, matures by December 2024, and includes a 22% default rate. The stated principal includes a substantial original issue discount and fees. |
Changes, outlook and material items
- Revenue declined from the filing’s pro forma 2023 comparison, mainly because professional-services revenue fell as the company shifted toward a SaaS model. Higher subscription mix and an 82% gross margin were reported.
- In January, CXApp reduced global headcount by about 20% to conserve cash. It also negotiated a 50% reduction in D&O insurance premiums.
- Google Cloud agreed to a go-to-market partnership and Google Marketplace listing. The platform was expected to be first deployed in summer 2024; the filing provides no quantified revenue guidance.
- On May 22, 2024, the company entered an equity-line agreement for up to $10 million, with an initial $2.5 million draw in Q2. Management said available cash and financing were expected to support liquidity needs for at least 12 months from issuance of the financial statements. This remains dependent on execution and access to the financing.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing recurring losses and operating cash use, while stating that financing and cost actions were expected to mitigate the concern. No assurance of profitability or sufficient future revenue was provided.
- Warrant remeasurement caused a $1.472 million non-cash loss in Q1 and increased the warrant liability from $1.683 million to $3.155 million. The company also reported a $36.056 million goodwill impairment in its 2023 annual evaluation; it recorded no impairment in Q1 2024.
- Nasdaq notified the company on April 18 that its late 2023 Form 10-K caused noncompliance with timely-filing rules. The company said it intended to submit a compliance plan; the 10-K was subsequently filed May 24. Verify Nasdaq’s current compliance status.
- Disclosure controls and procedures were deemed ineffective as of March 31, 2024, due to a material weakness referenced in the 2023 Form 10-K. The filing reports no material litigation currently pending and no material changes to the previously disclosed risk factors.
Important facts for investors to verify
- Whether the $2.5 million initial equity-line draw was completed, the remaining availability and terms of the facility, and whether additional financing will be needed.
- Cash burn, collections, deferred-revenue conversion and the company’s ability to meet the December 2024 note maturity and any lender redemption demands.
- Nasdaq’s current listing-compliance status and progress remediating the material weakness in disclosure controls.
- Commercial results from the Google partnership, including platform launch timing, customer adoption and any measurable revenue contribution.
- Comparability of reported periods: the 2023 business-combination accounting created separate predecessor and successor periods, and the pro forma comparison is not actual combined historical results.