CXApp Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2023; filed November 14, 2023. Financial amounts below are in USD millions unless stated otherwise. The March 14, 2023 business combination created a new accounting basis, so successor and predecessor periods are not fully comparable.
Business context and results
CXApp provides a SaaS workplace-experience platform, including employee applications, indoor mapping, positioning, augmented reality, and analytics. The company completed its business combination on March 14, 2023, acquiring the Enterprise Apps Business.
| Metric | Q3 2023 | Q3 2022 |
|---|---|---|
| Revenue | $1.770 | $1.742 |
| Gross profit / margin | $1.412 / 80% | $1.243 / 71% |
| Operating expenses | $5.641 | $10.759 |
| Operating loss | $(4.229) | $(9.516) |
| Other income (expense), net | $5.253 | $(1.413) |
| Net income (loss) | $1.441 | $(10.929) |
| Basic and diluted EPS | $0.13 | Not clearly provided |
Q3 revenue increased about 1.6%. Management attributed growth to new customers booked in prior quarters and service upgrades. Subscription revenue was $1.411 million and professional-services revenue was $0.359 million. Management attributed the higher gross margin to a more efficient cost structure and a greater share of subscription revenue. Lower operating expenses primarily reflected professional fees incurred in the prior-year period.
Cash, liquidity, and capital structure
- At September 30, cash and cash equivalents were $7.179 million, working capital was $1.216 million, and total current liabilities were $8.048 million.
- From March 15 through September 30, 2023, operating cash use was $8.937 million. This included a $4.666 million reduction in accrued liabilities, primarily payment of merger-related transaction liabilities. The period’s net loss was $10.531 million.
- Cash at period-end reflects, among other items, $10.003 million of cash acquired in the business combination and $5.002 million of cash proceeds from warrant exercises. These are not recurring operating cash sources.
- Total liabilities were $9.718 million, including a $2.103 million warrant liability and $0.594 million of operating lease obligations. The filing does not clearly present conventional borrowing debt; a $0.328 million related-party promissory note was repaid during the successor period.
- There were 15,254,389 Class A shares outstanding at September 30. In addition, 21.032 million warrants remained outstanding, alongside 0.985 million options and 0.821 million restricted stock units; potential dilution is subject to applicable terms and conditions.
Material changes, unusual items, and outlook
- The Q3 net profit depended on a $5.220 million non-cash gain from a change in fair value of warrant liabilities. For the March 15–September 30 successor period, the corresponding fair-value change was a $5.134 million loss; these items can materially affect reported earnings.
- The business combination was recorded using acquisition accounting, including $44.200 million of goodwill and $19.359 million of net intangible assets. Purchase-price allocations remained provisional; management reported no goodwill impairment indicators at September 30.
- Management reported adjusted EBITDA of $(2.749) million for Q3 and $(5.977) million for the March 15–September 30 successor period. Adjusted EBITDA is a non-GAAP measure and should not be treated as operating cash flow or a substitute for GAAP results.
- On October 3, 2023, the company reduced North American headcount; management estimated savings of approximately $0.300 million per quarter. Management said the action would improve cash burn and provide cash runway for the next twelve months and beyond.
- The filing states that recurring losses and operating cash use raise substantial doubt about the company’s ability to continue as a going concern. Management cited cost reductions and potential access to equity financing, but acknowledged there can be no assurance of adequate funds for the next twelve months.
- No formal revenue or earnings guidance is provided. Management cited uncertainty around customer demand, project timing, macroeconomic conditions, and the availability and terms of future financing. No material litigation was reported as pending; the filing says risk factors were not materially changed from the latest annual report.
Important facts for investors to verify
- Cash runway and subsequent operating cash burn, particularly after separating recurring cash generation from acquisition cash and warrant proceeds.
- Whether the announced cost savings are realized and whether the company can improve revenue growth, bookings, and renewals.
- The fair-value sensitivity and potential share dilution from outstanding warrants, options, and restricted stock units.
- Final purchase-price allocation, goodwill recoverability, and the assumptions supporting the acquired intangible-asset values.
- Management’s going-concern assessment and the availability, timing, and terms of any additional financing.