CXApp Inc (CXAI) 2025 Q3 法說會逐字稿

Greetings. Welcome to the CXAI Third quarter 2025 earnings call. At this time, (Operator Instruction). I would like to turn the call over to your host, Khurram Sheikh, Chairman and CEO of CXAI.

Thank you, operator. Good afternoon, everyone, and thank you for joining us. I'm Khurram Sheikh, Chairman and CEO of CXApp Inc. Trading on NASDAQ under the symbol CXAI pronounced sky.

Also joining me on this call is our CFO Joy Mbanugo.

And before we begin, please note our forward-looking statements as outlined in our.

Safe harbor, statements as outlined in our disclosures. We're also submitting our 10-Q which will be filed with the SEC, and you'll also see a press release that just got launched out there.

So let me talk about Sky.

People ask me the question, what does Sky actually do? And at Sky, we are defining the intelligent experience layer for the modern enterprise.

Our platform blends agentic AI, autonomous context-aware agents with spatial intelligence that understands how people actually use the workplace.

This combination turns data into decisioning and routine actions into automation.

We're not just another AI platform, we're the bridge between billions in corporate AI investment and the actual human experience of work.

When people ask what this guy actually do, here's my answer.

We transform office buildings, campuses, and digital workspaces into living, learning, and adaptive environments that think and act with you.

We now operate in 200+ cities across 50 countries serving over a million users.

And all of those users are using us in a very secure manner across all their campus environments integrating all the enterprise functions into one application.

I'm also proud of the great team we have. We have around 65 fellow Sky employees who are all based in multiple offices globally in the Bay Area where our headquarters is in Toronto, Canada, and in Manila.

And more than 70% of them are in R&D. It's a very technology focused company, and this tells you that our DNA is an innovation company.

So let's talk about, technology wise, what does this entail, and, we've been the leader in the first mobile app for this application of workplace experience in cloud first, and now we're AI native in terms of this deployment that we're embarking on with Sky 1.0 going to Sky 2.0. So, and I've shared the slides in the past, but I want to just reinforce the fact that we're building this as a platform. It's not a one-off application.

The sky apps go from all the way from your mobile device all the way to a kiosk or even larger. We'll talk about that today. Also be multi OS and be able to be adaptive. Our BTS behind the scenes is our rule engine, our brains behind the sky system that allows. Enterprise owners and users to control and manage the content as well as provide access control and create all the great things that will enable productivity at the workplace. I'm going to show you some great examples of that. And then finally, Sky View is our data analytics and ingestion engine that allows you to create your own dashboard, create your own analytics, and create the insights and. The outcomes that really matter at the end of the day, and all of this is hosted on the cloud. We're partnered with Google, as but we also enable things on AWS and and Azure, so we're multi-cloud, we're multi, multi-application across the board, and we're building this as a platform for scale.

So I want to talk about the market and what's happening in the market today and the market trends across this is a study done by McKinsey and it's very enlightening to see that across the Fortune 500 where we participate 88% of organizations say they can when they use AI they only don't scale it to the enterprise level. So although AI is being used by more than a large percentage of of enterprises, they're not using a scale. They have the tools but not the orchestration. That's where Sky comes in. Sky solves that execution GAAP by unifying workflows, analytics, and human experience into a single agenttic layer. It's what we call agentic orchestration, turning disconnected tools into intelligent systems that anticipate and act.

Think of a global bank with 40 offices worldwide. You already have Teams, Zoom, ServiceNow, and multiple space management tools, but no unified experience. Our agentic engine stitches those environments together so that when a team lead books a hybrid meetings in New York, the system automatically coordinates rooms, catering, visitor access, and Navy support across different time zones.

It's invisible, autonomous, and measurable.

Along with that you've seen what's happening in the environment. You see a lot of CEOs are mandating return to office and AI tool adoption, but employees are burned out and disengaged.

That's the leadership expectation versus workflow reality divide as executives everywhere are pushing to return to office mandate, employees crave flexibility. The result is policy friction.

Strike bridges that mandate to execution GAAP for major technology client in Silicon Valley. We used our platform to launch the new campus headquarters, right size their campus designs and footprint, allowing for colleague booking feature to allow selecting where and who they want to spend their day and providing an automated check-in process for their users via their internal badging system. This improved on-site attendance satisfaction scores as well as created higher employee engagement. That's productivity, collaboration, and sustainability all together. That's the beauty of Sky we enable all of these great capabilities and the outcomes are coming very clear now with our clients.

And you know this is not us just talking about it and the world is taking notice. This quarter Gardner named Sky as a representative vendor in the 2025 Market guide for workplace experience applications. Academy we helped define, by the way, we've been working with them for the last two years, educating them on the benefits of AI and the benefits of our capability to enable this transformation.

It's a validation that our combination of agentic AI and spatial intelligence isn't just visionary, it's essential to the future of work.

And you know we've been very happy to see this this guide come out. There's also more work coming out from Gartner and other analysts as we said in our first calls with you guys, this is going to be a new category called employee experiences, and I think the market is headed in that direction.

This last quarter, we were super busy also with lots of events and lots of things happening in the market. We amplified our ecosystem presence at the San Francisco Tech Week. We'll talk about that in a bit here. We were at WorkTech at the Meta headquarters in, Menlo Park in Palo Alto area on October 9th, and then we also attended the, CoreNet Global Summit in Anaheim. Across these events, one theme was constant.

AI in the workplace is no longer a pilot. It is a board level imperative.

So it's super important to recognize that as we talk to our ecosystem partners, our customers, our stakeholders, all of them are pretty clear that the bandwagon is everybody's gotta be on it and it's going to change the way we work, so, We're excited about, the events we were there's a lot of great new clients that came to us or existing clients were there. We hosted a number of networking events and, we discussed and debated and the reality is everybody wants our agenic air solution. They want it faster.

Another strategic collaboration that we announced, this week was, our collaboration with, a really cool company called Noro. We are thrilled about our collaboration with Noro. It's a pioneer in immersive telepresence. Together we're merging Sky's autonomous AI engine with Noro's life, life-size presence portals.

Imagine walking up to a wall in New York and speaking naturally face to face with a colleague in London with Sky's gentech AI automatically handling context, environment, and collaboration tools behind the scenes. That's how we're turning presence into intelligence.

For most of our global customers this partnership will allow hybrid project teams to occupy.

I mean, occupy in commace shared spaces in real time, seeing body language, maintaining eye contact, and ensuring digital work streams all orchestrated by Regenic AI.

That's how Sky makes distance disappear and hybrid work, and we're super excited about it. We're going to have, the first units being installed in our offices, Noro also has, locations already deployed in London and New York and in Atlanta and Chicago, and we're going to be taking to our clients. We're putting the roadmap together in terms of, the combined offering. It'll be available to clients beginning in Q1, but we're doing a lot of internal testing right now, so super excited by this opportunity, and Tomaso is a great partner, and I've known him for a while and super happy that we're working together now.

So, let me talk about other highlights on the product side.

Innovation continues to define Sky's edge. Our Sky 1.0 platform, saw major performance gains this quarter, cutting space, booking time by over 50%, enhancing colleague visibility through dynamic maps, delivering a cleaner, faster UI. And this is really important because a lot of our clients this last quarter were starting their RTO plans again, were re-engaging with their employees too, and they wanted something slicker, faster, and our team delivered. For example, one global client used the enhanced booking engine to manage more than 10,000+ deaths across five campuses. They reported a significant percent drop in scheduling conflicts in the order of 40% or so and a double-digit increase in employee satisfaction with hybrid coordination. So that's another example where as our solution, as you can see the, colleague booking where you can see the screens and the people and their images and also look at, the visual representation of all the things around them. It's super, amazing and interesting, and it creates that engagement layer to say, yeah, I really want to get back to the office. I really want to interact with these people and I really want to get my work done faster.

Now to enable that we also have, we've talked about a BTS which is our behind the scenes. Oh, by the way, before I go there, let me show you a video jumping ahead of, when I talked about this at the conference of the SF tech Week where we had Google as our invited guests as partners. But let me tell, share with you, something that I've said there.

Okay, I don't know if the video was accessible or not, but we're going to have it available on the on the platform.

Let me TRY to play it again actually with my volume one. Maybe that'll help.

That feature has become so important. Our customers said this is a must-have. You gotta have it. And by the way, we want pictures, and it's like a scramble screen of all these images like no we want to see them.

To see who they are, right? It's just human behavior. Desk booking is a self-created feature, meaning that there's no need for it if you're assigned desk, which we grew up with assigned desk. It was created because of the pandemic. So you create a new problem that has now made it difficult for an employee to get to the office and find a spot, but it's created this new set of opportunities, which I think against CXAI.

Makes it more easy and simple because you don't want to go every morning.

Where do I have to sit or what do I have to do? Whatever we make it for the recommendations for me so I can make it better. So that's what we do.

Okay, so I think we had some technical glitch earlier, but hopefully the audience heard the the audio, and that just tells you, what we see as a really killer application, a killer use case, wanting to have this colleague booking feature, knowing what's in the office, where they're sitting, being able to, adjust your daily calendar as well as your weekly calendar based on where it is, and I think.

It's pretty cool to see this live in motion now and a lot of our clients are using it. It's a great feature. It's a must have for a lot of our clients so I'm super excited about that and what enables all of this stuff is the behind the scenes, the brains behind it. And before we go there, let me talk to you a little bit about one of the big deployments that we did this quarter, which was we were live at 30 Rock, which is a marquee marquee place, and it's been pretty amazing to have that deployment be live now and that took a lot of effort from our client as well as us and as you know it's a high profile place, so making sure that. Everything is working well. We're around, 6,000 users day one on that system. The system did not implode. It actually worked really well. People were super happy. Actually the clients made some, Instagram posts, as you can see there, and there were some really great, activities happening and as we look at the activity logs and we have our Skype View analytics, we can show you all the. People were doing and it's interesting that that client actually does not do any space booking, but they were doing a lot of amenities, a lot of content, a lot of events, and most importantly, dining. Dining was the number one feature across the board. We launched not only that one site in New York, we also launched four sites across the country. One is on the West Coast, the others were on the East Coast, and it's interesting to see that.

There's a lot of great demand for the capability. A lot of users are using it every single day, and, some of the sites that we thought were going to be less using it actually using it more, primarily, as I said, the dining feature is a must-have.

Everybody loves the dining feature and then seeing all of the other, capabilities in terms of access to all the different amenities at the offices, all the different events that you can go to really creates that engagement layer so now all of the ideas we talked about are now in real motion in real deployment with this this client and they're super happy with the performance.

So let's talk a little bit about I mentioned the BTS which is behind the scenes, and that is actually the key technology platform that is letting enterprise admins manage complex content faster.

And now we actually are in beta trials with a full AI plug-in for natural language content creation. These migrations are beginning in Q4, and this will be fully compatible with our legacy apps offering faster administration and granular role controls as well. And what that means is, you, if you're the IT guy, you can get access to all the information related to IT or if you're an HR manager, you get all the people data. Or if you're an operations manager and you want your team data, you can have that access to that. You can, provide content, notifications, all the things that are necessary for that. So it's super exciting, and this is an infrastructure player that we really believe will enable, supercharge your legacy apps.

So, I want to go to the future a little bit. So we've talked about our Sky digital assistant and how it works. I'm going to play a little video of how, our existing new and enhanced Sky digital assistant is working in our labs in San Ramon. It's kind of like a, Sky digital assistant is like an intelligent concierge. It's, employees can now book, plan, and act in real time using natural language with the system proactively suggesting actions based on calendar, location, behavior. It's a living example of, agentic AI workplace intelligence that works for you, not the other way around. So I'm going to play the video. Hopefully you will hear the audio on this, and you'll see our Sky assistant, interacting with one of our engineers.

Hi, I'm Sky at San Ramon HQ. I can book meetings.

Reserve desks.

Or food. How can I help today?

I want to book a meeting tomorrow at 2 p.m. for.

How many people, including you, will be attending, and will you need a screen?

Yeah, there will be three people and yes I need to.

Diablo den with capacity for 5 and a screen sounds ideal. Would you like me to check its availability for tomorrow, November 12th at 2 p.m. for one hour?

Yes, please.

Perfect. Let me check if Diablo Den is available for you. Good news, Diablo Den is available. Booking it now, all done. I've successfully booked Diablo Den for Wednesday, November 12th from 2 p.m. to 3:00 p.m. Would you like to order food for your meeting?

Yeah, that that's actually would be great.

Great, what type of food would you prefer? We recommend bamboo sushi for sushi, foam talus for vegetarian, or mixed for healthy bowls.

I'll go with Perfect choice. I know you love the Dave's Taco Bowl from Nix. Should I order that for ALL3 people?

Yes Great, what time should it arrive? Your meeting starts at 2 p.m. 23 Perfect. I've ordered 3 days's taco bowls from Mixed being delivered to Diablo Den by 2:30 p.m. You're all set.

So that's a gentey at work context aware, proactive and human centered. Hopefully you see how intuitive it was, how easy it was to use, and how, context aware it was to find the right thing for you and making it happen effectively. I know that, if you turn, if you, push the video on the screen, you could see it in real time. So we'll have that available for you after the call and for the next video I'll let you know how to to press it, but hopefully you heard the audio on this. And you know before I go forward you know Q3 was a really good quarter for us. We had a lot of these great customer highlights and deployments as well as you know this new advancement with the Sky platform. So we're super excited about that. I'm now going to turn it to my partner CFO, Joy to give you the financial updates for Q3 Joy.

Thank you Khurram. It sounds like, or not sounds like, but, the digital assistant just, reminds me of a theme for this quarter, something I've been thinking about, and the theme or keyword is momentum. So we're seeing momentum in the AI ecosystem. We're seeing momentum in the speed at which, companies are implementing return to office or the reboot of. Return to office, so return to office 2.0 and then, more excitingly, momentum in our product and I think the digital assistant is, super exciting for me. I don't know if I want the whatever bowl I was ordering, but that sounds a lot of great progress there. So if we go to slit 18, we can look at our Q3 financial highlights. This was a solid quarter of execution and operating discipline. We maintained strong margins, controlled optics, and delivered measurable improvement in profitability.

Starting with ARR expansion, we close the quarter with two large logo renewals, both in the enterprise segment. These renewals reflect customer confidence in our workplace platform and demonstrate the durability of a recurring revenue base. Our subscription revenue mix reached 99%, an increase from 88% in the same quarter last year. That transition toward pure staff continues to be one of our key strategic levers. It increases predictability, expands gross margins, and creates multi-year visibility into future cash flows.

Next, on gross margin, we delivered an 89% increase compared to 88% in Q3 of last year.

And 86% last quarter. The steady improvement reflects the benefits of disciplined cloud cost management and more efficient infrastructure scaling. We're continuing to see leverage in our cost delivery as we optimize across multi-tenant environments and automate provisioning.

Turning to cash OE, we held steady at $3.2 million flat compared to both last quarter and the prior period. That stability reflects our ongoing focus on operational efficiency for maintaining a lean structure while still investing in innovation and go to-market execution.

Finally, on profitability and earnings per share, we improved earnings per share this quarter to 0.13, a substantial gain from 0.34 the same quarter last year. That's a very clear signal that our cost controls and recurring model are working together to improve the bottom line. We can go to slide 19, which is our quarter over quarter comparison.

Revenue came in at $1.1 million compared to $1.2 million in Q2. The modest decline reflects the shift in revenue mix. We saw lower hardware related sales this quarter, consistent with our strategy to phase out non-core components and focus on software-led growth.

Cost of revenue decreased from 171,000 to 123,000, which drove an improvement in gross profit to 991,000 and lifted gross margin to 89%.

That game was driven primarily by tighter control over cloud utilization and vendor optimization.

Looking at operating expenses, total OpEx declined to $4.8 million from 5.2 million in Q2, an 8% reduction quarter over quarter.

Most of that was related to, some of that was related to savings in other areas, and you will see a slight increase in G&A but that is primarily due to stock-based comp.

Just because we have a large amount of, stock that vests for employees in Q3, so you'll always see that probably quarter over quarter.

Overall, these shifts demonstrate the flexibility of our operating model. We're able to scale innovation while containing discretionary spend.

As a result, loss from operations improved to Negative 3.8 million compared to Negative 4.1 million in Q2 2025. That's continued progress quarter over quarter as we execute against our goal of reaching breakeven.

As we execute reaching break even eventually. I also like to talk about our cash position. We remain very healthy with our cash position. We ended the quarter or as of right now, today actually with $9 million in the bank.

And with our equity and debt fundraising that we've done throughout the year, we have access to cash that should last us at least for the next two years.

In summary, Q3 showcased steady discipline, performance, improving gross margins, consistent OpEx, and expanding recurring revenue for managing growth and profitability in tandem, ensuring Sky is pos positioned to scale efficiently while driving durable shareholder value. Back over to you, Khurram.

Thank you, Joy.

So I want to talk a little bit about the future here. At SF Tech Week, we hosted a panel monitor by Samra Khan, who heads up System integrator Partnerships at Google Cloud, and she talked about the inclusive and immersive workplaces of the future. It's a very interesting talk. And so I'm going to play a snippet of it and what I ask the audience is please press on the play button so you can watch the video, but you're going to hear the audio through this as well. So I'm going to start right now.

If I'm in Foster City, and my hologram is going to be sitting here.

For those of you who are big Star Trek fans. I growing up as a kid. I was like big into it. I always believed that one day that's going to become reality. And if any of you have visited our, executive briefing center, we already have a demo of it. I have gone through It's, I must say it's amazing.

All at the same time that, the holibrand was eating an apple and I'm like, oh my God.

Get so I believe you know we're going to end in workspace we're going to enter the world of me works where there's going to be virtual reality that's how we're going to do meetings and I'm not saying that.

We're going to replace human interaction, absolutely not. I think there is a need for that. The need for it is always going to stay there. If COVID has proven one thing, it's proven that that human connections are important.

We're going to continue to be in the hybrid environment, but I think most importantly what it's going to do, what is going to get.

Even more better in 2030 and beyond is that no matter what part of the globe you are in your employee experience is going to be inclusive. It's going to be culturally adaptable to for somebody who's working out of Alaska versus.

Going to be, it's going to be inclusive, which I think is very important. That's why I think virtual reality is going to be a big part of it. So I wouldn't be surprised if I'm talking to for around five years from now and he's like, Hey, I'm better testing this new app. It has none of us in it.

You know I have all this other stuff and then the agents are going to work for you.

It's pretty exciting stuff and these conversations and the other conversation we've had with great partners at our events reaffirmed the sky is the partner of choice for the world's most advanced AI ecosystems. We're very proud of our partnership with Google. And it's super interesting how they are, aligned with our vision, helping us on the infrastructure side, helping us on the go to market side as well, and then, being thought leaders with us as we look at defining the future work.

So I want to summarize, what you saw today, what you heard from us today, but, as we exit Q3 and now in Q4 moving into 2026, our priorities are clear, three priorities. Number one, expand within our current customer base. Many of our Fortune 500 clients use only, two or three or four modules today. Every expansion into either analytics or content management or digital assistant that you saw multiplies ARR potential. Number two.

Accelerate ecosystem integrations. Partnerships like you heard about Noro and Google Cloud extend Sky's reach beyond traditional workplace apps into immersive and energetic experiences.

And third, maintaining cost discipline while investing in AI leadership. We're balancing growth with responsibility, proving that AI companies can scale intelligently. In short, Sky is the most advanced agentic AI solution for workplace and employee experience markets. We're not just riding the A wave, we're architecting it. We're building not just another AI company, we're building a category defining enterprise platform, the most advanced agentic AI solution for workplace experience and hybrid collaboration. I want to thank our employees, and extraordinary creative mission-driven team, and our customers and shareholders for believing in this journey.

Guys, more than a ticker symbol, it's a movement to make AI human again. We're super excited about this opportunity.

Thank you everybody for joining the call. We're going to take a couple of questions that came online and so Joy, if you have a list of questions, please go ahead.

Yeah. There's one from Jackson Vanderbilt Art, from Maxim. It's, multiple questions, Khurram, so I'm going to let you decide how you want to answer all of this, but the question is, give me second, he wants the kiosk update customer feedback and usage set, how many units deployed today versus pipeline growth and expansion progress with largest existing customers.

Status of testing before expanding deployments to all locations, it's a couple of our clients and.

Just just status of testing before expanding to large deployments and maybe more information on the 30 Rock deployment and how we did that.

Okay, great, thank you, Joy. Yeah, that's a lot of great questions all rolled into one so I'll TRY to, dissect it. So the first one on kiosk, absolutely, that's been a great product launch. We launched it with one client in Silicon Valley. They've deployed it in their campus in San Jose. It's working really well. It's, super exciting for them to start using it for their employees as they implement RTO and. That deployment was our first deployment that you know it gained the traction they want to first, make sure San Jose works really well and then deployed globally around all of their 14+ campuses so that's an interesting opportunity and in parallel we've got three more clients, the existing clients who are already in pilots and starting to the pilot phase to deployment and a lot of. I really like the fact that it's engaging it's real time it's just in time, getting actions completing either it's booking a desk or or booking a conference room or just navigating to the right person or universal search all of those are implemented with with that and I think there's a lot of genuine interest I can't give you exact numbers on on units right now. But I can tell you that you know of all the deployments and all the campuses that we have with our clients when they deploy one it's obviously they're going to deploy in all the all the different campuses so we're excited about it and I think there's a great opportunity, coming into one where we're going to launch these other three clients and then from those three will be the next 10 so I think that's the kind of scaling we see on on that on that product.

On the other question in terms of our, I think Joy was it about the, other expansion opportunities, right? So 30 Rock is an excellent example of a large multinational media company that deployed a marquee site in New York City. It was super critical for them to get it absolutely right, and so it was a lot of focus, a lot of hard work, and I commend the team. Both our team and the customer's team for making it happen, but they're not only just launched New York, they actually launched LA and they launched Miami and they launched, Connecticut, so they're super excited actually even though they're early customer of the product, they want the kiosk right away so they're actually in trials with the kiosk so I think all in all it just shows that. It takes a little effort to get into, these big clients, but once you're in there, they see the opportunity, they're super excited about the potential of it, and then the outcomes, through Sky View will be the test of saying, is it actually, really doing a great job for the for the employees, and I've mentioned before my success criteria is the adoption, and, we've been talking about our adoption numbers in terms.

Per users, but I think it's going to be a number of interactions. If you look at the Sky View analytics slide I showed you, in those 6,000 day one users there were 30,000 plus interactions, right, which is amazing the fact that they don't come to the app one time, they actually come to the app 5 times or 6 times. I think those are the. The must-have moments that we believe create that affinity for Sky, to create that affinity for the value of Sky, and then with the agenda, as you can see, everything can be done within the New York minute, and that to us is game changing. That's why these clients are staying with us because they see the potential of how Sky with 2.0 and with the Agentic solution is really going to be transformative to their business and to their. To their clients, I would tell you one of the, there's a new study that I just saw that said that people are spending.

At least 25 minutes or more a day in scheduling conflicts, and what we showed you we can take that scheduling conflicts out of the way so you get your 25 minutes back or more and then you make your life more productive. So I think we're in the phase now of moving into predictable outcomes and showing them the real value of the application, not just the. The fact that the application functions, the fact that it actually transforms the way they work and the way they, are productive in their environment. So I think there's a lot more coming, I would say, Jack, to answer your question, and we believe that all of our clients are destined for scale.

All right, Any other questions, Joy, that came in, or is that the only.

Question you have? That was the only one.

Okay, well, I'm, I want to close by saying thank you everybody for joining the call for supporting Sky. I think we have a great future ahead of us, as you can hear from some of the partners we're working with. We're super excited for our success, and we're looking forward to giving you better and more predictable results in the future here as we start scaling the business. I think the exciting part is now coming with AI now being. Fully being adopted in the enterprise CIOs are not saying this is a nice to have, this is a must have, and we believe that we have an exciting opportunity to enable them in the future. So we're going to be making a lot more announcements in the coming weeks and months in terms of these opportunities. So stay tuned and we look forward to having our next earnings call or annual call hopefully early next year. But until then, thank you everybody and have a good evening.

(Operator Instruction).