CXApp Inc.

Good day, everyone, and welcome to the CX App Fourth Quarter 2025 Earnings Call. At this time, all participants are placed on a listen-only mode. You can submit a question at any time by clicking on the Ask Question button on the left side of your screen. Type your question into the box and hit Send button to submit your question. It is now my pleasure to hand the floor over to your host, Kuram Shaikh. Sir, the floor is yours.

Thank you, Matthew. Good afternoon, everyone, and thank you for joining CX App Fiscal Year 2025 Earnings Call. I'm joined today by our Chief Financial Officer, Joy Bonugo. I'm Khurram Shaikh, Chairman and CEO of CX App. Before we begin, I want to frame today's discussion. 2025 was a year of deliberate transformation. 2026 is a year of AI-driven acceleration. Today, we will walk you through what we accomplished where the market is heading, and why we believe 2026 represents a true inflection point for CXCI. As you know, we pronounce it Sky. With Sky, we are moving beyond simple workplace apps to an autonomous agentic platform that redefines the employee experience. Let me start by directing your attention to our safe harbor statement with the next few slides. Please read at leisure once you have the slide deck. All right, for those newer to the Sky story, let me give you a quick snapshot of who we are. CX App trades on NASDAQ under the ticker CXAI. We're headquartered in the San Francisco Bay Area with offices in Toronto and Manila, giving us a global engineering and delivery footprint. Sky is a global AI native workplace experience platform deployed across 200 plus cities, 50 plus countries, with over a million plus users. We built this with a lean and highly technical team with over 70% focus on R&D, which is critical given our pivot into agentic AI. Importantly, we now have 39 patents filed, including a new provisional filed on agentic AI just recently, and we're really proud of that filing because it is a landmark in our space. And then we also already have 18 grand of patents. This patent portfolio is a meaningful competitive mode. This is not just a product company. This is becoming a defensible AI platform company. We maintain enterprise-grade compliance with ISO 2701, SOC 2, and GDPR certification. This is a global... enterprise-ready platform with the security credentials that Fortune 500 procurement teams aspired to. So very proud of that, very proud of the accomplishment of the team over the last year. And we're going to share with you what this three-year transformation has been about and why this is a really great point for our investors to understand what is really happening in the market. So I want to start with the market. You know, why is this timing right for Sky, right? We are seeing a fundamental market shift in enterprise workplace technology. Three forces are converging simultaneously. First, hybrid workplace orchestration. Fortune 500 enterprises are actively procuring unified platforms that consolidate desk booking, room booking, parking, dining, and attendance into a single workflow. They want calendar and HR system integration with AI-driven smart bookings. The days of cobbling together five or six point solutions are ending. Secondly, AI and specifically agentic AI have moved from nice to have to required or must-haves. Enterprise buyers are now mandating AI agents with three-year roadmaps. They want conversational assistance, proactive suggestions, auto-routing, and AI-enhanced incident reporting. This is not a future requirement. This is the current RFP today. And this is why we're seeing this good momentum, because we've seen a lot of RFUs from large enterprise that are exactly what we've been working on. And thirdly, you know, we have started our journey with indoor intelligence and IoT, the Internet of Things. Enterprise One interactive maps real-time occupancy data from IoT sensors, wayfinding, colleague finders, and visitor management with multimodal physical and access control. That kind of gives us a new advantage in terms of the AI world. It gives us that localization and edge experience. So Sky, CXAI sits at the intersection of all these three trends. We're not changing the market. The market is coming to us now. And that's why we see as very, very different from 2025. Now, what is happening with the GenTech AI and the defining trend there? Let me put some numbers behind the AI opportunity. By the end of 2026, Gartner estimates that 40% of enterprise apps will feature task-specific AI agents, up from less than 5% in 2025. This is an eight times increase in a single year, and workplaces identify it as a primary deployment domain. Booking, service requests, contextual suggestions, this is exactly what we built. The AI agent market currently sits at $7.8 billion and is projected to reach $52 billion by 2030. Gen AI model spending alone is going north of 80% in 2026. On the adoption side, 88% of organizations now report regular AI use in at least one business function. Enterprise software spending is up to around 15% year-over-year, driven primarily by AI investment. The validation from Fortune 500 buyers is clear. They now require AI agents, conversation assistants, and AI roadmaps in their procurement decisions. They are specifying exactly what sky goes. And as you all know, we didn't pivot to AI. We've been building towards this for years. The market has now validated our thesis. So what I see is this is really a platform shift. Agentic AI is becoming the control layer of enterprise software. and Sky is positioned directly in that layer at the intersection of workflows, data, and physical environments. You heard at DTC Jensen talked about physical AI. We are the physical AI for that workplace environment. So I'm super excited about the direction the market is heading and what we've been accomplishing over the last two years with our GenTech AI platform. You know, it's interesting. When I've been working with our sales team on all the different opportunities that come in, it is Super interesting to watch that our competition is actually no longer there because with our agentic platform, our clients are coming to us saying, this is what we actually want. We want you to be successful and build it for us. So all the new clients coming in are asking for agentic. It's critical as part of their roadmap. Without it, they will never deploy a solution. And the existing customers are naturally evolving to this very rapidly. So let me summarize also. What has been the strategic transformation in 2025? And what did we actually do? We executed a comprehensive strategic transformation built on four pillars. First, we focused on high-quality recurring revenue. We made a deliberate decision to prioritize subscription revenue over one-time services and implementation fees. That shows up clearly in the numbers, which our CFO, Joy, will walk through shortly. Secondly, we implemented an AI-driven cost structure. As you know, we have a partnership with Google where we are implementing a lot of the GCP-based solutions. We're a big AI user. We're using Gemini. We're using all the different tools out there with different providers. I won't name all of them because some of them may be upset that we're not using them, but we're using a number of those guys. But it's all driven towards productivity and to drive operational efficiency, reduced cloud costs, and automating the process that previously required manual effort. That AI-driven cost structure is across all our functions, be it engineering, be it sales, be it marketing. And that has resulted in, as you've seen in the numbers, a much reduced cost structure for us. Thirdly, and most importantly, we built our platform from the ground up as an AI-native Sky platform. This wasn't a bolt-on. We'll talk about Bond and Cortex. They were our key orchestration and intelligence layer solutions. They are designed from day one as core platform components, not afterthoughts. And fourth, we balance short-term impact with long-term scalability. Yes, revenue declined in 2025, and we're transparent about that, but the revenue we have today is dramatically higher quality, and the platform we built positions us for sustainable, scalable growth in 2026 and beyond. You know, I'm going to talk a little bit more about the impact of all of that to our clients and to, you know, the end market. This slide illustrates the fundamental transformation we made in how our product delivers value. Because a lot of the customers ask the question, so what? Why is this so important to me? What's the ROI? What's the value? And given all the, you know, information out there on AI and agentic AI, all the promising we made, Why is our solution relevant? And this is where we want to show you what the legacy systems are and what our system, we're going to describe those systems in detail later, but I want to show the value and outcome. If you look at the legacy world, workplace tools required multiple clicks, manual configuration, fragmenting analytics across different tools. That's what most of our competitors still offer. With our AI platform, we've replaced those pain points with four core capabilities. Bond plus Cortex replaces multi-click workflows with instant actions and autonomous workflows. Skyview replaces static analytics with real-time insights that produce actionable outcomes. Our One Map Engine and Experience Engine replaces fragmented tools with a single source for all workplace data and actions. And finally, our zero-touch deployment replaces months of manual configuration with site deployments measured in days now versus months. This is an incremental improvement. This is a category shift from SaaS to the intelligent AI platform. And it's the reason enterprises are choosing Sky over legacy alternatives. And that's been delivered from us in terms of our design, our capability, and how we've thought about making this system frictionless for our clients. So I'm going to pause now and turn it over to the CFO, Joy Benugo, to go through the financial results, and I'll be back with the strategic implications for 2026. Joy, over to you.

Thank you, Karim. Let me walk you through the financial results for fiscal year 2025. I want to start by framing how we think about the past year. As Kerr mentioned, fiscal year 2025 was a year of intentional and strategic reset. We made very deliberate decisions to exit lower quality revenue, transition the platform from SaaS to AI, and build a more durable foundation. Those decisions had a short-term cost, and you'll see that impact in the top line. But the underlying health of the business has improved meaningfully, and I want to walk you through exactly why. Starting with the headline numbers on slide 10, total revenue came in at 4.6 million compared to 7.2 million in the prior year. I'll address the decline directly in a moment, but first let me highlight what moved in the right direction. Subscription revenue now represents 98% of total revenue, up from 87% a year ago. That shift matters because subscription revenue is recurring, predictable, and very high margin. It's the foundation that every AI, before it was SaaS, and it's the foundation that every AI company wants to be built on, and we're essentially there. Gross margin expanded to 87%, up five points from 82% in 2024. That improvement came from disciplined cloud cost management and platform efficiency gains. It demonstrates the operating leverage in our model. We ended the year with a really healthy cash balance of $11.1 million as of December 31st, strengthened by various capital raises throughout the year. And that gives us a real runway to execute for the rest of this year. So we have enough cash to cover our expenses for the next six quarters. And on a per share non-GAAP basis, our diluted earnings per share was negative 58 percent um improving um from last year which was negative a negative one dollar twenty cents so yes revenue declined but the business that remains is fundamentally stronger than what we started the year with let me go to the next slide So now I'll go line by line on the P&L so you have a more robust picture of what happened over the last year. Revenue was $4.6 million, down 36% year over year. This reflects three things. The exit of non-core contracts and professional services, customer churn during our platform transition, and reduced bookings during the positioning period. We expected some of this decline, and it's the cost of doing the reset correctly. Cost of revenues dropped 55% from 1.3 million to 578,000. That decline significantly outpaced the revenue decline, which is exactly what drove the margin expansion. We became materially more efficient at delivering the product. Growth profit was $4 million at 87% growth margin, up 5 points year over year. For context, that puts us in best in class with other companies in this area. This is a structural improvement, not a one-time event. Now on to operating expenses. Total OPEX was $21.6 million, up 10% from $19.6 million. I want to be direct about what drove that. R&D modestly increased by 4%, but that was intentional, and we'll continue to invest in R&D while we continue to invest in AI and improve in the product. We believe that this investment is what's going to position us for double-digit growth in 2026. Sales and marketing was cut by a significant 36% as we used AI in our marketing efforts, and made our go-to-market motion leaner, more targeted enterprise sales approach. G&A increased 10%, and part of that is restructuring related. We're actively managing this down this year. The most important part in OPEX is the goodwill impairment of $2.1 million. This is a non-cash accounting charge. It does not reflect cash outflow. It does not affect operations, and it's not recurring. It is the primary reason that OPEX increased year over year. Excluding that item, our operating cost base was essentially flat. Lost from operations was $17.6 million, adjusted for the goodwill impairment of $2.1 million, the under Underlying operating loss was approximately $15.4 million, roughly in line with the prior year, even as we continue building this platform. Now, let's walk through the EBITDA bridge. If we can go to the next slide, please. So, going through EBITDA and adjusted EBITDA, this is really important because this shows where some of the operational improvements where some of the operational improvement comes from. Starting at a net loss of $13.5 million for the year, this is already a meaningful improvement from $19.4 million of last year. Adding back interest, taxes, depreciation, we arrive at negative EBITDA at $10 million compared to negative $15.6 million EBITDA in 2024. That is a 35% improvement year over year. This is a number I would point you to as the clearest measure of our operational progress in 2025. The trajectory is definitely trending in the right direction. Now, adjusted EBITDA came in at negative 9.8 million compared to negative 8.3 million in 2024. I want to address this directly because on the surface, it could look like a step backwards. And I don't want that to go unexplained. The entire difference comes down to one line, our change in fair value of derivative liabilities. And if you remember from last year, this is related to our convertible notes. In fiscal year 2024, this line item was a positive $3.2 million, and it flattened adjusted EBITDA. In 2025, it flipped to a negative $4.5 million. That is a $7.7 million non-cash swing driven entirely by mark-to-market accounting on derivative liabilities. This has zero impact on our cash position, zero impact on our operations. It is purely an accounting timing item. If you strip that one item out, adjusted EBITDA improved year over year. The other adjustments are pretty straightforward, stock-based comp, $2.8 million, $2.1 million of goodwill impairment we already discussed, and smaller items that net close to zero. The real punchline is that our $11.1 million cash balance more than covers our cash-based operating loss. We have the necessary runway to execute, and the hard part of this transition is behind us. If you remember last year, we ended with a significantly lower cash balance, and so we We're starting off 2026 very, very strong. Now let's talk about pipeline and sales momentum, which is really exciting to discuss. As Karim mentioned earlier, I think if we were at this time last year, we had momentum, but the momentum we see now as enterprises move towards the Gen Tech AI is really exciting. And even at CFO conferences and other tech conferences, you can see the excitement and the flurry of activity as people think about moving away from pure SaaS platforms and look into adopting agentic AI. So where does that leave us as we head into 2026? The pipeline is growing. We are seeing expansion activity within existing enterprise customers. Accounts that have been on the platform are now asking for more. We are seeing new vertical opportunities that were not pursuing 12 months ago, and we are seeing early signs of acceleration in bookings. In Q4 2025, we had really strong bookings, and that has really continued into this year. On the market signal side, three things stand out. First, enterprises are consolidating, as you can see in the news. They're moving away from point solutions towards unified experience solutions. That is exactly what CXI is. The procurement conversations we are having today are fundamentally different from a year ago. Buyers are not comparing us to individual tools. They are evaluating us as a complete platform. Second, and very importantly, agentic AI has become a buying requirement. Executive buyers like CFOs and real estate, people that own real estate, are now specifying AI agents, conversational agents, and three-year AI roadmaps as a baseline requirement before they sign, before even having a conversation. And we have built exactly that. The platform we spent rebuilding is what enterprise procurement teams are now asking for by name. Third, and this is the one that gives us the most confidence, customers are telling us that they need our identity capabilities to make their final buy decision. That is a closing signal. That is pipeline converting. 2025 was a strategic reset. 2026 is where that investment pays off. With that, I'll turn it back to Karim, who will go through the rest of the presentation.