Greetings. Welcome to the CX AI Third Quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please click on the ask question box on the left side of your screen. Type in your question, and hit submit. As a reminder, this conference call is being recorded. Now I would like to turn the call over to your host, Khurram Sheikh, Chairman and CEO of CXAI. Please go ahead.
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. You know, people ask me the question, what does Sky actually do? At Sky, we are defining the intelligent experience layer for the modern enterprise. Our platform blends AgenTeq AI autonomous context over agents, spatial intelligence that understands how people actually use the workplace. This combination turns data into decision-making 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 at work. When people ask, what does Sky actually do? Here's my answer. We transform office buildings, campuses, and digital workspaces into living, learning, and adaptive environments. Environments that think and act with you. We now operate in over 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 Willow 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. We're a technology-focused company. And this tells you that our DNA is an innovation company.
So let's talk about, you know, technology-wise, what does this entail? We've been the leader in the first mobile app for this application of workplace experience. Being 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 these 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 want to show you some great examples of that.
And then finally, SkyView is our data analytics and ingestion engine that allows you to create your own dashboard, create your own analytics, and create 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 you know, but we also enable things on AWS and Azure. So we're multi-cloud. We're 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 within the market today and the market trends. This is a study done by McKinsey. 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 simply don’t scale it to the enterprise level. So although AI is being used by more than a large percent of enterprises, they're not using it at scale. They have the tools but not the orchestration.
That's where Sky comes in. Sky solves that execution gap. By unifying workflows, analytics, and human experience into a single agentic 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. OriginChic engine stitches those environments together so that a team lead books a hybrid meeting in New York, the system automatically coordinates rooms, catering, visitor access, AV support across different time zones. It's invisible, autonomous, and measurable. Along with that, you've seen what's happening in the environment. A lot of CEOs are mandating return to office and AI tool adoption. Employees are burned out and disengaged. That's the leadership expectation versus workflow reality divide.
As executives, we are pushing return to office mandates while employees create flexibility. The result is policy friction. Sky bridges that mandate to execution gap. For a major technology client in Silicon Valley, we used our platform to launch the new campus at headquarters, right-sizing their campus designs and footprint, allowing for colleague booking feature, to allow selecting where and who they want to spend their day 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 altogether. That's the beauty of Sky. We enable all of these great capabilities, and the outcomes are becoming very clear now with our clients. The world is taking notice. This quarter, Gartner named Sky as a representative vendor in the 2025 market guide for workplace experience applications.
A category 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 our capability to enable this transformation. It's validation that our combination of AgenTeq AI and spatial intelligence isn't just visionary. It's essential to the future of work. We've been very happy to see this guide come out. There's also more work coming out from Gartner and their analysts. As we said in our first calls with you, there is going to be a new category called employee experience. I think the market is headed in that direction. This last quarter, we were super busy also with lots of events happening in the market. Amplified our ecosystem presence at the San Francisco Tech Week. We were at WORKTEC at the META headquarters in Menlo Park on October 9, and then we also attended the Connect 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 AI bandwagon is something everybody needs to be on, and it's going to change the way we work. We are super excited about the events. We had a lot of great new clients that came to us. Our existing clients were there. We hosted a number of networking events. We discussed and debated the reality is everybody wants our agentic AI 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-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 agentic 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 shared spaces in real-time, seeing body language, maintaining eye contact, ensuring digital workflows, all orchestrated by AgenTeq AI. That's how Sky makes distance disappear in hybrid work. We're super excited about it. We're going to have the first unit installed in our offices, and Noro also has locations already deployed in London, New York, Atlanta, and Chicago. We're putting the roadmap together for the combined offering, and it will 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; I’ve known him for a while and I'm super happy that we're working together now. Let me talk about highlights on the product side. Innovation continues to define Sky's Edge, enhancing colleague visibility through dynamic math, delivering a cleaner, faster UI.
This is really important because a lot of our clients this last quarter were starting their return to office plans again, re-engaging with their employees. They wanted something slicker, faster, and our team delivered. For example, one global client used the enhanced booking engine to manage more than ten thousand desks across five campuses. They reported a significant drop in scheduling conflicts, on the order of forty percent or so, and a double-digit increase in employee satisfaction with hybrid coordination. That's another example where as our solution, you can see the colleague booking, which has visual representations of everything around them. It creates that engagement layer. They want to get back to the office. They want to interact with these people, and they want to get their work done faster. We also have, we talked about VTS, which is our behind-the-scenes technology. By the way, before I go there, let me show you a video jumping ahead of when I talked about this at the conference at the SF Tech Week, where we had Google as our invited guests as partners.
I don't know if the video was accessible or not, but we're gonna have it available on the platform. Let me try to play it again actually with my volume up; maybe that'll help. The feature becomes so important. Our customers said this is a must-have. And by the demo pictures, it's like a scramble screen of all these images. Don't we want to see them? It's just human behavior. Dash booking is a self-created feature, meaning that there's no need for it if you have assigned desks. Which we grew up with assigned desks. It was clear, because of the pandemic. So you create a new problem that has now been difficult for an employee to get to the office and find a spot. We think agentic AI makes it easier and simpler because you don't want to go every morning thinking, 'Where do I have to sit?' or 'What do I have to do?' Whatever recommendations we make is to improve that experience. Okay, so I think we had some technical glitch earlier, but hopefully, the audience heard the audio that just tells you, you know, what we see as a really killer application.
A killer use case wanting to have this colleague booking feature, knowing who is in the office, where they're sitting, being able to look at and adjust your daily calendar as well as your weekly calendar. It's pretty cool to see this live in motion now. A lot of our clients are using it. It's a great feature. It's a must-have for a lot of our clients. I'm super excited about that. What enables all of this is the behind-the-scenes technology. Before we go there, let me talk to you about one of the big deployments we did this quarter, which was live at 30 Rock. It's been pretty amazing to have that deployment be live now. It took a lot of effort from our client as well as us. As you know, it’s a high-profile place, so making sure that everything is working well around 6,000 users on day one. The system did not implode; it actually worked really well. People were super happy. The clients made some Instagram posts, and there were some great activities happening.
As we look at the activity logs, with our SkyView Analytics, we can show you what people were doing, and it's interesting. That client actually does not do any space booking, but they were doing a lot of amenities, content, events, and most importantly, dining. Dining was the number one feature across the board. We launched that one site in New York, and we also launched four sites across the country — one on the West Coast, the others on the East Coast. A lot of users are using it every single day, and some sites we thought would be less used are actually using it more. As I said, the dining feature is a must-have. Everybody loves the dining feature. Seeing all of the other capabilities in terms of access to different amenities at the offices and all the events really create that engagement layer. Now all of the ideas we talked about are now in real motion and deployment with this client, and they're super happy with the performance.
I mentioned the BTS, which is behind the scenes, and that is the key technology platform that is helping enterprise admins manage complex content faster. We're 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 growth controls. This means that if you're the IT guy, you can access all the information ready for IT. If you're an HR manager, you get all the people data. Operations managers can have access to team data. You can provide content, notifications, and all the necessary things. It's super exciting, and this is an infrastructure player that we really believe will supercharge your legacy apps. I want to go to the future a little bit. 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, it's like an intelligent concierge. Employees can book, plan, and act in real-time using natural language, with the system proactively suggesting actions based on calendar, location, and behavior. It's a living example of AgenTeq AI—workspace that works for you, not the other way around. I want to play the video. Hopefully, you'll 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. Can book meetings, reserve desks, or order food. How can I help today?
I'm on the clinic tomorrow at 2 PM for one hour.
Thanks. How many people including you will be attending, and will you need a screen?
Oh, yeah. There will be screen people, and, yes, I need a screen.
Yablo Gen with capacity for five and a screen sounds ideal. Would you like me to check its availability for tomorrow, November 12, at 2 PM 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 12, from 2 PM to 3 PM. Would you like to order food for your meeting?
Yeah. That actually would be great.
Great. What type of food would you prefer? Do you recommend bamboo sushi for sushi, both vegetarian or mixed for healthy bowls?
I'll go with mixed.
Perfect choice. I know you love the Dave's Taco Bowl from mixed. Should I order that for all three people?
Yes.
What time should it arrive? Your meeting starts at 2 PM.
02:30 PM.
Perfect. I've ordered three Dave's Taco Bowls from Mixed, being delivered to Diablo Den by 02:30 PM. You're all set.
That’s agentic AI 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 make it happen effectively. Q3 was a really good quarter for us. We had a lot of great customer highlights, deployments, and advancements with the Sky platform. I'm now going to continue to my partner, CFO, Joy, to give you the financial updates for Q3. Joy?
Thank you, Khurram. The theme for this quarter is momentum. We're seeing momentum in the AI ecosystem, in the speed at which companies are implementing return to office or the reboot of return to office. And then, more excitingly, momentum in our product. I think the digital assistant is super exciting for me. If we go to slide 18, we can look at our three financial highlights. This was a solid quarter of execution and operating discipline. We maintained strong margins, controlled OpEx, and delivered measurable improvements in profitability. Starting with ARR expansion, we closed 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 our 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 multiyear visibility into future cash flow. 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 multitenant environments and automate provisioning. Turning to cash OpEx, we held steady at $3,200,000 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 negative $0.13, a substantial gain from negative $0.34 in 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. Revenue came in at $1,100,000 compared to $1,200,000 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 gain was driven primarily by tighter control over cloud utilization and vendor optimization. Looking at operating expenses, total OpEx declined to $4,800,000 from $5,200,000 in Q2, an 8% reduction quarter over quarter. Most of that was related to savings in other areas, and you will see a slight increase in G&A due primarily to stock-based compensation. Overall, this shift demonstrates the flexibility of our operating model.
We're able to scale innovation while containing discretionary spend. As a result, operating losses improved to negative $3.8 million compared to negative $4.1 million in Q2. That's continued progress quarter over quarter as we execute our goal of reaching breakeven eventually. I also like to talk about our cash position. We remain very healthy with our cash position. We ended the quarter as of right now with $9,000,000 in the bank. With our equity and debt fundraising throughout the year, we have access to cash that should last for at least 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 positioned to scale efficiently while driving durable shareholder value.
Thank you, Joy. So I want to talk a little bit about the future here. At Tech Week, we hosted a panel moderated by Samra Khan, who heads up system integrator partnerships at Google Cloud. She talked about the inclusive and immersive workplaces of the future. It's a very interesting talk. So I'm going to play a snippet of it. What I ask the audience is to please press on the play button so you can watch the video, but you're going to hear the audio through this as well.
If I'm in Foster City, my hologram is going to be sitting here. Those of you who are big Star Trek fans, I drove growing up as a kid. I always believed that one day that’s going to become reality. Visiting the Executive Meeting Center, we already have a demo of it. I must say it's amazing and scary. The hologram was eating an apple, and I'm like, oh my god. We're going to enter the world of the metaverse. There is going to be virtual reality. That's how we're going to do meetings. I'm not saying that we'll replace human interaction, absolutely not. The need for it will always stay. COVID has proven that human connections are important. We're going to continue to be in the hybrid environment. What's going to get better in 2030 and beyond is that no matter where you are in the globe, your employee experience is going to be inclusive, culturally adaptable for someone working out of Alaska versus Silicon Valley. That’s going to be very important.
It's pretty exciting stuff. These conversations, along with those we've had with great partners at our events, reaffirm that Sky is the partner choice for the world's most advanced AI ecosystems. We are 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 and on the go-to-market side, and being thought leaders with us as we look at defining future work. To summarize what you saw and heard from us today, as we exit Q3 and now move into Q4 heading towards 2026, our priorities are clear. Number one: expand within our current customer base. For Fortune 500 clients, we have two, three, or four modules today; any expansion into analytics or content management or the digital assistant multiplies ARR potential. Number two: accelerate ecosystem integrations. Partnerships, like Noro and Google Cloud, extend Sky's reach beyond traditional workplace apps into immersive and agentic experiences.
And third, maintain 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 markets. We're not just riding the AI wave; we're architecting it. We're building not just another AI company; we're building a category-defining enterprise cloud platform—the most advanced agent AI solution for workplace experience and hybrid collaboration. I want to thank our employees, our extraordinary, creative mission-driven team, our customers, and shareholders for believing in this journey. Sky is 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. I'm going to take a couple of questions that came online. So, Joy, if you have a list of questions, please go ahead.
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 one second. He wants the kiosk update, customer feedback, and usage set—how many units deployed today versus pipeline growth, and expansion progress with the largest existing customers—the status of testing before expanding deployments to all locations. It's a couple of our clients and just the status of testing before expanding to large deployments and maybe more information on the 30 Rock deployment and how you did that.
Great. Thank you, Joy. That's a lot of great questions all rolled into one, so I'll try to dissect it. The first one on the kiosk: absolutely. That's been a great product launch. We launched it with one client in Silicon Valley. They've deployed it on their campus in San Jose, and it's working really well. It's super exciting for them to start using it as they implement RTO. That deployment was our first deployment and gained traction. They want to first ensure San Jose works really well before deploying it globally across all of their 14-plus campuses. That's an interesting opportunity. In parallel, we've got three more clients, existing clients already in the pilot phase, starting to move toward deployment. A lot of them really like the fact that it’s engaging, real-time, just-in-time. Getting actions completed, whether it's booking a desk, scheduling a conference room, or navigating to the right person—universal search—all of those are implemented.
I think there's a lot of genuine interest. I can't give you exact numbers on units right now, but I can tell you that for all the deployments in all the campuses, once they implement one, they plan to deploy across other campuses. We're excited about it, and I think there’s a great opportunity coming in Q1 when we will launch for these other three clients. From those three, we will expect to see the next ten. That’s the kind of scaling you see on that product. Regarding the other question about other expansion opportunities, 30 Rock is an example of a large multinational media company that deployed at a marquee site in New York City. It was super critical for them to get it absolutely right. A lot of focus and hard work went into making it happen—commendable effort from both our team and the client's team. Not only has New York launched, but they've also launched in LA, Miami, and Connecticut.
We’re excited. Even though they are early customers of the product, they want the kiosk right away. They are actually in trials for the kiosk. It takes a little effort to engage these clients, but once you are in, they see the opportunity. They're super excited about the potential. The outcomes will be measured, and through SkyView, we’ll assess whether it truly benefits the employees. As mentioned before, my success criteria is adoption. We've been discussing numbers in terms of users and interactions. If you look at Sky, the cloud, in those first 6,000 day-one users, there were over 30,000 interactions. It’s amazing. The fact that they come to the app is one thing, but returning five or six times is a critical metric. Those are the must-have moments that create an affinity for Sky and showcase the value. I can tell you there's a study showing that people are spending at least twenty-five minutes or more each day on scheduling conflicts.
With what we showed you, we can take that scheduling conflicts out of the way. You get your twenty-five minutes back or more and become more productive. We're moving into predictable outcomes and showing them the real value of the application—not just that it functions, but that it transforms the way they work and their productivity in their environment. I believe all of our clients are destined for scale. Any other questions, Joy, or is that the only one?
That was the only one.
I want to close by saying thank you to everyone for joining the call and supporting Sky. 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 about our success, and we're looking forward to giving you better and more predictable results in the future as we scale the business. The exciting part is now the adoption of AI in the enterprise. CIOs are no longer viewing this as a nice-to-have; it has become a must-have. We believe we have an exciting opportunity to enable them in the future. We'll be making many more announcements in the upcoming weeks and months. Stay tuned, and we look forward to having our next earnings call or annual call, hopefully early next year. Till then, thank you everyone, and have a good evening.
Thank you. This concludes today's conference call and webcast. You may disconnect at this time. Have a wonderful day. Thank you once again for your participation.