Company: CXAI
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001829126-25-009077
Chunk: 52

Company: CXApp Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 52
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, or integration services
that are customer-specific and non-recurring in nature.

Subscription-based
revenue comprised approximately 98.12% of total revenue for the nine months ended September 30, 2025, compared to 86.70% for the same
period in 2024, representing a 12-percentage point increase in revenue mix. This shift in revenue composition is consistent with management’s
strategy to drive predictable recurring revenue and improve gross margin over time.

Gross
Margin

Cost
of revenues includes the direct costs to deliver the services, including labor and overhead. Cost of revenues was $444 thousand for the
nine months ended September 30, 2025, compared to $1,052 thousand for the nine months ended September 30, 2024. The gross profit margin
was 87.53% for the nine months ended September 30, 2025, compared to 80.81% for the nine months ended September 30, 2024. The decrease
in cost of revenues of approximately $608 thousand, or approximately 57.79%, for the comparative periods ended September 30, 2025 and
September 30, 2024, was attributable to a reduction in professional services-related costs, as well as lower hosting and infrastructure
expenses for cloud services.

40

Operating
Expenses

Operating
expenses consist primarily of research and development (“R&D”), sales and marketing, and general and administrative (“G&A”)
costs. For the nine months ended September 30, 2025, total operating expenses were $14,798 thousand, compared to $15,351 thousand for
the same period in 2024, representing a decrease of $553 thousand.

The
decrease was primarily driven by a $1,076 thousand rise in S&M expenses, was mainly driven by workforce downsizing and lower payroll,
travel, and commission-related costs.

The
decrease in S&M was partially offset by a $261 thousand increase in general and administrative expenses, primarily due to higher professional
service fees and increased stock-based compensation expenses related to restricted stock units (RSUs). Furthermore, R&D expenses increase
by $262 thousand, primarily due to the true-up billing of the Google commit and the completion of the GCP Marketplace integration.

Management
believes that these investments in innovation and platform interoperability position the Company to scale its AI-native offerings while
driving long-term operating leverage.

Other
Income/Expense

Other
income/