CXApp Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 12, 2025

Key Takeaways

  • Positive Sentiment: Two Fortune 1,000 customers, including a Fortune 50 client, renewed and expanded their commitments, driving a >150% usage lift at key sites and signaling strong ARR growth.
  • Positive Sentiment: Q2 revenue held steady at $1.22 M with 96% from subscription services, gross margin up to 86%, and improved EPS of -$0.16, reflecting a transition to higher-margin recurring revenue.
  • Positive Sentiment: CXAI secured ISO 27001 and SOC 2 compliance and deepened its strategic partnership with Google Cloud, leveraging Gemini 2.5 for advanced Agentic AI capabilities.
  • Positive Sentiment: New product rollouts such as the Sky Kiosk, immersive OneMap experience, and a granted patent for 3D mapping demonstrate technological leadership in workplace experience.
  • Neutral Sentiment: Market trends show a record decline in U.S. office space and rising RTO mandates, creating potential tailwinds for CXAI's AI-driven workplace management solutions.
AI Generated. May Contain Errors.
Earnings Conference Call
CXApp Q2 2025
00:00 / 00:00

There are 3 speakers on the call.

Operator

Greetings. Welcome to the CXAI second quarter two thousand twenty five earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded.

Operator

Now I would like to turn the call over to your host, Karam Sheikh, chairman and CEO of CXAI. Please go ahead.

Speaker 1

Thank you, operator. Good afternoon, everybody. I'm joined today by our CFO, Joey Benuga, as well, and we are both excited to share with you our earnings for the 2025. We will also provide an overall business update on our progress in shaping the future of work and creating transformative employee experiences with our state of the art agentic AI platform, CXAI, pronounced Sky. By now, everyone should have access to our earnings press release as well as the 10 Q that was filed with the SEC.

Speaker 1

This information will also be found on our website, www.cxapp.com or www.cxai.ai. With that, I'm gonna move to the next couple of slides, which are disclaimer slides. You can read it on your own ledger when you after the earnings calls. I'm not gonna go through each of the slides, but kinda show you the disclaimer slides. Okay.

Speaker 1

So I wanna start by giving you a snapshot of the company. You know, the Sky platform is anchored on customer experience, CX, and artificial intelligence AI is the most advanced technology solution transforming people, places, and things in the workplace. We are solving the biggest problems in our industry post the pandemic, I e, the return to office RTO and employee engagement. So before I get into the specifics, what if what if planning your entire workday took seconds? That's what we can do with Sky.

Speaker 1

We can schedule meetings, desk, parking and catering in the New York minute. We can keep you spatially aware of events, even food trucks, even help you hit your step goals without missing a meeting. This is the future of the workplace and is closer than you think. I know we've been talking about this for a while, but we are here now with the Sky platform being deployed across the world with all our great customers. We, the company, are located in the San Francisco Bay Area.

Speaker 1

We're regional tech hubs globally. The global presence and diversity of experiences gives us a leading edge as we shape the future work everywhere. Of the 65 plus team members at Sky, more than 70% are engineers focused on building agentic AI solutions and maintaining our technology and product leadership. The culture of Sky is innovation focused with three core values, purpose, passion, and positivity. We are passionate about solving the big problems in the future work using AI, and we are super positive about creating a new paradigm of digital transformation of the enterprise focused on employee experiences.

Speaker 1

We believe the employees at the center of this multi billion dollar growing workplace experiences market, and we're creating a new category in software, employee experiences. The Sky platform is based on 39 file patents with 19 of them already granted. We have actually one new patent grant this quarter. We'll talk about it later in the slides, but it's tied to our multidimensional mapping and object orientation technology. We are super proud to have some of the largest logos of the world as our customers that are at the leading edge of the employee experience transformation.

Speaker 1

Our customers are sophisticated by the technology solutions and do not compromise on quality, performance, security, reliability, scalability, and the technology road map. One of the key differentiators for our business is that we have strong security and compliance credentials globally. We have both ISO 27,001 and SOC two compliance certifications. We just recently went through these compliance and we're successful in achieving them. And that is the reason why you see so many logos from regulated industries, from the finance, health care, entertainment, technology industry.

Speaker 1

They use Sky because they know they can trust us with their data and their enterprise security growth. If you ask me in a nutshell, what is our focus? Our focus is really in creating amazing employee experiences that create the engagement to drive actionable insights for our enterprise clients. So let me talk a little bit about what our architecture is and what the products are, and we'll talk about the market and what our results for twenty twenty five q two are. So, you know, the Sky platform is really a platform that's AI first and is driven to a mobile and cloud first architecture.

Speaker 1

We were the first to develop the mobile application in this space. We were first to have cloud first, and now we're the first deploying AI native application. As you think about this application platform, it is not just about the app. It's also about the infrastructure and the back end architecture that we've developed and deployed now that's really creating these amazing experiences. So when you think about our app, it's a multi OS app, could be Android, buy OS, could be on any of those platform, but it is driven towards multiple devices from the mobile device to the laptop to even the large size kiosk.

Speaker 1

And we will also be on watches as well. We will we are creating that environment that allows us multi US and multi device capability. The brains behind all of this is the VTS, which is the behind the scenes solution that drives the management. And finally, SkyView ties it all together with the actionable insights and analytics that that drive the user behavior, but also drive the the enterprise. And all of this is tied to our strategic partners on the cloud.

Speaker 1

Google Cloud is our biggest strategic partner, but we have now relationship with Azure and with AWS, and we're partnering with all three of the cloud providers to provide these end to end solutions to our esteemed customers. So now the question is how does this architecture manifest into customer experiences? And when we think about customer experiences, we think about four pillars. The first pillar is this unified employee experience, which integrates 100 plus enterprise tools and functionalities into a seamless employee experience on one single pane of glass. So from a user perspective, you don't have to go anywhere besides Sky if you wanna get your work done.

Speaker 1

Second part is the spatial intelligence. There's a key part of the Sky technology stack, focusing on optimizing physical spaces and enhancing interactions within the workplaces through multidimensional mapping technologies. The third part of this is the experiential analytics. The use of AI to derive insights into employee engagement and workplace utilization is a core component of Sky, emphasizing the value of data in making decisions as well as measured productivity. And finally, Agendaq AI boosts its efficiency and productivity by enabling multimodal activated tasks, like scheduling meetings with a simple command and features like search and discovery.

Speaker 1

This streamlines administrative duties, driving efficiency and convenience for employees, as well as personalization for on demand knowledge augmentation. This is the future. This is the future that's here now with us. So when we think about the Sky platform, we've been talking about the technology. But now, you know, from the last quarter, we have actually been out there in the market talking about our marketing initiatives or branding.

Speaker 1

And our small marketing team has actually done an amazing job this quarter with three main initiatives. Number one, sharing case studies and trend reports based on the actual user data and experiences from our global deployments. You know, we've got around, you know, 200 plus cities covered. We have 50 plus countries covered. We have deployments all over the globe.

Speaker 1

And now we're sharing all of the use cases and the case studies that drive the value, the ROI for the end user. Secondly, we've been starting to work on podcasts on key industry topics. The first one was actually with me, with Chris Daigle, who runs chiefaiofficer.com. And we had a really great off the cuff sixty minute podcast that has had a strong response to social media. Feel free to check it out on the attached link.

Speaker 1

I trust me, it will be sixty minutes of fun as we talk about not only the capabilities of our platform, but the unique experiences we found with our clients that are enabling this amazing amazing experience. Finally, we're gonna be talking more about the people that make up Sky, you know, the human side. We are an AI first enterprise where everyone on the team, whether they are in sales, marketing, finance, engineering, DevOps, all use AI. And as you can see, the first video we have is of our of our CFO, Joy, who's on the call, who's an amazing finance expert, but she's actually pretty passionate about AI. And you can see that she has a lot of to say about AI, and she she's also a user of AI.

Speaker 1

And, basically, every single employee at Sky is using AI. You know, it's it's also part of our Google partnership where we get access to Gemini enterprise access. But my expectation is clear to the team. If you do not use AI in your job function, you'll be left behind. And I'm proud to say that every team member on Sky is using it, and we're finding a lot of great capability and efficiency because of that.

Speaker 1

So that's a little bit about the company and what we do, but let me talk about the market. Let me talk about what's happened since we last talked to you guys about the market. And the headline is the corporate real estate world is getting compressed, And no pun intended, for the first time in modern history, The US is set to lose more office space than it built. And that's let that sink in. That's kind of an interesting phenomena.

Speaker 1

And and that is driven by the fact that employees don't wanna spend more more money on on space. They they're fine with the space they have. The more important thing that's happening is that the large employers are saying, we want people to come back to the office, not one day, two day, but at least three day. Most of them are asking for four day, and, actually, there are some that even asking for five day. As you can see, we've been showing you the flex index charts for the last year, and the trend is going toward more structured hybrid work.

Speaker 1

That seems the highest. But on that, the return to office or full time in the office has increased from the, you know, you know, low twenties to now 33. But the structured hybrid, which means that you're gonna be in the office at least three days, more more mostly four days is is on the rise. And, you know, in the last couple of weeks, we've had HSBC, Royal Bank of Canada, Scotiabank, TD Bank, Rogers, Starbucks, all have announced 40 in office mandates. And, actually, you know, one of the headlines that made last week was AT and T CEO, John Stankey, made a headline saying that if you don't wanna show up at the office, you not you may not be part of the new culture he believes ADNA needs.

Speaker 1

And so he's making it very clear that he needs it based on performance and loyalty and culture. And so that's where the wind is blowing is towards more and more ability to come together in the office so we can collaborate and and expand our capabilities. And by the way, just yesterday, the mighty Microsoft was reported mulling the three day return to office beginning January. So we believe that, you know, we believe work is anywhere. We believe we can provide the capability where the employees wanna be.

Speaker 1

But the reality is is corporations are reversing hybrid flexibility even as workspace density increases and floor plans shrink, pressuring real estate and workplace planners. So we're getting a lot of interest from folks that are saying, you know what? We need a solution to this problem because we're getting less space and we're getting more people back. And the reality is the Sky platform, the way we designed it, is all redoing AI powered desk reservations. They're doing capacity analysis.

Speaker 1

They're doing space time optimizations. They're doing a lot of things that will drive the innovation as well as drive the demand for this stuff. So that's a that's an interesting trend that we see. The second thing that I would like to share on the trends is the hype cycle on AI, which is now getting towards the real estate as well as the workplace experience market. We've actually been working with Gartner for over two years as we've shared our AgenTik AI story for workplace and employee transformation.

Speaker 1

I'm happy to say that they are on board with our thinking, and their AgenTik AI analyst and digital workplace experience analyst who used to have the separate little words have now come together as combined forces to create the type cycle for digital workplace applications. And as you can see in the in the workplace application, the employee experience app, which was the traditional mobile app, is kind of going through a a down cycle in terms of people are using it, but the adoption is not that high as people expected because Facebooking is just one one aspect of it. People wanna see more than Facebooking. And then on the other side, you see That is in a in a little bit of a hype cycle, but at the same time, the reality is kicking in that the agenda guy is here.

Speaker 1

It's solving problems today for customers, and customers have no issues of using the technology because it is solving a real problem for them and creating great value. So we feel pretty bullish about this opportunity, and we were headlining this Gartner report. It's out there in July. And, you know, but AgenTeq AI is transformational. You know, the way humans interact and collaborate with AI is taking dramatically forward with AgenTeq AI.

Speaker 1

The Genentech AI system understands what the goal or vision of the user is and the context to the problem what they're trying to solve. Genentech AI focuses on completing actions and outcomes versus just assistance. Like a trusted adviser that is proactive, insightful, and acts to solve problems, and that's the key. That's what we've been focused on, and that's what we believe is where the industry is headed. So that's my market overview of what's happening in the market, what we believe.

Speaker 1

It's pretty obvious to us that this day was coming. I think now is the time that the acceleration of the adoption needs to start happening. So let me talk about what happened in in q two here for us, and I'll focus on the product and customer highlights. Q two twenty twenty five was a period of strategic execution and deeper customer engagement across our Fortune 1,000 base. The company made amazing progress on existing customer growth, adoption, and usage leading to high employee engagement with a large enterprise client.

Speaker 1

Some of the key highlights, I would say, are two of our largest customers renewed this quarter and are accelerating the adoption of all Sky products as they see incredible uses of our technology platform by their employees. We had our largest ARR renewal with the leading Fortune 50 client that is now planning to expand globally to all sites as well as adopt all of the groundbreaking capabilities on the Sky platform. They want it all as they want all the employees to experience the magic of Sky. We are seeing more than a 150% plus usage at some of their sites, primarily driven by the mandate for RTO as well as the ease of using capabilities of the Sky platform. You may ask, how can you have a 150% plus usage?

Speaker 1

Well, it's pretty simple. Not only everybody who's supposed to come to the office comes to the office, but also they're getting people from out of site, out of state, or out of city coming in because the headquarters is is an important place to be. And we're finding a resurgence of people saying, well, we wanna be in person, and we wanna collaborate. So they're pretty excited. Now this also leads to interesting problems in terms of capacity planning and and trend analysis and seeing what we can do, and we'll show you a lot of the insights you've done with analytics that that is a solution for this problem.

Speaker 1

But it's a good problem to have. And by the way, they are not unique in their demand for this product. We believe that every large enterprise is grappling with this problem, grappling with the fact that, you know, people wanna come back to the office or ask to come back and there's not enough space for them and there's not enough ways to collaborate. The other big news for this quarter was one of our new clients is launching major iconic campuses across The US in the coming month that signifies their commitment to scale. Our teams work tirelessly with them, and these sites are gonna be in New York City, in LA, in Miami, all the great centers of excellence for them.

Speaker 1

So we're really excited about that deployment. And finally, if we talked last quarter, we talked about a Sky Kiosk. Well, we got our first orders in for that, and that deployment has gone successfully with our client. And now there are multiple customers lining up for Sky Kiosk, and we'll talk about how the kiosk is game changing in the market. Our Skype platform, Anchor at Jentica, is now in deployment accelerating workplace transformation at scale.

Speaker 1

Key products on the Sky platform gaining momentum, including the Sky Kiosk, allowing employees to do JIT, just in time bookings and connection from an interactive stream, all powered by the Sky BTS as the brains managing access, space, and content on the system, leading to actionable insights and outcomes with the SkyView Analytics platform. We are committed to being the system of intelligence for the hybrid workplace. So, you know, these disruptive new products that I talked about offered by the Sky platform, are a direct result of our partnership with Google Cloud or Orgentic AI technologies. Creating intelligent, superhuman like, and proactive personalized experiences at scale is made possible because of this strategic partnership. So I wanna thank the Google team, and I wanna thank our engineering teams for really working hard on this.

Speaker 1

And and when you think we we'll talk about all of these other capabilities in detail in the coming slides in terms of analytics, what we've done, where we've rolled it out to all our clients, and now we're getting some amazing insights. Sky VTS was deployed with our newest client at scale. And now since we've tested it, validated, we're gonna deploy it across all our customers this coming quarter. And then finally, we have the SkyOneMap experience. We'll show you some examples of that.

Speaker 1

One place to navigate, to book, to connect, and more. It's been great working with a new client and putting that together. Now all our clients wanting the same experience. We're super excited about that. And I'm gonna turn it to the Google partnership now.

Speaker 1

So, you know, our Google partnership and products is moving at a rapid pace as the e AI ecosystem has evolved dramatically over the last year. And it's great to see Google Gemini leading the pack with innovation cost disruption. So this year, we just signed our next year commit with Google Cloud. And as part of that, we're getting a lot of great technology capability. I'd break it down from infrastructure to spatial intelligence and security.

Speaker 1

Leveraging Gemini two dot five, Sky is now enabling automation of nuanced and multi turn booking request, significantly enhancing the employee experience where Sky agents will complete their daily space booking tasks so employees can be more productive on getting the work done versus scheduling work. And then we're using both the data engineering agent and the code and per agent in our infrastructure and our code development that's gonna accelerate the development of those products. In terms of spatial intelligence, the Gemini data agent API provides the building block to integrate Google's Booker, natural language processing and code interpreter capabilities directly into SkyView, resulting in more contextual, very insightful outcomes, allowing users to create unique, engaging, and accessible data experiences to meet their specific business needs. We'll show you an example of what we've done there with one of our clients this quarter. That's pretty amazing.

Speaker 1

And given that, you know, most of our customer base are Fortune 1,000 clients, Sky provides the enterprise grade governance framework need to accelerate AI adoption and value while ensuring trust, transparency, and security. We are using the Google Threat Intelligence, GTI platform module now, in addition to our GCP platform to provide that trusted and secure experience globally. You know, as you look at our demand is increasing with our clients, the deployments are global. Think about a forty, fifty thousand person organization that's globally it's a large bank or it's a large entertainment company, no matter what, security is top of mind. And the fact that now usage is happening not in one or two sites, it's happening in 50 sites.

Speaker 1

It's not happening with 4,000 users. It's happening with 30,000 users. It's coming to a point where security becomes, you know, essential. It's a it's well, I would say existential and essential, and we are partnering with our clients to make sure that we deliver that really on demand secure experience for them everywhere. So this is a good problem to have, but it's something that as we grow, we we are definitely gonna make it more and more important.

Speaker 1

So let me talk about the other products that we are that we delivered and that the capabilities that we offer. So you get a glimpse of, you know, specifically what are the users using it for and what's the experience like. So let me talk about the OneMap experience. We're implementing the OneMap experience across all our customers now, empowering employees to book, navigate, connect, rate, review, all through a single map view. Some favorite use cases are colleague booking.

Speaker 1

You know, you wanna see who's in the office when before you book. So that's becoming very very popular, and it's interesting that even in a small fee, if you wanna see who's in the office, wanna see their picture, wanna make sure they can connect or they can be next to them or nearby them, or maybe they wanna be far away from them. It gives them the full flexibility and opportunity. Similarly, we've got another interesting use case of emerging notifications where panic button triggers a location sharing or, you know, or or a notification that allow users to very quickly react and and also for employees to very quickly inform employees of of different actions. So that's also an exciting thing that's now, you know, fully deployed.

Speaker 1

And it's also enabled through that one map experience. You don't have to go to a separate map to book, have to get a separate map to navigate. You have one place to go, and it's interactive. It's immersive. It lets you interact very easily, and it's very easy to use.

Speaker 1

And that has been really the key part of our drive towards this one Mac experience is that ease of use and that immersive experience. I'm happy to say we just were awarded a new patent on three d mapping and augmented reality. The panel number is over there. It's really a cornerstone of our multidimensional map strategy, providing context here where immersive experiences. You know, this is a future road map for us in terms of developing that multi d environment, but we believe that, you know, a lot of our users are finding the capability to be super interesting and to find them to give them more and more context than just booking a room or booking a desk.

Speaker 1

They really wanna see what's in their environment. So super excited about that. So next, let me talk about analytics and spatial intelligence. As you know, we just talked about, you know, launching SkyView across all our customers. And you've seen the slide before that we talk about, you know, all the great things we can do in terms of space optimization, user engagement analytics, you know, give you data driven decision making capability.

Speaker 1

But the more interesting part is give you the insights and the and the analytics that allow you to do predictions. And that's been really interesting for us as we start appealing the onions with our clients. And then finally, the automation of the dashboards. You know, some people wanna have dashboards, some wanna create their own dashboard, some wanna have reports. Then then we can put all those capabilities.

Speaker 1

And this is where we partner with Google in trying that advanced SkyView capability. And so let me talk about an interesting model that our team developed. So as we look at all of the, you know, hundreds of sites that we have globally, we took a case study with one of our clients who's got, you know, the problem of cancellations of bookings. So the problem exists is that, you know, when you book a room, you have the opportunity to keep it till you cancel it. And sometimes people don't cancel in advance or sometimes it it auto cancels.

Speaker 1

Depends on the on the settings through BTS. And the funny thing we found is that, you know, we're seeing these are two campuses. One is in Southeast Asia where you have enormous number of bookings. You know, maybe there's 10,000 plus bookings a week whereas or a month. And and in in some cases, we have only a couple thousand a month in in a in a US campus, but we found that the auto cancellation or the auto release was independent of the booking volume.

Speaker 1

Like, you could have more bookings, but it didn't matter. You still would have the similar number of auto releases or or or non non auto releases, meaning cancellations. So we as we delve further into this, we actually created, you know, a model, prediction model to say, how would we be able to, you know, predict what the cancellations would be given that we have all this historical data and usage data? And we do this as a function of the campus, the department, the user title they have, what they booked ahead, how they used it. So we have all the history of the usage as well as the campus.

Speaker 1

And looking that, we've created this very accurate prediction model. We think it's more than 90% accuracy on it. But we've been able to showcase to our client really three major business impacts. Number one is real estate optimization. If you look at the number of desks that were wasted or were never ever utilized, you know, we've got a metric on what the cost per desk per day is, and we've realized that for that campus alone, there's a $300,000 cost savings in there, which is significant for a campus If you can predict or know that these desks were gonna get canceled anyway or these rooms were not gonna get booked, you don't need to you need to give it to somebody else to use or you don't need to even have those rooms or desks.

Speaker 1

Secondly, employee productivity, you know, we've seen that the number of hours that we can save an employee, you know, the the team, it's in the thousands of hours per year that we can save in terms of their lack of productivity because they're spending time trying to book and rebook and cancel, the auto release feature kinda enables that easily for them. And lastly, you know, when you have these cancellations late in the time before, you know, the the the day comes, people are not utilizing that those resources because it's too late to come back. So given that our algorithm can show you that these things will be released could be released sooner, could be canceled sooner, We've shown that you can have a 75% savings of the underutilized spaces, which is significant because this means that somebody who wanted to come to the office can now be at the office, and somebody who wasn't gonna come was actually let go earlier. So very interesting model that we built with our team. We're building these kind of models on on top of the Google AI infrastructure that will allow really value based, you know, insights and and outcomes to our clients, which is exactly what they're looking for.

Speaker 1

So I'm super excited about this this development. And let me talk about, last but not least, the brains behind our system called SkyBTS. And BTS stands for behind the scenes. So, you know, it's not Korean pop. It's really just more about making sure that we have all the capabilities that allow for a great infrastructure for our clients.

Speaker 1

And the way we think about it now is not just about traditionally, these systems used to have content management system. We've actually enabled it to have access, space, and content management. Right? And the newest client that we have is super happy with this unified experience because now you can see everything, one pane of glass. You can see your space.

Speaker 1

You can see the people using it. You can give them access control and rights to where they wanna be, where they want access. And finally, you can distribute content anywhere you want, anytime you want using NLP commands. So our future with us is we're gonna use Gemini to provide NLP based commands, and we'll be launching the solution across all our clients this coming quarter. But the beauty of the system is that, you know, in the traditional old school real estate models where you've got maps sitting somewhere, you got space information sitting somewhere else, you got people content somewhere else, there's lot of coordination that needs to happen to actually make some of these solutions work.

Speaker 1

We're now integrating all those pieces together, providing dynamic updates, and creating this really easy solution for our clients to create content, to give access control to folks, and manage their spaces more efficiently. So this is gonna be a platform play that we're gonna do across our clients. With that, this is the end of the product and customer presentation. Let me focus on now on finance, and I'm gonna move over to our CFO, Joy, to share with you the financial results for q two twenty twenty five. Joy?

Speaker 2

Thank you, Karam. And turning to our q two twenty twenty five results, picking up where Karam left off, we saw a meaningful ARR expansion this quarter anchored by two large Fortune 1,000 renewals. And I just wanna note that these aren't just contracts. They're multiyear partnerships that reflect both customer trust and the mission critical role our platform plays in our operations and in improving overall employee experience. Subscription revenue made up 96% of total revenue compared to 87% just a year ago, showing our progress toward a higher margin recurring model.

Speaker 2

Gross margin improved to 86% from 80% last year even as we invested heavily in r and d to accelerate ARR growth. EPS also increased from last quarter and from last year up to negative 16 per share, but that's an increase quarter over quarter and year over year. And then we're also happy to report that cash on hand cash as of today, year over year has increased. So we're really happy with the direction that we're heading in. And move to the next slide.

Speaker 2

We can go into more details. We did quarter over quarter. So revenue had held steady at 1,220,000.00, which is a strong outcome given some of the macroeconomic headwinds and some of the the the news we're seeing about whether or not we're heading into a recession, it just shows that we're holding steady. You'll see that cost of revenue increased slightly, but that's due to hardware that we purchased on behalf of a client. So that cost is passed through, which brings our gross margin to 8686% this quarter versus 88%.

Speaker 2

So, again, above the 80% mark, but and still holding steady. Overall, operating expenses increased, but that is attributable to some of the investment we had in r and d that Kerm talked about, our continued and expanded partnership with Google, the Gemini tools that we're using, etcetera. So, you know, you'll see a onetime pop from this quarter and an increase year over year and quarter over quarter. But, again, that's significant investment that we think is, you know, much needed at the time. Sales and marketing has held steady, and we'll continue to hold steady.

Speaker 2

We are making investments, but we're being smarter about it. So not spending more dollars, but thinking more about how we can do you know, I don't wanna use the cliche term more with less, but that's absolutely what we're doing. And we're proud of the work the team has done with the podcast, humanizing CXAI, and the case studies, and we'll continue in that vein. Quarter quarter over quarter, g and a did decrease. If you remember from last quarter, we had a bit of an increase quarter over quarter and year over year based on some of the, filings and other costs that we had that were baked into g and a.

Speaker 2

So overall, loss from operations did you know, our loss did increase, but it's, it's a significant investment in r and d. And we believe this is, you know, the the the direction that we need to go in. So taking it together, q two demonstrates our ability to maintain revenue stability, strategically invest for growth, and strengthen our market partner market position. This combination, resilient recurring revenue, disciplined disciplined cost management, and innovation investment is exactly what positions Sky to capture growing share of employee experiences. Market for penetration is still just five to 20% according to the Gartner survey that Kerm mentioned earlier.

Speaker 2

That's why we believe Sky is on a clear path to continue to lead lead the mark in this area and this new this new vertical. Kerm, over to you.

Speaker 1

Thank you, Joy. You know, and just echoing what Joy said, we've done a great job in terms of managing our expenses, but at the same time, investing in the right technology sets. And as you can see, our focus really has been on the technology. And as we scale up, we're gonna be focusing on sales and marketing as well and growing that base. But we have a very small team working that area because our best references are existing clients.

Speaker 1

And the existing clients are loving what we're doing, and they're they're investing the time and effort to help scale this business. So let me close out by the summary slide of talking about why should you invest in Sky. I think the fundamental belief that you have to believe is at the heart of Sky, we also have a simple yet powerful belief. Put the employee first and everything else follows. It's not just about the work, it's about the people who do it, the places where they come together, and the things they need to succeed.

Speaker 1

Sky redefines how we think about work, life, and the seamless interplay between the two. And I think we're onto something be really big here because as I talk to our clients that who are all the largest brands in the world in the Fortune 1,000, and they wanna work with us as partners not just the vendor customer relationship because they want us to solve their problems. And their commitment to renew and expand significantly with us in this market establishes us as the leader in this emerging market. There are many other options they could choose to. They could have the large bulge bracket, you know, large trillion dollar companies.

Speaker 1

They could also have the the other start ups that could be in the space, but they trust us because they know that what we're working on is truly transformational, truly helping them be successful. So we really believe in that transformation. We've shown a continued recurring revenue path as you see with Joy's numbers. You know, we're increasing the subscriber the subscription revenue, you know, quarter to quarter, and we have a path to profitability based on that because we believe these clients are not easy to get hold of, not easy to scale up. And once they we are with them, they wanna go everywhere.

Speaker 1

So we really believe that there's a huge opportunity for expansion with these amazing clients we have. And because of the diversity of deployment and you saw the insights that I showed you, I just gave you a snapshot. There's so many interesting insights that we're finding that will allow employers to become more savvy about what to offer to the employees, how to make them more productive in their environment, and for employees to also feel like, how can I take advantage of all the assets of my company? I think this is a two way street where employees and employees have to be together, and we believe Sky is that tool that bring brings it all together for them. And finally, you know, we are an innovation driven team.

Speaker 1

We've got a great board. We've got great management team. We're situated in Silicon Valley. We have partnership with leading innovators, and we're really on a mission to define a new category and software called employee experiences. So I'm super excited about it.

Speaker 1

I am I think we we believe that this opportunity is long term. It's not a short term opportunity. The demand is coming, and we believe that we are at the right time, at the right place, with the right technology set to be able to scale this business. With that, operator, if there are any questions from the audience, I know Joy was monitoring them. We can take some questions from the web that's there, and then we can answer them.

Speaker 1

Joy, do you have any any questions coming from the web?

Speaker 2

Yep. There are two questions, and we can tag team on them. The first one is Okay. How is Sky differentiating itself from a larger from larger AI competitors in the enterprise engagement space? And what specific areas are driving your competitive advantage?

Speaker 2

I I think I would add in, Karim. Let me know what you wanna add. Skye is delivering enterprise scale AI solutions validated in live complex workplace environment. Our platform enables advanced capabilities such as AgenTik AI based behavior analytics and intelligent employee experience orchestration. A key differentiator is that our enterprise clients actively provide feedback and collaborate with us on a product road map.

Speaker 2

I get to hear it all the time in the office, and I I love to hear it. Ensuring that we prioritize and deliver the most valuable features for real world experiences. So we're not making this up. The continuous loop of engagement from our customers ensures our innovations directly address market needs and drive measurable outcomes. As Kura mentioned, we're able to ideate, test, and deliver innovations because we're based in the Bay Area, the AI hub at the moment.

Speaker 2

This agility also allows us to respond rapidly to evolving enterprise needs while larger competitors are often a bit slower to adapt. Our size is our advantage. Our technology consistently supports organizations in improving spatialization, enhancing workforce engagement, and optimizing operational efficiency. Kerm, you wanna add anything to that?

Speaker 1

Yeah. That's that's great, Joy. I think the only thing I'll add is one of the things that we pride ourselves is localization, And this drives to this one map experience because a lot of the tools out there are digital tools and with the AI space, which definitely we leverage all the AI tools. I mean, we're using Gemini, but we're also using other other AI LLMs and tools in our platform. But what they can do is they don't know the map.

Speaker 1

They don't know the localization. They don't know some of their user history and data and the contextual awareness. We think that's a strong differentiator for us. And then finally, we integrate all these other pieces together. So, you know, it's very hard when you when you're, you know, one part of company or focus on that.

Speaker 1

We're actually more an experienced company. We focus on all these integrations. So I think those are our key differentiator. And finally, it's our great team. We deliver great service to our our our customers, and they love working with us.

Speaker 1

So I think those are the three, from my perspective, the main differentiations for us.

Speaker 2

Okay. We have a second question. Are there any strategic partnerships or integrations in the pipeline that could meaningfully accelerate market penetration over the next twelve months? Kerm, I'll I'll take the first part, and then I think you could take more and go you already talked about Google, but it may may make sense to do that. But I think we're also partnering with four other groups, design build firms, incorporating our solutions into workplace projects at the planning stage.

Speaker 2

So when a building is being built, that's probably a great time to get in there. Business process automation providers that embed our capabilities into existing client workflows and global real estate firms that are active referrals. So they refer Sky when their clients are looking for digital transformation and employee experience solutions. And then lastly, any technology ecosystem partners that have engagement platforms and then the the cloud providers, Karim, your thoughts on that?

Speaker 1

No. That's great, Joy. I think you hit all the different pieces. I think what I would say is that, you know, we believe that our best reference is our existing clients, and it's a small network of leaders in the industry because we don't work with just the project managers at these companies. We work with the c levels.

Speaker 1

So the CIO at these large clients are talking to us. The c in one case, actually, the CEOs are actually talking to us. But more and more, we have leaders in HR, in real estate, and in IT working with us. So all are at the senior executive level. And I think in that if you look at that network of people, they have a high criteria for quality products, and they have a reference group that's very, very collegial.

Speaker 1

Right? So for us, it's super important to get those clients to be at the maximum level of Sky experience, and then great things will happen. But at the same time, as Joyce said, we are working with different partners in the industry, you know, as we integrate, say, a locker or vendor. We work with them, and we work with parking folks. We work with real estate folks.

Speaker 1

So those are all there, but at the same time, our key differentiator is the technology, and that's where we partner with the cloud providers that also are, you know, providing us a lot of great access to clients, but also we're providing access to technology. So I think it's a great question. I think we we we talk about it every day at the office, and what we're finding is that, you know, they said what's working best for us is references from existing clients. Any other questions, Joy, or is this it?

Speaker 2

That's that's it.

Speaker 1

Okay. Great. Well, I wanna thank everybody for joining us in the call. We look forward to giving you updates in the coming weeks and months. We have some really interesting strategic opportunities that we're working on both from a product, technology, and market perspective.

Speaker 1

So look out for those press releases, and then we will be hopefully scheduling our next earnings call in the November time frame for q three. And look forward to your your interest in Sky, and thank you for your interest for joining the call, and look forward to sharing you future results and future success of the company. Thank you so much. Take care.

Operator

Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.

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