XTI Aerospace, Inc. (INPX)·Q3 2023 Earnings Summary

Executive Summary

• Q3 revenue declined to $2.02M (−2% q/q; −17% y/y), while gross margin expanded to 78% (+900 bps y/y) as the mix shifted toward higher‑margin subscription RTLS; operating expenses rose on acquisition/transaction costs, driving a larger operating loss q/q .
• Strategic catalysts advanced: the S‑4 for the XTI Aircraft merger became effective Nov 13; shareholder vote set for Dec 8; close expected in Q4 2023; separately, the SAVES UK spin-off into Grafiti and its proposed merger with Damon Motors was announced, with ~$85M in pre‑production reservations cited by Damon .
• Cash and equivalents ended Q3 at $13.49M (down from $15.68M in Q2), providing near‑term liquidity but with continued operating losses and transaction costs as headwinds .
• Nasdaq issued a delisting determination (sub‑$0.10 bid for 10 days); the company intends to appeal and may enact a reverse split, a potential overhang until resolved; closing the XTI deal is expected to facilitate compliance efforts .

What Went Well and What Went Wrong

• What Went Well

  • Gross margin improved to 78% in Q3 (vs. 69% a year ago) as the company continued transitioning RTLS from one‑time sales to higher‑margin subscription revenue, which management expects will support improved operating results over time .
  • Strategic milestones: S‑4 declared effective; XTI shareholder meeting scheduled; merger expected to close in Q4 2023; spin-off of Grafiti (SAVES UK) and proposed merger with Damon outlined, broadening potential equity optionality for shareholders .
  • CEO tone on value creation: “We believe these transactions will be transformational for Inpixon and our shareholders, providing the opportunity to be stockholders in two separate, publicly traded companies” .

• What Went Wrong

  • Top‑line pressure: Q3 revenue fell to $2.02M (−17% y/y), with management citing longer sales cycles in Indoor Intelligence as the primary driver .
  • Operating expenses rose to $10.65M (+$3.5M y/y), mainly due to acquisition and transaction costs, pressuring operating loss (−$9.08M) and non‑GAAP metrics (Adjusted EBITDA −$4.11M) .
  • Listing risk emerged: Nasdaq issued a staff delisting determination; while the company intends to appeal and may reverse split, the listing outcome remains uncertain near term .

Financial Results

Sequential performance (oldest → newest):

Year-over-year (oldest → newest):

KPIs and strategic context:

Notes:

• Revenue decline was attributed to longer sales cycles; gross margin expansion was driven by lower cost of revenue in SAVES and Indoor Intelligence and by the shift to recurring subscription sales .
• Non‑GAAP definitions and reconciliations are provided in the 8‑K Exhibit 99.1; Adjusted EBITDA excludes non‑cash and non‑recurring items including stock‑based comp, transaction costs, and gains/losses on securities .

Guidance Changes

Earnings Call Themes & Trends

Note: The Q3 2023 earnings call transcript could not be retrieved from the document repository; themes below reflect disclosures in Q1–Q3 press releases.

Management Commentary

• “We have entered into two definitive agreements with innovative transportation companies... We believe these transactions will be transformational for Inpixon and our shareholders” — Nadir Ali, CEO .
• “Our proposed merger with XTI Aircraft Company is progressing as anticipated… S‑4… declared effective… shareholder meeting… December 8th, 2023… We anticipate closing this transaction during the fourth quarter of 2023” .
• “We also continued transforming our real-time location system (RTLS) business from one-time sales to recurring, higher-margin subscription sales, which resulted in improved gross margin for the quarter… We ended the quarter with over $13.5 million in cash and cash equivalents” .
• Prior periods: “We’re excited to have recently announced entering into a definitive merger agreement with XTI Aircraft… With over 700 conditional pre-orders… representing the potential for gross revenues of approximately $7.1 billion” (Q2 press release) . “The spinoff of the workplace experience business line was our most significant accomplishment in the first quarter… revenue to $3.1 million… reallocated resources and streamlined operations to focus on RTLS” (Q1 press release) .

Q&A Highlights

• Not available: The Q3 2023 earnings call transcript could not be accessed in the document repository; no Q&A details were disclosed in the press release -.

Estimates Context

• Wall Street consensus (S&P Global) for INPX Q3 2023 EPS and revenue was unavailable via our S&P Global connector (no CIQ mapping for this ticker), so we cannot benchmark reported results vs. estimates. As a result, any beat/miss analysis relative to consensus is not provided.

Key Takeaways for Investors

• Margin narrative constructive despite soft revenue: Gross margin expanded to 78% on mix and subscription shift, partially offsetting sales cycle headwinds; sustaining this shift is key to improving operating leverage .
• Opex/transaction drag likely persists near term: Elevated acquisition/transaction costs inflated OpEx to $10.65M; visibility on normalization depends on deal timing .
• Liquidity adequate but trending lower: Cash fell to $13.49M; continued operating losses and deal costs warrant close monitoring of capital needs .
• Catalysts ahead: XTI merger vote (Dec 8) and expected Q4 close; Grafiti/Damon spin and Q1 2024 close; both could reset the equity narrative and structure .
• Listing risk is a swing factor: Nasdaq delisting process and potential reverse split create binary headline risk; successful transaction close and compliance plan could remove an overhang .
• Strategic optionality: Post‑merger, investors could gain exposure to an aerospace VLCA platform with 700+ conditional pre‑orders (subject to certification/execution), and a separate Damon‑combined company, broadening potential upside tails albeit with execution risk .

Appendix: Source Documents

• Q3 2023 Form 8‑K and Exhibit 99.1 press release (financial results and strategic updates) -.
• Q2 2023 Form 8‑K and Exhibit 99.1 press release -.
• Q1 2023 Form 8‑K and Exhibit 99.1 press release -.