So who’s using this product and why is this so transformative? We’re blessed to have really great customers across many enterprise verticals. The primary business now is a SaaS platform that we sell to enterprise customers and an annual subscription for normally three-year periods. Today, customers deploy our cloud-hosted software across their enterprise campuses to allow employees to connect with their workplace for a lot of different use cases, examples being desk room booking, collaboration, navigation, food ordering, and internal communication. Our large enterprise customers are mainly divided into the following top five verticals, financial services, technology, media and entertainment, healthcare, and consumer. We are proud to have some of the largest logos of the world as our customers that are at the leading edge of the workplace transformation.
We have a healthy distribution across all verticals and we see the adoption trend developing from technology sector focused companies to larger Fortune 1000 portfolio. As you can see, some of the new logos that we’ve had are coming from the financial services, from health tech, and from media and entertainment. A lot of regulated industries are adopting our technology because they see the value of the mobile first application that we have. But all of our customers are sophisticated buyers of technology solutions and do not compromise on quality, performance, security, reliability, scalability, and technology roadmap. So that’s why we – as we compete in the market, we find us to be at the leading edge of all these large enterprises. So let me talk about the transformation we’ve done overall as a company.
As we think about the business, the predecessor business that we acquired was the custom design services for enterprise clients business. While this approach provided customized solutions, it limited our scalability and ability to solve a broader market and heavily weighted the business to one-time revenues. Upon taking over the business last year, we immediately recognized the need to evolve. That’s why we made a strategic shift to become an AI first, subscription-based SaaS platform. This transition empowers us to deliver a unified work experience to our workplace SuperApp. By leveraging AI, we can drive personalized user experience, automate tasks, and provide valuable data insights to our customers. This shift towards a platform model with recurring revenue streams positions CXAI for long term sustainable growth.
Ultimately, it’s a win-win for both CXAI and our customers. We gain scalability and efficiency while our customers benefit from a platform that leverages the software capabilities at scale, as well as by more engaging productive work experience. So when you look at our today’s business, we are signing multi-year AR licenses. We are going to multi-cloud now. Besides Google Cloud, we have deployments with AWS, as well as with Azure. And then we are now building feature based releases with engineering. So you’re seeing a much, much more refined engineering team, as well as a much more clear product focus in driving scalability. As you look to the future and all the work that we’re doing with CXAI platform, we’re really moving the value chain into the value to the user and to the end user experiences, as well as providing a SaaS platform with microservices.
And lastly, but most importantly, the data analytics and the Gen AI applications are where we’re headed. So we’ve gone through this transformation in year one. We’re ready for year two in terms of scaling of this business. And we’re super excited that we’re achieving a lot of success with our customers and our partners in achieving that mission. So I want to just recap our mission statement, which I know that when we acquired the business, we’ve had it and we’re going to stick with it because it is the right mission and vision. The CXAI SaaS platform is anchored on the intersection of customer experience and artificial intelligence, providing digital transformation of the workplace to enhance experiences across people, places and things. So that’s our mission.
That’s been our focus. And I’m really proud that the team has executed this year to get us to this phase. So now I’m going to flip over to the financial section and financial results. We’re going to talk about Q4 first and then we’re going to talk about the year, comparing from year to year. So let’s get into it. On Q4, it’s been a great, amazing Q4 for us. We’ve had double-digit growth in our ARR, which is annual recurring revenue, which is a key metric for us. We saw the significant increase due to some really large wins. Our team pulled through these deals after lots of scrutiny and testing, as well as fierce competition. And this transferred to robust future subscription revenue and a healthy pipeline. Additionally, subscription revenue continues to increase and is now 81% of our total revenue.
This again reinforces our successful transition to a recurring revenue model. And we continue to increase that percentage. If you recall, this was – at the time of transaction, it was in the 60s to 70%, but now it’s north of 80%. Our gross margins remain strong at 80%, indicating operational efficiency and healthy profitability potential as we scale our business. On the customer acquisition side, we proudly have secured two enterprise clients, NBC Universal, one of the largest media entertainment companies in the world, and a greater than $5 billion investment management company in the financial services has been the two big wins for this quarter. This further validates the market demand for our solution with the world’s biggest enterprise companies.
We’re super excited to work with them. And with these clients, we are going to deploy it with CXAI and with our newly formed Google Cloud partnership. Finally, we have achieved a 56% net reduction in operating expenses comparing to Q3 2022. This proactive cost optimization will position us for sustainable growth and strategic investment. So as you’ve done that restructuring, we have, as I mentioned earlier, doubled the number of engineering staff that’s supporting it. We’ve taken out a lot of the G&A costs and other costs in sales and marketing that were not productive for us, but we’re now really at a tipping point of scaling up with the right technology, right platform, and the right focus of the business. Now I’m going to move to 2023. How do we do there?
