Nine months ago, I rated Sprinklr ( NYSE: CXM ) as a hold. The stock's current price is essentially unchanged since then. At that time, I claimed "plenty of downside risks loom over the company and promise to leave the company and the stock rightDr. Duru has blogged about financial markets since the year 2000. A veteran of the dot-com bubble and bust, the financial crisis, and the coronavirus pandemic, he fully appreciates the value in trading and investing around the extremes of market behavior. In this sp ...

Sprinklr (NYSE: CXM ) has been on a challenging path for the greater part of the last 12–18 months. With sales execution significantly underperforming, the company saw material revenue growth deceleration and a more volatile margin profile. While the companyAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am n ...

Financial Performance - Revenue for the year ended January 31, 2025, was $796.4 million, up from $732.4 million in 2024 and $618.2 million in 2023, indicating a growth trend [70]. - The company reported an accumulated deficit of $626.1 million as of January 31, 2025, compared to $474.8 million in 2024, highlighting ongoing financial challenges [72]. - The company has incurred significant net losses in the past and may continue to do so as it invests in growth initiatives [72]. - The company’s stock price may be volatile, influenced by various market assumptions and the accuracy of its financial guidance [80]. - Customer renewal rates and the ability to attract new customers are critical for maintaining revenue growth and profitability [76]. - Customer renewal rates and expansion are vital for maintaining revenue, with fluctuations influenced by customer satisfaction and economic conditions [91]. Market and Competitive Landscape - The market for Unified-CXM solutions is rapidly evolving, and the company faces risks if it cannot effectively compete or adapt to market changes [68]. - The competitive landscape for Unified-CXM solutions is intensifying, with competitors potentially offering similar products at more attractive prices [88]. - The Unified-CXM platform's market acceptance is crucial for the company's growth, with potential adverse effects if demand does not meet expectations [86]. - The company aims to expand its customer base by targeting governmental agencies, which presents unique challenges and risks [77]. Investment and Growth Strategy - The company plans to invest significantly in its Unified-CXM platform, including enhancements to technology infrastructure and expansion of sales and marketing efforts [74]. - The company invests at least 10% of its revenue in research and development for the years ending January 31, 2025, and 2024 [114]. - The company may acquire or invest in businesses to expand its Unified-CXM platform, but such transactions may divert management's attention and result in additional dilution to stockholders [120]. - Future success depends on the ability to innovate and introduce new products, with potential delays or errors impacting customer satisfaction [99]. Operational Challenges - The company has experienced significant growth in the number of enterprises and end users, which has increased operational complexity and demands on resources [75]. - The company faces risks from reliance on third-party data centers, which could impair service delivery and harm business operations [95]. - The company may incur significant costs and service interruptions if data center agreements are not renewed on favorable terms [98]. - The ability to attract and retain qualified talent is critical, with competition for skilled professionals impacting operational execution [94]. Intellectual Property and Legal Risks - The company faces challenges in maintaining adequate intellectual property protections in foreign countries, which could impact its competitive position [133]. - The costs associated with protecting intellectual property rights are significant and can detract from resources available for development and marketing activities [138]. - The company may incur substantial expenses and liabilities due to claims of intellectual property infringement, which could adversely affect its financial condition [141]. - Indemnification provisions in customer agreements may expose the company to significant liabilities related to intellectual property claims [144]. - The company is subject to ongoing securities litigation, including a class action filed in August 2024 and a derivative action filed in March 2025 [148]. Regulatory and Compliance Risks - The company is subject to stringent data privacy and security obligations, with non-compliance potentially resulting in regulatory actions, litigation, and reputational harm [164]. - The company may face significant penalties if it fails to comply with the Health Insurance Portability and Accountability Act (HIPAA) when processing protected health information [166]. - Noncompliance with the EU General Data Protection Regulation (GDPR) can result in fines of up to €20 million or 4% of global annual turnover, and similar penalties apply under the UK GDPR [169]. - The company is exposed to increased scrutiny regarding third-party data suppliers, which may face compliance risks that could affect data availability and costs [173]. Cybersecurity Risks - The company faces significant cybersecurity risks, including potential vulnerabilities in its Unified-CXM platform and third-party systems, which could lead to operational disruptions and reputational harm [184][186][192]. - Cyber-attacks, particularly ransomware, are prevalent and can result in substantial operational interruptions, loss of data, and financial impacts [186][187]. - The company relies on third-party technologies for critical business operations, and any security incidents involving these third parties could adversely affect its operations and reputation [189][190]. Tax and Financial Regulations - The company is subject to evolving tax obligations across various jurisdictions, which could lead to substantial tax liabilities and affect its financial results [199][201]. - Recent legislation, such as the Inflation Reduction Act, may increase the company's tax liabilities, impacting its overall profitability [204]. - The company’s international operations are subject to complex tax regulations, and disagreements with tax authorities could result in additional taxes and penalties [202][203]. International Operations - Approximately 41% of the company's sales during the year ended January 31, 2025, were to customers outside of the Americas [123]. - The company expects to continue expanding its international operations, which may include opening additional offices and providing services in more languages [123]. - The company faces various risks in international operations, including increased management costs and compliance with non-U.S. data privacy laws [124]. Corporate Governance - As of January 31, 2025, holders of Class B common stock controlled approximately 89.3% of the voting power, concentrating control over corporate matters [212]. - The company’s amended and restated bylaws restrict stockholder actions and require a majority of the board to call special meetings [225]. - Certain amendments to the company's certificate of incorporation require approval from at least 66 2/3% of outstanding common stock [225].

On Thursday, Wall Street analysts rerated Sprinklr Inc CXM after the company reported its fourth-quarter report Wednesday.The company reported quarterly revenue of $202.54 million, up 4% year-over-year, topping the analyst consensus estimate of $200.58 million.Adjusted EPS of $0.10 topped the analyst consensus estimate of $0.07.Rosenblatt analyst Catharine Trebnick reiterated Sprinklr with a Buy and raised the price target from $10.50 to $12.Scotiabank analyst Allan Verkhovski maintained Sprinklr with a Sec ...

Financial Data and Key Metrics Changes - In Q4 FY '25, total revenue grew 4% year-over-year to $202.5 million, while subscription revenue increased 3% year-over-year to $182.1 million [8][31] - Non-GAAP operating income for the quarter was $25.9 million, resulting in a 13% non-GAAP operating margin [8][35] - For the full year FY '25, total revenue was $796.4 million, up 9% year-over-year, with subscription revenue of $717.9 million, up 7% [38] Business Line Data and Key Metrics Changes - Professional services revenue for Q4 was $20.5 million, contributing to the overall revenue [31] - The subscription revenue-based net dollar expansion rate was 104% in Q4, reflecting the impact of elevated churn experienced during FY '25 [32] - The number of customers generating at least $1 million in annual subscription revenue grew by 18% year-over-year to 149 [19][33] Market Data and Key Metrics Changes - The company reported a total remaining performance obligation (RPO) of $987.7 million, up 2% year-over-year, with current RPO at $612.5 million, up 4% [38] - Calculated billings for Q4 were $298.6 million, an increase of 10% year-over-year [37] Company Strategy and Development Direction - The company is focusing on transforming its business with a clear ambidextrous strategy and execution plan to grow its core while enhancing its service offerings [9][22] - A restructuring plan was implemented, including a 15% reduction in workforce to optimize expenses and reallocate resources [15][41] - The go-to-market coverage model has been redefined to focus on the top 400 customers, aiming to deepen relationships and enhance product innovation [18][20] Management's Comments on Operating Environment and Future Outlook - Management views FY '26 as a transitional year to stabilize the business and improve execution, with a focus on consistent delivery and customer satisfaction [27][28] - The macro environment is described as unpredictable, but the company believes it is well-positioned to handle challenges due to its strong balance sheet and prudent guidance [103][106] Other Important Information - The company is experiencing higher data and hosting costs, which are expected to negatively impact subscription gross margins by approximately 400 basis points for FY '26 [47] - Free cash flow generation for FY '25 was $59.2 million, with expectations of approximately $120 million for FY '26, representing a 100% increase [52] Q&A Session Summary Question: What avenues are driving cost efficiency? - Management emphasized a focus on making the business more efficient without sacrificing growth, optimizing investments in critical areas and restructuring the go-to-market model [56][61] Question: What is the impact of higher data costs on subscription gross margin? - The CFO noted that rising data costs are affecting gross margins, particularly due to increased expenses from data feeds and new data centers [69][71] Question: How is the company prioritizing new customer acquisition versus existing customers? - Management indicated a tactical focus on solidifying and expanding the existing customer base while also pursuing new logos, with a 70/30 emphasis on existing customers [78][81] Question: What are the challenges with implementation? - Management acknowledged historical implementation challenges and is working to standardize and improve the process to enhance customer satisfaction and upsell opportunities [82][86] Question: What is the hiring strategy for go-to-market resources? - The company plans to hire in the second half of the year to ensure new sales representatives are ramped up in time for FY '27, focusing on both account executives and technical success managers [94][100] Question: How is the macro environment affecting customer spending? - Management noted that while there is some uncertainty in the macro environment, they are not seeing significant issues in the pipeline and believe they can navigate through potential challenges [103][106] Question: How significant is the federal government business for Sprinklr? - Management stated that federal government business is very small and not material to the overall business [112] Question: Has anything in the transformation process been harder than expected? - Management indicated that while there are challenges, the technology and market demand are strong, and the focus is on improving execution and consistency [114][120]

Core Viewpoint - Sprinklr reported quarterly earnings of $0.10 per share, exceeding the Zacks Consensus Estimate of $0.07 per share, but down from $0.12 per share a year ago, indicating a 42.86% earnings surprise [1] Financial Performance - The company achieved revenues of $202.54 million for the quarter ended January 2025, surpassing the Zacks Consensus Estimate by 1% and showing an increase from $194.21 million year-over-year [2] - Over the last four quarters, Sprinklr has exceeded consensus EPS estimates three times and topped revenue estimates four times [2] Stock Performance - Sprinklr shares have declined approximately 4.4% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $200.24 million, and for the current fiscal year, it is $0.37 on revenues of $819.21 million [7] - The outlook for the Technology Services industry, where Sprinklr operates, is favorable, ranking in the top 30% of over 250 Zacks industries, suggesting potential for outperformance [8]

Revenue Performance - Q4 total revenue was $202.5 million, representing a 4% year-over-year increase from $194.2 million[7]. - Q4 subscription revenue reached $182.1 million, up 3% year-over-year from $177.0 million[8]. - Fiscal year 2025 total revenue was $796.4 million, a 9% increase from $732.4 million in fiscal year 2024[8]. - Fiscal year 2025 subscription revenue was $717.9 million, up 7% from $668.5 million year-over-year[8]. - Total revenue for the three months ended January 31, 2025, was $202.539 million, a 4.3% increase from $194.207 million in the same period of 2024[20]. - Subscription revenue increased to $182.067 million for the three months ended January 31, 2025, compared to $176.960 million in the prior year, reflecting a growth of 2.5%[20]. - Sprinklr anticipates fiscal year 2026 total revenue between $821.5 million and $823.5 million[13]. - For Q1 fiscal 2026, the company expects total revenue between $201.5 million and $202.5 million[13]. Profitability Metrics - Q4 GAAP operating income was $10.5 million, down from $18.5 million in the same quarter last year, with a GAAP operating margin of 5%[8]. - Operating income for the three months ended January 31, 2025, was $10.459 million, down from $18.460 million in the same period of 2024, indicating a decrease of 43.4%[20]. - Net income for the year ended January 31, 2025, was $121.609 million, significantly up from $51.403 million in 2024, representing a year-over-year increase of 136.1%[22]. - Net income for the three months ended January 31, 2025, was $98,679 thousand, translating to $0.39 per share, compared to $21,143 thousand or $0.08 per share for the same period in 2024[25]. - The company reported a net income of $121,609 thousand for the year ended January 31, 2025, or $0.47 per share, compared to $51,403 thousand or $0.19 per share for the year ended January 31, 2024[25]. Cash Flow and Assets - Cash flow from operating activities for the year ended January 31, 2025, was $77.590 million, compared to $71.465 million in 2024, showing an increase of 8.6%[22]. - Free cash flow for the year ended January 31, 2025, was $59.157 million, compared to $51.140 million in 2024, reflecting an increase of 15.7%[24]. - Total current assets decreased to $854.097 million as of January 31, 2025, from $1,000.976 million a year earlier, a decline of 14.6%[18]. Stockholder Equity and Liabilities - Total liabilities increased to $572.136 million as of January 31, 2025, from $543.406 million a year earlier, an increase of 5.3%[18]. - The company’s total stockholders' equity decreased to $612.063 million as of January 31, 2025, from $679.704 million in 2024, a decline of 9.9%[18]. Non-GAAP Metrics - Non-GAAP net income per share for Q1 fiscal 2026 is projected to be approximately $0.10[13]. - Non-GAAP Net Income for the year ended January 31, 2025, was $95,332 thousand, or $0.37 per share, compared to $109,505 thousand or $0.41 per share for the year ended January 31, 2024[25]. - Non-GAAP Net Income for the three months ended January 31, 2025, was $27,041 thousand, or $0.11 per share, compared to $35,052 thousand or $0.13 per share for the same period in 2024[25]. Stock-Based Compensation - Stock-based compensation expense-related charges for the three months ended January 31, 2025, were $15,420 thousand, or $0.06 per share, compared to $13,859 thousand or $0.05 per share for the same period in 2024[25]. - Stock-based compensation expense-related charges for the year ended January 31, 2025, were $60,663 thousand, or $0.23 per share, compared to $57,902 thousand or $0.22 per share for the year ended January 31, 2024[25].

Financial Results - Sprinklr, Inc. is set to release its fourth-quarter financial results on March 12, with analysts expecting earnings of 7 cents per share, a decrease from 12 cents per share in the same period last year [1] - The company projects quarterly revenue of $200.59 million, up from $194.21 million a year earlier [1] Workforce Reduction - On February 6, Sprinklr announced plans to reduce its workforce by 15% [1] Stock Performance - Sprinklr shares fell 2.9% to close at $8.19 on Monday [2] Analyst Ratings - JMP Securities analyst Patrick Walravens reinstated a Market Outperform rating with a price target of $17 [4] - Rosenblatt analyst Catherine Trebnick maintained a Buy rating with a price target of $10.5 [4] - JP Morgan analyst Pinjalim Bora downgraded the stock from Overweight to Neutral with a price target of $11 [4] - Barclays analyst Raimo Lenschow maintained an Underweight rating and raised the price target from $7 to $9 [4] - Citigroup analyst Tyler Radke maintained a Neutral rating and cut the price target from $11 to $9 [4]

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