Sprinklr Announces Second Quarter Fiscal 2026 Results NEW YORK, New York--September 3, 2025--Sprinklr (NYSE: CXM), the unified customer experience management (Unified-CXM) platform for modern enterprises, today reported financial results for its second fiscal quarter ended July 31, 2025. "Our Q2 results reflect the continued and intentional progress we are making in our transformation to better serve our customers and partners. And while we still have work to do, we are encouraged by the increasing quality ...

Core Viewpoint - The article discusses the investment outlook for Sprinklr (NYSE: CXM), maintaining a hold rating due to the expectation that valuation upside will not occur until the company delivers tangible results from initiatives led by the new CEO [1]. Group 1: Company Overview - Sprinklr is currently under the leadership of a new CEO, and the author emphasizes the need for the company to show concrete results from recent initiatives before any positive valuation changes can be anticipated [1]. Group 2: Investment Strategy - The author highlights a diverse investment background, utilizing various approaches such as fundamental, technical, and momentum investing to refine their investment process [1]. - The purpose of writing on Seeking Alpha is to track investment ideas and connect with like-minded investors [1].

Core Insights - Sprinklr reported revenue of $205.5 million for the quarter ended April 2025, marking a year-over-year increase of 4.9% and an EPS of $0.12 compared to $0.09 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $201.89 million by 1.79%, and the EPS surpassed the consensus estimate of $0.10 by 20% [1] Financial Performance Metrics - Gross Margin for Subscription was reported at 77%, above the five-analyst average estimate of 76.4% [4] - Gross Margin for Professional Services was 4%, compared to the two-analyst average estimate of -1% [4] - Subscription Revenue reached $184.13 million, exceeding the average estimate of $182.39 million by analysts, representing a year-over-year increase of 3.8% [4] - Professional Services Revenue was reported at $21.37 million, surpassing the average estimate of $19.49 million, reflecting a year-over-year change of 14.9% [4] Stock Performance - Sprinklr's shares have returned 17.1% over the past month, outperforming the Zacks S&P 500 composite's 5.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Revenue Performance - Total revenue for the three months ended April 30, 2025, was $205.5 million, an increase from $196.0 million in the same period of 2024, representing a growth of 4.8%[161] - Subscription revenue increased to $184.1 million in Q1 2025 from $177.4 million in Q1 2024, reflecting a growth of 3.8%[161] - Total revenue for the three months ended April 30, 2025, was $205.5 million, a 5% increase from $196.0 million in the same period of 2024[163] - Subscription revenue increased by 4% to $184.1 million, while professional services revenue rose by 15% to $21.4 million[163][164] Profitability and Expenses - Gross profit for the three months ended April 30, 2025, was $142.9 million, with a gross margin of approximately 69.5%[161] - Operating expenses totaled $144.6 million for Q1 2025, up from $139.1 million in Q1 2024, driven by increased sales and marketing expenses[161] - The company reported a net loss of $1.6 million for the three months ended April 30, 2025, compared to a net income of $10.6 million in the same period of 2024[161] - Research and development expenses were $22.8 million for Q1 2025, slightly up from $22.5 million in Q1 2024, reflecting ongoing investment in product development[161] - Sales and marketing expenses decreased to $71.1 million in Q1 2025 from $87.5 million in Q1 2024, due to recent restructuring efforts[161] - General and administrative expenses increased by 18% to $34.4 million, representing 17% of total revenue[171] - Restructuring expenses amounted to $16.3 million, constituting 8% of total revenue[172] - Non-GAAP net income for the three months ended April 30, 2025, was $32.3 million, or $0.13 per share, compared to $25.8 million, or $0.09 per share in 2024[181] Customer Metrics - The company had 146 large customers as of April 30, 2025, an increase from 138 large customers a year earlier, indicating growth in its enterprise customer base[139] Future Revenue Visibility - Remaining Performance Obligation (RPO) as of April 30, 2025, was $943.2 million, with Current RPO (cRPO) at $596.8 million, indicating strong future revenue visibility[141] Cash Flow and Liquidity - Cash provided by operating activities increased to $83.8 million in Q2 2025 from $41.7 million in Q2 2024, driven by a significant decrease in accounts receivable[192] - Free cash flow for the three months ended April 30, 2025, was $80.7 million, up from $36.2 million in the same period of 2024[190] - As of April 30, 2025, the company had $126.4 million in cash and cash equivalents and $443.8 million in marketable securities, indicating strong liquidity[182] Financial Obligations and Shareholder Returns - The company has contractually obligated expenditures totaling $324.8 million through fiscal year 2030, with $107.1 million due within the next twelve months[186] - A share repurchase program was authorized for up to $150 million of Class A common stock, reflecting the company's commitment to returning value to shareholders[187] Investment Activities and Future Outlook - Cash used in investing activities for the three months ended April 30, 2025, was $108.0 million, primarily due to purchases of marketable securities[194] - The company expects free cash flow to fluctuate in future periods due to changes in operating expenses and continued investments in growth[191] - The company may finance future acquisitions through cash, debt, or stock, maintaining financial flexibility for strategic growth initiatives[189] Market and Performance Metrics - Net Dollar Expansion Rate (NDE) for the trailing 12-month period ending April 30, 2025, was 101.8%, down from 114.6% in the previous year, attributed to increased churn and down-selling[142] - Total costs of revenue increased by 23% to $62.6 million, with subscription costs rising by 30% to $42.2 million[166] - Gross margin for subscription decreased from 82% to 77%, while gross margin for professional services improved from 0% to 4%[168] - Research and development expenses were $22.8 million, representing 11% of total revenue, a slight increase from 12% in the prior year[169] - Sales and marketing expenses decreased by 19% to $71.1 million, accounting for 35% of total revenue, down from 45%[170] - Other income decreased by 8% to $6.9 million, primarily due to a decline in interest income[173] - Provision for income taxes increased by 162% to $6.7 million, representing 3% of total revenue[174]

Core Viewpoint - Sprinklr's recent results indicate progress in its transformation, despite challenges with customer churn and down-sell activity [1][2]. Financial Performance - Total revenue reached $205.5 million, reflecting a 5% year-over-year increase, surpassing the Street estimate of $201.8 million and guidance of $201.5 million to $202.5 million [6]. - Subscription revenue increased by 4% year-over-year to $184.1 million, accounting for 90% of total revenue and exceeding consensus estimates by $1 million [6]. - Professional services revenue was $21.4 million, up 15% year-over-year, beating the analyst's estimate by approximately $2 million [6]. - Operating income stood at $36.7 million, representing an 18% margin, which exceeded the analyst estimate of $32.3 million (16% margin) and guidance of $31.5 million to $32.5 million [6]. - Adjusted EPS was 12 cents, beating the Street estimate of 10 cents [6]. Customer Dynamics - Net Revenue Retention (NRR) declined to 102% from 104% in the previous quarter, attributed to ongoing customer churn and down-sell activity [2]. - The number of customers generating over $1 million in subscription revenue grew by 6% year-over-year to 146, but saw a quarter-over-quarter decline from 149 due to limited renewals and reduced up-sell/cross-sell activity [2]. Strategic Initiatives - Management is focusing on reducing churn through the "Project Bear Hug" initiative, which has engaged over 200 of its top 500 customers and is showing positive results [3]. - Standardization of implementation processes has reached 80% consistency to enhance customer success [3]. - A comprehensive go-to-market overhaul, including new sales pod structures and enablement programs, is expected to gain momentum in the second half of 2026, positioning Sprinklr for potential acceleration in fiscal 2027 and 2028 [4]. Market Reaction - CXM shares increased by 0.55% to $9.11 during the last check on Thursday [5].

Group 1 - The article highlights Sprinklr, Inc. (NYSE: CXM) as a focus for investment analysis after several years, indicating it is a "busted IPO" that emerged during the IPO/SPAC wave of 2020/2021, driven by the Federal Reserve's zero interest rate policies [1] - The Busted IPO Forum, led by Bret Jensen, specializes in identifying small-cap stocks that have been public for 18 months to 6 years and are trading significantly below their initial offering price [1] Group 2 - The article does not provide specific financial metrics or performance data for Sprinklr, Inc. or the broader market context [1]

Group 1 - The stock market appears complacent regarding long-term macro risks, including potential recessionary impacts from tariffs and signs of strain in the bond market [1] - Emphasis is placed on value stocks over growth stocks in the current market environment [1] - Gary Alexander has extensive experience in technology companies and has been a contributor to Seeking Alpha since 2017, providing insights into industry trends [1]

Core Viewpoint - Sprinklr reported quarterly earnings of $0.12 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.09 per share a year ago, indicating a 20% earnings surprise [1][2] Financial Performance - The company achieved revenues of $205.5 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 1.79%, and up from $195.96 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 increased approximately 1.2% since the beginning of the year, compared to a 1.5% gain 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] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.09 on revenues of $202.92 million, and for the current fiscal year, it is $0.38 on revenues of $820.03 million [7] - The trend of estimate revisions for Sprinklr is mixed, which could change following the recent earnings report [6] Industry Context - The Technology Services industry, to which Sprinklr belongs, is currently ranked in the top 19% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 grew 5% year over year to $205.5 million, while subscription revenue increased 4% year over year to $184.1 million [6][22] - Non-GAAP operating income was $36.7 million, resulting in an 18% non-GAAP operating margin for the quarter [6][25] - Free cash flow generation reached a record $81 million for the quarter [6][26] - The subscription revenue base net dollar expansion rate was 102%, reflecting ongoing customer churn and downsell activity [22] Business Line Data and Key Metrics Changes - Professional services revenue was $21.4 million, contributing to the overall revenue growth [22] - Subscription gross margin was 78%, while professional services gross margin was 6%, leading to a total non-GAAP gross margin of 70% [24] - The number of customers generating at least $1 million in annual subscription revenue increased by 6% year over year to 146 [22][23] Market Data and Key Metrics Changes - The company noted that macroeconomic uncertainty has led to longer sales cycles and increased scrutiny of enterprise spending [9][28] - The core pipeline is reported to be at its highest level in the past 18 months, indicating a healthy market position [11][54] Company Strategy and Development Direction - The company is focused on transforming its business through an ambidextrous strategy, optimizing cost structures, and strengthening product delivery roadmaps [8][12] - Project Bearhug aims to engage the top 500 customers, representing approximately 80% of revenue, to improve customer relationships and drive ROI [14][15] - The company is committed to enhancing its AI-native platform to deliver unified customer experience management [20][21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that FY 2026 is a transitional year with expected challenges due to past execution issues and macroeconomic factors [9][10] - There is optimism about future growth as the company works to improve execution and customer engagement [20][21] - The company maintains its guidance for FY 2026, expecting subscription revenue to be in the range of $741 million to $743 million, representing 3% growth year over year [33][34] Other Important Information - The company has authorized a new $150 million stock buyback program, expected to be completed by June 30, 2026 [26] - Total remaining performance obligations (RPO) increased by 2% year over year to $943.2 million [27] Q&A Session Summary Question: What is the timeline for the go-to-market strategy to reach its full potential? - Management indicated that FY 2026 is transitional, with expectations for improved sales execution and customer engagement in the latter half of the year [40][42] Question: What differentiates Sprinklr in the CCaaS market? - The AI capabilities of the platform are key differentiators, providing a unified experience for agents and customers [44][46] Question: Is the elongation in sales cycles broad-based across customers? - Management noted that the scrutiny is widespread, affecting all customers, but emphasized that the company is seeing opportunities in its pipeline [52][54] Question: What is driving logo churn and how should it be viewed through the year? - Management attributed churn to execution challenges and emphasized the need for improved customer engagement and implementation consistency [55][56] Question: What R&D activities are being pursued to help with renewals? - The company is focusing on improving user experience and exploring acquisition opportunities to enhance its core offerings [66][68]

Financial Data and Key Metrics Changes - Total revenue for the first quarter grew 5% year over year to $205.5 million, while subscription revenue increased 4% year over year to $184.1 million [5][22] - Non-GAAP operating income was $36.7 million, resulting in an 18% non-GAAP operating margin for the quarter [5][24] - Free cash flow generation reached a record $81 million for the quarter [5][25] - The subscription revenue base net dollar expansion rate was 102%, reflecting elevated customer churn and down-sell activity [22] Business Line Data and Key Metrics Changes - Professional services revenue was $21.4 million, contributing to the overall revenue growth [22] - Subscription gross margin was 78%, while professional services gross margin was 6%, leading to a total non-GAAP gross margin of 70% [23] Market Data and Key Metrics Changes - As of April 30, the company had 146 customers generating at least $1 million in annual subscription revenue, a 6% increase year over year [17][22] - The total remaining performance obligations (RPO) were $943.2 million, up 2% year over year, while current RPO was $596.8 million, up 5% year over year [27] Company Strategy and Development Direction - The company is focused on transforming its business through a clear ambidextrous strategy, optimizing its cost structure, and strengthening its product delivery roadmaps [7][12] - Project Bearhug aims to engage the top 500 customers, representing approximately 80% of revenue, to drive accelerated ROI [14] - The company is committed to improving customer implementation processes and post-sales support to enhance customer satisfaction and retention [10][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainties leading to longer sales cycles and increased scrutiny of enterprise spending [9][28] - The company expects FY 2026 to be a transitional year with ongoing challenges but remains optimistic about future growth opportunities [20][33] - Guidance for Q2 indicates total revenue in the range of $205 million to $206 million, representing 4% growth year over year [31] Other Important Information - The company has authorized a new $150 million stock buyback program, expected to be completed by June 30, 2026 [26] - The company is experiencing higher data and hosting costs due to launching new cloud environments [23] Q&A Session Summary Question: How long until the go-to-market strategy reaches its full potential? - Management indicated that FY 2026 is a transitional year, with expectations for improved sales execution and customer engagement in the latter half of the year [39][41] Question: What differentiates Sprinklr in the CCaaS market? - The company highlighted its AI capabilities and unified platform as key differentiators, enabling a seamless experience for agents and customers [44][46] Question: Is the elongation in sales cycles broad-based across customers? - Management noted that the scrutiny is widespread, affecting all customers, but emphasized that the company is seeing opportunities in its core pipeline [51][53] Question: What is driving logo churn and how to address it? - Management attributed churn to past execution challenges and emphasized the need for improved customer engagement and consistent implementation processes [55][57] Question: What R&D activities are being pursued to help with renewals? - The company is focusing on improving user experience and exploring acquisition opportunities to enhance its core offerings [65][67] Question: What metrics are being used to measure the success of the new pod structure? - Management is implementing a collaborative approach within sales teams, emphasizing accountability and customer engagement to drive success [100][102]