Sprinklr(US:CXM)2025-12-04 21:06Financial Performance - As of October 31, 2025, the Remaining Performance Obligation (RPO) was $857.6 million, with Current RPO (cRPO) at $562.2 million[150]. - The Net Dollar Expansion Rate (NDE) for the trailing 12-month period ending October 31, 2025, was 102.3%, down from 107.3% in the previous year, attributed to increased churn and down-selling[151]. - The company had 145 large customers as of October 31, 2025, compared to 147 large customers a year earlier, defined as those generating at least $1.0 million in subscription revenue[148]. - Subscription revenue for Q3 2025 reached $190,295, a 5% increase from $180,634 in Q3 2024, while professional services revenue increased by 43% to $28,773 from $20,055[170]. - Total revenue for the nine months ended October 31, 2025, was $636,608, up 7% from $593,855 in the same period of 2024[182]. - Gross profit for Q3 2025 was $145,486, compared to $142,840 in Q3 2024, with a gross margin for subscription decreasing to 76% from 80%[172][175]. - Total operating expenses for Q3 2025 were $133,935, a slight decrease from $134,951 in Q3 2024, resulting in an operating income of $11,551, up from $7,889[170]. - Non-GAAP operating income increased by $45.0 million (71%) to $108.5 million, with a non-GAAP operating margin of 17%[198]. - For the three months ended October 31, 2025, the company reported a net income of $2.9 million, down from $10.5 million in the same period of 2024, representing a decrease of 72.2%[199]. - Non-GAAP net income for the three months ended October 31, 2025, was $29.1 million, compared to $25.6 million in 2024, reflecting an increase of 13.5%[199]. Revenue and Cost Structure - Subscription revenue is recognized ratably over the contract term, which typically ranges from one to three years, with a significant portion of sales occurring in the fourth quarter[155]. - Gross margin on subscription revenue is significantly higher than that of professional services revenue, with expectations of a near-term decline due to rising data and hosting costs[160]. - The increase in costs of subscription revenue was primarily due to a $9,677 increase in costs, reflecting a 27% rise compared to the previous year[172]. - Subscription revenue costs increased by $28.2 million (27%) to $130.8 million, primarily due to a $25.9 million rise in third-party data and infrastructure costs[184]. - Professional services revenue costs rose by $12.5 million (21%) to $72.9 million, driven by higher subcontractor and personnel-related costs[185]. - Total costs of revenue increased by $40.7 million (25%) to $203.7 million, impacting overall gross margins[184]. - Gross margin for subscription decreased by 4 percentage points to 77%, while professional services gross margin improved by 5 percentage points to 1%[186]. Expenses and Investments - Research and development expenses are expected to increase in absolute dollars as the company invests in enhancing the Unified-CXM platform[162]. - Research and development expenses increased by 6% to $24,707 in Q3 2025, representing 11% of total revenue, compared to 12% in Q3 2024[176]. - Sales and marketing expenses are anticipated to rise as the company continues to drive business growth while seeking efficiencies[163]. - Sales and marketing expenses decreased by $26.7 million (11%) to $216.7 million, now 34% of revenue, due to reduced personnel-related costs[188]. - General and administrative expenses rose by $1.7 million (2%) to $103.7 million, accounting for 16% of revenue, influenced by increased personnel costs[189]. - Restructuring expenses surged by $12.9 million (435%) to $15.9 million, affecting 12% of the workforce[190]. Cash Flow and Liquidity - Free cash flow for the nine months ended October 31, 2025, was $126.0 million, significantly higher than $57.6 million in 2024, marking a growth of 118.5%[200]. - As of October 31, 2025, the company had $189.6 million in cash and cash equivalents and $290.8 million in highly liquid marketable securities, indicating strong liquidity[201]. - Cash provided by operating activities for the nine months ended October 31, 2025, was $138.5 million, compared to $72.2 million in 2024, an increase of 92.0%[211]. - The company expects to meet its working capital needs and capital expenditures for at least the next 12 months with existing cash and cash equivalents[201]. - The company has material cash requirements totaling $324.8 million in guaranteed purchase commitments through fiscal year 2030, with $107.1 million due within the next 12 months[204]. - The company experienced a $133.4 million decrease in accounts receivable due to collections outpacing billings for the nine months ended October 31, 2025[211]. - The company anticipates fluctuations in free cash flow in future periods due to changes in operating expenses and continued investments in growth[210]. - Cash provided by investing activities for the nine months ended October 31, 2025, was $39.2 million, primarily from $416.0 million in sales and maturities of marketable securities[213]. - Cash used in financing activities for the nine months ended October 31, 2025, was $135.6 million, including $152.3 million for the 2025 Share Repurchase Program[215]. Tax and Accounting - The provision for income taxes increased significantly by 392% to $14,410 in Q3 2025, primarily due to changes in the effective tax rate computation[181]. - Provision for income taxes increased by $22.3 million (223%) to $32.3 million, now 5% of revenue, due to changes in tax rate computations[192]. - The company’s critical accounting estimates include revenue recognition and stock-based compensation expense, which may materially impact financial statements[218]. - There have been no material changes to the company's critical accounting policies and estimates compared to those disclosed in the 2025 10-K[219]. - Market risk exposures include foreign exchange risk and interest rate risk, with no material changes since January 31, 2025[221]. Market and Economic Conditions - The company operates in over 80 countries and its AI-based platform recognizes over 150 languages, indicating a broad global reach[148]. - Macroeconomic conditions, including inflation and geopolitical events, may negatively impact business growth and customer spending on technology[152].