Sprinklr(CXM)2025-03-12 18:00Financial Data and Key Metrics Changes - In Q4 FY '25, total revenue grew 4% year-over-year to 182.1 million [8][31] - Non-GAAP operating income for the quarter was 796.4 million, up 9% year-over-year, with subscription revenue of 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 987.7 million, up 2% year-over-year, with current RPO at 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 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]