Sprinklr(CXM) - 2026 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q3 grew 9% year-over-year to $219.1 million, while subscription revenue increased 5% year-over-year to $190.3 million [4][16] - Non-GAAP operating income was $33.5 million, resulting in a 15% non-GAAP operating margin for the quarter [4][19] - Free cash flow for Q3 was $15.5 million, with a year-to-date total of $126 million [19][24] - Subscription revenue-based net dollar expansion rate was 102%, showing stabilization [17] Business Line Data and Key Metrics Changes - Professional services revenue was $28.8 million, driven by large CCaaS rollouts expected to translate into future software subscription revenue [17] - The number of customers contributing $1 million or more in subscription revenue decreased by four to 145, but revenue from this cohort grew 9% year-over-year [18] Market Data and Key Metrics Changes - Total remaining performance obligations (RPO) were $857.6 million, down 5% year-over-year, while current RPO was $562.2 million, up 3% year-over-year [20][21] - The company expects total billings of approximately $320 million for Q4, traditionally the strongest quarter [22] Company Strategy and Development Direction - The company is focused on deepening engagement with its top 700 customers through Project Bear Hug, which aims to improve renewal rates and customer relationships [9][31] - The strategy includes leveraging AI capabilities to enhance customer experience and operational efficiency [5][10] - The company is in a transitional year, with plans to embed operational changes and drive sustainable growth [8][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strategy and noted improvements in key metrics, but emphasized the need for continued execution and patience [28][56] - The leadership team is aligned and focused on scaling the business with operational discipline [15][16] - Management anticipates that FY27 will provide clearer guidance as the company transitions into an acceleration phase [55] Other Important Information - The company has made significant operational improvements, including streamlining processes and enhancing cross-functional alignment [8] - The balance sheet remains strong, with $480.3 million in cash and marketable securities and no debt [19] Q&A Session Summary Question: How sustainable is the recent revenue performance as the company heads into next year? - Management indicated that while Q3 showed good performance, it is essential to string several quarters together to assess sustainability [28][29] Question: What is the expected impact of Project Bear Hug on troubled accounts? - Project Bear Hug aims to deepen customer relationships and has shown positive metrics, with a net dollar expansion rate of 113% for the $1 million-plus customer cohort [31][32] Question: How is the leadership team stabilizing after recent changes? - Management stated that most senior leadership changes are complete, and the team is experienced and focused on the transformation journey [33][36] Question: How did renewals in Q3 compare to expectations? - Renewals met or exceeded expectations, with improved predictability in metrics, and management is actively managing renewals for upcoming quarters [39][40] Question: What is the company's approach to AI capabilities and investments? - The company views its AI-native platform as critical for unifying customer experience and plans to continue investing in AI capabilities [49][52]