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 [19][20] - Free cash flow generated in Q3 was $15.5 million, with a year-to-date total of $126 million [20] - Non-GAAP net income per diluted share was $0.12, with a projected range of $0.09 to $0.10 for Q4 [19][23] Business Line Data and Key Metrics Changes - Professional services revenue was $28.8 million, attributed to large CCaaS rollouts expected to translate into future subscription revenue [17] - Subscription revenue-based net dollar expansion rate was 102%, indicating stabilization [17][18] - 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 [21] - Calculated billings for Q3 were $158.4 million, an increase of 7% year-over-year [21] 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][14] - The strategy includes leveraging AI-powered platforms for personalized customer engagement and enhancing operational efficiencies [5][6] - The company is in a transitional year, with plans to embed foundational changes into operations and culture for sustainable growth [8][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and noted that while challenges remain, there are signs of improvement in key metrics and customer engagement [8][14] - The leadership team changes are complete, and management is focused on maintaining productivity and driving growth [42][44] - The company expects Q4 revenue to be in the range of $216.5 million to $217.5 million, representing 7% growth year-over-year at the midpoint [22][24] Other Important Information - The company has a strong balance sheet with $480.3 million in cash and marketable securities and no debt [20] - The company is investing in AI and R&D talent to enhance customer service and go-to-market capabilities [23][24] Q&A Session Summary Question: How sustainable is the revenue performance as the company heads into next year? - Management indicated that while Q3 performance was strong, it is essential to string several quarters together to assess sustainability [30][31] Question: What is at risk with Project Bear Hug and what outcomes can be expected? - Management noted that the initiative aims to deepen customer relationships and has shown positive results, with some accounts seeing reduced downsell risks [33][36] Question: How is the leadership team stabilizing after recent changes? - Management stated that the major leadership changes are complete and emphasized the importance of having experienced team members to drive the transformation [42][44] Question: How did renewals in Q3 compare to expectations? - Management reported that renewal rates were better than expected, with improved predictability in forecasting [50][51] Question: What is the status of the pricing and bundling strategy? - Management confirmed that the first phase of the new pricing and bundling strategy has been implemented with positive early feedback [58][59] Question: What is the progress on large deployments like Deutsche Telekom? - Management indicated significant improvements in execution and positive feedback from customers during the rollout of large implementations [60][61] Question: What are the expectations for AI capabilities and investments? - Management highlighted that AI is fundamental to the platform and will continue to be a focus for investment, with over 300 AI skills already in place [64][66]