Sprinklr, Inc. ((CXM)) has held its Q3 earnings call. Read on for the main highlights of the call.
Claim 50% Off TipRanks Premium and Invest with Confidence
- Unlock hedge-fund level data and powerful investing tools designed to help you make smarter, sharper decisions
- Stay ahead of the market with the latest news and analysis so your portfolio is always positioned for maximum potential
Sprinklr, Inc.’s recent earnings call painted a mixed picture, showcasing both strengths and challenges. The company reported robust revenue growth and successful customer initiatives, yet faced ongoing hurdles in subscription renewals and service implementations. While strategic investments and transformations are underway, their full impact remains to be seen.
Revenue Growth
Sprinklr reported a 9% year-over-year increase in total revenue for the third quarter, reaching $219.1 million. Subscription revenue also saw a rise, growing by 5% to $190.3 million. This growth underscores the company’s ability to expand its market presence despite challenging conditions.
Non-GAAP Operating Income
The company achieved a non-GAAP operating income of $33.5 million, resulting in a 15% non-GAAP operating margin for the quarter. This reflects Sprinklr’s focus on maintaining profitability while navigating market dynamics.
Project Bearhug Success
Project Bearhug has shown promising early results, strengthening C-suite relationships and aligning more closely with customer priorities. This initiative has been pivotal in improving renewal rates, setting a positive trajectory into fiscal year 2027.
Customer Success Stories
A notable highlight was an expansion deal with a leading Latin American bank, which led to significant productivity boosts and improvements in customer satisfaction (CSAT). Such success stories exemplify Sprinklr’s ability to deliver value to its clients.
Improved Financial Outlook
Sprinklr has raised its expectations for both subscription and total revenue estimates for fiscal year 2026. The company now anticipates total revenue to be between $853 million and $854 million, reflecting confidence in its growth strategy.
Subscription Revenue Challenges
Despite a 5% increase in subscription revenue, Sprinklr faces downward pressure from renewals, a challenge persisting for over two years. Addressing these renewal challenges remains a priority for the company.
Customer Cohort Decline
The third quarter saw a decline in the number of customers contributing $1 million or more in subscription revenue, decreasing by four from the previous quarter. This highlights the need for Sprinklr to enhance customer retention strategies.
High Data and Hosting Costs
Sprinklr is experiencing increased data and hosting costs, driven by business opportunities and the expansion of AI capabilities. Managing these costs is crucial for sustaining profitability.
Challenges in Implementation
The company acknowledged challenges in some service implementations, with inconsistencies in execution being addressed. Efforts are underway to streamline processes and improve service delivery.
Forward-Looking Guidance
Sprinklr’s guidance for the fourth quarter and full fiscal year reflects a positive outlook, with projected Q4 revenue between $216.5 million and $217.5 million, indicating a 7% growth year over year. The company also expects subscription revenue to rise by 5%. For the fiscal year, total revenue is anticipated to be between $853 million and $854 million, with a focus on improving renewal rates and investing in AI and R&D to drive future growth.
In summary, Sprinklr’s earnings call highlighted a blend of achievements and challenges. The company is on a growth trajectory with strong revenue figures and strategic initiatives like Project Bearhug. However, it must address subscription renewal pressures and implementation challenges to sustain its momentum.