Sprinklr, Inc. Earnings Call: Growth Amid Challenges

Sprinklr, Inc. ((CXM)) has held its Q3 earnings call. Read on for the main highlights of the call.TipRanks Cyber Monday Sale Claim 60% off TipRanks Premium for data-backed insights and research tools you need to invest with confidence. Subscribe to TipRanks' Smart Investor Picks and see our data in action through our high-performing model portfolio - now also 60% off 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.