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01/09 22:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture: while there is positive growth in revenue and a strong buyback program, concerns like elevated churn, operational execution issues, and macroeconomic uncertainties temper enthusiasm. The stock buyback program and record free cash flow are positives, but the lack of clear guidance on resolving FX headwinds and improving customer retention are negatives. Given the company's market cap, the stock price is likely to remain stable, resulting in a neutral sentiment.
Total Revenue $205.5 million, up 5% year-over-year.
Subscription Revenue $184.1 million, up 4% year-over-year.
Professional Services Revenue $21.4 million.
Non-GAAP Operating Income $36.7 million, resulting in an 18% non-GAAP operating margin.
Free Cash Flow $80.7 million, record for Sprinklr.
Net Dollar Expansion Rate 102%, reflecting elevated customer churn and downsell activity.
Subscription Gross Margin 78%.
Professional Services Gross Margin 6%.
Total Non-GAAP Gross Margin 70%.
Cash and Marketable Securities $570.2 million with no debt outstanding.
Calculated Billings $204.3 million, an increase of 7% year-over-year.
Remaining Performance Obligations (RPO) $943.2 million, up 2% year-over-year.
Current RPO (CRPO) $596.8 million, up 5% year-over-year.
Restructuring Charges $16.3 million.
Cash Paid for Restructuring $11.8 million.
Litigation Costs $0.8 million.
AI Native Platform: Sprinklr is focused on strengthening its AI native platform to enhance customer experience management.
Project Bear Hug: This initiative aims to engage top 500 customers, representing 80% of revenue, to drive accelerated ROI.
Market Positioning: Sprinklr positions itself as a leader in social media management and customer experience management, leveraging advancements in AI.
Customer Wins: Recent wins include major brands like Calvin Klein and Pepsi, indicating strong market demand.
Free Cash Flow: Sprinklr generated a record $80.7 million in free cash flow for Q1 2026.
Cost Structure Optimization: The company has optimized its cost structure and implemented a new business management system.
Leadership Changes: Sanjay Macwan was appointed as Chief Information Officer to enhance security and product delivery.
Sales Pod Structure: A new sales pod structure was implemented to improve collaboration across teams.
Macroeconomic Uncertainty: The broader macroeconomic uncertainty has resulted in longer sales cycles and increased scrutiny of enterprise spending, which has put pressure on renewal cycles and led to downsell activity and logo churn.
Operational Execution Challenges: Inconsistent operational execution and lingering technical debt from past years have continued to affect customer satisfaction and retention.
Customer Churn: Elevated customer churn and downsell activity have been experienced over the past 24 months, impacting subscription revenue and customer count.
Foreign Exchange Impact: A significant portion of the employee population is based outside the U.S. and paid in local currency, leading to an estimated $10 million negative impact on non-GAAP operating expenses due to currency fluctuations.
Restructuring Costs: The company incurred $16.3 million in restructuring charges and $11.8 million in cash related to restructuring, which are not included in non-GAAP figures.
Project Bear Hug: A key initiative focused on deeply engaging the top 500 customers, representing approximately 80% of revenue. Early results show positive engagement and expanded use cases.
Leadership Changes: Welcomed Sanjay Macwan as Chief Information Officer to strengthen security and support long-term vision.
AI Integration: Continued investment in AI solutions to enhance customer experience and operational efficiency.
Sales Pod Structure: Implemented a new sales pod structure to improve collaboration among sales, services, and product teams.
Customer Engagement: Focused on improving implementation processes and post-sale support to enhance customer satisfaction and reduce churn.
Q2 Revenue Guidance: Expected total revenue in the range of $205 million to $206 million, representing 4% growth year-over-year.
FY '26 Subscription Revenue Guidance: Maintaining expectation for subscription revenue in the range of $741 million to $743 million, representing 3% growth year-over-year.
FY '26 Total Revenue Guidance: Expected total revenue in the range of $825 million to $827 million, representing 4% growth year-over-year.
Non-GAAP Operating Income Guidance: Maintaining guidance for non-GAAP operating income in the range of $129 million to $131 million for FY '26.
Free Cash Flow Guidance: Tracking to achieve a 15% free cash flow margin in FY '26, equating to approximately $125 million for the full year.
Stock Buyback Program: Sprinklr's Board has authorized a new $150 million stock buyback program, intended to be completed by June 30, 2026.
The earnings call shows steady financial growth, with revenue and subscription increases. Positive developments include improved renewal predictability, successful pricing initiatives, and strategic AI investments. Leadership stability and positive market feedback further support sentiment. While some concerns exist, like the lack of detailed guidance and margin pressures, the overall outlook remains positive due to optimistic guidance and strategic initiatives.
The earnings call presents a mixed picture: positive engagement in Project Bear Hug and AI integration, but concerns about deceleration in revenue guidance and higher cloud costs affecting margins. Management's unclear responses on some issues add uncertainty. The market cap suggests moderate sensitivity to news, leading to a neutral stock price prediction.
The earnings call presents a mixed picture: while there is positive growth in revenue and a strong buyback program, concerns like elevated churn, operational execution issues, and macroeconomic uncertainties temper enthusiasm. The stock buyback program and record free cash flow are positives, but the lack of clear guidance on resolving FX headwinds and improving customer retention are negatives. Given the company's market cap, the stock price is likely to remain stable, resulting in a neutral sentiment.
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