Sprinklr, Inc. (CXM) Q4 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a generally positive outlook, with stable financial performance, a focus on innovation, and improved renewal rates. Despite some concerns about elevated churn and service deceleration, management's emphasis on strategic investments, AI, and customer relationships supports a positive sentiment. The market cap indicates moderate sensitivity to these factors, and the company's strategic focus and financial health are likely to result in a stock price increase over the next two weeks.
Key Financial Performance
Total Revenue $220.6 million, up 9% year-over-year. The increase was attributed to healthy demand and a solid pipeline despite macroeconomic challenges.
Subscription Revenue $193.4 million, up 6% year-over-year. Growth was driven by strong demand for AI agents, contact center intelligence, and agent copilot.
Professional Services Revenue $27.1 million, with a 29% year-over-year increase for the full year. Growth was due to large CCaaS rollouts and more hours led to large global projects.
Non-GAAP Operating Income $37.7 million, representing a 17% non-GAAP operating margin. This was achieved through cost discipline and operational efficiency.
Free Cash Flow $15.9 million in Q4 and $142 million for the year, up 140% year-over-year. Improvement was driven by cost discipline, strong collections, and improved cash conversion.
Subscription Revenue-Based Net Dollar Expansion Rate 103%, a slight sequential increase, indicating improved renewal rates.
Customers Contributing $1 Million or More in Subscription Revenue 141 customers, down by 4 from Q3. However, the net dollar expansion for this cohort was 115%, and the average revenue per customer in this cohort is now above $3 million.
Non-GAAP Gross Margin 67% total, with subscription gross margin at 76% and professional services gross margin at 1%. Higher data and hosting costs impacted margins.
Calculated Billings $317.4 million, up 6% year-over-year. A minor variance was due to one deal closing in February instead of Q4.
Total Remaining Performance Obligation (RPO) $986.5 million, stable year-over-year and up 15% sequentially.
Current Remaining Performance Obligation (cRPO) $618.8 million, up 1% year-over-year and up 10% quarter-on-quarter.
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Operating Highlights
Generative AI-native Sprinklr Service SKUs: Annual recurring revenue (ARR) grew 50% year-over-year, driven by demand for AI agents, contact center intelligence, and agent copilot.
Unified Customer Experience Management: Sprinklr is defining a platform that connects insights, predictions, and actions across the customer journey, leveraging enterprise-grade metadata and AI.
AI-driven marketing and commerce: Focus on AI Copilots, conversational interfaces, and real-time content generation.
Global payments company partnership: Sprinklr partnered with a leading global payments company operating in over 200 markets, consolidating multiple legacy tools into one unified platform.
U.S. telecommunications provider expansion: ARR doubled year-over-year and increased sixfold over two years, with over 600 social care specialists using Sprinklr's AI-powered tools.
Cost structure optimization: Sprinklr optimized its cost structure, revamped its go-to-market model, streamlined processes, and strengthened its leadership team.
Project Bear Hug: Driving cultural shifts towards accountability, customer centricity, and operational discipline.
Renewal rates: Achieved the highest renewal rates in the fourth quarter of FY '26, with continued improvement expected in FY '27.
Three-phase transformation strategy: Sprinklr is in the second phase (transition and execution) of its transformation, focusing on embedding changes for scale and efficiency, with acceleration planned for FY '28.
AI integration in enterprise systems: Sprinklr is leveraging AI to enhance enterprise workflows, focusing on automation, ROI, and measurable impact.
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Risk or Challenges
Higher churn in FY '26: The company experienced higher churn rates than preferred, particularly in the first half of FY '26, which could impact customer retention and revenue stability.
Elevated data and hosting costs: Higher data and hosting costs are being incurred due to increased business opportunities, especially in Sprinklr Service and expanded AI capabilities, which could pressure profit margins.
Geopolitical risks in the Middle East: The company has meaningful business and pipeline in the Middle East, where the macro environment has become fluid due to geopolitical events, posing risks to operations and revenue.
Decline in $1 million customer cohort: The number of customers contributing $1 million or more in subscription revenue decreased by 4 in Q4, indicating potential challenges in maintaining high-value customer relationships.
Increased cloud and data costs from AI adoption: The uptake in AI products is leading to higher cloud and data costs, which could impact profitability.
Dependence on large projects for professional services revenue: Professional services revenue is tied to large CCaaS rollouts, and a step-down in such projects is expected in FY '27, potentially reducing revenue from this segment.
Macroeconomic uncertainties: The broader macroeconomic environment, including fluid conditions and potential economic downturns, could impact customer spending and the company's financial performance.
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Guidance & Outlook
FY '27 Revenue Guidance: Total revenue is expected to be in the range of $869 million to $871 million, representing 1% growth year-over-year at the midpoint. Subscription revenue is projected to be in the range of $778 million to $780 million, representing 3% growth year-over-year at the midpoint.
Q1 FY '27 Revenue Guidance: Total revenue is expected to be in the range of $215.5 million to $216.5 million, representing 5% growth year-over-year at the midpoint. Subscription revenue is projected to be in the range of $193 million to $194 million, also representing 5% growth year-over-year at the midpoint.
Professional Services Revenue: For FY '27, professional services revenue is expected to be $91 million, which is lower compared to FY '26 due to the completion of Bear Hug initiatives. This represents approximately 10% of total revenue, aligning with the trailing 3-year average.
Non-GAAP Operating Income: For FY '27, non-GAAP operating income is expected to be in the range of $144 million to $146 million, driving a 17% non-GAAP operating margin. For Q1 FY '27, non-GAAP operating income is expected to be in the range of $28.5 million to $29.5 million, resulting in a 13% non-GAAP operating margin at the midpoint.
Free Cash Flow: For FY '27, free cash flow is estimated to be $150 million, with $40 million expected in Q1.
AI and R&D Investments: The company plans to invest in AI and R&D talent, particularly in targeted regions, to enhance forward-deployed engineering capabilities and go-to-market strategies.
Market Trends and AI Adoption: Marketing budgets are stabilizing, with spending shifting toward ROI, automation, and measurable impact. AI adoption in marketing is expected to grow significantly over the next several years, favoring unified platforms like Sprinklr.
Strategic Transformation Phases: FY '27 is positioned as the second phase of Sprinklr's transformation, focusing on transition and execution, with acceleration expected in FY '28.
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Shareholder Return Plan
Share Buyback Program: The Board has authorized a new $200 million share buyback program, expected to be completed by March 15, 2027. This includes a $125 million accelerated share repurchase launching shortly, supplemented by open market repurchases. The company views the current share price as a compelling opportunity and remains well-capitalized to execute its strategy even after completing the authorized repurchases.
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Key Q&A
Q:Is the full-year margin guide conservative, and is there a built-in cushion for investments?
A:Rory Read explained that the company aims to be prudent and disciplined in its approach, balancing long-term growth with tactical investments. He emphasized the focus on innovation, AI-agentic agents, and CCaaS solutions while ensuring healthy returns for investors. The company is in the second phase of transformation, aiming for acceleration in FY '28.
Q:What is the percentage revenue breakdown between international and U.S. markets, and how does the Middle East factor into the conservative guide?
A:Rory Read stated that the Middle East is in the upper middle of their 12 regions, with meaningful business and a good pipeline. He provided a revenue breakdown: 50-55% from the Americas, 35%+ from Europe, and 10% from Asia/APJI. The Middle East and Africa are important but not the largest contributors.
Q:Is the elevated churn from last year expected to continue in fiscal '27, and why might the run rate be flat or down?
A:Rory Read clarified that elevated churn is not expected to continue. Renewal rates improved in 4Q, and further improvement is expected in 1Q and 2Q. The company is focused on 'Bear Hugging' its top 900 customers, representing 90% of revenue, to ensure better predictability and renewal rates.
Q:What are the plans for increasing margins outside of restructuring?
A:Anthony Coletta highlighted revenue mix, investments in AI solutions, and disciplined expense management as key factors. The company is focusing on innovation, go-to-market capabilities, and operational efficiency. Rory Read added that improving renewal rates and customer focus will also support margin expansion.
Q:Has the timeline for the acceleration phase shifted to fiscal '28, and what factors contribute to this?
A:Rory Read explained that the timeline aligns with expectations, with the second phase lasting 12-18 months. Progress in renewal rates and other metrics supports this timeline. The company is preparing for the acceleration phase by investing in innovation and improving customer relationships.
Q:What does 'putting more logs on the fire' mean in the context of the acceleration phase?
A:Rory Read described it as overlapping phases, with investments in ramped AEs, innovation, and customer relationships already underway. The goal is to position the company for the acceleration phase by building a stronger foundation and improving customer feedback.
Q:Why does the services segment appear to decelerate, and what role does it play going forward?
A:Rory Read explained that the deceleration is due to a large Global 50 implementation transitioning to subscription revenue. The company aims to grow its ecosystem with partners and maintain a balanced approach to services, focusing on software and AI platform growth.
Q:Where does the budget for generative AI SKUs come from, and who are the competitors?
A:Rory Read stated that the budget comes from investments in contextual data and AI capabilities. Competitors include external vendors and DIY initiatives. The company focuses on intelligent collaboration and agentic AI to differentiate its offerings.
Q:What is needed to move from the execution phase to the acceleration phase?
A:Rory Read outlined several factors, including paying down technical debt, improving renewal rates, ramping AEs, and enhancing customer sentiment. Progress in these areas will position the company for durable, sustained performance.
Q:Has the $1 million-plus customer cohort stabilized, and how much of this cohort uses Sprinklr services?
A:Rory Read noted that the cohort is generating over $3 million per client on average, with improved quality and longer relationships. The company aims to grow this segment while maintaining strong customer relationships.
Q:How will social insights evolve given changes in social media and other factors?
A:Rory Read emphasized the importance of listening and insights across social and digital channels. The company is investing in innovation to adapt to emerging trends, such as LLM listening, video, and omnichannel capabilities.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the specific timeline for the acceleration phase, using vague language about overlapping phases and progress metrics. Additionally, the response to the deceleration in services lacked clarity on whether it signals any demand issues or is purely strategic.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Copilots
AI Service
AI action
AI adoption
AI agent
AI enterprise
AI insight
AI listening
AI marketing
AI platform
AI studio
AI usage
ARR AI
ARR year
CMO survey
Consumers brand
Copilots interface
Customer Experience
Customer sentiment
Demand event
acceleration FY
care
channel
communication
contact
couple example
customer insight
discipline phase
environment
foundation
generation
intelligence
renewal rate
scale AI
shift
software
tool
transformation transition
workflow
CXM Transcript
Sprinklr, Inc. (CXM) Q4 2026 Earnings Call Transcript
Positive3-11
The earnings call presents a generally positive outlook, with stable financial performance, a focus on innovation, and improved renewal rates. Despite some concerns about elevated churn and service deceleration, management's emphasis on strategic investments, AI, and customer relationships supports a positive sentiment. The market cap indicates moderate sensitivity to these factors, and the company's strategic focus and financial health are likely to result in a stock price increase over the next two weeks.
Sprinklr, Inc. (CXM) Q3 2026 Earnings Call Transcript
Positive12-3
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.
Sprinklr, Inc. (CXM) Presents At Citi's 2025 Global Technology, Media And Telecommunications Conference Transcript
Neutral9-4
Sprinklr, Inc. (CXM) Q2 2026 Earnings Call Transcript
Unknown9-3
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.
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