Market Overview - The stock market is experiencing strain near all-time highs, indicating investor concerns about valuations [1] - Large-cap tech stocks are primarily responsible for driving the majority of the year's market performance, suggesting a disparity in stock valuations [1] Analyst Insights - Gary Alexander has extensive experience in covering technology companies and has been involved with seed-round startups, providing insights into current industry themes [1] - His contributions to Seeking Alpha since 2017 highlight his engagement with market trends and investor sentiment [1]

Financial Data and Key Metrics Changes - Total revenue for Q2 FY26 grew 8% year over year to $212 million, while subscription revenue increased 6% year over year to $188.5 million [5][20] - Non-GAAP operating income reached a record $38.2 million, resulting in an 18% non-GAAP operating margin for the quarter [5][22] - Free cash flow generated was $29.8 million, with a total of $123.5 million in the first half of FY26, excluding restructuring payments [22][29] Business Line Data and Key Metrics Changes - Professional services revenue was $23.6 million, driven by large CCaaS implementations [20] - Subscription revenue-based net dollar expansion rate was 102%, reflecting ongoing elevated customer churn and downsell activity [20][21] - The number of customers generating at least $1 million in annual subscription revenue increased to 149, up three from the previous quarter [21][18] Market Data and Key Metrics Changes - Total remaining performance obligations (RPO) was $923.8 million, up 4% year over year, while current RPO (CRPO) was $597.1 million, up 7% year over year [24] - Calculated billings for Q2 were $200.6 million, an increase of 4% year over year [23] Company Strategy and Development Direction - The company is in a transitional year, focusing on business optimization and entering the second phase of transformation, which includes strategic investments in AI and customer engagement [6][7] - Project BearHug aims to minimize churn by deeply engaging with top customers, representing over 80% of total revenue [11][13] - The company is enhancing its product offerings, including AI functionality and improved customer feedback management [16][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in renewals and customer satisfaction but expressed optimism about improvements in the second half of FY26 and into FY27 [32][34] - The focus remains on improving execution, customer engagement, and addressing past implementation issues to drive growth [10][18] - Management expects total revenue for Q3 to be in the range of $209 million to $210 million, reflecting a 4% growth year over year at the midpoint [24][26] Other Important Information - The company has a healthy balance sheet with $474 million in cash and marketable securities and no debt outstanding [23] - The CFO, Manish Sarin, will be leaving the company, and the CEO will assume interim responsibilities while a search for a new CFO is conducted [5][29] Q&A Session Summary Question: When will the company see a bend in its transformation journey? - Management indicated that improvements in renewals, customer satisfaction, and growth metrics are expected in the second half of FY26 into FY27 [31][32] Question: Can you provide an example of a significant churn situation? - Management explained that renewal pressure has been ongoing for several years, with efforts focused on improving customer engagement and execution to mitigate churn [38][39] Question: What are the drivers for unlocking demand in the CCaaS business? - Management highlighted the importance of successful large implementations and enhancing customer experience as key drivers for growth in the CCaaS segment [49][51] Question: How is the hybrid pricing model impacting revenue and profitability? - Management discussed the implementation of a simplified pricing model aimed at increasing customer satisfaction and driving subscription revenue [56][58] Question: What is the company's perspective on AI's impact on customer understanding and adoption? - Management believes that AI is a critical technology and emphasized the importance of integrating AI into workflows to unlock value for customers [77][79]

Financial Data and Key Metrics Changes - Total revenue for the second quarter grew 8% year over year to $212 million, while subscription revenue increased 6% year over year to $188.5 million [4][18] - Non-GAAP operating income reached a record $38.2 million, resulting in an 18% non-GAAP operating margin for the quarter [4][21] - Free cash flow generated was $29.8 million, or $31 million after adjustments for restructuring payments [21][28] - Non-GAAP net income per diluted share was $0.13 [21] Business Line Data and Key Metrics Changes - Professional services revenue was $23.6 million, driven by large CCaaS implementations [18] - Subscription revenue-based net dollar expansion rate was 102%, reflecting ongoing customer churn and downsell activity [18] - The number of customers generating at least $1 million in annual subscription revenue increased to 149, up three from the previous quarter [17][19] Market Data and Key Metrics Changes - Total remaining performance obligations (RPO) was $923.8 million, up 4% year over year, while current RPO was $597.1 million, up 7% year over year [23] - Calculated billings for the second quarter were $200.6 million, an increase of 4% year over year [22] Company Strategy and Development Direction - The company is in a transitional year, focusing on business optimization and entering the second phase of transformation, which includes strategic investments in AI functionality and enhanced product capabilities [5][8] - Project BearHug aims to engage top customers to minimize churn and improve customer satisfaction [11][12] - The company is making incremental investments to extend enterprise leadership across core and Sprinklr Service [8][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in renewal cycles and customer churn, emphasizing the importance of improving customer engagement and satisfaction [10][11] - The company expects a bend in business metrics in the second half of FY26 into FY27, with improvements in renewals and customer satisfaction [31][32] - Management remains optimistic about the impact of AI investments and the overall transformation strategy [41][75] Other Important Information - The CFO, Manish Sarin, will be leaving the company on September 19, 2024, with the CEO assuming interim responsibilities [4][5] - The company has a healthy balance sheet with $474 million in cash and marketable securities and no debt outstanding [21] Q&A Session Summary Question: When will the company see a bend in business metrics? - Management indicated that improvements in renewals and customer satisfaction are expected in the second half of FY26 into FY27, with metrics to watch including renewals and customer engagement [30][31] Question: Can you provide an example of a significant churn situation? - Management explained that renewal pressure has been ongoing for several years, with efforts focused on improving customer engagement and addressing execution issues [37][38] Question: What is the impact of AI investments on costs? - Management noted that increased uptake in AI products is leading to higher cloud costs, but the growth in consumption is positive [40][41] Question: What are the drivers for unlocking demand in the CCaaS business? - Management highlighted the importance of successful large implementations and enhancing customer experience as key drivers for growth in the CCaaS space [49][50] Question: How is the hybrid pricing model being received? - Management explained that the new pricing model aims to simplify customer purchasing and improve satisfaction, with plans to expand it across the product portfolio [54][56] Question: What is the company's approach to new customer acquisition? - Management stated that the focus for the year has been on expanding existing accounts rather than aggressively pursuing new logos, with a mix of 25% new logo and 75% expansion planned [80]

Financial Data and Key Metrics Changes - Total revenue for Q2 FY26 grew 8% year over year to $212 million, while subscription revenue increased 6% year over year to $188.5 million [4][18] - Non-GAAP operating income reached a record $38.2 million, resulting in an 18% non-GAAP operating margin for the quarter [4][21] - Free cash flow generated was $29.8 million, with a total of $123.5 million in the first half of FY26, excluding restructuring payments [21][28] Business Line Data and Key Metrics Changes - Professional services revenue was $23.6 million, driven by large CCaaS implementations [18] - Subscription revenue-based net dollar expansion rate was 102%, reflecting ongoing customer churn and downsell activity [18] - The number of customers generating at least $1 million in annual subscription revenue increased to 149, up by three from the previous quarter [17][19] Market Data and Key Metrics Changes - Total remaining performance obligations (RPO) was $923.8 million, up 4% year over year, while current RPO (CRPO) was $597.1 million, up 7% year over year [23] - Calculated billings for Q2 were $200.6 million, an increase of 4% year over year [22] Company Strategy and Development Direction - The company is in a transformation phase, focusing on business optimization and strategic investments to improve execution and customer service [5][6] - Investments are being made in AI functionality, enhanced video capabilities, and technical skills to better serve customers [8][9] - The company aims to strengthen its leadership team and improve customer engagement through initiatives like Project BearHug [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in renewals and customer churn, emphasizing the importance of improving customer satisfaction and engagement [10][11] - The company expects to see improvements in renewals and customer satisfaction metrics in the second half of FY26 and into FY27 [31][32] - Management remains optimistic about the transformational journey and the potential for growth in the coming quarters [17][32] Other Important Information - The CFO announced plans to step down, with the CEO assuming interim responsibilities while a search for a new CFO is conducted [4][5] - The company has completed a $150 million stock buyback program, purchasing 16.5 million shares [22] Q&A Session Summary Question: When will the company see a bend in the transformation journey? - Management indicated that improvements in renewals and customer satisfaction are expected in the second half of FY26, with metrics to watch including renewals and customer engagement [30][31] Question: Can you provide an example of a significant churn situation? - Management explained that churn has been influenced by inconsistent execution and customer engagement, but efforts like Project BearHug are aimed at improving these relationships [37][38] Question: What is the impact of AI-related investments on costs? - Management noted that increased costs are associated with the uptake of AI products, including hosting and support, but the growth in consumption is positive [40][41] Question: What are the drivers for unlocking demand in the CCaaS business? - Management highlighted the importance of successful large implementations and enhancing customer experience as key drivers for growth in the CCaaS segment [49][50] Question: How is the hybrid pricing model being received by customers? - Management stated that the new hybrid pricing model aims to simplify customer purchasing and improve satisfaction, with plans to expand it across the product portfolio [54][56] Question: What is the company's approach to new customer acquisition? - Management indicated a focus on expanding existing customer relationships while being cautious about introducing new logos until execution improves [80]

Core Insights - Sprinklr reported quarterly earnings of $0.13 per share, exceeding the Zacks Consensus Estimate of $0.10 per share, and showing an increase from $0.06 per share a year ago, resulting in an earnings surprise of +30.00% [1] - The company achieved revenues of $212.04 million for the quarter ended July 2025, surpassing the Zacks Consensus Estimate by 3.16% and up from $197.21 million year-over-year [2] - Sprinklr has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Performance - The earnings surprise of +30.00% indicates strong performance relative to expectations, with a previous quarter surprise of +20% [1][2] - The current consensus EPS estimate for the upcoming quarter is $0.09, with projected revenues of $206.46 million, and for the current fiscal year, the EPS estimate is $0.40 on revenues of $826.2 million [7] Stock Performance and Outlook - Sprinklr shares have increased by approximately 1.8% since the beginning of the year, underperforming compared to the S&P 500's gain of 9.1% [3] - The company's Zacks Rank is currently 3 (Hold), suggesting that shares are expected to perform in line with the market in the near future [6] Industry Context - The Technology Services industry, to which Sprinklr belongs, is currently ranked in the top 38% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Total RPO reached $924 million[4], with subscription revenue accounting for 78%[4] - The company achieved a net dollar expansion rate of 102%[4] - Q2 total revenue grew by 8% year-over-year[4] - LTM Q2 FY26 subscription revenue was $735.3 million, a 5% increase year-over-year[25] - LTM Q2 FY26 total revenue reached $820.8 million, reflecting a 6% year-over-year growth[25] - The company has 149 customers with over $1 million in revenue[4] Guidance - Q3 FY26 subscription revenue is projected to be between $186 million and $187 million, a 3% increase year-over-year at the midpoint[37] - Q3 FY26 total revenue is expected to be between $209 million and $210 million, a 4% increase year-over-year at the midpoint[37] - Full-year fiscal 2026 subscription revenue is guided to be between $746 million and $748 million, a 4% increase year-over-year at the midpoint[37] - Full-year fiscal 2026 total revenue is projected to be between $837 million and $839 million, a 5% increase year-over-year at the midpoint[37]

Revenue Performance - Total revenue for Q2 fiscal 2026 was $212.0 million, an increase of 8% year-over-year from $197.2 million[7] - Subscription revenue for Q2 was $188.5 million, up 6% year-over-year from $177.9 million[7] - Total revenue for the three months ended July 31, 2025, was $212.04 million, a 7.9% increase from $197.21 million in the same period of 2024[21] - Subscription revenue increased to $188.47 million for the three months ended July 31, 2025, compared to $177.86 million in 2024, reflecting a growth of 5.9%[21] - Guidance for Q3 includes total revenue between $209 million and $210 million and subscription revenue between $186 million and $187 million[8] Profitability Metrics - GAAP operating income for Q2 was $16.3 million, compared to an operating loss of $0.1 million in the same quarter last year[7] - Non-GAAP operating income for Q2 was $38.2 million, up from $19.6 million year-over-year[7] - GAAP net income per share for Q2 was $0.05, compared to $0.01 in the same quarter last year[7] - Non-GAAP net income per share for Q2 was $0.13, compared to $0.08 in the same quarter last year[7] - Operating income for the three months ended July 31, 2025, was $16.27 million, compared to a loss of $0.09 million in the same period of 2024[21] - Net income for the six months ended July 31, 2025, was $11.05 million, down from $12.48 million in 2024[23] - Non-GAAP net income for the three months ended July 31, 2025, was $33,829,000, representing an increase from $21,503,000 in the same period of 2024, reflecting a growth of 57.5%[26] - The net income for the six months ended July 31, 2025, was $66,145,000, compared to $47,303,000 for the same period in 2024, indicating a year-over-year increase of 39.8%[26] - The company reported a net income of $12,615,000 for the three months ended July 31, 2025, compared to $1,841,000 in 2024, marking a significant increase of 585.5%[26] Cash Flow and Expenses - Free cash flow for Q2 was $29.8 million, with net cash provided by operating activities at $34.8 million[6] - Free cash flow for the six months ended July 31, 2025, was $110.45 million, significantly higher than $52.72 million in 2024[25] - Total operating expenses for the three months ended July 31, 2025, were $128.33 million, a decrease from $143.33 million in 2024[21] - Cash, cash equivalents, and restricted cash at the end of the period were $133.83 million, compared to $126.82 million at the end of July 2024[23] - The company reported a net cash provided by operating activities of $118.57 million for the six months ended July 31, 2025, up from $63.03 million in 2024[23] Stock-Based Compensation and Other Costs - Stock-based compensation expense for the three months ended July 31, 2025, was $21.30 million, compared to $15.09 million in 2024[25] - Stock-based compensation expense for the three months ended July 31, 2025, was $21,450,000, up from $15,243,000 in 2024, which is a rise of 40.6%[26] - For the six months ended July 31, 2025, stock-based compensation expense was $42,214,000, compared to $29,867,000 in 2024, representing a growth of 41.2%[26] - The non-recurring litigation costs for the three months ended July 31, 2025, were $816,000, while there were no such costs reported in the same period of 2024[26] - Restructuring costs for the six months ended July 31, 2025, were $15,329,000, compared to $3,830,000 in 2024, indicating an increase of 300.5%[26] Customer Metrics and Leadership Changes - The company has 149 customers contributing $1 million or more in revenue, an increase of 3 customers quarter-over-quarter[6] - The company appointed Scott Millard as Chief Revenue Officer effective September 22, 2025[6] Share Metrics - The weighted-average shares outstanding for the three months ended July 31, 2025, were 254,391, compared to 263,201 in 2024, showing a decrease of 3.1%[26] - Total additions to non-GAAP net income for the three months ended July 31, 2025, amounted to $21,214,000, compared to $19,662,000 in 2024, reflecting an increase of 7.9%[26]

Core Viewpoint - The article discusses the investment outlook for Sprinklr (NYSE: CXM), maintaining a hold rating due to the expectation that valuation upside will not occur until the company delivers tangible results from initiatives led by the new CEO [1]. Group 1: Company Overview - Sprinklr is currently under the leadership of a new CEO, and the author emphasizes the need for the company to show concrete results from recent initiatives before any positive valuation changes can be anticipated [1]. Group 2: Investment Strategy - The author highlights a diverse investment background, utilizing various approaches such as fundamental, technical, and momentum investing to refine their investment process [1]. - The purpose of writing on Seeking Alpha is to track investment ideas and connect with like-minded investors [1].

Core Insights - Sprinklr reported revenue of $205.5 million for the quarter ended April 2025, marking a year-over-year increase of 4.9% and an EPS of $0.12 compared to $0.09 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $201.89 million by 1.79%, and the EPS surpassed the consensus estimate of $0.10 by 20% [1] Financial Performance Metrics - Gross Margin for Subscription was reported at 77%, above the five-analyst average estimate of 76.4% [4] - Gross Margin for Professional Services was 4%, compared to the two-analyst average estimate of -1% [4] - Subscription Revenue reached $184.13 million, exceeding the average estimate of $182.39 million by analysts, representing a year-over-year increase of 3.8% [4] - Professional Services Revenue was reported at $21.37 million, surpassing the average estimate of $19.49 million, reflecting a year-over-year change of 14.9% [4] Stock Performance - Sprinklr's shares have returned 17.1% over the past month, outperforming the Zacks S&P 500 composite's 5.2% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Revenue Performance - Total revenue for the three months ended April 30, 2025, was $205.5 million, an increase from $196.0 million in the same period of 2024, representing a growth of 4.8%[161] - Subscription revenue increased to $184.1 million in Q1 2025 from $177.4 million in Q1 2024, reflecting a growth of 3.8%[161] - Total revenue for the three months ended April 30, 2025, was $205.5 million, a 5% increase from $196.0 million in the same period of 2024[163] - Subscription revenue increased by 4% to $184.1 million, while professional services revenue rose by 15% to $21.4 million[163][164] Profitability and Expenses - Gross profit for the three months ended April 30, 2025, was $142.9 million, with a gross margin of approximately 69.5%[161] - Operating expenses totaled $144.6 million for Q1 2025, up from $139.1 million in Q1 2024, driven by increased sales and marketing expenses[161] - The company reported a net loss of $1.6 million for the three months ended April 30, 2025, compared to a net income of $10.6 million in the same period of 2024[161] - Research and development expenses were $22.8 million for Q1 2025, slightly up from $22.5 million in Q1 2024, reflecting ongoing investment in product development[161] - Sales and marketing expenses decreased to $71.1 million in Q1 2025 from $87.5 million in Q1 2024, due to recent restructuring efforts[161] - General and administrative expenses increased by 18% to $34.4 million, representing 17% of total revenue[171] - Restructuring expenses amounted to $16.3 million, constituting 8% of total revenue[172] - Non-GAAP net income for the three months ended April 30, 2025, was $32.3 million, or $0.13 per share, compared to $25.8 million, or $0.09 per share in 2024[181] Customer Metrics - The company had 146 large customers as of April 30, 2025, an increase from 138 large customers a year earlier, indicating growth in its enterprise customer base[139] Future Revenue Visibility - Remaining Performance Obligation (RPO) as of April 30, 2025, was $943.2 million, with Current RPO (cRPO) at $596.8 million, indicating strong future revenue visibility[141] Cash Flow and Liquidity - Cash provided by operating activities increased to $83.8 million in Q2 2025 from $41.7 million in Q2 2024, driven by a significant decrease in accounts receivable[192] - Free cash flow for the three months ended April 30, 2025, was $80.7 million, up from $36.2 million in the same period of 2024[190] - As of April 30, 2025, the company had $126.4 million in cash and cash equivalents and $443.8 million in marketable securities, indicating strong liquidity[182] Financial Obligations and Shareholder Returns - The company has contractually obligated expenditures totaling $324.8 million through fiscal year 2030, with $107.1 million due within the next twelve months[186] - A share repurchase program was authorized for up to $150 million of Class A common stock, reflecting the company's commitment to returning value to shareholders[187] Investment Activities and Future Outlook - Cash used in investing activities for the three months ended April 30, 2025, was $108.0 million, primarily due to purchases of marketable securities[194] - The company expects free cash flow to fluctuate in future periods due to changes in operating expenses and continued investments in growth[191] - The company may finance future acquisitions through cash, debt, or stock, maintaining financial flexibility for strategic growth initiatives[189] Market and Performance Metrics - Net Dollar Expansion Rate (NDE) for the trailing 12-month period ending April 30, 2025, was 101.8%, down from 114.6% in the previous year, attributed to increased churn and down-selling[142] - Total costs of revenue increased by 23% to $62.6 million, with subscription costs rising by 30% to $42.2 million[166] - Gross margin for subscription decreased from 82% to 77%, while gross margin for professional services improved from 0% to 4%[168] - Research and development expenses were $22.8 million, representing 11% of total revenue, a slight increase from 12% in the prior year[169] - Sales and marketing expenses decreased by 19% to $71.1 million, accounting for 35% of total revenue, down from 45%[170] - Other income decreased by 8% to $6.9 million, primarily due to a decline in interest income[173] - Provision for income taxes increased by 162% to $6.7 million, representing 3% of total revenue[174]