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Sprinklr, Inc. (CXM)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 FY26 revenue was $212.0M (+8% YoY); non-GAAP diluted EPS was $0.13, both above Wall Street consensus (Revenue: $205.4M*, EPS: $0.10*) .
  • Operating performance improved: non-GAAP operating income reached $38.2M (18% margin), while GAAP operating income was $16.3M (8% margin) .
  • Full-year FY26 guidance was raised across revenue and profitability; Q3 guidance implies a sequential step-down in subscription revenue due to continued “cleanup” of challenged accounts .
  • Management changes and AI initiatives are key catalysts: CFO transition (Sarin departing), new CRO (Scott Millard) to sharpen go-to-market, and AI-native product launches (Copilot, AI Agents, enhanced CFM) .

What Went Well and What Went Wrong

What Went Well

  • Revenue and EPS beat: Q2 revenue $212.0M vs. $205.4M* consensus; non-GAAP EPS $0.13 vs. $0.10* consensus; non-GAAP operating margin expanded to 18% (from 10% YoY) .
  • RPO and cRPO grew YoY (+4% and +7% respectively), and $1M+ customer cohort expanded to 149 (+3 sequential) highlighting enterprise traction .
  • CEO on transformation progress and customer engagement: “Project BearHug is focused on deeply engaging our top 700 customers… we’ve had detailed engagements with nearly half” . “We believe the investments we are now making and our continued focus on improving execution should begin to show a bend in our business over the next few quarters” .

What Went Wrong

  • Churn and downsell remain headwinds; net dollar expansion held at 102% reflecting elevated churn and downsell activity .
  • Subscription gross margin pressure from higher cloud/LLM hosting costs tied to strong AI product uptake; management expects 2–3 point gross margin reduction in 2H FY26 .
  • Q3 guide implies sequential subscription revenue step-down (to $186–$187M) as “cleanup” continues, and non-GAAP margin compression on AI infrastructure and hiring investments .

Financial Results

MetricQ4 FY25Q1 FY26Q2 FY26
Total Revenue ($USD Millions)$202.539 $205.500 $212.040
Subscription Revenue ($USD Millions)$182.067 $184.127 $188.473
Professional Services Revenue ($USD Millions)$20.472 $21.373 $23.567
GAAP Operating Income ($USD Millions)$10.459 $(1.755) $16.272
GAAP Operating Margin %5% (1)% 8%
Non-GAAP Operating Income ($USD Millions)$25.879 $36.740 $38.246
Non-GAAP Operating Margin %13% 18% 18%
GAAP Diluted EPS ($USD)$0.10 (non-GAAP); GAAP $0.37 $(0.01) $0.05
Non-GAAP Diluted EPS ($USD)$0.10 $0.12 $0.13
Non-GAAP Gross Margin %71% 70% 69%

Estimates vs Actuals

MetricQ4 FY25Q1 FY26Q2 FY26
Revenue Consensus Mean ($USD Millions)*$200.592$201.844$205.380
Revenue Actual ($USD Millions)$202.539 $205.500 $212.040
Primary EPS Consensus Mean ($USD)*$0.0709$0.0987$0.1001
Non-GAAP Diluted EPS Actual ($USD)$0.10 $0.12 $0.13

Values with an asterisk were retrieved from S&P Global.

Segment Breakdown

SegmentQ4 FY25 ($M)Q1 FY26 ($M)Q2 FY26 ($M)
Subscription Revenue$182.067 $184.127 $188.473
Professional Services Revenue$20.472 $21.373 $23.567

KPIs

KPIQ1 FY26Q2 FY26
Customers ≥$1M TTM146 149
Net Dollar Expansion (Subscription)102% 102%
RPO ($USD Millions)$943.2 $923.8
cRPO ($USD Millions)$596.8 $597.1
Calculated Billings ($USD Millions)$204.3 $200.6
Free Cash Flow ($USD Millions)$80.701 $29.753
Cash & Marketable Securities ($USD Millions)$570.2 $474.0

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Subscription RevenueFY 2026$741M–$743M $746M–$748M Raised
Total RevenueFY 2026$825M–$827M $837M–$839M Raised
Non-GAAP Operating IncomeFY 2026$129M–$131M $131M–$133M Raised
Non-GAAP Diluted EPSFY 2026$0.39–$0.40 $0.42–$0.43 Raised
Subscription RevenueQ3 FY26NA (not previously provided)$186M–$187M New
Total RevenueQ3 FY26NA (not previously provided)$209M–$210M New
Non-GAAP Operating IncomeQ3 FY26NA (not previously provided)$28.5M–$29.5M New
Non-GAAP Diluted EPSQ3 FY26NA (not previously provided)~$0.09 (257M diluted shares) New
Professional Services RevenueQ3 FY26NA~$23M implied New
Professional Services Gross MarginQ3 FY26NA~-3% New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY25 and Q1 FY26)Current Period (Q2 FY26)Trend
Transformation roadmap & “bend”FY26 as transitional; optimization underway Bend expected 2H FY26 into FY27 Improving but gradual
Churn/renewals pressureAcknowledged churn, downsell; NDE 102% Churn remains challenge; BearHug customer engagement; NDE 102% Stabilizing efforts
CCaaS hardening before accelerationGovern growth to harden; mission-critical maturity focus Harden through 2H FY26; accelerate in FY27 Building foundation
AI investments & costsLLM-agnostic AI; containment gains; record FCF Strong uptake; higher cloud/LLM costs; 2–3pt GM pressure Adoption rising, margin headwind
Pricing & packagingPod-driven GTM; enablement ramp Hybrid seat + consumption bundles launched for new logos Simplification in-flight
Macro/FXMore cautious spend; ~$10M FX opex headwind Continued prudent guidance and cleanup impact on Q3 Neutral-to-cautious
Leadership changesCIO hire; buyback authorized CFO departing; CEO interim CFO; CRO appointed Transitioning leadership

Management Commentary

  • “Project BearHug is focused on deeply engaging our top 700 customers who collectively represent more than 80% of our total revenue… we’ve had detailed engagements with nearly half” – Rory Read .
  • “We believe the investments we are now making and our continued focus on improving execution should begin to show a bend in our business over the next few quarters” – Rory Read .
  • “Subscription gross margin was 78%… total non-GAAP gross margin of 69%… we are experiencing higher data and hosting costs… especially in Sprinklr Service and our expanded AI capabilities” – Manish Sarin .
  • “For Q3… subscription revenue $186–$187M… step down from Q2 driven by continued necessary cleanup of challenged accounts from the past” – Manish Sarin .
  • “We generated a record $38.2M in non-GAAP operating income… non-GAAP operating margin of 18%” – Rory Read .
  • “Scott Millard… will join Sprinklr as its Chief Revenue Officer… marks a pivotal moment as we sharpen our go-to-market strategy” – Company release .

Q&A Highlights

  • Timing of “bend”: Management expects improvement to show in 2H FY26 into early FY27, tracking renewals, customer satisfaction, and challenged account reduction .
  • Churn examples: Downsells from budget pressure and over-purchased ELAs during COVID were “cleaned up”; renewed focus on multi-year renewals and C-level engagement .
  • AI cost impact: Strong AI product uptake drove higher hosting/LLM costs; prudent guidance reflects margin impact while adoption is positive .
  • CCaaS strategy: Deliberately governing growth to harden support and functionality in FY26 before accelerating in FY27 .
  • Pricing: Hybrid seat plus consumption bundles tested on core new logos to simplify buying and improve customer satisfaction .

Estimates Context

  • Q2 FY26 results beat consensus: Revenue $212.0M vs. $205.4M*, EPS $0.13 vs. $0.10* .
  • Q1 FY26 also beat: Revenue $205.5M vs. $201.8M*, EPS $0.12 vs. $0.099* .
  • FY26 Street outlook sits at Revenue ~$838.0M* and EPS ~$0.430*; company raised FY26 guidance above early-year levels .
    Values with an asterisk were retrieved from S&P Global.

Key Takeaways for Investors

  • Execution inflection: Non-GAAP margins held at 18% while revenue and EPS beat; management points to 2H FY26 as the window for narrative “bend,” suggesting estimate risk skewed toward stabilization/improvement if churn mitigation holds .
  • Guidance credibility: FY26 raises (revenue, EPS, operating income) reinforce prudence; however, Q3 step-down and AI cost pressure warrant near-term caution on margins .
  • AI-native differentiation: Strong adoption of Copilot/Agents drives customer value but increases cloud/LLM costs near-term; longer-term, this should aid enterprise wins and CCaaS acceleration post-hardening .
  • Enterprise focus: $1M+ customer cohort growth and BearHug engagement on top accounts are key to retention and expansion; watch NDE and churn narratives over the next two quarters .
  • Leadership transitions: CFO departure and CRO arrival are notable; near-term continuity (CEO interim CFO) plus upgraded GTM leadership may accelerate sales discipline and pipeline conversion .
  • Trading setup: Positive estimate beats and FY raise vs. cautious Q3 guide and margin headwinds create a mixed near-term setup; monitor Q3 execution on renewals, CCaaS implementations, and AI cost normalization .
  • Medium-term thesis: If churn moderation, pricing simplification, and CCaaS hardening deliver, CXM can move toward stronger growth while maintaining mid-teens+ non-GAAP margins, consistent with Rule of 40 ambitions .