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Sprinklr, Inc. (CXM)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 beat consensus: revenue $202.54M vs $200.59M*, and non-GAAP diluted EPS $0.10 vs $0.071*, driven by several large customer deals across Core and Sprinklr Service .
  • GAAP EPS spiked to $0.37 on a discrete, non-cash $87.1M deferred tax benefit from releasing U.S. valuation allowances; underlying non-GAAP margin remained solid at 13% .
  • FY2026 guidance initiated: ~3% y/y revenue growth, non-GAAP operating margin ~16%, and free cash flow ~$120M; subscription gross margin headwind (~400 bps) from higher data/hosting costs (e.g., X/Twitter license) is baked in .
  • Transformation catalysts: 15% workforce reduction, go-to-market “pod” coverage model, implementation rigor, and product roadmaps (telephony, WFM, reporting) to stabilize execution and reaccelerate growth toward Rule of 40 targets .

What Went Well and What Went Wrong

  • What Went Well

    • “We are encouraged by our Q4 results driven by several large customer deals across both Core and Sprinklr Service” and continued progress on margin discipline; non-GAAP operating margin 13% .
    • Landmark customer wins/expansions: an 8-figure multiyear renewal at a global technology company and new wins with Delta, Ford, MSCI, Live Nation, Ralph Lauren .
    • KPI resilience: $1M+ customers rose 18% y/y to 149; calculated billings +10% y/y to $298.6M; cRPO +4% y/y to $612.5M .

  • What Went Wrong

    • Subscription gross margin under pressure from data/hosting costs; FY2026 guide embeds ~400 bps headwind; professional services margins at breakeven near term .
    • Net dollar expansion rate cooled to 104% (lagging effect of FY2025 churn/downsells), with management highlighting need to fix implementation consistency and renewals discipline .
    • Free cash flow moderated in Q4 to $1.5M as mix and timing shifted; GAAP operating income declined y/y for Q4 despite revenue growth .

Financial Results

Core P&L vs prior periods and estimates

MetricQ4 FY2024Q3 FY2025Q4 FY2025Vs Consensus
Total Revenue ($M)194.21 200.69 202.54 200.59*
Subscription Revenue ($M)176.96 180.63 182.07 —
Professional Services Revenue ($M)17.25 20.06 20.47 —
GAAP Operating Income ($M)18.46 7.89 10.46 —
GAAP Operating Margin (%)10% 4% 5% —
Non-GAAP Operating Income ($M)32.37 23.28 25.88 —
Non-GAAP Operating Margin (%)17% 12% 13% —
GAAP Diluted EPS ($)0.07 0.04 0.37 —
Non-GAAP Diluted EPS ($)0.12 0.10 0.10 0.071*
Non-GAAP Gross Margin (%)76% 72% 71% —

Values with * retrieved from S&P Global.

Segment breakdown and margins

MetricQ4 FY2024Q3 FY2025Q4 FY2025
Subscription Revenue ($M)176.96 180.63 182.07
Subscription Gross Margin (non-GAAP, %)—80% 79%
Professional Services Revenue ($M)17.25 20.06 20.47
Professional Services Gross Margin (non-GAAP, %)—-8% ~0%

KPIs and cash metrics (trend)

KPIQ2 FY2025Q3 FY2025Q4 FY2025
Net Dollar Expansion (Subscription, %)111% 107% 104%
$1M+ Customers (count)145 147 149
Calculated Billings ($M)192.8 147.9 298.6
RPO ($M)887.7 906.3 987.7
cRPO ($M)557.8 545.6 612.5
Free Cash Flow ($M)16.53 4.90 1.54
Cash & Marketable Securities ($M)468.5 476.6 483.5

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Subscription Revenue ($M)Q1 FY2026N/A182–183 Initiated
Total Revenue ($M)Q1 FY2026N/A201.5–202.5 Initiated
Non-GAAP Operating Income ($M)Q1 FY2026N/A31.5–32.5 Initiated
Non-GAAP Diluted EPS ($)Q1 FY2026N/A~0.10 (269M diluted shares) Initiated
Subscription Revenue ($M)FY2026N/A741–743 Initiated
Total Revenue ($M)FY2026N/A821.5–823.5 Initiated
Non-GAAP Operating Income ($M)FY2026N/A129–131 Initiated
Non-GAAP Diluted EPS ($)FY2026N/A0.38–0.39 (277M diluted shares) Initiated
Non-GAAP Tax Rate (%)FY2026N/A~30% (cash taxes low given NOLs) Initiated
Subscription Gross MarginFY2026N/A~-400 bps y/y headwind Initiated
Professional Services Gross MarginFY2026N/A~Breakeven Initiated
Billings ($M)FY2026N/A~863 Initiated
Other Income ($M)FY2026N/A~16 (Q1: ~$4) Initiated
Free Cash Flow ($M)FY2026N/A~120 (15% margin) Initiated

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 FY2025 / Q3 FY2025)Current Period (Q4 FY2025)Trend
AI/technology initiativesCCaaS bots drove 35–60% containment gains; platform named leader by Forrester; pricing/packaging simplification underway Data feeds (X/Twitter) renewed; higher data costs industry-wide; roadmap on telephony, WFM, reporting architecture refactor Continued focus; product hardening and data cost headwinds
Macro/tariffsBudget scrutiny; elongated cycles; AI crowd-out in marketing debated Macro “choppy”; tariffs not impactful; prudent FY2026 guide Cautious stance maintained
Go-to-market executionRenewal team centralization; geographic alignment; C‑suite selling emphasis Pod coverage model launched; focus on top 400–500 accounts; “Project Bear Hug” Structural overhaul in motion
Implementation qualityAcknowledged challenges; standardization/templatization by industry planned Treat implementation “as a product”; documentation/training; consistency target over 2–4 quarters Improving; multi-quarter fix
Pricing & packagingSimplification initiative started; no material FY2025 impact Continued work; module approach; align incentives for multiyear deals Ongoing refinement
Regulatory/legalNot central to operations; law-firm press releases unrelated to core KPIs No new regulatory impacts flagged Stable
R&D/product roadmapCore and CCaaS innovation; partner ecosystem expansion Telephony options, WFM improvements (Jul/Nov releases), reporting via data lake/Tableau-style layer Execution focus rising

Management Commentary

  • “FY 26 will be a transition year… as we execute our strategy that we believe will position the company to drive durable, efficient growth as we march towards the Rule of 40.” — Rory Read, President & CEO .
  • “We concluded… our U.S. deferred tax assets are realizable and… released the valuation allowance… discrete U.S. GAAP noncash deferred tax benefit of approximately $87 million.” — Manish Sarin, CFO .
  • “We closed an 8-figure multiyear renewal… mission critical… shifting from costly channels like voice and email to efficient AI-driven support on digital channels.” — Rory Read .
  • “Incremental data and hosting costs will negatively impact subscription gross margins by ~400 basis points in FY ’26.” — Manish Sarin .

Q&A Highlights

  • Cost efficiency vs growth: efficiency actions free up dollars to invest in talent, coverage, innovation; intent is to improve both margin and durable growth, not sacrifice growth .
  • Gross margin headwinds: rising data costs across vendors and $2M per new POP setup in hosting; FY2026 subscription margin impact baked into outlook .
  • Go-to-market prioritization: stabilize/expand the base; target Global 2000–5000; net-new logos secondary to deepening enterprise relationships .
  • Implementation discipline: productized, documented implementations with training; expect 2–3 (possibly 4) quarters to reach consistent quality .
  • Renewals seasonality: largest renewals in Q4, second-largest in Q2; shift toward 3-year deals continues .
  • Federal exposure: not material; no impact on outlook .

Estimates Context

  • Q4 FY2025: Revenue $202.54M vs consensus $200.59M*; non-GAAP diluted EPS $0.10 vs consensus $0.071*; 12 revenue estimates and 14 EPS estimates indicated a modest beat breadth. Values retrieved from S&P Global.
  • Implication: Modest top-line and EPS beats likely support near-term sentiment, but investors may look through GAAP EPS due to non-cash tax benefit and focus on FY2026 growth/margin setup .

Key Takeaways for Investors

  • Quality beats with caveats: non-GAAP EPS and revenue beat; GAAP EPS inflated by non-cash tax benefit—focus on non-GAAP margin trajectory and execution fixes .
  • FY2026 setup is margin/FCF-led: ~16% non-GAAP operating margin and ~$120M FCF target despite ~400 bps subscription margin headwinds (data/hosting); growth guided ~3%—a “stabilize then accelerate” playbook .
  • Execution is the swing factor: pod coverage model, renewal discipline, and implementation rigor are central to bending NDE and reaccelerating growth into FY2026/27 .
  • Strategic customer depth: 149 $1M+ customers and an 8-figure renewal at a top tech company underscore platform stickiness and cross-suite expansion potential .
  • Watch data cost dynamics: renewed X/Twitter data and broader vendor pricing drive structural cost pressure; product roadmap (telephony, WFM, reporting) aims to expand CCaaS value and offset mix .
  • Near-term trading lens: beats plus new FY2026 guide and transformation milestones are positives; investors will monitor cRPO/RPO, NDE, professional services profitability, and the pace of implementation improvements .
  • Medium-term thesis: if execution drives core growth while service hardens and margins expand, Rule of 40 progress with rising FCF can re-rate shares; risk is prolonged margin headwinds and slower-than-planned implementation fixes .