Sprinklr, the innovative unicorn in the cloud software industry, has been making waves with its comprehensive Unified Customer Experience Management (Unified-CXM) platform. Founded in 2009, this New York-based company has rapidly risen to become a leader in the fast-growing enterprise CXM market, serving some of the world's most iconic brands across diverse verticals.
Company Origins and Early Growth
The company's origins trace back to 2009, when Ragy Thomas, a serial entrepreneur, recognized the need for a unified platform to manage the increasingly complex customer experience landscape. Sprinklr was born out of this vision, with the goal of empowering enterprises to seamlessly orchestrate their marketing, advertising, research, care, sales, and engagement efforts across modern channels such as social, messaging, chat, and text. Initially incorporated in Delaware in 2011, Sprinklr has since expanded to include 20 operating subsidiaries globally.
In its early years, Sprinklr focused on developing its core social media management and analytics capabilities, quickly establishing itself as a frontrunner in the emerging Unified-CXM market. This period saw robust growth as enterprises increasingly recognized the need for a unified platform to manage customer experiences across digital channels. As the company evolved, it expanded its product suite to include capabilities in marketing, advertising, and customer service, positioning its platform as a comprehensive solution for enterprises looking to transform their customer engagement strategies.
Challenges and Evolution
During this expansion phase, Sprinklr encountered challenges related to platform complexity and customer implementations. However, the company successfully navigated these issues, maintaining its growth momentum and continuing to innovate. In recent years, Sprinklr has made significant investments in artificial intelligence and machine learning, enhancing the capabilities of its Unified-CXM platform and differentiating itself in an increasingly competitive market.
The company has also focused on expanding its global footprint, opening new offices and establishing partnerships worldwide to support its growing base of large enterprise customers. This international expansion has been crucial in diversifying Sprinklr's revenue streams and capitalizing on the growing demand for Unified-CXM solutions in markets beyond North America.
Platform Evolution and Offerings
Over the past 14 years, Sprinklr has evolved its Unified-CXM platform, continuously expanding its capabilities to meet the evolving needs of its customers. The platform's core offerings include Sprinklr Social, Sprinklr Insights, Sprinklr Marketing, and the more recently introduced Sprinklr Service, all powered by proprietary AI, collaborative workflow, seamless automation, broad-based listening, and customer-led governance.
Financials
Sprinklr's financial performance has shown improvement in recent years. For the fiscal year ended January 31, 2024, the company reported annual revenue of $732.36 million and a net income of $51.40 million. This marks a significant turnaround from the prior fiscal year, which saw the company incur a net loss of $55.74 million on revenue of $618.19 million. The return to profitability highlights the company's ability to scale its operations efficiently while continuing to grow its top line.
In the most recent quarter (Q2 FY 2025), Sprinklr reported total revenue of $197.21 million, representing an 11% year-over-year growth. The company's subscription revenue, which constitutes the bulk of its income, grew 9% year-over-year to $177.86 million, accounting for 90% of total revenue. Professional services revenue for the quarter stood at $19.35 million.
Sprinklr's gross margins remain strong, with the subscription business achieving an 81% gross margin in the most recent quarter. The overall gross margin for the company was 72%, reflecting the lower margins associated with the professional services segment.
One of the key financial metrics that Sprinklr closely monitors is its net dollar expansion (NDE) rate, which tracks the company's ability to retain and expand subscription revenue from existing customers. As of the most recent quarter, Sprinklr's NDE stood at 111%, indicating that the company is still able to drive incremental revenue growth from its customer base, despite the broader macroeconomic challenges. However, this represents a decrease from the 120% NDE rate reported in the prior year period, reflecting the increased churn and longer sales cycles the company has experienced.
Operating cash flow (OCF) for the most recent fiscal year was $71.47 million, with free cash flow (FCF) of $51.14 million. In the most recent quarter, Sprinklr generated OCF of $21.32 million and FCF of $16.53 million, demonstrating the company's ability to generate positive cash flows from its operations.
Customer Base and Geographic Presence
Sprinklr's customer base is equally impressive, with 145 customers contributing over $1 million in subscription revenue over the trailing 12-month period as of the end of the second quarter of fiscal year 2025. This represents a 21% year-over-year increase, underscoring the platform's appeal and the company's success in expanding its footprint with large enterprises.
Geographically, Sprinklr has a global footprint, with approximately 41% of its sales coming from outside the Americas region during the first half of fiscal year 2025. This international diversification has been a key focus for the company as it looks to capitalize on the growing demand for Unified-CXM solutions in markets beyond its North American base.
Challenges and Strategic Initiatives
However, Sprinklr has not been immune to the broader macroeconomic headwinds that have impacted the technology sector. The company has reported increased churn in its core product suites, as well as longer sales cycles and heightened budgetary scrutiny from customers. In response, Sprinklr has been taking decisive action to address these challenges, including sharpening its strategic focus, refining its go-to-market execution, and driving operational efficiencies.
One of the key initiatives Sprinklr has undertaken is the reorganization of its sales and customer success teams to improve renewal rates and reduce churn. The company has also been investing in its contact center-as-a-service (CCaaS) offering, which represents a significant growth opportunity, while simultaneously streamlining its pricing and packaging to create more targeted bundles for customers.
Additionally, Sprinklr has made changes to its executive leadership team, with the recent appointment of Rory Read as the new President and Chief Executive Officer. Read, a seasoned technology industry veteran, has been tasked with accelerating the company's next phase of growth and scale, drawing on his extensive experience in leading global technology organizations.
Liquidity
Sprinklr's liquidity position remains strong, with $119.12 million in cash and cash equivalents as of July 31, 2024. The company's debt-to-equity ratio stands at a conservative 0.05, indicating a low level of financial leverage. Sprinklr's current ratio and quick ratio both stand at 1.53, suggesting that the company has sufficient short-term assets to cover its short-term liabilities.
In April 2023, Sprinklr terminated its credit facility with Silicon Valley Bank but maintains existing letters of credit totaling approximately $1.3 million, which are collateralized with cash. The company also has $6.4 million in cash collateral agreements with J.P. Morgan Bank. These arrangements provide additional financial flexibility while maintaining a conservative balance sheet structure.
Future Outlook and Guidance
Looking ahead, Sprinklr has provided guidance for both the upcoming quarter and the full fiscal year 2025. For the third quarter of fiscal year 2025, the company expects total revenue between $196 million and $197 million, representing 5% growth year-over-year at the midpoint. Subscription revenue is projected to be between $177.5 million and $178.5 million, a 4% year-over-year growth at the midpoint. Non-GAAP operating income is expected to be between $19 million and $20 million, with non-GAAP net income per diluted share of approximately $0.08.
For the full fiscal year 2025, Sprinklr anticipates subscription revenue of $710.5 million to $712.5 million, representing 6% growth year-over-year at the midpoint. Total revenue is expected to be between $785 million and $787 million, a 7% year-over-year growth at the midpoint. The company projects non-GAAP operating income of $80.5 million to $81.5 million, implying a 10% non-GAAP operating margin at the midpoint. Non-GAAP net income per diluted share is expected to be between $0.32 and $0.33. Additionally, Sprinklr forecasts free cash flow of approximately $55 million for the full year.
Sprinklr's future success will hinge on its ability to navigate the evolving CXM landscape, capitalize on the growing demand for Unified-CXM solutions, and execute its strategic initiatives effectively. The company's strong customer relationships, differentiated technology, and experienced leadership team provide a solid foundation for its continued growth and expansion.
As Sprinklr embarks on its next chapter, investors will closely monitor the company's progress in driving revenue growth, improving profitability, and solidifying its position as a market leader in the rapidly evolving Unified-CXM space. The company's ability to maintain its high net dollar expansion rate, attract new large enterprise customers, and successfully expand its international presence will be key factors in determining its long-term success in the competitive cloud software market.