Business Overview and History
Sprinklr, Inc. (CXM) is a leading provider of unified customer experience management (Unified-CXM) software, empowering enterprises to deliver exceptional customer experiences across digital channels. The company's AI-powered platform integrates marketing, advertising, research, care, sales, and engagement functionalities, enabling organizations to better understand and serve their customers.
Sprinklr was founded in 2009 as a platform for enterprises to manage their marketing, advertising, research, care, sales, and engagement across social media channels. The company was incorporated in Delaware in 2011 and is headquartered in New York, New York, with 20 operating subsidiaries globally.
In its early years, Sprinklr focused on building out its Unified Customer Experience Management (Unified-CXM) platform, which utilizes an architecture purpose-built for managing customer experience data and is powered by proprietary AI, collaborative workflow, seamless automation, broad-based listening, and customer-led governance. The company generated revenue from the sale of subscriptions to its Unified-CXM platform and related professional services.
Sprinklr experienced rapid growth over the following years, expanding its customer base across a broad array of industries and geographies. By the end of fiscal year 2023, the company had 123 "large customers" - those generating at least $1 million in subscription revenue on a trailing 12-month basis. This customer base included global enterprises, marketing agencies, government departments, non-profits, and educational institutions located in over 80 countries.
However, Sprinklr also faced challenges during this period of growth. In fiscal year 2023, the company incurred a significant net loss of $55.7 million as it continued to invest heavily in research and development, sales and marketing, and general and administrative functions to support its expansion. The company also experienced issues with consistent delivery and implementation of its Unified-CXM platform, which impacted customer satisfaction and renewal rates in some instances. These operational challenges, combined with the company's significant spending, resulted in Sprinklr's accumulated deficit growing to $474.8 million by the end of fiscal year 2024.
Product Offerings and Revenue Streams
Sprinklr's Unified-CXM platform comprises four main product suites:
1. Sprinklr Social: Enables customers to reach, engage, and listen to their customers on social media channels, providing capabilities for social media management, content publishing, audience targeting, and analytics.
2. Sprinklr Insights: Offers social listening, brand monitoring, and customer sentiment analysis across various digital channels, allowing customers to gather and analyze data to gain insights into their customers' needs and preferences.
3. Sprinklr Marketing: Provides tools for marketers to create, manage, and measure digital marketing campaigns across multiple channels, including social media, email, and web. Features include content creation, campaign planning, and performance tracking.
4. Sprinklr Service: The company's newest offering, focusing on customer service and support functionalities. It enables companies to manage customer inquiries, complaints, and cases across different communication channels, such as chat, messaging, and voice.
Sprinklr generates revenue primarily through two streams:
1. Subscription Revenue: Fees from customers accessing the Unified-CXM platform and related support services, accounting for the majority of the company's total revenue.
2. Professional Services Revenue: Fees for services that assist customers with the configuration and optimization of the Unified-CXM platform, as well as managed services and enablement services.
Financial Performance and Metrics
For the fiscal year ended January 31, 2025 (FY 2025), Sprinklr reported total revenue of $796.4 million, a 9% increase from the previous year. Subscription revenue, which accounts for the majority of the company's top line, grew 7% to $717.9 million. The company's net income improved significantly to $121.6 million in fiscal year 2025 from $51.4 million in fiscal year 2024.
Sprinklr's financial performance has been further highlighted by its strong cash flow generation. In fiscal year 2025, the company reported operating cash flow of $71.5 million and free cash flow of $51.1 million, representing a free cash flow margin of 6.4%.
For the fourth quarter of fiscal year 2025, Sprinklr reported total revenue of $202.5 million, up 4% year-over-year. Subscription revenue for the quarter was $182.1 million, a 3% increase from the same period in the previous year. The company's net income for Q4 FY 2025 was $98.7 million, with operating cash flow of $5.4 million and free cash flow of $1.5 million.
As of January 31, 2025, Sprinklr had a robust balance sheet, with $483.5 million in cash and marketable securities, and no outstanding debt. The company's current ratio stood at 1.97, indicating a healthy liquidity position. The debt-to-equity ratio was 0.049, reflecting the company's strong financial position.
One of Sprinklr's key operational metrics is the number of customers generating $1 million or more in annual subscription revenue. As of the end of fiscal year 2025, Sprinklr had 149 such customers, an 18% increase from the previous year, underscoring the company's ability to expand its relationships with its largest clients.
In terms of geographic performance, approximately 41% of revenue in the nine months ended October 31, 2024, was from customers outside of the Americas region, with the remainder from the Americas region. The United States was the only country that represented more than 10% of the company's revenues.
Challenges and Transformation
Despite Sprinklr's impressive growth and financial strength, the company has faced operational challenges in recent years that have impacted its performance. These challenges include inconsistent implementation of its Unified-CXM platform, leading to customer dissatisfaction and churn, as well as technical debt and operational inefficiencies that have hindered the company's ability to consistently deliver innovative products and services.
In response to these challenges, Sprinklr has undertaken a comprehensive transformation effort under the leadership of its new CEO, Rory Read, who joined the company in late 2024. Read, a seasoned technology executive with a track record of leading successful turnarounds, has laid out a multifaceted strategy to stabilize and reinvigorate the business.
Key elements of Sprinklr's transformation plan include:
1. Optimizing the company's cost structure: Sprinklr recently announced a 15% reduction in its global workforce, streamlining its operations and freeing up resources to invest in critical areas.
2. Realigning the go-to-market strategy: The company has implemented a new go-to-market coverage model, focusing its sales and marketing efforts on its top 400-500 enterprise customers, with the goal of deepening relationships and driving increased adoption of its Unified-CXM platform.
3. Enhancing product delivery and innovation: Sprinklr is working to improve the consistency and reliability of its product implementations, while also accelerating the development of new features and functionalities, particularly in the areas of customer service and contact center capabilities.
4. Strengthening leadership and governance: Sprinklr has bolstered its executive team and board of directors with the addition of seasoned technology leaders, bringing in expertise to support the company's transformation efforts.
Outlook and Guidance
As Sprinklr navigates this transitional period, the company has provided guidance for the upcoming fiscal year 2026. For the first quarter of FY 2026, Sprinklr expects total revenue between $201.5 million to $202.5 million, representing 3% growth year-over-year at the midpoint. Subscription revenue is expected to be between $182 million to $183 million, also 3% growth year-over-year at the midpoint.
For the full fiscal year 2026, Sprinklr expects subscription revenue to grow 3% to a range of $741 million to $743 million, with total revenue expected to be in the range of $821.5 million to $823.5 million, representing 3% growth year-over-year.
The company's non-GAAP operating income is forecasted to be in the range of $129 million to $131 million, translating to a non-GAAP operating margin of approximately 16% at the midpoint. Sprinklr also expects to generate free cash flow of approximately $120 million in fiscal year 2026, which would represent a 100% increase compared to FY 2025 and translate to a 15% free cash flow margin.
Management has emphasized that fiscal year 2026 will be a transitional year as the company focuses on stabilizing the business, improving execution, and positioning itself for durable long-term growth.
Risks and Considerations
While Sprinklr's transformation efforts hold promise, the company faces several risks and challenges that investors should consider:
1. Execution risk: Sprinklr's ability to successfully implement its turnaround plan and address its operational challenges will be critical to its long-term success.
2. Competitive landscape: The Unified-CXM market is highly competitive, with Sprinklr facing pressure from both established players and emerging competitors. The company competes with various experience management solutions, marketing and advertising firms, and customer relationship management providers.
3. Macroeconomic conditions: Uncertain economic conditions, including rising inflation and interest rates, could impact Sprinklr's customers and their willingness to invest in Unified-CXM solutions.
4. Regulatory and compliance risks: As a global software provider, Sprinklr must navigate an evolving regulatory landscape, particularly around data privacy and security.
5. Market adoption: The customer experience management (CXM) market is still evolving, and Sprinklr's success will depend on the continued widespread adoption of CXM solutions in general and the company's Unified-CXM platform in particular.
Conclusion
Sprinklr is at a critical juncture in its evolution, as the company navigates a comprehensive transformation to address its operational challenges and position itself for long-term success. While the path forward may be difficult, the company's strong financial position, loyal customer base, and seasoned leadership team under Rory Read provide grounds for cautious optimism. As Sprinklr continues to execute on its strategic initiatives, investors will closely monitor the company's ability to deliver consistent financial performance and operational excellence in the Unified-CXM market.
The company's focus on its top enterprise customers, coupled with its efforts to improve product delivery and innovation, could potentially drive growth in the coming years. However, the success of these initiatives will largely depend on Sprinklr's ability to execute its transformation plan effectively while navigating the competitive landscape and evolving market dynamics of the Unified-CXM industry.