Sprinklr Announces Third Quarter Fiscal 2025 Results

Q3 Total Revenue of $200.7 million, up 8% year-over-year
Q3 Subscription Revenue of $180.6 million, up 6% year-over-year
Q3 net cash provided by operating activities of $9.2 million and free cash flow* of $4.9 million
RPO and cRPO up 17% and 11% year-over-year, respectively
147 $1 million customers, up 20% year-over-year

Sprinklr (NYSE: CXM), the unified customer experience management (Unified-CXM) platform for modern enterprises, today reported financial results for its third fiscal quarter ended October 31, 2024.

“Sprinklr’s third quarter results delivered a 12% non-GAAP operating margin and positive free cash flow,” said Rory Read, Sprinklr’s President and CEO. Read continued, “Since joining the company, I have seen first-hand the strengths that set us apart: our industry-leading technology, exceptional roster of customers and partners, and a strong market fit. While there is work ahead in becoming a Rule of 40 company, we are confident in our ability to accelerate growth and deliver meaningful margin expansion - creating value for our customers, partners and stockholders.”

Third Quarter Fiscal 2025 Financial Highlights

Revenue: Total revenue for the third quarter was $200.7 million, up from $186.3 million one year ago, an increase of 8% year-over-year. Subscription revenue for the third quarter was $180.6 million, up from $170.5 million one year ago, an increase of 6% year-over-year.
Operating Income and Margin*: Third quarter GAAP operating income was $7.9 million, compared to operating income of $13.2 million one year ago. Non-GAAP operating income was $23.3 million, compared to non-GAAP operating income of $27.4 million one year ago. For the third quarter, GAAP operating margin was 4% and non-GAAP operating margin was 12% compared to GAAP operating margin of 7% and non-GAAP operating margin of 15% in the third quarter of fiscal year 2024.
Net Income Per Share*: Third quarter GAAP net income per share, diluted was $0.04, compared to net income per share, diluted of $0.06 in the third quarter of fiscal year 2024. Non-GAAP net income per share, diluted for the third quarter was $0.10, compared to non-GAAP net income per share, diluted of $0.11 in the third quarter of fiscal year 2024.
Cash, Cash Equivalents and Marketable Securities: Total cash, cash equivalents and marketable securities as of October 31, 2024 was $476.6 million.

* Free cash flow, non-GAAP operating income, non-GAAP operating margin and non-GAAP net income per share are non-GAAP financial measures defined under “Non-GAAP Financial Measures,” and are reconciled to net cash provided by operating activities, operating income, net income or net income per share, as applicable, the closest comparable GAAP measure, at the end of this release.

Financial Outlook

Sprinklr is providing the following guidance for the fourth fiscal quarter ending January 31, 2025:

Subscription revenue between $180 million and $181 million.
Total revenue between $200 million and $201 million.
Non-GAAP operating income between $17.5 million and $18.5 million.
Non-GAAP net income per share of approximately $0.07 assuming 265 million diluted weighted-average shares outstanding.

Sprinklr is providing the following guidance for the full fiscal year ending January 31, 2025:

Subscription revenue between $715.9 million and $716.9 million.
Total revenue between $793.9 million and $794.9 million.
Non-GAAP operating income between $76.4 million and $77.4 million.
Non-GAAP net income per share between $0.31 and $0.32, assuming 275 million diluted weighted-average shares outstanding.

Non-GAAP Financial Measures

In addition to our results determined in accordance with U.S. GAAP, we believe that the following non-GAAP financial measures associated with our condensed consolidated statements of operations are useful in evaluating our operating performance:

Non-GAAP gross profit and non-GAAP gross margin;
Non-GAAP operating income and non-GAAP operating margin; and
Non-GAAP net income and non-GAAP net income per share.

We define these non-GAAP financial measures as the respective U.S. GAAP measures, excluding, as applicable, stock-based compensation expense and related charges and amortization of acquired intangible assets. We believe that it is useful to exclude stock-based compensation expense-related charges and amortization of acquired intangible assets in order to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies over multiple periods.

In addition, we believe that free cash flow is also a useful non-GAAP financial measure. Free cash flow is defined as net cash provided by operating activities less cash used for purchases of property and equipment and capitalized internal-use software. We believe that free cash flow is a useful indicator of liquidity as it measures our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments. We expect our free cash flow to fluctuate in future periods with changes in our operating expenses and as we continue to invest in our growth. We typically experience higher billings in the fourth quarter compared to other quarters and experience higher collections of accounts receivable in the first half of the year, which results in a decrease in accounts receivable in the first half of the year.

However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by U.S. GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. As a result, our non-GAAP financial measures are presented for supplemental informational purposes only and should not be considered in isolation or as a substitute for our consolidated financial statements presented in accordance with U.S. GAAP.

Sprinklr has not reconciled its financial outlook expectations as to non-GAAP operating income or as to non-GAAP net income per share to their respective most directly comparable U.S. GAAP measures as a result of the high variability, complexity and low visibility with respect to the charges excluded from these non-GAAP measures, in particular, the measures and effects of stock-based compensation expense specific to equity compensation awards that are directly impacted by unpredictable fluctuations in our stock price. We expect the variability of the above charges to have a significant, and potentially unpredictable, impact on our future U.S. GAAP financial results. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to Sprinklr’s results computed in accordance with U.S. GAAP.

Conference Call Information Sprinklr will host a conference call today, December 4, 2024, to discuss third quarter fiscal 2025 financial results, as well as the fourth quarter and full year fiscal 2025 outlook, at 5:00 p.m. Eastern Time, 2:00 p.m. Pacific Time. Investors are invited to join the webcast by visiting: https://investors.sprinklr.com/. To access the call by phone, dial 877-459-3955 (domestic) or 201-689-8588 (international). The conference ID number is 13750163. The webcast will be available live, and a replay will be available following completion of the live broadcast for approximately 90 days.

About Sprinklr, Inc. Sprinklr is a leading enterprise software company for all customer-facing functions. With advanced AI, Sprinklr's unified customer experience management (Unified-CXM) platform helps companies deliver human experiences to every customer, every time, across any modern channel. Headquartered in New York City with employees around the world, Sprinklr works with more than 1,800 valuable enterprises — global brands like Microsoft, P&G, Samsung and more than 60% of the Fortune 100. Sprinklr's value to the enterprise is simple: We un-silo teams to make customers happier.

Forward-Looking Statements This press release contains express and implied “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial outlook for the fourth quarter and full year fiscal 2025, the impact of, and our ability to execute, our corporate strategies and business initiatives, including our ability to accelerate growth and deliver meaningful margin expansion, our expectations regarding our free cash flow, stock-based compensation expense-related charges and amortization of acquired intangible assets. In some cases, you can identify forward-looking statements by terms such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “should,” “could,” “can,” “predict,” “potential,” “target,” “explore,” “continue,” or the negative of these terms, and similar expressions intended to identify forward-looking statements. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance, or achievement to differ materially and adversely from those anticipated or implied in the statements, including: our rapid growth may not be indicative of our future growth; our revenue growth rate has fluctuated in prior periods; our ability to achieve or maintain profitability; we derive the substantial majority of our revenue from subscriptions to our Unified-CXM platform; our ability to manage our growth and organizational change; the market for Unified-CXM solutions is new and rapidly evolving; our ability to attract new customers in a manner that is cost-effective and assures customer success; our ability to attract and retain customers to use our products; our ability to drive customer subscription renewals and expand our sales to existing customers; our ability to effectively develop platform enhancements, introduce new products or keep pace with technological developments; the market in which we participate is new and rapidly evolving and our ability to compete effectively; our business and growth depend in part on the success of our strategic relationships with third parties; our ability to develop and maintain successful relationships with partners who provide access to data that enhances our Unified-CXM platform’s artificial intelligence capabilities; the majority of our customer base consists of large enterprises, and we currently generate a significant portion of our revenue from a relatively small number of enterprises; our investments in research and development; our ability to expand our sales and marketing capabilities; our sales cycle with enterprise and international clients can be long and unpredictable; certain of our results of operations and financial metrics may be difficult to predict; our ability to maintain data privacy and data security; we rely on third-party data centers and cloud computing providers; the sufficiency of our cash and cash equivalents to meet our liquidity needs; our ability to comply with modified or new laws and regulations applying to our business; our ability to successfully enter into new markets and manage our international expansion; the attraction and retention of qualified employees and key personnel; our ability to effectively manage our growth and future expenses and maintain our corporate culture; our ability to maintain, protect, and enhance our intellectual property rights; unstable market and economic conditions, including as a result of fluctuations in inflation and interest rates, bank closures or instability, public health crises and geopolitical actions, such as war and terrorism or the perception that such hostilities may be imminent; and our ability to successfully defend litigation brought against us. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are or will be discussed in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2024, filed with the SEC on September 4, 2024, under the caption “Risk Factors,” and in other filings that we make from time to time with the SEC. Forward-looking statements speak only as of the date the statements are made and are based on information available to Sprinklr at the time those statements are made and/or management’s good faith belief as of that time with respect to future events. Sprinklr assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Key Business Metrics

RPO. RPO, or remaining performance obligations, represents contracted revenues that have not yet been recognized, and include deferred revenue and amounts that will be invoiced and recognized in future periods.

cRPO. cRPO, or current RPO, represents contracted revenues that have not yet been recognized, and include deferred revenue and amounts that will be invoiced and recognized in the next 12 months.

Sprinklr, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

October 31, 2024

January 31, 2024

Assets

Current assets:

Cash and cash equivalents

93,239

164,024

Marketable securities

383,404

498,531

Accounts receivable, net of allowance of $9.0 million and $5.3 million, respectively

174,218

267,731

Prepaid expenses and other current assets

78,916

70,690

Total current assets

729,777

1,000,976

Property and equipment, net

33,146

32,176

Goodwill and other intangible assets

49,913

50,145

Operating lease right-of-use assets

47,467

31,058

Other non-current assets

109,998

108,755

Total assets

970,301

1,223,110

Liabilities and stockholders’ equity

Liabilities

Current liabilities:

Accounts payable

32,693

34,691

Accrued expenses and other current liabilities

67,923

93,187

Operating lease liabilities, current

7,228

5,730

Deferred revenue

311,009

374,552

Total current liabilities

418,853

508,160

Deferred revenue, non-current

2,737

506

Deferred tax liability, non-current

1,475

1,474

Operating lease liabilities, non-current

43,930

27,562

Other liabilities, non-current

6,282

5,704

Total liabilities

473,277

543,406

Commitments and contingencies

Stockholders’ equity

Class A common stock

Class B common stock

Treasury stock

(23,831

)

(23,831

)

Additional paid-in capital

1,249,724

1,182,150

Accumulated other comprehensive loss

(4,031

)

(3,836

)

Accumulated deficit

(724,846

)

(474,787

)

Total stockholders’ equity

497,024

679,704

Total liabilities and stockholders’ equity

970,301

1,223,110

Sprinklr, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

2024

2023

2024

2023

Revenue:

Subscription

180,634

170,464

535,856

491,581

Professional services

20,055

15,861

57,999

46,572

Total revenue

200,689

186,325

593,855

538,153

Costs of revenue:

Costs of subscription (1)

35,723

29,877

102,599

85,136

Costs of professional services (1)

22,098

16,571

60,663

46,716

Total costs of revenue

57,821

46,448

163,262

131,852

Gross profit

142,868

139,877

430,593

406,301

Operating expense:

Research and development (1)

23,280

23,146

69,441

68,230

Sales and marketing (1)

77,576

75,446

245,557

244,766

General and administrative (1)

34,123

28,096

102,084

77,820

Total operating expense

134,979

126,688

417,082

390,816

Operating income

7,889

13,189

13,511

15,485

Other income, net

5,495

6,328

19,409

18,324

Income before provision for income taxes

13,384

19,517

32,920

33,809

Provision for income taxes

2,929

2,550

9,990

3,549

Net income

10,455

16,967

22,930

30,260

Net income per share, basic

0.04

0.06

0.09

0.11

Weighted average shares used in computing net income per share, basic

253,807

271,202

262,030

268,596

Net income per share, diluted

0.04

0.06

0.08

0.11

Weighted average shares used in computing net income per share, diluted

261,972

288,121

275,109

285,985

(1) Includes stock-based compensation expense, net of amounts capitalized, as follows:

Three Months Ended October 31,

Nine Months Ended October 31,

(in thousands)

2024

2023

2024

2023

Costs of subscription

335

268

945

858

Costs of professional services

400

331

1,081

1,139

Research and development

2,896

2,128

8,304

9,092

Sales and marketing

5,091

6,132

16,497

18,398

General and administrative

6,508

5,071

17,350

12,618

Stock-based compensation expense, net of amounts capitalized

15,230

13,930

44,177

42,105

Sprinklr, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Nine Months Ended October 31,

2024

2023

Cash flow from operating activities:

Net income

22,930

30,260

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense

13,815

11,283

Provision for credit losses

12,413

3,370

Stock-based compensation, net of amounts capitalized

44,177

42,105

Non-cash lease expense

6,186

6,102

Deferred income taxes

(3,205

)

Net amortization/accretion on marketable securities

(9,830

)

(12,379

)

Other non-cash items, net

207

Changes in operating assets and liabilities:

Accounts receivable

80,653

47,876

Prepaid expenses and other current assets

(9,129

)

2,246

Other non-current assets

(1,867

)

(8,424

)

Accounts payable

(1,653

)

(8,878

)

Operating lease liabilities

(3,928

)

(6,098

)

Accrued expenses and other current liabilities

(21,929

)

(23,744

)

Deferred revenue

(60,462

)

(26,807

)

Other liabilities

604

399

Net cash provided by operating activities

72,225

54,162

Cash flow from investing activities:

Purchases of marketable securities

(329,258

)

(443,850

)

Proceeds from sales and maturities of marketable securities

453,863

362,797

Purchases of property and equipment

(5,000

)

(6,494

)

Capitalized internal-use software

(9,609

)

(8,791

)

Net cash provided by (used in) investing activities

109,996

(96,338

)

Cash flow from financing activities:

Proceeds from issuance of common stock upon exercise of stock options

18,919

32,331

Proceeds from issuance of common stock upon ESPP purchases

3,403

3,970

Payments for repurchase of Class A common shares

(273,873

)

—

Net cash (used in) provided by financing activities

(251,551

)

36,301

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

(1,596

)

(1,648

)

Net change in cash, cash equivalents and restricted cash

(70,926

)

(7,523

)

Cash, cash equivalents and restricted cash at beginning of period

172,429

188,387

Cash, cash equivalents and restricted cash at end of period

101,503

180,864

Sprinklr, Inc.

Reconciliation of Non-GAAP Measures

(in thousands)

(unaudited)

Three Months Ended October 31,

Nine Months Ended October 31,

2024

2023

2024

2023

Non-GAAP gross profit and non-GAAP gross margin:

U.S. GAAP gross profit

142,868

139,877

430,593

406,301

Stock-based compensation expense and related charges (1)

740

612

2,064

2,035

Non-GAAP gross profit

143,608

140,489

432,657

408,336

Gross margin

Non-GAAP gross margin

Non-GAAP operating income:

U.S. GAAP operating income

7,889

13,189

13,511

15,485

Stock-based compensation expense and related charges (2)

15,376

14,204

45,243

44,043

Amortization of acquired intangible assets

118

150

Non-GAAP operating income

23,283

27,443

58,872

59,678

Operating margin

Non-GAAP operating margin

Free cash flow:

Net cash provided by operating activities

9,191

21,027

72,225

54,162

Purchase of property and equipment

(972

)

(2,081

)

(5,000

)

(6,494

)

Capitalized internal-use software

(3,318

)

(3,047

)

(9,609

)

(8,791

)

Free cash flow

4,901

15,899

57,616

38,877

(1) Employer payroll tax related to stock-based compensation for the periods ended October 31, 2024 and 2023 was immaterial as it relates to the impact to gross profit.

(2) Includes $0.1 million and $0.3 million of employer payroll tax related to stock-based compensation for the three months ended October 31, 2024 and 2023, respectively, and $1.1 million and $1.9 million of employer payroll tax related to stock-based compensation expense for the nine months ended October 31, 2024 and 2023, respectively.

Three Months Ended October 31,

2024

2023

(in thousands)

Per Share-Basic

Per Share-Diluted

(in thousands)

Per Share-Basic

Per Share-Diluted

Non-GAAP net income reconciliation to net income