Summary of Sprinklr Q1 Fiscal Year 2027 Earnings Call

1Key Financial Results and Metrics

Total Revenue: $219.5 million, up 7% year-over-year.

Subscription Revenue: $194.8 million, up 6% year-over-year.

Non-GAAP Operating Income: $31.7 million, representing a 14% non-GAAP operating margin.

Net Dollar Expansion Rate: 104%, showing improvement over the previous quarter.

Total Remaining Performance Obligations (RPO): $1.04 billion, up 10% year-over-year.

Current RPO: $627.1 million, up 5% year-over-year.

Free Cash Flow: $65.8 million, representing a 30% free cash flow margin.

Subscription Gross Margin: 74%, with total non-GAAP gross margin at 66%.

2Strategic Updates and Business Highlights

The company is in the second phase of its transformation, focusing on execution and embedding changes made in the previous year.

Successful completion of the largest software deal in Sprinklr's history with a global consumer electronics company.

Strong renewal rates achieved, the highest in over two years, driven by the "Bear Hug" initiative targeting larger customers.

The acquisition of ViralMoment enhances Sprinklr's AI video analytics capabilities, aligning with the growing importance of short-form video.

Positive momentum in AI-native products, with 180 AI projects underway, contributing to improved customer engagement and operational efficiency.

3Forward Guidance and Outlook

Q2 Revenue Guidance: Expected to be between $214 million and $215 million, representing 1% growth year-over-year.

Full Year Revenue Guidance: Total revenue expected between $866.5 million and $868.5 million, reflecting 1% growth year-over-year.

Subscription Revenue Guidance for FY '27: Raised to between $779.5 million and $781.5 million, representing 3% growth year-over-year.

Non-GAAP Operating Income Guidance for FY '27: Expected to be between $139 million and $141 million, with a 16% non-GAAP operating margin.

4Bad News, Challenges, or Points of Concern

Middle East Market Pressure: Ongoing geopolitical challenges have delayed some deals, with an estimated $3 million to $4 million in revenue impacted this quarter.

Professional Services Revenue Decline: Expected to decrease by 13% year-over-year in Q2 due to the completion of large projects and a shift in focus.

Cost Pressures: Increased data and hosting costs related to AI initiatives are impacting margins, with expectations of negative gross margins in professional services for Q2.

Shift in Customer Metrics: The decision to discontinue reporting on the $1 million customer cohort metric raised concerns about potential declines in customer retention and growth.

5Notable Q&A Insights

Rory Read emphasized the resilience of the Middle East team and the healthy pipeline despite current challenges, expressing optimism for recovery in upcoming quarters.

The management team acknowledged the importance of improving customer engagement and renewal rates, particularly focusing on the "Cornerstone" strategy for smaller accounts.

There was a discussion on the balance between M&A and share repurchases, with a focus on strategic acquisitions that enhance product offerings without compromising capital allocation.

The executives expressed confidence in the trajectory of the business, citing improved analytics and customer engagement as key indicators of future success. Overall, Sprinklr's Q1 results reflect a company in transition, making strides in customer engagement and AI capabilities while navigating external challenges and preparing for future growth.