Release Date: December 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sprinklr Inc (CXM, Financial) reported an 8% year-over-year increase in total revenue, reaching $200.7 million for Q3.
- Subscription revenue grew by 6% year-over-year to $180.6 million, indicating strong demand for Sprinklr's offerings.
- The company achieved a non-GAAP operating income of $23.3 million, resulting in a 12% non-GAAP operating margin.
- Sprinklr Inc (CXM) has a robust customer base with over 1,800 customers, including nearly 150 customers contributing $1 million or more in subscription revenue.
- The company has a healthy balance sheet with $477 million in cash and marketable securities and no debt outstanding.
Negative Points
- Sprinklr Inc (CXM) is currently operating below the Rule of 40, with a combined growth rate and profit margin under 20%, which is considered unsatisfactory by management.
- Professional services gross margin was negative 8%, highlighting inefficiencies in this segment.
- The company is experiencing elevated churn and a lower quantum of new business, which is expected to impact future revenue growth.
- Calculated billings for Q3 decreased by 8% year-over-year, indicating potential challenges in securing new contracts or renewals.
- Sprinklr Inc (CXM) faces challenges in improving sales and marketing efficiency and needs to streamline its go-to-market structure.
Q & A Highlights
Q: What is your perspective on the future direction of Sprinklr, particularly between CCaaS and core social solutions?
A: Rory Read, President and CEO, emphasized an ambidextrous strategy focusing on reenergizing and growing the core social and customer experience solutions while hardening and expanding the service offerings. He highlighted the importance of improving Rule of 40 results and driving long-term durable, profitable growth.
Q: Can you explain the differences in growth rates between subscription revenue, billings, and cRPO?
A: Manish Sarin, CFO, noted that billings are not a good metric due to many customers being on quarterly or semiannual billing cycles. He suggested focusing on RPO and cRPO as stronger indicators and mentioned that a more thorough plan would be discussed in the March call.
Q: What changes are being made to address churn and operational debt?
A: Rory Read acknowledged the need to improve renewal rates and identified overbuying post-COVID and a shift in focus away from core products as issues. He plans to implement a robust coverage model with a dual pod structure and focus on managing customer relationships throughout the year.
Q: Are there any updates on pricing and packaging strategies?
A: Rory Read mentioned plans to simplify pricing and packaging by moving away from a large number of SKUs to a model with essential and professional Sprinklr offerings, supplemented by modules. This change is expected to be implemented in FY26.
Q: What is your approach to potential M&A activities?
A: Rory Read expressed a preference for focusing on internal execution and efficiency improvements. However, he is open to small tuck-in acquisitions if they provide necessary skills or technology, but does not foresee major M&A actions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
