EPS of $-0.01 decreased by 115.6% from previous year
Gross margin of 69.5%
Net income of -1.57M
"FY2026 is a transitional year for Sprinklr, Inc. We anticipated some near-certain challenges as we implemented a series of strategic and operational changes to directly address past execution challenges and to position the company for the long term." - Rory Read
Sprinklr Inc (CXM) QQ1 2026 Results Analysis: AI-Native Unified CXM Platform Delivers Transition Year Progress with Strong Free Cash Flow and Visible Growth Opportunities
Executive Summary
Sprinklr reported QQ1 2026 total revenue of $205.5 million, up 5% year over year, with subscription revenue of $184.1 million (+4% YoY). Non-GAAP operating income was $36.7 million, delivering an 18% margin, and free cash flow reached a record $80.7 million for the quarter. Management characterized FY2026 as a transitional year focused on transforming go-to-market, cost structure, and post-sales execution to lift long-term growth, customer retention, and expansion opportunities. The company also highlighted a strong pipeline, including seven-figure opportunities in CCaaS and a sizable HealthCore core, alongside 146 customers generating at least $1 million in annual subscription revenue (up 6% YoY). Sprinklr authorized a $150 million stock buyback to be completed by 6/30/2026, reflecting confidence in near-term cash generation. Despite encouraging gross margin stability (GAAP gross margin not explicitly provided; non-GAAP subscription gross margin at 78% and overall non-GAAP gross margin at 70%), the quarter faced renewal pressure and elevated churn dynamics driven by macro uncertainty and execution challenges from the prior period. The guidance contemplates continued investments in GTM and AI capabilities, with FY2026 subscription revenue projected to $741â$743 million and total revenue of $825â$827 million, implying mid-single-digit top-line growth and a 16-17% non-GAAP operating margin at the midpoint for the full year. Investors should monitor: (i) the pace and durability of the Bear Hug program across top customers, (ii) CAC/sales productivity improvements as pods scale, (iii) CCaaS platform maturation and service delivery robustness, (iv) FX headwinds and their offsetting cost-reduction initiatives, and (v) the trajectory toward a bend in the revenue and profitability path in H2 FY2026 and into FY2027.
Key Performance Indicators
Revenue
205.50M
QoQ: 1.46% | YoY:4.87%
Gross Profit
142.87M
69.52% margin
QoQ: -0.59% | YoY:-1.32%
Operating Income
-1.76M
QoQ: -116.78% | YoY:-130.74%
Net Income
-1.57M
QoQ: -101.59% | YoY:-114.75%
EPS
-0.01
QoQ: -101.56% | YoY:-115.60%
Revenue Trend
Margin Analysis
Key Insights
Total revenue: $205.5 million, up 5% YoY; subscription revenue: $184.1 million, up 4% YoY; professional services: $21.4 million.
Operating profitability (non-GAAP): non-GAAP operating income $36.7 million; non-GAAP operating margin 18%; non-GAAP net income per diluted share $0.12.
GAAP results: operating income at a loss of $1.6 million; net income for the quarter negative at $(1.568) million; EPS (GAAP) $(0.006).
Free cash flow: $80.7 million in Q1 (record); after restructuring cash outflow of $11.8 million, the quarterly FCF would be $92.5 million.
Financial Highlights
Revenue and profitability metrics (Q1 FY2026):
- Total revenue: $205.5 million, up 5% YoY; subscription revenue: $184.1 million, up 4% YoY; professional services: $21.4 million.
- Gross margins (non-GAAP): subscription gross margin 78%; professional services gross margin 6%; overall non-GAAP gross margin 70%.
- Operating profitability (non-GAAP): non-GAAP operating income $36.7 million; non-GAAP operating margin 18%; non-GAAP net income per diluted share $0.12.
- GAAP results: operating income at a loss of $1.6 million; net income for the quarter negative at $(1.568) million; EPS (GAAP) $(0.006).
- Free cash flow: $80.7 million in Q1 (record); after restructuring cash outflow of $11.8 million, the quarterly FCF would be $92.5 million.
- Cash and liquidity: cash and marketable securities totaled $570.2 million with no debt; net cash position (net debt) negative $(75.5) million.
- Subscriber and mix indicators: 146 customers contributing âĨ$1 million in subscription revenue over the trailing twelve months, up 6% YoY (slightly down vs Q4 sequentially due to churn).
- RPO and billings: total remaining performance obligations (RPO) $943.2 million (â 2% YoY); current RPO (CRPO) $596.8 million (â 5% YoY); calculated billings $204.3 million (â 7% YoY).
- Guidance highlights (FY2026): subscription revenue guidance of $741â$743 million (3% YoY growth); total revenue guidance of $825â$827 million (â4% YoY); non-GAAP operating income guidance of $129â$131 million (midpoint â$130M); non-GAAP diluted EPS guidance of $0.39â$0.40; expected FY2026 free cash flow margin around 15% (~$125 million); FX headwind estimated to affect non-GAAP operating expenses by about $10 million, with offsetting savings anticipated.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
205.50M
4.87%
1.46%
Gross Profit
142.87M
-1.32%
-0.59%
Operating Income
-1.76M
-130.74%
-116.78%
Net Income
-1.57M
-114.75%
-101.59%
EPS
-0.01
-115.60%
-101.56%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key insights from management discussions on the QQ1 2026 earnings call:
- Transformation and transitional year: Rory Read emphasized that FY2026 is a transitional year aimed at addressing past execution challenges and building the foundation for durable profitability. Quote: FY2026 is a transitional year; we must continue to improve execution to drive stronger performance in FY2027 and beyond.
- Bear Hug program and GTM changes: Management highlighted Project Bear Hug to re-engage top customers and improve sales execution, with progress on ~200 of the top 500 customers in the early months and a plan to expand to ~5â600 customers over the next two quarters. Quote: This Bear Hug initiative is designed to drive faster time-to-value, deepen customer confidence, and unlock expansion opportunities.
- AI-native platform and CCaaS momentum: The leadership stressed AI-native CXM as a differentiator, especially in CCaaS, citing AI agent copilots, containment rates (30% to 80%), and cross-functional platform advantages. Quote: Our AI-native platform enables real-time decision-making and seamless integration across listening, ads, and service; CCaaS is a core growth vector but must be matured and hardened for enterprise scale.
- HealthCore/core pipeline and seven-figure opportunities: Sprinklr Metallic HealthCore pipeline remains strong, with seven-figure CCaaS opportunities in service and a broader platform strategy to unify customer experience across channels. Quote: Core HealthCore remains strong and is at the highest level in 18 months; we are reenergizing the core while expanding service offerings.
- Customer wins and revenue visibility: Notable wins included Calvin Klein, LG Electronics, Pepsi; 146 customers âĨ$1M subscription revenue; emphasis on the value of unified platform in enterprise deployments. Quote: A Fortune 500 medical technology leader selected Sprinklr to unify global operations across customer service, advertising, and listening, on one AI-native platform.
FY2026 is a transitional year for Sprinklr, Inc. We anticipated some near-certain challenges as we implemented a series of strategic and operational changes to directly address past execution challenges and to position the company for the long term.
â Rory Read
This Bear Hug initiative brings together all functions of Sprinklr, Inc., sales, service, product, marketing, to bear hug our customers, enabling us to better understand their priorities and deliver better outcomes for their business.
â Rory Read
Forward Guidance
Guidance and outlook (details as communicated by management):
- Q2 FY2026 guidance: total revenue of $205â$206 million (~4% YoY at midpoint); subscription revenue $184â$185 million (4% YoY); professional services revenue around $21 million; non-GAAP operating income $33.5â$34.5 million; non-GAAP EPS â$0.10; tax rate assumed to be ~26% on non-GAAP profit; FX headwinds anticipated to modestly raise non-GAAP Opex by ~$10 million with offsetting savings in the business.
- Full-year FY2026 guidance: subscription revenue $741â$743 million (â3% YoY); total revenue $825â$827 million (â4% YoY); non-GAAP operating income $129â$131 million; non-GAAP EPS $0.39â$0.40 (assuming ~277 million diluted shares); mid-point H2 non-GAAP operating income guidance around $30 million per quarter (Q3 and Q4) as investments flow through.
- Free cash flow: targeted 15% FCF margin for FY2026 (~$125 million), with Q1 FCF of $92.5 million underpinning confidence in achieving the full-year target.
- Investment discipline and headwinds: management signaled continued investment in GTM, R&D, and AI resources, balanced against cost discipline and a focus on reducing churn and improving post-sales support. Key risk factors include macro-driven spending caution and longer sales cycles; management remains optimistic about achieving a bend in the revenue and profitability trajectory in H2 FY2026 and beyond, contingent on execution improvements and continued platform maturation.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CXM Focus
69.52%
N/A
N/A
N/A
SPT
77.30%
-10.20%
-6.40%
-28.37%
BRZE
67.10%
-29.60%
-8.17%
-29.62%
CWAN
73.30%
5.58%
0.58%
244.25%
GBTG
62.80%
8.86%
6.69%
11.27%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Sprinklr is positioned for medium-to-long-term upside as the transition to an ambidextrous GTM model and a hardened, AI-native CXM platform progress. The QQ1 2026 results show meaningful operating leverage from non-GAAP metrics, strong free cash flow generation, and a robust balance sheet that enables a $150 million buyback and potential strategic investments. The primary near-term question is the pace at which the pod-based GTM, Bear Hug customer engagement, and post-sales execution translate into a bend in revenue growth and a sustained expansion of gross and operating margins in H2 FY2026 and into FY2027. The CCaaS momentum, AI-driven workflows, and cross-functional platform integration support a constructive longer-term trajectory, but investors should monitor churn dynamics, renewal timing, and the effectiveness of the enablement program. If management delivers a tangible improvement in renewal stability and a meaningful acceleration in customer expansion by late FY2026, Sprinklr could re-rate toward higher-growth software peers, particularly given the scale of its RPO and free cash flow profile.
Key Investment Factors
Growth Potential
High-potential growth drivers include: (1) CCaaS expansion leveraging Sprinklr's AI-native platform with copilot capabilities and nine-figure enterprise opportunities; (2) Bear Hug program enabling faster cross-sell/upsell and healthier retention among the top accounts; (3) HealthCore core pipeline and seven-figure opportunities across service and listening; (4) AI-native unified CXM platform enabling deeper engagement across marketing, social, listening, and customer care; (5) sizable RPO of $943.2 million indicating substantial future revenue visibility; (6) record quarterly free cash flow supporting buybacks and potential future M&A or strategic investment.
Profitability Risk
Key downside risks include: (1) persistent renewal headwinds and increased churn downsell in a cautious macro environment; (2) execution risk as Sprinklr migrates customers to an eight-to-nine-figure cross-functional sell via pods and an enhanced enablement program; (3) longer-than-expected sales cycles and macro volatility affecting deal timing; (4) FX headwinds impacting non-GAAP opex (offset by savings) and potential volatility in international cost structures; (5) competition in CCaaS and marketing/CRM platforms and the risk of under-delivering on maturity/hardening of the CCaaS product; (6) the need for continued investments that may pressure near-term profitability if growth is slower than anticipated.
Financial Position
Sprinklr maintains a robust balance sheet with no debt and $570.2 million in cash and marketable securities as of QQ1 2026, yielding a net cash position of approximately -$75.5 million. The company generated $80.7 million in free cash flow in Q1 (before restructuring outflows), supporting a new $150 million stock buyback authorization to be completed by 6/30/2026. RPO of $943.2 million and CRPO of $596.8 million provide substantial revenue visibility. Non-GAAP gross margin stood at 70% overall, with subscription gross margin at 78%, and SG&A discipline contributing to an 18% non-GAAP operating margin in Q1. The company plans to invest in GTM, R&D, and AI resources while executing cost containment and efficiency improvements to drive long-term profitability.
SWOT Analysis
Strengths
AI-native, unified CXM platform with CCaaS capabilities; strong cross-sell potential across marketing, social listening, and customer care
Healthy gross margins (non-GAAP) and record free cash flow in QQ1 2026
Solid balance sheet: $570.2M cash & equivalents and no debt; substantial FCF supports buybacks and strategic investments