EPS of $0.04 decreased by 34.2% from previous year
Gross margin of 71.2%
Net income of 10.46M
""Ambidextrous strategy to reenergize and grow our Sprinklr core, while hardening and expanding Sprinklr service, thus enabling our customers to realize the full value of our platform."" - Rory Read
Sprinklr Inc (CXM) QQ3 2025 Results — Ambidextrous Growth Plan to Reignite the Rule of 40
Executive Summary
Sprinklr reported a solid QQ3 2025 performance with continued top-line growth and improving profitability metrics, underscoring the early stages of a broader strategic transformation. Total revenue reached $200.7 million, up 8% year over year, with subscription revenue at $180.6 million, up 6% YoY, and a 107% subscription-based net dollar expansion rate, signaling meaningful expansion within existing customers. Non-GAAP operating income was $23.3 million, delivering a 12% margin, while GAAP operating income stood at $7.9 million for the quarter. Free cash flow generation remained positive at $4.9 million in QQ3, contributing to a robust liquidity profile.
Key Performance Indicators
Revenue
200.69M
QoQ: 1.77% | YoY:7.71%
Gross Profit
142.87M
71.19% margin
QoQ: -0.02% | YoY:2.14%
Operating Income
7.89M
QoQ: 9 167.82% | YoY:-40.19%
Net Income
10.46M
QoQ: 467.90% | YoY:-38.38%
EPS
0.04
QoQ: 480.28% | YoY:-34.19%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $200.689 million, YoY +8% (QoQ not disclosed in data).
Financial and operating metrics highlights (QQ3 2025):
- Revenue: $200.689 million, YoY +8% (QoQ not disclosed in data).
- Subscription revenue: $180.6 million, YoY +6%.
- Gross margin (non-GAAP): 72.0% overall; subscription gross margin 80%; professional services gross margin −8%.
- Gross profit: $142.868 million; gross margin 71.19%.
- Non-GAAP operating income: $23.3 million; margin 12.0%.
- GAAP operating income: $7.889 million; operating margin 3.93%.
- Net income (GAAP): $10.455 million; net margin 5.21%.
- Non-GAAP diluted EPS: $0.10; GAAP EPS: $0.0412; diluted: $0.0399.
- Weighted-average diluted shares: 261.972 million.
- Net cash position: cash and marketable securities $476.643 million; cash at end of period $101.503 million; total debt $51.158 million; net debt −$42.081 million (net cash).
- Free cash flow: $4.901 million in QQ3; trailing twelve months FCF: $57.6 million.
- Billings: $147.9 million, down 8% YoY; remaining performance obligations (RPO): $906.3 million, up 17% YoY; current RPO (cRPO): $545.6 million, up 11% YoY.
- Customer concentration: 147 customers contributing $1 million+ in subscription revenue over the trailing 12 months, up 20% YoY.
- Guidance (Q4 FY25): total revenue $200–$201 million (≈ +3% YoY); subscription $180–$181 million (≈ +2% YoY); professional services ~$20 million; non-GAAP operating income $17.5–$18.5 million; non-GAAP EPS ≈ $0.07; full-year FY25 guidance: subscription $715.9–$716.9 million (≈ +7%); total revenue $793.9–$794.9 million (≈ +8%); non-GAAP operating income $76.4–$77.4 million; non-GAAP EPS $0.31–$0.32; FY25 billings ≈ $826.5 million (≈ +6% YoY).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
200.69M
7.71%
1.77%
Gross Profit
142.87M
2.14%
-0.02%
Operating Income
7.89M
-40.19%
9 167.82%
Net Income
10.46M
-38.38%
467.90%
EPS
0.04
-34.19%
480.28%
Key Financial Ratios
currentRatio
1.74
grossProfitMargin
71.2%
operatingProfitMargin
3.93%
netProfitMargin
5.21%
returnOnAssets
1.08%
returnOnEquity
2.1%
debtEquityRatio
0.1
operatingCashFlowPerShare
$0.04
freeCashFlowPerShare
$0.02
priceToBookRatio
3.79
priceEarningsRatio
45.09
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the QQ3 2025 earnings call and Q&A:
- Strategy and growth framework: Rory Read outlined an ambidextrous strategy to reenergize Sprinklr’s core while hardening and expanding Sprinklr Service, aiming to become a Rule of 40 company with margin expansion and more durable growth. “Ambidextrous strategy to reenergize and grow our Sprinklr core, while hardening and expanding Sprinklr service, thus enabling our customers to realize the full value of our platform.”
- Margin discipline and efficiency: Read emphasized improving efficiency, reducing the cost base, and tightening go-to-market effectiveness to lift margins toward a Rule of 40 target (currently “below 20%”). He also signaled upcoming operational plans and a comprehensive FY26 execution program to be detailed on the March call.
- GTM transformation and coverage model: The management discussed launching a mature enterprise coverage model at the start of FY26 (Feb), with dual pods (AE + renewal account manager) and a services pod, plus expanded partner ecosystems to drive adoption and renewals. “You’ll see a robust coverage model… a dual pod structure… the services pod… and a renewed partner ecosystem.”
- Churn and renewal execution: Management acknowledged churn as a risk and cited overbuying post-COVID and execution gaps as drivers. They expect improvements in renewal management beginning early FY26, with a sales kickoff and incentive redesign to emphasize ongoing customer relationships, not just renewal near contract end.
- Pricing, packaging, and product roadmap: Elizabeth Porter and Rory discussed simplifying pricing/packaging in FY26 to a platform-based model (Essential Sprinklr and Professional Sprinklr with modular add-ons), which is expected to improve billing efficiency and reduce SKU complexity.
- Macro backdrop: The executives described IT spend in the mid-single digits and expressed cautious optimism about macro stability, while highlighting the enduring demand for unified customer experiences across major brands.
"Ambidextrous strategy to reenergize and grow our Sprinklr core, while hardening and expanding Sprinklr service, thus enabling our customers to realize the full value of our platform."
— Rory Read
"Billing is not a good metric for us."
— Manish Sarin
Forward Guidance
Assessment of management guidance and near-term outlook:
- Q4 FY25 revenue trajectory implies a modest sequential improvement in billings cadence but a relatively flat near-term top line, with total revenue guided to $200–$201 million and subscription at $180–$181 million. The modest Q4 growth aligns with seasonality and ongoing GTM restructuring. Management reiterated that billings are not a primary leading indicator and emphasized RPO/cRPO as better forward looks.
- Full-year FY25 targets indicate continued expansion in subscription revenue (≈ 7% YoY) and an overall revenue pace of ≈ 8% YoY, with professional services growth lifted to $78 million for the year. Non-GAAP operating income is guided to $76.4–$77.4 million, implying a mid-teens margin for the year, absent one-time charges; non-GAAP EPS around $0.31–$0.32.
- Key risk factors: (i) ongoing data hosting costs as cloud environments scale, (ii) negative gross margins in professional services (~low single digits negative in Q4), (iii) incremental costs from leadership changes (CEO signing fees and retention bonuses) and (iv) potential churn headwinds if renewal discipline remains suboptimal.
- Achievability: If Sprinklr executes the FY26 transformational plan (simplified pricing/packaging, retooled GTM with pod-based coverage, enhanced partner ecosystem, and disciplined cost management), the company could accelerate margin expansion and top-line growth to approach Rule of 40. The primary near-term catalysts are: improved renewal management 12-month coverage, broader cross-sell into the 1,800+ customer base (including 147 ≥$1m accounts), and the planned product work that is expected to deliver in H1 FY26. Investors should monitor: (1) progression of cRPO/RPO growth into Q4 and FY26, (2) sustainability of 107% net dollar expansion, (3) GM/PS margins improvement as data costs stabilize, and (4) the pace of GTM restructuring and incentive alignment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CXM Focus
71.19%
3.93%
2.10%
45.09%
SPT
77.40%
-16.40%
-10.80%
-24.32%
BRZE
69.80%
-21.40%
-6.09%
-28.78%
CWAN
72.90%
6.34%
0.90%
380.96%
GBTG
60.30%
4.52%
-11.70%
-6.89%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Bottom-line investment view: Sprinklr is at a pivotal inflection point, transitioning toward a Rule of 40 operating profile through an ambidextrous strategy that reaccelerates the core CXM business and strengthens services. Near-term results show solid revenue growth (Q3 YoY +8%), healthy customer expansion (107% subscription net expansion), and meaningful backlog (RPO 906.3m). However, near-term profitability remains constrained by data costs and negative PS margins, and execution risk surrounds the GTM overhaul and FY26 product initiatives. The stock trades at a relatively rich multiple given the growth profile (e.g., price-to-sales ~9.4x; price/operating metrics not provided here but flagged by high implied valuation metrics in the peer set). The key to unlocking value will be achieving sustained margin expansion and a durable top-line growth cadence through disciplined cost management, GTM execution, and the timely rollout of FY26 product and pricing changes. If the company delivers on the FY26 plan with renewed pricing clarity, stronger renewal coverage, and improved PS profitability, the investment thesis supports higher multiple re-rating as Rule of 40 profitability trajectory materializes. Investors should monitor RPO/cRPO progression, renewal churn reductions, and the pace of GTM restructuring and product introductions as primary catalysts for the trajectory toward durable, profitable growth.
Key Investment Factors
Growth Potential
Sprinklr’s ambidextrous strategy targets durable, profitable growth by redeploying resources toward the core Social/CXM suite while hardening the services business. Key growth levers include: expanding the ~1,800-customer base (with 147 customers contributing ≥$1m in the trailing 12 months, up 20% YoY), increasing cross-sell across product modules, and accelerating net expansion (subscription revenue-based net dollar expansion rate at 107%). The FY26 product roadmap and simplified pricing/packaging could reduce friction for customers and improve adoption across Discovery, Social Engagement and Sales, Modern Research, and Modern Care platforms. The backlog embedded in RPO of $906.3m (up 17% YoY) and current RPO of $545.6m (up 11% YoY) provides a multi-year revenue visibility tailwind.
Profitability Risk
Key downside risks include: (a) persistent churn or renewal inefficiencies despite a renewed pod-driven GTM and incentives, (b) negative PS gross margins remaining in the low single digits due to service delivery costs, (c) higher-than-expected data hosting costs as cloud environments scale, (d) execution risk around a broad restructuring (Sunrise of FY26) and (e) macro IT spending sensitivity despite observed mid-single-digit demand. Competitive pressures from larger enterprise platforms (e.g., Microsoft, Salesforce) could pressure pricing and bundle strategies if not differentiated by AI-first CXM capabilities.
Financial Position
Sprinklr maintains a robust liquidity position with substantial cash and marketable securities (~$476.6m) and a net cash position (~$42.1m). Total debt stands at ~$51.2m, yielding a net cash balance per management commentary and reported metrics. The company generated ~$57.6m FCF for the first three quarters of FY25 and guided for negative to breakeven FCF in Q4. RPO/cRPO levels imply strong backlog and revenue visibility, while a relatively modest GAAP profitability backdrop is offset by healthier non-GAAP margins (72% gross margin, 12% non-GAAP operating margin in QQ3) and a focus on margin expansion through efficiency gains and cost discipline.
SWOT Analysis
Strengths
Large, diversified enterprise client base with over 1,800 customers and ~150 million-dollar-plus accounts.
Healthy net expansion (subscription-based net dollar expansion rate of 107%).
Strong liquidity position with substantial cash and minimal net debt; robust balance sheet support for strategic investments.
Integrated multi-product CXM platform spanning Modern Research, Modern Care, Modern Marketing/Advertising, and Social Engagement to drive enterprise-wide customer experiences.
Visible revenue backlog via RPO of $906.3m and cRPO of $545.6m, signaling durable revenue opportunities.
Weaknesses
Negative professional services gross margin (−8%) highlights inefficiencies in service delivery and data-hosting cost pressures.
Near-term profitability remains sensitive to one-time costs associated with leadership changes (CEO signing/recruiting costs) and data costs growth.
Churn challenges persist; renewal execution and long-term retention require continued focus and structural changes.
Dependency on GTM transformation to unlock gross/margin improvements could introduce execution risk in the near term.
Opportunities
Pricing and packaging simplification (Essential Sprinklr vs Professional Sprinklr) to reduce SKU complexity and improve billing clarity.
FY26 product enhancements and GTM incentives to accelerate core growth and cross-sell across modules.
Expansion of channel partnerships and a more disciplined renewal coverage model to lift retention and account expansion.
Product-driven differentiation leveraging AI-powered insights to maintain leadership in unified CXM.
Threats
IT spending remains subject to macro and political uncertainty; potential mid-single-digit market softness could dampen growth.
Competitive pressure from large incumbents and new entrants leveraging AI-enabled CX capabilities.
Sustainability of PS margins and data cost controls as cloud environments scale; any delay could hurt profitability.