Sprinklr Inc (CXM) Q2 2026 Earnings Report

Revenue and profitability fundamentals:
- Total revenue: $212.04 million, up 8% YoY; subscription revenue: $188.5 million, up 6% YoY; implied non-GAAP gross margin (total) 69%; subscription gross margin 78%; professional services gross margin (non-GAAP) modeled as breakeven, implying pressure on overall gross margin from AI/cloud costs.
- Non-GAAP operating income: $38.2 million, 18.0% margin. Non-GAAP net income per diluted share: $0.13.
- Net cash/position: cash and marketable securities $474 million; no debt; net debt disclosed as negative, signaling a net cash position.
- Operating cash flow and free cash flow: Operating cash flow (reported) not stated in the summary, but free cash flow was $29.8 million reported and about $31.0 million after restructuring payments in Q2. For H1 FY26, free cash flow was $123.5 million ex-restructuring charges; full-year free cash flow guidance is $125 million.
- Share repurchase: 16.5 million shares purchased for $140.4 million in Q2; by early August, Sprinklr completed the full $150 million authorization (17.6 million shares to be returned to the reserve).
- Customer metrics: 149 customers generating at least $1 million in annual subscription revenue (up 3 sequentially); seven-figure cohort revenue continued to grow on a trailing-12-month basis; calculated billings for Q2 were $200.6 million, up 4% YoY.
- Backlog/backlog-like metric: RPO as of 7/31/2025 was $923.8 million, up 4% YoY. Current RPO (CRPO) was $597.1 million, up 7% YoY.
- Guidance highlights: Q3 revenueGUIDE $209–$210 million (about +4% YoY), subscription $186–$187 million (about +3% YoY), professional services approx. $23 million (up 15% YoY) with professional services gross margin around -3%; Q3 non-GAAP operating income guidance $28.5–$29.5 million (~14% non-GAAP op margin). Full-year FY26 targets: revenue $837–$839 million (~5% YoY), subscription $746–$748 million (~4%), non-GAAP net income per diluted share $0.42–$0.43, with an estimated 266 million diluted shares; expected ~26% effective tax rate on non-GAAP PBT; FCF around $125 million (slightly negative in Q3, stronger in Q4).

Management commentary and notable quotes from the earnings call:
- Strategy and transformation: Rory Read stated that FY2026 is a transitional year and that phase one (business optimization) is largely complete, with the second phase (transition) extending through H2 FY26 and into FY27. Investments in AI functionality (marketing, insights, CCaaS), expanded channels, and in-region GTM capabilities are designed to sustain long-term growth. Quote: 'Fiscal year 2026 is a transitional year for the company... we are now entering the second phase of our transformation, the transition phase, which we anticipate will continue through the back half of FY26 and into FY27.'
- BearHug and churn: BearHug is Sprinklr’s back-to-the-field initiative targeting the top 700 customers (>80% of revenue) to reduce churn and improve renewals; Rory noted early progress with detailed engagements for nearly half of these customers. Quote: 'BearHug is focused on deeply engaging our top 700 customers who collectively represent more than 80% of our total revenue.'
- AI investments and cloud costs: Manish Sarin highlighted higher data hosting costs and cloud-related expenses tied to AI deployments, flagging a 2–3 percentage point gross margin headwind in H2 FY26. Quote: 'There is going to be pressure on the gross margin, largely driven by consumption of our AI product... I would assume a 2 to 3 point reduction in gross margins in the second half.'
- New leadership and execution speed: Rory emphasized the addition of experienced leaders (Scott Millar as Chief Revenue Officer; Bit Rambusch as Head of Global Services and Support) as accelerants to execution and growth; he framed leadership transitions as a net positive for clock speed.
- Pricing and product strategy: The company rolled out a new core pricing/packaging model for new logos (seat-based with consumption-based commitments) to simplify buying and improve transparency; this is expected to expand across the portfolio and support recurring revenue growth through a more predictable, base-driven model.
- AI strategy and enterprise value: Rory stressed Sprinklr’s AI-native platform approach, emphasizing cohesive AI-enabled workflows across listening, social, CCaaS, and customer feedback management to deliver a unified voice of the customer and attractive expansion opportunities with global brands.

Sprinklr is navigating a transitional year (FY26) with a clear strategic plan to move from stabilization to growth acceleration. The BearHug program targets a substantial share of revenue concentrated in the top 700 customers, which, if successful, could meaningfully lift renewal rates and long-term stickiness. The AI investment cycle, while creating near-term gross margin pressure, is positioned to drive longer-term monetization through expanded adoption across core and Sprinklr Service (CCaaS) and enhanced customer outcomes. The updated FY26 guidance implies modest top-line growth with a path to improved profitability as transformation benefits begin to flow through, particularly in FY27. Investors should monitor: 1) renewal/downgrade dynamics and six- to twelve-month renewal tailwinds as BearHug iterations complete; 2) AI-driven cloud hosting costs and the resulting gross margin trajectory; 3) progress in new pricing/packaging adoption among new logos and cross-sell into CCaaS; 4) CDS metrics such as RPO/CRPO evolution and net dollar expansion of the subscription base; and 5) execution clock speed from leadership changes and their impact on GTM efficiency and time-to-value for large deals. Overall, Sprinklr presents a compelling long-term growth narrative anchored in an AI-native platform with strong enterprise value, tempered by near-term margin headwinds and execution risk that warrant a patient but constructive stance on the stock.