Sprinklr reported Q4 FY2025 total revenue of $202.5 million, up 4% year over year, with subscription revenue of $182.1 million, up 3% YoY. Non-GAAP operating income was $25.9 million, delivering a 13% non-GAAP operating margin for the quarter. Net income was $98.7 million in GAAP terms, aided by an approximately $87 million discrete tax benefit from the release of the U.S. valuation allowance, with no material cash taxes in the near term. Cash and marketable securities totaled $483.5 million with no debt, signaling strong liquidity to fund strategic investments. Remaining performance obligations (RPO) rose to $987.7 million (up 2% YoY) and current RPO (CRPO) to $612.5 million (up 4% YoY), indicating substantial revenue visibility. Calculated billings reached $298.6 million (up 10% YoY). At year-end FY25, Sprinklr boasted 149 customers generating at least $1 million in annual subscription revenue, up 18% YoY, including a cohort with $10–$20 million in trailing subscription revenue. Management framed FY26 as a transitional year focused on stabilizing the business, reducing costs (approximately 15% workforce reduction), realigning the go-to-market (GTM) coverage model, and accelerating product delivery and AI-enabled innovation to bend the cost base toward durable growth. The plan anticipates 3% subscription revenue growth in FY26, 3% total revenue growth, and a 15% free cash flow margin (~$120 million) for the full year, alongside a ~400bp negative drag to subscription gross margins from data/hosting costs as new cloud environments come online. The company expects to invest in GTM and R&D in H2 FY26 to position for acceleration in FY27 and beyond.
Key Performance Indicators
Revenue
202.54M
QoQ: 0.92% | YoY:4.29%
Gross Profit
143.72M
70.96% margin
QoQ: 0.60% | YoY:-1.97%
Operating Income
10.46M
QoQ: 32.58% | YoY:-43.03%
Net Income
98.68M
QoQ: 843.85% | YoY:366.72%
EPS
0.39
QoQ: 846.60% | YoY:405.18%
Revenue Trend
Margin Analysis
Key Insights
Q4 FY2025 total revenue: $202.5 million, up 4% YoY; subscription revenue: $182.1 million, up 3% YoY. Professional services: $20.5 million.
Non-GAAP operating income: $25.9 million; non-GAAP operating margin: 13%. Non-GAAP net income per diluted share: $0.10 for the quarter (per CFO commentary); GAAP net income benefited from one-time tax items.
Gross margins (non-GAAP): subscription gross margin 79%; professional services gross margin breakeven; total non-GAAP gross margin: 71%.
Net income: $98.7 million (GAAP) with net income margin of 48.7% driven by an $87 million discrete U.S. federal/state tax benefit; diluted GAAP EPS: $0.37; GAAP EPS: $0.39.
Financial Highlights
Revenue and profitability highlights
- Q4 FY2025 total revenue: $202.5 million, up 4% YoY; subscription revenue: $182.1 million, up 3% YoY. Professional services: $20.5 million.
- Non-GAAP operating income: $25.9 million; non-GAAP operating margin: 13%. Non-GAAP net income per diluted share: $0.10 for the quarter (per CFO commentary); GAAP net income benefited from one-time tax items.
- Gross margins (non-GAAP): subscription gross margin 79%; professional services gross margin breakeven; total non-GAAP gross margin: 71%.
- EBITDA: $15.32 million; EBITDA margin: 7.56% (EBITDAR 7.56%).
- Net income: $98.7 million (GAAP) with net income margin of 48.7% driven by an $87 million discrete U.S. federal/state tax benefit; diluted GAAP EPS: $0.37; GAAP EPS: $0.39.
- Calculated billings: $298.6 million, up 10% YoY.
- RPO: $987.7 million (2% YoY); CRPO: $612.5 million (4% YoY).
- Cash and investments: $483.5 million on the balance sheet; debt: $0; net cash: approximately -$96.6 million (net cash).
- Free cash flow: $1.5 million in Q4; full-year FCF: $59.2 million (FCF margin: 7%).
- Customers: 149 customers generating at least $1 million in subscription revenue over the trailing 12 months, up 18% YoY; notable large deals in the quarter highlighted by multi-year, high-value renewals and acceleration of AI-enabled CX capabilities.
- Q4 revenue and profitability drivers: 4% top-line growth supported by core platform adoption; ongoing data/hosting investments tied to Sprinklr Service and AI-enabled capabilities.
Full-year FY25 snapshot
- Total revenue: $796.4 million, up 9% YoY; subscription revenue: $717.9 million, up 7% YoY; calculated billings: $831.1 million, up 6% YoY.
- Non-GAAP operating income: $84.8 million; non-GAAP diluted EPS: $0.35; non-GAAP operating margin: 11%; free cash flow: $59.2 million (FCF margin 7%).
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
202.54M
4.29%
0.92%
Gross Profit
143.72M
-1.97%
0.60%
Operating Income
10.46M
-43.03%
32.58%
Net Income
98.68M
366.72%
843.85%
EPS
0.39
405.18%
846.60%
Key Financial Ratios
currentRatio
1.65
grossProfitMargin
71%
operatingProfitMargin
5.16%
netProfitMargin
48.7%
returnOnAssets
8.33%
returnOnEquity
16.1%
debtEquityRatio
0.08
operatingCashFlowPerShare
$0.02
freeCashFlowPerShare
$0.01
priceToBookRatio
3.71
priceEarningsRatio
5.75
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Management and operational themes from the earnings call:
- Strategy and transformation: Rory Read outlined an ambidextrous strategy to re-energize Sprinklr core while hardening Sprinklr service, aiming for durable growth and progress toward the Rule of 40. The company implemented a business management system (BMS) to track execution, rebalanced its expense base, and redesigned GTM to focus on top customers.
- Cost discipline and headcount actions: The company reduced the global workforce by approximately 15% (announced Feb 6, 2025) to enable investment in prioritized areas (GTM, AI, product, and service delivery). Read emphasized that the cost actions are intended to improve operating margins while preserving growth initiatives.
- Customer win/loss and implementation execution: Sprinklr highlighted large wins (Delta Airlines, Ford, MSCI, Live Nation, Ralph Lauren) and stressed that improvements in implementation consistency and customer renewals are critical to expand within the installed base (Project Bear Hug). Read acknowledged past inconsistencies in delivery and announced a shift to productizing implementation with better documentation and training.
- AI and platform emphasis: The leadership stressed continued investment in AI-enabled CX capabilities, CCaaS, and platform fabric to unify discovery, commerce, support, and service, with a focus on multi-year, multi-solution deals and C-suite engagement.
- Near-term financial trajectory and FY26 guidance: Manish Sarin highlighted gross margin pressures from data/hosting costs as Sprinklr scales Sprinklr Service environments and data feeds for AI; management described FY26 as a transitional year with cost actions expected to drive margin improvements in later quarters. The company guided to 3% subscription growth and 3% total revenue growth in FY26, with non-GAAP operating income of $129–$131 million and non-GAAP EPS of $0.38–$0.39. Free cash flow is expected to reach ~15% margin (~$120 million) for FY26, excluding restructuring cash charges.
- Market conditions and pipeline: Read acknowledged macro uncertainty but maintained a stable stance with a strong balance sheet. The pipeline remains robust, with a shift toward three-year renewals and a focus on enterprise customers rather than smaller deals; the company intends to hire and ramp sales capacity for FY27 with a multi-quarter ramp period (6-9 months per rep).
We reduced our global workforce by approximately 15%.
— Rory Read
Our initial focus will be on our top 400 customers.
— Rory Read
Forward Guidance
Guidance and outlook for FY26 and near-term:
- Q1 FY26: Revenue $201.5–$202.5 million (midpoint $202.0 million), YoY growth of ~3%. Subscription revenue $182–$183 million; professional services around $19.5 million. Non-GAAP operating income guidance: $31.5–$32.5 million (approx. 16% non-GAAP operating margin at the midpoint). Non-GAAP diluted EPS around $0.10; assumes 30% non-GAAP tax rate due to U.S. NOL considerations; cash taxes expected to be lower given NOLs. Restructuring-related charges of ~$22 million are not included in the non-GAAP guidance; initial quarter will reflect around $16 million in Q1 as restructuring costs.
- FY26: Subscriptions revenue $741–$743 million; total revenue $821.5–$823.5 million (implies ~3% total revenue growth at midpoint). Professional services revenue: ~ $18.5 million. Data/hosting cost headwinds expected to depress subscription gross margin by ~400 basis points for the full year; professional services gross margins expected to be breakeven. Billings guidance: ~$863 million, ~4% year-over-year growth.
- Profitability and cash flow: Non-GAAP operating income guidance of $129–$131 million; non-GAAP diluted EPS of $0.38–$0.39; expectation of a ~16% non-GAAP operating margin at the midpoint. Free cash flow margin guidance of ~15% for FY26, corresponding to roughly $120 million in FCF for the full year, excluding restructuring cash outlays. The company anticipates a GAAP net income positive for FY26, supported by NOLs and a lower cash tax outlay than the GAAP tax rate would imply.
- Investment plan and risk factors: Management intends to defer some OpEx in H1 FY26 following restructuring, with investments ramping in H2 (GT M resources, R&D, service delivery). R&D and G&A are expected to be around 10% of revenue; remaining OpEx allocated to sales and marketing. Key risks include execution risk during the transition, continued higher data/hosting costs, churn pressure from FY25, and macro volatility. Monitoring metrics include: progression toward Rule of 40, stabilization of gross margins after data/hosting normalization, and the pace of GTM and implementation improvements that support durable revenue growth.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
CXM Focus
70.96%
5.16%
16.10%
5.75%
SPT
78.10%
-12.80%
-8.65%
-30.63%
BRZE
69.30%
-13.40%
-3.62%
-68.81%
CWAN
73.50%
0.96%
41.60%
3.72%
GBTG
59.70%
5.08%
-1.52%
-67.09%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base-case view: Sprinklr is mid-transformation toward a durable growth trajectory anchored by an ambidextrous strategy and a more efficient cost structure. The FY26 plan contemplates modest revenue growth (3% top-line; 3% subscription growth) but a meaningful improvement in profitability and free cash flow (15% FCF margin) once restructuring actions and GTM realignment bear fruit. The company’s strength lies in its enterprise-oriented platform and large, multi-year contracts, supported by a robust RPO backlog. Risks center on execution during the transition, rising data/hosting costs, and macro volatility. If Sprinklr successfully stabilizes delivery, improves renewals, and scales GTM with the top 400 accounts, the path to the Rule of 40 and mid- to long-term upside from CCaaS and AI-enabled CX could be meaningful. Investors should monitor: cadence of margin expansion, progress on implementation productization, go-to-market ramp efficiency (6–9 months per rep), and the evolution of gross margins as hosting costs normalize.
Key Investment Factors
Growth Potential
Sprinklr's growth potential centers on the enterprise-grade CX platform that unifies discovery, engagement, marketing, and service across digital channels (Social, CCaaS, and Insights). The company targets Global 2000–5000 customers with a high concentration of large, multi-year deals. Key levers include: (1) expanding the 149 customers generating $1m+ in annual subscription revenue into larger multi-year, multi-product engagements; (2) intensifying focus on top 400 accounts through a POD-based GTM to deepen top-tier relationships; (3) leveraging AI-enabled capabilities to drive adoption across marketing, social, and service, expanding CCaaS and integrated workflows; (4) improving implementation consistency to increase renewals and reduce churn, enabling multi-product cross-sell within the installed base; (5) achieving higher operating efficiency to support durable growth in the 15–20% margin range as cost savings are reinvested in GTM and product development.
Profitability Risk
Key risks include: (1) persistent elevated data/hosting costs as Sprinklr scales cloud environments, which may persist into FY26 with a ~400bp drag on subscription margins; (2) execution risk during the transition to an ambidextrous model and revised GTM coverage; (3) customer renewals and implementation quality impacting retention and cross-sell opportunities; (4) macro weakness or volatility affecting enterprise IT budgets; (5) competition from larger platform players (e.g., Salesforce) and price-based competition; (6) potential delays in achieving desired ramp in new sales hires (6–9 months ramp) and in realizing the full benefit of restructuring; (7) dependence on a relatively small set of large customers for growth momentum; (8) regulatory or geopolitical headwinds that could impact enterprise CX investments.
Financial Position
Sprinklr demonstrates solid liquidity and a conservative capital structure. As of 2025-01-31, cash and marketable securities totaled approximately $483.5 million with no debt outstanding; net cash was approximately -$96.6 million. The balance sheet shows total assets of ~$1.18 billion, total liabilities of ~$0.57 billion, and total stockholders’ equity around $0.61 billion. The company reports a robust RPO of $987.7 million and CRPO of $612.5 million, signaling substantial long-term revenue visibility. Free cash flow generated in FY25 was $59.2 million (FCF margin 7%), with a plan to reach ~15% FCF margin in FY26 (~$120 million) excluding restructuring cash outlays. The balance sheet provides ample flexibility to fund strategic investments in GTM, AI, and platform hardening while maintaining a debt-free capital structure.
SWOT Analysis
Strengths
Mature, scalable AI-driven unified CX platform with cross-domain capabilities (Discovery, Social, Insights, CCaaS, and Marketing/Advertising).
Strong enterprise footprint with 149 customers generating $1m+ in annual subscription revenue; some customers in $10–$20m range in trailing12-months.
Solid balance sheet: $483.5m cash and marketable securities, no debt, net cash position (~$-96.6m).
High RPO ($987.7m) and CRPO ($612.5m) indicating durable revenue visibility.
Weaknesses
Near-term gross margin pressure from data/hosting costs as Sprinklr scales new cloud environments (expected ~400bp drag in FY26).
Relatively high reliance on a subset of large enterprise deals; renewal risk if implementation quality declines.
Transition to ambidextrous growth requires substantial organizational and process changes; execution risk remains in FY26.
Professional services margins are currently not at optimal levels (gross margins breakeven) and cost structure refinements are ongoing.
Opportunities
Expansion of CCaaS and AI-enabled service capabilities across large enterprise customers.
Cross-sell and upsell within top accounts (Project Bear Hug) with improved implementation discipline and account planning.
Pricing and packaging revamp and solutions selling incentivization for multiyear deals.
Accelerated hiring and ramp in late FY26 to prepare for FY27 growth, with a focus on GTM, AI, and product delivery.
Threats
Macro headwinds and potential budget tightening among enterprise customers; execution risk during transitional year.
Competitive pressure from larger platform players with broader ecosystems and channel partnerships.
Sustainability of data/hosting cost increases and potential longer-term effect on gross margins.
Churn risk if implementation quality remains inconsistent during the transition period.