- Total Revenue: $197.2 million, up 11% year over year.
- Subscription Revenue: $177.9 million, up 9% year over year.
- Services Revenue: $19.3 million.
- Non-GAAP Operating Income: $15.2 million, resulting in an 8% non-GAAP operating margin.
- Credit Loss Charge: $10.1 million.
- Free Cash Flow: $16.5 million, representing an 8% free cash flow margin.
- Subscription Revenue-Based Net Dollar Expansion Rate: 111%.
- Customers Contributing $1 Million+ in Subscription Revenue: 145 customers, a 21% increase year over year.
- Non-GAAP Gross Margin: 73% (Subscription Gross Margin: 81%, Professional Services Gross Margin: -1%).
- Non-GAAP Net Income: $0.06 per diluted share.
- Cash and Equivalents: $468.5 million with no debt outstanding.
- Stock Buyback: 17.1 million shares repurchased for $169.8 million.
- Calculated Billings: $192.8 million, up 8% year over year.
- Total Remaining Performance Obligations (RPO): $887.1 million, up 10% year over year.
- Current Remaining Performance Obligations (cRPO): $557.8 million, up 9% year over year.
- Q3 Revenue Guidance: $196 million to $197 million.
- Q3 Subscription Revenue Guidance: $177.5 million to $178.5 million.
- Q3 Non-GAAP Operating Income Guidance: $19 million to $20 million.
- Full Year FY25 Subscription Revenue Guidance: $710.5 million to $712.5 million.
- Full Year FY25 Total Revenue Guidance: $785 million to $787 million.
- Full Year FY25 Non-GAAP Operating Income Guidance: $80.5 million to $81.5 million.
- Full Year FY25 Free Cash Flow Guidance: Approximately $55 million.
Release Date: September 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 a total revenue growth of 11% year over year to $197.2 million.
- Subscription revenue grew by 9% year over year to $177.9 million.
- The company generated $15.2 million in non-GAAP operating income, resulting in an 8% non-GAAP operating margin.
- Sprinklr Inc (CXM) added several new customers and expanded with existing ones, including notable names like UBS, Ford, T-Mobile, Grupo Bimbo, and Planet Fitness.
- Sprinklr Inc (CXM) was named a leader in digital customer interaction solutions by Forrester Wave and a major player in the 2024 IDC Marketscape for Contact Center as a Service.
Negative Points
- The company experienced a credit loss charge of $10.1 million, impacting non-GAAP operating income.
- Elevated churn in core product suites is expected to continue for the full year FY25.
- The broader demand environment remains challenging with longer sales cycles and heightened budgetary scrutiny.
- Subscription revenue-based net dollar expansion rate is expected to decline over the next few quarters.
- Professional services gross margin was negative 1%, indicating challenges in this segment.
Q & A Highlights
Q: It sounds like pricing pressure is continuing. Is it to the same extent as last quarter?
A: We're continuing to see budgetary pressures, and it's consistent with what we have seen in the past last quarter and the quarter before. - Ragy Thomas, CEO
Q: Can you unpack the pricing and packaging changes mentioned in your prepared remarks?
A: We are re-evaluating our pricing and packaging to align more with how customers buy now. This includes building a pricing team and working with a pricing consulting company to evaluate the market and talk to our customers comprehensively. - Ragy Thomas, CEO
Q: Last quarter, you mentioned an AI crowding out effect in marketing spend. How has this trend played out?
A: We are seeing success with AI, particularly in our CCaaS and service suite, where AI is improving call deflection and agent productivity. - Ragy Thomas, CEO
Q: What are you hearing from companies in terms of agent growth as they see productivity improvements from AI?
A: Companies are either cutting down human labor costs or repurposing productivity gains into sales improvements. We are also evaluating interaction-based pricing models for AI. - Ragy Thomas, CEO
Q: Can you explain the mechanics of the credit charge and its impact on revenue?
A: The $10.1 million charge includes $3.5 million to $4 million in write-offs and $6 million in specific reserves. This impacts both revenue recognition and cash collection, with a $3.5 million impact on FY25 subscription revenue. - Manish Sarin, CFO
Q: What is your view on the build versus buy debate for AI capabilities?
A: We focus on the application layer of AI, providing governance, compliance, and guardrailing on data. This makes us confident in our unique enterprise-grade offering. - Trac Pham, Co-CEO
Q: Can you speak to the productivity levels within the sales force and where you expect to be heading into next year?
A: We are seeing stabilization and making the right changes, but it takes time for these organizational changes to flow through. - Trac Pham, Co-CEO
Q: When customers churn or reduce their spend, where are they going?
A: We are seeing budget cuts and downsells, but no significant shift in competitors. - Ragy Thomas, CEO
Q: Can you provide an update on your self-serve social media management solution?
A: The self-serve product is more experimental and not a substantial revenue driver. It allows enterprise customers to explore Sprinklr's capabilities. - Ragy Thomas, CEO
Q: What are the issues around renewals and what actions are you taking?
A: We are addressing internal execution and implementation challenges, and putting more discipline around consistent AE, Success Manager, and SE support. - Ragy Thomas, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
