10-Q: Sprinklr Reports Q1 Results: Revenue Up 7%, Net Income Positive

Sprinklr, Inc. announced its first-quarter fiscal year 2027 results, reporting a 7% increase in total revenue to $219.5 million and a return to net income.

Summary

• Sprinklr, Inc. reported total revenue of $219.5 million for the three months ended April 30, 2026, a 7% increase from $205.5 million in the same period last year.
• Subscription revenue grew by 6% to $194.8 million, while professional services revenue increased by 16% to $24.7 million.
• Gross profit was $143.0 million, a slight increase from $142.9 million in the prior year, with a gross margin of 65% compared to 70% in the prior year.
• Operating expenses decreased by 9% to $132.4 million, primarily due to a significant reduction in restructuring costs.
• The company reported an operating income of $10.6 million, a substantial improvement from an operating loss of $1.8 million in the prior year.
• Net income for the quarter was $4.2 million, or $0.02 per diluted share, a significant turnaround from a net loss of $1.6 million, or ($0.01) per diluted share, in the prior year.
• Cash provided by operating activities was $70.4 million, down from $83.8 million in the prior year, while free cash flow was $65.8 million, down from $80.7 million.
• The company announced a new $200 million share repurchase program, under which it has already entered into an accelerated share repurchase agreement for $125 million.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a cautiously optimistic report, with solid revenue growth and a return to profitability, but with some pressure on margins and a significant accumulated deficit.

Positives

• Total revenue increased by 7% to $219.5 million.
• Subscription revenue grew by 6% to $194.8 million, driven by existing customer expansion.
• Professional services revenue increased by 16% to $24.7 million, primarily due to implementation services for large projects.
• Operating income turned positive at $10.6 million, compared to a loss of $1.8 million in the prior year.
• Net income was $4.2 million, a significant improvement from a net loss of $1.6 million in the prior year.
• Diluted earnings per share was $0.02, compared to ($0.01) in the prior year.
• The company has $163.3 million in cash and cash equivalents and $279.5 million in marketable securities, indicating strong liquidity.
• Remaining Performance Obligation (RPO) increased to $1,038.3 million as of April 30, 2026, from $986.5 million as of January 31, 2026.
• Net Dollar Expansion Rate (NDE) was 103.5% for the trailing 12 months ended April 30, 2026, indicating growth from existing customers.
• The company announced a new $200 million share repurchase program.

Negatives

• Gross margin decreased to 65% from 70% in the prior year, primarily due to increased third-party cloud, data, and network infrastructure costs, as well as higher personnel costs.
• Subscription cost of revenue increased by 21% to $50.9 million.
• Professional services cost of revenue increased by 25% to $25.6 million.
• Cash provided by operating activities decreased to $70.4 million from $83.8 million.
• Free cash flow decreased to $65.8 million from $80.7 million.
• The company's accumulated deficit stands at $296.5 million as of April 30, 2026.

Risks

• The company's recent revenue growth may not be indicative of future growth, and growth makes it difficult to evaluate future prospects.
• The company has incurred significant net losses in the past and may not be able to achieve and maintain profitability.
• Failure to effectively manage growth and organizational change could harm the business.
• The market for Unified-CXM solutions is rapidly evolving, and failure to compete effectively could adversely affect the business.
• Reliance on customer subscription renewals and expansion is critical; any decline would harm the business.
• The use of artificial intelligence (AI) in products may result in operational challenges, legal liability, reputational concerns, and competitive risks.
• The company's stock price may be volatile, and the value of its Class A common stock may decline.
• Concentrated voting control by holders of Class B common stock limits the ability of Class A stockholders to influence corporate matters.
• Unstable market and economic conditions, including geopolitical events, could have serious adverse consequences on the business, financial condition, and share price.
• The company is subject to stringent and changing obligations related to data privacy and security, and failure to comply could lead to significant penalties.
• Cybersecurity breaches or security incidents could harm the company's reputation and reduce demand for its platform.
• The company's reliance on third-party cloud service providers could lead to disruptions or suboptimal performance.
• Failure to develop platform enhancements or keep pace with technological developments could adversely affect the business.
• The company's agreement with X (formerly Twitter) expires on December 31, 2026, and its renewal on similar terms is not guaranteed, which could materially affect business operations.
• The company is subject to ongoing legal proceedings, including a securities class action and stockholder derivative actions, which could result in substantial costs and divert management attention.

Future Outlook

The company expects to continue investing in its Unified-CXM platform and developing new features. While the company believes its current cash, cash equivalents, and marketable securities are sufficient for at least the next 12 months and over the long term, future capital requirements will depend on growth rate, expansion of sales force, strategic relationships, international operations, and R&D spending. The company may seek additional capital through equity or debt financing if needed.

Management Comments

• The company continues to invest in its Unified-CXM platform and develop new features and enhancements for each suite in response to evolving customer needs.
• The company believes that its Unified-CXM platform, powered by proprietary AI, collaborative workflow, automation, broad-based listening, and customer-led governance, helps enterprises analyze massive amounts of unstructured and structured data.
• The company expects that cost of subscription revenue will increase in absolute dollars as it expands its customer base and makes continued investments in its cloud infrastructure and support organization.
• The company expects research and development expenses to generally increase in absolute dollars as it continues to innovate and invest in enhancing and expanding the capabilities of its Unified-CXM platform.
• The company expects sales and marketing expenses to generally increase in absolute dollars as it continues to drive the business growth, while also optimizing expenses and seeking efficiencies.
• The company expects that its gross margin will decline in the near term due to higher data and hosting costs, coupled with higher service delivery costs, and, in the long term, will vary from period to period.
• The company believes that its existing cash, cash equivalents, and marketable securities, along with cash from operations, will be sufficient to meet its working capital needs, capital expenditures, and financing obligations for at least the next 12 months and over the long term.

Industry Context

StockSavvy.ai notes that Sprinklr's performance reflects the ongoing trend of enterprises seeking integrated customer experience management solutions. The company's focus on AI-native capabilities and its expansion into new markets are key differentiators in a competitive landscape. However, the pressure on gross margins due to rising infrastructure costs is a common challenge faced by SaaS providers.

Comparison to Industry Standards

• Sprinklr's Net Dollar Expansion Rate (NDE) of 103.5% is a positive indicator, suggesting effective customer retention and upselling, which is generally considered a strong metric in the SaaS industry.
• The company's gross margin for subscription revenue of 74% is competitive within the SaaS sector, though the overall gross margin of 65% is impacted by higher costs in professional services and infrastructure.
• The increase in RPO to over $1 billion indicates a healthy sales pipeline and future revenue visibility, a key benchmark for growth-oriented software companies.
• The company's investment in R&D as a percentage of revenue, while not explicitly stated as a percentage in the summary, is implied to be significant given the focus on platform enhancements and AI development, which is typical for companies in this space aiming for innovation.

Legal Proceedings

• A putative securities class action was filed on August 13, 2024, alleging violations of federal securities laws. The court dismissed the action with prejudice on March 31, 2026.
• Three stockholder derivative actions were filed between March 18, 2025, and April 30, 2025, alleging breaches of fiduciary duties. These actions were consolidated and subsequently dismissed without prejudice on May 6, 2026.

Stakeholder Impact

• Shareholders: The return to profitability and the announcement of a share repurchase program are positive indicators. However, the decline in gross margin and the ongoing accumulated deficit may temper enthusiasm. The concentrated voting power of Class B shareholders could limit influence for Class A shareholders.
• Employees: The company's continued investment in R&D and platform development suggests ongoing opportunities. However, past restructuring initiatives indicate potential for workforce adjustments.
• Customers: The 7% revenue growth and positive net income suggest continued service availability. However, potential increases in infrastructure costs could indirectly impact pricing or service levels in the future. The company's reliance on third-party data providers, like X, poses a risk to the continuity of certain platform features.
• Creditors: The company's strong liquidity position with significant cash and marketable securities provides a buffer for its debt obligations.

Next Steps

• Continue to invest in the Unified-CXM platform and develop new features.
• Focus on expanding customer base and increasing sales to existing customers.
• Manage and optimize sales and marketing expenses.
• Monitor and manage costs associated with third-party cloud, data, and network infrastructure.
• Execute the $200 million share repurchase program.

Key Dates

Recommendation

Sprinklr has demonstrated revenue growth and a return to profitability, which are positive signs. However, the decline in gross margins due to rising costs, coupled with a substantial accumulated deficit and the risks associated with AI development and third-party data dependencies, warrant a cautious approach. The share repurchase program is a positive signal, but the overall financial health and competitive landscape suggest a 'hold' rating until further improvements in profitability and margin stability are evident.

Keywords

Sprinklr, 10-Q, SEC Filing, Customer Experience Management, CXM, SaaS, Cloud Software, AI, Financial Results, Revenue Growth, Net Income, Share Repurchase