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Sprinklr (NYSE:CXM) Posts Better-Than-Expected Sales In Q1


Adam Hejl /
2022/06/14 4:12 pm EDT
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Customer experience software provider Sprinklr (NYSE:CXM) reported Q1 FY2023 results that beat analyst expectations, with revenue up 30.6% year on year to $144.9 million. The company expects that next quarter's revenue would be around $147.5 million, which is the midpoint of the guidance range. That was in roughly line with analyst expectations. Sprinklr made a GAAP loss of $25.2 million, down on its loss of $14.6 million, in the same quarter last year.

Is now the time to buy Sprinklr? Access our full analysis of the earnings results here, it's free.

Sprinklr (CXM) Q1 FY2023 Highlights:

  • Revenue: $144.9 million vs analyst estimates of $140.9 million (2.84% beat)
  • EPS (non-GAAP): -$0.05 vs analyst estimates of -$0.06
  • Revenue guidance for Q2 2023 is $147.5 million at the midpoint, roughly in line with what analysts were expecting
  • The company reconfirmed revenue guidance for the full year, at $615 million at the midpoint
  • Free cash flow was negative $5.83 million, compared to negative free cash flow of $18 million in previous quarter
  • Customers: 90 customers paying more than $1m annually
  • Gross Margin (GAAP): 71.2%, in line with same quarter last year

“We are very pleased with Sprinklr’s performance in Q1 across our four product suites, as customers within every industry continue to drive revenue, reduce costs and mitigate risks using Sprinklr’s unified platform. With improved operating discipline, we achieved positive adjusted free cash flow for the quarter,” said Ragy Thomas, Sprinklr Founder and CEO.

Initially focused only on social media management, Sprinklr (NYSE: CXM) is a leading provider of unified customer experience management software.

The Internet has given customers more choice on whom to conduct business with and has also given them the power to easily share their experiences with other customers. These twin dynamics effectively have increased pressure on companies to both improve their customer service and also monitor their brand reputation online, driving the need for customer experience software offerings.

Sales Growth

As you can see below, Sprinklr's revenue growth has been strong over the last year, growing from quarterly revenue of $110.9 million, to $144.9 million.

Sprinklr Total Revenue

And unsurprisingly, this was another great quarter for Sprinklr with revenue up 30.6% year on year. On top of that, revenue increased $9.31 million quarter on quarter, a solid improvement on the $8.61 million increase in Q4 2022, and even a sign of slight re-acceleration of growth.

Guidance for the next quarter indicates Sprinklr is expecting revenue to grow 24.2% year on year to $147.5 million, in line with the 26.9% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 21.9% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Profitability

What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Sprinklr's gross profit margin, an important metric measuring how much money there is left after paying for servers, licenses, technical support and other necessary running expenses was at 71.2% in Q1.

Sprinklr Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.71 left to spend on developing new products, marketing & sales and the general administrative overhead. This is around the lower average of what we typically see in SaaS businesses. Gross margin has a major impact on a company’s ability to invest in developing new products and sales & marketing, which may ultimately determine the winner in a competitive market so it is important to track.

Key Takeaways from Sprinklr's Q1 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Sprinklr’s balance sheet, but we note that with a market capitalization of $2.53 billion and more than $530.8 million in cash, the company has the capacity to continue to prioritise growth over profitability.

It was good to see Sprinklr deliver strong revenue growth this quarter. And we were also excited to see that it outperformed analysts' revenue expectations. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is up 0.89% on the results and currently trades at $10.13 per share.

Should you invest in Sprinklr right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.