Customer experience software provider Sprinklr (NYSE:CXM) reported Q1 FY2024 results topping analyst expectations, with revenue up 19.6% year on year to $173.4 million. The company expects that next quarter's revenue would be around $173 million, which is the midpoint of the guidance range. That was roughly in line with analyst expectations. Sprinklr made a GAAP profit of $2.81 million, improving on its loss of $25.3 million, in the same quarter last year.
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Sprinklr (CXM) Q1 FY2024 Highlights:
- Revenue: $173.4 million vs analyst estimates of $169 million (2.58% beat)
- EPS (non-GAAP): $0.06 vs analyst estimates of $0.01 ($0.05 beat)
- Revenue guidance for Q2 2024 is $173 million at the midpoint, roughly in line with what analysts were expecting
- The company dropped revenue guidance for the full year, from $712 million to $651 million at the midpoint, a 8.57% decrease
- Free cash flow of $14.3 million, down 12.5% from previous quarter
- Customers: 115 customers paying more than $1m annually
- Gross Margin (GAAP): 75.8%, up from 71.2% same quarter last year
“Sprinklr had a strong start to the year, and I’m pleased with our focused execution. During the quarter, we continued to see broad participation across our four product suites and through innovations such as Sprinklr AI+ we continue to develop ways for our customers to realize value through our unified platform,” said Ragy Thomas, Founder and CEO at Sprinklr.
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 two years, growing from quarterly revenue of $111 million in Q1 FY2022, to $173.4 million.
This quarter, Sprinklr's quarterly revenue was once again up 19.6% year on year. We can see that revenue increased by $8.03 million in Q1, which was roughly the same as in Q4 2023. This steady quarter-on-quarter growth shows the company is able to maintain its paced growth trajectory.
Guidance for the next quarter indicates Sprinklr is expecting revenue to grow 14.9% year on year to $173 million, slowing down from 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 14.1% 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 75.8% in Q1.
That means that for every $1 in revenue the company had $0.76 left to spend on developing new products, marketing & sales and the general administrative overhead. Trending up over the last year, this is a good gross margin that allows companies like Sprinklr to fund large investments in product and sales during periods of rapid growth and be profitable when they reach maturity.
Key Takeaways from Sprinklr's Q1 Results
With a market capitalization of $3.53 billion Sprinklr is among smaller companies, but its more than $604.4 million in cash and positive free cash flow over the last twelve months give us confidence that Sprinklr has the resources it needs to pursue a high growth business strategy.
We were very impressed how strongly Sprinklr accelerated the rate of new contract wins this quarter. And we were also excited to see that it outperformed analysts' revenue (both total revenue and subscription revenue) and non-GAAP operating profit expectations. On the other hand, revenue guidance for the next quarter slightly missed analysts' expectations. However, full year revenue guidance was slightly ahead and non-GAAP operating profit guidance was more convincingly ahead. Overall, this quarter's results weren't perfect but seemed pretty positive and shareholders can feel optimistic. The company is up 4.85% on the results and currently trades at $14.15 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.