Sprinklr (NYSE:CXM) Reports Strong Q3 Results

Jabin Bastian /
2021/12/09 4:13 pm EST
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Customer experience software provider Sprinklr (NYSE:CXM) reported Q3 FY2022 results that beat analyst expectations, with revenue up 31.8% year on year to $127 million. Guidance for next quarter's revenue was surprisingly good, being $130 million at the midpoint, 3.8% above what analysts were expecting. Sprinklr made a GAAP loss of $29.2 million, down on its loss of $18.9 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) Q3 FY2022 Highlights:

  • Revenue: $127 million vs analyst estimates of $118 million (7.58% beat)
  • EPS (non-GAAP): -$0.06 vs analyst estimates of -$0.10
  • Revenue guidance for Q4 2022 is $130 million at the midpoint, above analyst estimates of $125.2 million
  • Free cash flow was negative $4.07 million, compared to negative free cash flow of $10.6 million in previous quarter
  • Customers: 80 customers paying more than $1m annually
  • Gross Margin (GAAP): 69.5%, up from 68.6% same quarter last year

“This is our fourth consecutive quarter of accelerating revenue growth and we couldn't be more pleased with our team's relentless focus on our customers. The most iconic enterprise brands continue to validate that the rise of Unified-CXM is inevitable. And only a platform designed with industry leading AI can solve their most complex problems. Sprinklr is well-positioned to become the strategic partner brands need to unify customer experiences across channels, teams, markets and products for a truly unified experience,” 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 $96.3 million, to $127 million.

Sprinklr Total Revenue

This was a standout quarter for Sprinklr, with the quarterly revenue up 31.8% year on year, which is above average for the company. On top of that, revenue increased $8.36 million quarter on quarter, a solid improvement on the $7.71 million increase in Q2 2022, and even a sign of slight re-acceleration of growth.

Analysts covering the company are expecting the revenues to grow 17.9% over the next twelve months, although estimates are likely to change post earnings.

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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 69.5% in Q3.

Sprinklr Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.69 left to spend on developing new products, marketing & sales and the general administrative overhead. While it improved significantly from the previous quarter this would still be considered a low gross margin for a SaaS company and we would like to see the improvements continue.

Key Takeaways from Sprinklr's Q3 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 $3.59 billion and more than $541.4 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were impressed by how strongly Sprinklr outperformed analysts’ revenue expectations this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Zooming out, we think this was a very solid quarter. The company is flat on the results and currently trades at $13.51 per share.

Sprinklr may have had a good quarter, so should you invest 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.