Sprinklr (NYSE:CXM) Reports Strong Q4, Stock Soars

Radek Strnad /
2022/04/06 4:15 pm EDT

Customer experience software provider Sprinklr (NYSE:CXM) reported results ahead of analyst expectations in the Q4 FY2022 quarter, with revenue up 30.3% year on year to $135.6 million. On top of that, guidance for next quarter's revenue was surprisingly good, being $141 million at the midpoint, 3.71% above what analysts were expecting. Sprinklr made a GAAP loss of $36.9 million, down on its loss of $14 million, in the same quarter last year.

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Sprinklr (CXM) Q4 FY2022 Highlights:

  • Revenue: $135.6 million vs analyst estimates of $130.4 million (4.05% beat)
  • EPS (non-GAAP): -$0.05 vs analyst estimates of -$0.09
  • Revenue guidance for Q1 2023 is $141 million at the midpoint, above analyst estimates of $135.9 million
  • Management's revenue guidance for upcoming financial year 2023 is $611 million at the midpoint, beating analyst estimates by 4.05% and predicting 24% growth (vs 27.1% in FY2022)
  • Free cash flow was negative $18 million, compared to negative free cash flow of $4.07 million in previous quarter
  • Customers: 82 customers paying more than $1m annually
  • Gross Margin (GAAP): 70.6%, up from 68.2% same quarter last year

“Fiscal Year 2022 was a monumental year for Sprinklr. We accelerated our growth, went public, and created a new category called unified customer experience management for the world’s leading enterprise brands. Our results this quarter demonstrate our deep commitment to our customers and partners as we support their shift from a brand-centric past to a customer-centric future. We’re innovating faster than ever before to make our platform and leading artificial intelligence the foundation of our customer's success so we can continue our strong growth in Fiscal Year 2023,” 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 $104.1 million, to $135.6 million.

Sprinklr Total Revenue

This was a standout quarter for Sprinklr, with the quarterly revenue up 30.3% year on year, which is above average for the company. Quarter on quarter the revenue increased by $8.61 million in Q4, which was in line with Q3 2022. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Guidance for the next quarter indicates Sprinklr is expecting revenue to grow 27% year on year to $141 million, improving on the 19.3% year-over-year increase in revenue the company had recorded in the same quarter last year. For the upcoming financial year management expects revenue to be $611 million at the midpoint, growing 24% compared to 27.1% increase in FY2022.

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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 70.6% in Q4.

Sprinklr Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.70 left to spend on developing new products, marketing & sales and the general administrative overhead. Significantly up from the last quarter, 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 Q4 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 $3.01 billion and more than $532.4 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We enjoyed Sprinklr's revenue forecast for the full year. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, we think this was a really good quarter, that should leave shareholders feeling very positive. The company is up 7.73% on the results and currently trades at $12.25 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.