Sprinklr (NYSE:CXM) Surprises With Q1 Sales But Stock Drops 16.4%

Jabin Bastian /
2024/06/05 4:16 pm EDT

Customer experience software provider Sprinklr (NYSE:CXM) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 13% year on year to $196 million. On the other hand, next quarter's revenue guidance of $194.5 million was less impressive, coming in 1.2% below analysts' estimates. It made a non-GAAP profit of $0.09 per share, improving from its profit of $0.01 per share in the same quarter last year.

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Sprinklr (CXM) Q1 CY2024 Highlights:

  • Revenue: $196 million vs analyst estimates of $194.4 million (small beat)
  • EPS (non-GAAP): $0.09 vs analyst estimates of $0.07 (26.5% beat)
  • Revenue Guidance for Q2 CY2024 is $194.5 million at the midpoint, below analyst estimates of $196.9 million
  • The company dropped its revenue guidance for the full year from $805 million to $780 million at the midpoint, a 3.1% decrease
  • Gross Margin (GAAP): 73.9%, down from 75.8% in the same quarter last year
  • Free Cash Flow of $36.19 million, up 195% from the previous quarter
  • Customers: 138 customers paying more than $1m annually
  • Market Capitalization: $2.89 billion

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

Customer Experience 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 three years, growing from $111 million in Q1 2022 to $196 million this quarter.

Sprinklr Total Revenue

This quarter, Sprinklr's quarterly revenue was once again up 13% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $1.75 million in Q1 compared to $7.88 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.

Next quarter's guidance suggests that Sprinklr is expecting revenue to grow 9% year on year to $194.5 million, slowing down from the 18.5% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 9.3% over the next 12 months before the earnings results announcement.

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Large Customers Growth

This quarter, Sprinklr reported 138 enterprise customers paying more than $1m annually, an increase of 12 from the previous quarter. That's quite a bit more contract wins than last quarter and quite a bit above what we've typically observed in past quarters, demonstrating that the business has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Sprinklr customers paying more than $1m annually

Key Takeaways from Sprinklr's Q1 Results

We were impressed by Sprinklr's significant improvement in new large contract wins this quarter. On the other hand, its full-year revenue guidance was below expectations after being lowered. Also, its revenue guidance for next quarter missed Wall Street's estimates. Overall, the guidance was quite bad and is weighing on the stock. The company is down 16.4% on the results and currently trades at $9.06 per share.

Sprinklr may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.