Summary
Sprinklr reported $173.4 million in total revenue for the first quarter of fiscal 2024, up 20% from $145.0 million a year earlier. Subscription revenue of $157.7 million rose 24% from $127.3 million, and it now makes up the overwhelming majority of the top line. Professional services revenue fell 11% to $15.7 million from $17.7 million as fewer implementation and managed services engagements were delivered. The quarter also marked the company's first GAAP profit as a public company.
Profitability improved across the board. Gross profit was $131.4 million, up from $103.3 million, and gross margin reached 75.8% versus 71.2% a year ago. The operating loss narrowed to $3.2 million from $23.1 million, which lifted operating margin to -1.8% from -16.0%. Net income of $2.8 million compared with a net loss in the prior-year quarter, and diluted EPS was $0.01 against a loss of $0.10 per share. Non-GAAP operating income was $11.0 million versus a non-GAAP operating loss of $10.3 million, and non-GAAP net income was $17.0 million versus a non-GAAP net loss of $12.5 million. Stock-based compensation, net of amounts capitalized, climbed to $13.3 million from $12.5 million. The company absorbed $5.0 million of restructuring costs in sales and marketing and $0.2 million in general and administrative expense during the quarter as it realigned its global workforce.
Cash generation flipped positive. Net cash provided by operating activities was $18.6 million compared with $2.9 million used in the prior-year period. Free cash flow, a non-GAAP measure that subtracts purchases of property and equipment and capitalized internal-use software, was $14.3 million versus negative $5.8 million. Capital expenditures of $1.6 million were up from $0.6 million. Cash, cash equivalents and marketable securities totaled $604.4 million at quarter end. Deferred revenue stood at $322.1 million, up 17.3% from $274.6 million, and RPO reached $708.1 million, up 20.9% from $585.8 million.
The customer base kept moving upmarket. Large customers, which the company defines as accounts generating at least $1.0 million in subscription revenue on a trailing 12-month basis, totaled 115 at quarter end, up 28% from 90 a year earlier. Current RPO rose 19% year over year. The trailing 12-month net dollar expansion rate was 122.2%, down from 123.4%. Management also revised the prior-year RPO and cRPO figures it had previously reported, reducing both to correct the treatment of an immaterial number of contracts.
Guidance for the second fiscal quarter ending July 31, 2023 targets non-GAAP operating income of $11 million to $13 million and non-GAAP net income per share of $0.04 to $0.05, assuming 270 million weighted-average shares outstanding. Subscription and total revenue guidance was also issued for that quarter. For the full fiscal year ending January 31, 2024, the company guided to non-GAAP operating income of $51 million to $55 million and non-GAAP net income per share of $0.19 to $0.21, assuming 273 million weighted-average shares outstanding, alongside subscription and total revenue guidance for the year.
Risks remain familiar and numerous. Sprinklr cites macroeconomic uncertainty, including rising inflation, the Federal Reserve raising interest rates, recent bank closures and the Russia-Ukraine war, any of which could slow enterprise spending on information technology. It warns that its rapid growth may not be indicative of future growth, that it derives most of its revenue from subscriptions to a single platform, that the Unified-CXM market is new and rapidly evolving, and that a significant portion of revenue comes from a relatively small number of large enterprises whose sales cycles can be long and unpredictable. Contractual purchase commitments with data and service providers totaled $220.9 million as of January 31, 2023, with $86.9 million due within twelve months. In April 2023 the company terminated its credit facility with SVB and collateralized related letters of credit with about $1.2 million of cash, while a new cash collateral agreement with J.P. Morgan Bank supported a letter of credit facility with roughly $3.4 million outstanding at quarter end.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $173.4M | $165.3M | +4.9% | $145.0M | +19.6% |
| Gross profit | $131.4M | $126.0M | +4.3% | $103.3M | +27.3% |
| Gross margin | 75.8% | 76.2% | -0.4 pp | 71.2% | +4.6 pp |
| Research & development | $20.8M | $20.1M | +3.1% | $17.3M | +19.8% |
| Sales & marketing | $89.2M | $83.3M | +7.1% | $86.9M | +2.6% |
| General & administrative | $24.7M | $24.4M | +1.1% | $22.1M | +11.5% |
| Total operating expenses | $134.6M | $127.8M | +5.3% | $126.4M | +6.5% |
| Operating income (loss) | -$3.2M | -$1.8M | -75.6% | -$23.1M | +86.2% |
| Operating margin | -1.8% | -1.1% | -0.7 pp | -15.9% | +14.1 pp |
| Net income (loss) | $2.8M | -$667.0K | +521.0% | -$25.3M | +111.1% |
| Net margin | 1.6% | -0.4% | +2.0 pp | -17.4% | +19.1 pp |
| Diluted EPS | $0.01 | $0.00 | +$0.01 | -$0.10 | +$0.11 |
Risks
The company identified a material weakness in its process to manage and record commission and bonus expense for the fiscal year ended January 31, 2023. Remediation controls are being implemented but may not be sufficient, and failure could prevent accurate or timely financial reporting.
Risk factors state revenue growth rate has fluctuated, previously declined, and may decline again as the customer base matures. MD&A notes net dollar expansion rate was 122.2% for the trailing 12 months ending April 30, 2023, compared with 123.4% for the prior-year period.
The business depends on continued availability of third-party data for its Unified-CXM platform and AI capabilities. The risk factor specifically notes the Twitter data agreement expires on February 28, 2025; if not renewed on similar terms, the company may not provide the same level of Unified-CXM insights.
MD&A cites rising inflation, Federal Reserve interest rate increases, recent bank closures and the Russia-Ukraine war as creating economic uncertainty that may slow customer spending on information technology. Weak economic conditions could reduce demand for Unified-CXM solutions.
Artificial intelligence is key to many services, and the company faces emerging ethical issues and potential government regulation around AI ethics. These could increase research and development burden and create brand, reputational, competitive or legal liability.
The top 10 customers accounted for 14% of subscription revenue in each of fiscal years ended January 31, 2023 and 2022, and the customer base is concentrated in large enterprises. Loss of any one large customer could have a relatively higher impact on results.
The sales cycle for enterprise and international clients is long and unpredictable, often around nine months or more from initial evaluation to payment. This makes the timing of sales and revenue recognition difficult to predict.
Success depends on the management team, including Founder, Chairman and CEO Ragy Thomas, and the company does not maintain key man insurance on executive officers. Competition for software engineers and sales professionals is intense, and the company has experienced greater than usual employee turnover recently.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Operating Margin
RPO
cRPO
Non-GAAP Gross Margin
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Sprinklr, Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.