Summary
Sprinklr reported results for its fiscal 2022 second quarter ended July 31, 2021, its first report as a public company after the June 2021 IPO. Total revenue was $118.7 million, up 27% from $93.5 million in the prior-year quarter. Subscription revenue reached $103.3 million, up 25%, and professional services revenue rose 44% to $15.4 million. Management described the period as a third consecutive quarter of accelerating revenue growth. The bottom line moved the other way. Operating results swung from income to an operating loss of $29.3 million, and net results swung from income to a net loss of $33.2 million. Diluted loss per share was $0.20, compared with diluted earnings per share of $0.01 a year earlier.
Cost trends explain much of that swing. Gross profit rose 22.9% to $81.4 million, but gross margin slipped to 68.5%, down 2.3 percentage points from a year earlier, as spending on third-party cloud infrastructure and data climbed. Operating margin was -24.7%, a sharp reversal from a positive margin in the prior-year quarter. Stock-based compensation accounts for a large slice of the gap between the GAAP loss and the underlying business, and it includes a charge tied to options granted to the chief executive officer around the IPO. Public company costs added to general and administrative spending as well. Non-GAAP figures, which strip out stock-based compensation and amortization of acquired intangibles, tell a different story: a non-GAAP operating loss of $11.4 million against non-GAAP operating income of $10.9 million a year earlier, and a non-GAAP net loss per share of $0.09 against non-GAAP net income per share of $0.05.
Customer metrics kept building. Sprinklr had 1,062 customers as of July 31, 2021, up from 950 a year earlier, and 74 customers spending at least $1.0 million in subscription revenue on a trailing-12-month basis, up 23% from 60. The trailing-12-month net dollar expansion rate was 114%, against 118% for the same measure a year earlier, which points to slower expansion from the existing base. Deferred revenue, current portion only, was $231.1 million at July 31, 2021, and remaining performance obligations totaled $457.4 million.
Cash generation turned negative. Operating cash flow was -$6.5 million for the quarter and -$16.9 million for the six months ended July 31, 2021, against positive operating cash flow of $23.4 million in the prior-year six-month period. Capital expenditures of $3.9 million for the six months were up 143.5% from a year earlier. Free cash flow, which deducts purchases of property and equipment and capitalized internal-use software from operating cash flow, was -$10.6 million for the quarter. The June 2021 IPO raised net proceeds of about $276.0 million, and cash, cash equivalents and marketable securities totaled $548.8 million at July 31, 2021.
Guidance points to continuing losses. For the third quarter ending October 31, 2021, management guided subscription revenue to $104 million to $106 million, with a non-GAAP operating loss of $24 million to $26 million and a non-GAAP net loss per share of $0.09 to $0.10. Total revenue guidance was also issued for that quarter. For the full fiscal year ending January 31, 2022, the company guided subscription revenue to $413 million to $418 million, a non-GAAP operating loss of $62 million to $66 million and a non-GAAP net loss per share of $0.36 to $0.38, with full-year total revenue guidance as well. Both the quarterly and the full-year outlooks sit well below the reported results on the profitability lines, so spending is not expected to slow in the near term.
Several risks sit alongside the growth story. The filings warn that rapid growth may not be indicative of future growth, that the revenue growth rate has fluctuated in prior periods, and that the company may not achieve or maintain profitability. They also note that Sprinklr derives the substantial majority of its revenue from subscriptions, that the Unified-CXM market is new and rapidly evolving, that enterprise and international sales cycles can be long and unpredictable, and that the business relies on third-party data centers and cloud providers. COVID-19 remains a named risk to demand, renewals, sales productivity and collections. With the net dollar expansion rate already lower than a year ago and both the operating and net lines deep in losses, the pace of spending and the path back to positive cash flow are the items to watch.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2022 | Q1 FY2022 | QoQ | Q2 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $118.7M | — | — | — | — |
| Gross profit | $81.4M | — | — | — | — |
| Gross margin | 68.5% | — | — | — | — |
| Research & development | $15.1M | — | — | — | — |
| Sales & marketing | $70.2M | — | — | — | — |
| General & administrative | $25.3M | — | — | — | — |
| Total operating expenses | $110.7M | — | — | — | — |
| Operating income (loss) | -$29.3M | — | — | — | — |
| Operating margin | -24.7% | — | — | — | — |
| Net income (loss) | -$33.2M | — | — | — | — |
| Net margin | -28.0% | — | — | — | — |
| Diluted EPS | -$0.20 | — | — | — | — |
| Customers | 1,062 | — | — | — | — |
Risks
The business depends on continued availability of data from partners, including Twitter data that supports the Unified-CXM platform under an agreement expiring February 28, 2025. Loss or nonrenewal of key data licenses could reduce platform insights and materially harm results.
Stringent and changing data privacy laws, including GDPR fines of up to the greater of 20 million euros or 4% of global annual revenue, CCPA and CPRA, LGPD and APPI, impose significant compliance costs and liability. Cross-border transfer uncertainty after the Privacy Shield invalidation could cause customer reluctance or require costly data processing changes.
The company and third-party service providers have experienced and may again experience cybersecurity breaches or incidents, and large enterprise customers have heightened sensitivity. Such incidents could lead to customer loss, regulatory fines, litigation, remediation costs and reputational damage.
The Unified-CXM market is fragmented, rapidly evolving and highly competitive, with competitors having greater name recognition, larger sales forces and more resources. Acquisitions of data providers by competitors could limit access to customer feedback data.
The business depends on customer renewals and expansion, and the net dollar expansion rate was 114% for the trailing 12 months ending July 31, 2021 versus 118% a year earlier. Declines in renewals or expansion would harm revenue and results of operations.
The company incurred significant net losses including $33.2 million for the three months ended July 31, 2021, and operating income swung to a loss of $29.3 million from income of $4.9 million in the prior-year quarter. Operating cash flow for the six months ended July 31, 2021 was negative $16.9 million versus positive $23.4 million in the prior-year period.
The substantial majority of revenue is derived from subscriptions to the Unified-CXM platform, so any failure of the platform to satisfy customer demands, achieve market acceptance or adapt to changing market dynamics would adversely affect the business.
COVID-19 has adversely affected and may continue to affect demand, new customer spending, renewal and retention rates, sales cycle length, sales productivity, collections, IT expenses and recruitment. MD&A states the ultimate duration and extent of the pandemic cannot be accurately predicted and the effect may not be fully reflected in revenue until future periods.
Recent rapid growth may not be indicative of future growth, and revenue growth rate is expected to decline as the business matures. Customer count grew to 1,062 as of July 31, 2021 from 950 a year earlier, and international and government sales add operational and compliance complexity.
Artificial intelligence serves a key role in many services, and AI presents emerging ethical issues and potential government regulation. If solutions draw controversy or regulation increases research and development burden, the company may face brand, reputational, competitive or legal harm.
Gross margin decreased to 68.5% in the quarter ended July 31, 2021 from 70.8% in the prior-year quarter, a decline of 2.3 percentage points, due to timing of investments in hosting and personnel. MD&A expects gross margin to vary and increase modestly over the long term.
The dual-class structure gives Class B holders approximately 99.3% of voting power as of July 31, 2021, concentrating control with executive officers and directors. This limits other stockholders' ability to influence corporate matters and may make the stock less attractive to index funds.
Corporate culture has contributed to success, and substantial anticipated headcount growth and the transition to being a public company may change that culture. Failure to maintain the culture could harm innovation, creativity and teamwork.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Gross Margin
Total customers
Summary, forecast, risks and KPIs are extracted from Sprinklr, Inc.'s SEC filings for Q2 FY2022 (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 2, 2026.