Summary
Sprinklr closed FY2027 Q2 with total revenue of $213.7 million, up 0.8% from the prior-year quarter. Year to date, revenue was $433.2 million, up 3.8%. The top line grew, but profitability moved the other way. Gross profit fell 3.7% to $139.2 million in the quarter, and year to date it fell 1.8% to $282.2 million. Gross margin was 65.1% in the quarter, down 3.1 percentage points, and 65.1% year to date, down 3.7 percentage points. Operating income dropped 38.8% to $9.96 million in the quarter, while year-to-date operating income rose 41.7% to $20.57 million. Operating margin was 4.7% in the quarter, down 3.0 percentage points, but 4.7% year to date, up 1.3 percentage points. Net income fell 43.6% to $7.12 million in the quarter, and year-to-date net income rose 2.3% to $11.30 million. Diluted EPS was $0.03, down $0.02, and year-to-date diluted EPS was $0.05, up $0.01.
The quarter's margin pressure came from the cost of subscription revenue, which rose on higher third-party cloud, network infrastructure, AI, and data costs, plus higher personnel costs. Professional services margin also weakened on higher delivery costs for complex implementations. Cash generation cooled. Operating cash flow was $18.17 million in the quarter, down 47.8%, and $88.55 million year to date, down 25.3%. Capital expenditures were $0.37 million in the quarter, up 2.2%, and $0.70 million year to date, up 7.2%. Free cash flow, a non-GAAP measure, was $13.1 million for the quarter and $78.9 million year to date. Deferred revenue, current portion, was $380.0 million, down 3.8% from the prior-year quarter. RPO was $1.03 billion, up 11.1%, and cRPO was $614.1 million. Net dollar expansion rate on a trailing 12-month basis was 102.4%. Non-GAAP operating income was $31.3 million in the quarter compared to $38.2 million one year ago, and non-GAAP operating margin was 15% compared to 18%. Non-GAAP net income per share was $0.11 compared to $0.13.
Guidance covers both the near term and the full year. For the third quarter ending October 31, 2026, Sprinklr guided non-GAAP operating income between $33.5 million and $34.5 million and non-GAAP net income per share of approximately $0.11, assuming 239 million diluted weighted-average shares outstanding. For the full fiscal year ending January 31, 2027, the company guided non-GAAP operating income between $139.0 million and $141.0 million and non-GAAP net income per share of approximately $0.47, assuming 240 million diluted weighted-average shares outstanding. Both sets of guidance also cover subscription revenue and total revenue ranges. Management ties the outlook to AI product innovation, new ARR growth, enterprise adoption, and contracted demand.
The outlook carries real margin risk. Management expects gross margin to decline in the near term because of higher AI, data, and hosting costs, coupled with higher service delivery costs. Macroeconomic and geopolitical pressures stay on the risk list. The 10-Q cites inflation, swings in interest and foreign currency rates, tariffs, the Russia-Ukraine war, the 2026 Iran conflict, and the 2025 U.S. government shutdown. The Iran conflict hurt operations in the Middle East, including disruptions and potential loss of customer data tied to a third-party data center in the United Arab Emirates. On the customer side, subscription gains were partly offset by reductions in contract size and by non-renewals, as some customers trimmed budgets or deferred investments. Long, unpredictable sales cycles with enterprise and international clients add another layer of uncertainty.
The installed base remains a strength. Sprinklr serves 1,600+ enterprises, including Microsoft, P&G, and Samsung, and 59% of the Fortune 100, with customers in more than 90 countries and support for over 150 languages. Capital returns continued under the $200 million share repurchase program authorized through March 15, 2027. As of September 1, 2026, the company had repurchased 22,118,413 Class A shares, completing the accelerated share repurchase agreement. Restructuring results in the quarter reflected insurance recoveries tied to the global workforce reduction launched in February 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2027 | Q1 FY2027 | QoQ | Q2 FY2026 | YoY |
|---|---|---|---|---|---|
| Revenue | $213.7M | $219.5M | -2.6% | $212.0M | +0.8% |
| Gross profit | $139.2M | $143.0M | -2.7% | $144.6M | -3.7% |
| Gross margin | 65.1% | 65.2% | -0.0 pp | 68.2% | -3.1 pp |
| Research & development | $24.4M | $23.4M | +4.6% | $23.2M | +5.5% |
| Sales & marketing | $70.9M | $74.9M | -5.3% | $70.6M | +0.5% |
| General & administrative | $34.3M | $34.8M | -1.4% | $35.6M | -3.6% |
| Total operating expenses | $129.2M | $132.4M | -2.4% | $128.3M | +0.7% |
| Operating income (loss) | $10.0M | $10.6M | -6.1% | $16.3M | -38.8% |
| Operating margin | 4.7% | 4.8% | -0.2 pp | 7.7% | -3.0 pp |
| Net income (loss) | $7.1M | $4.2M | +70.2% | $12.6M | -43.6% |
| Net margin | 3.3% | 1.9% | +1.4 pp | 6.0% | -2.6 pp |
| Diluted EPS | $0.03 | $0.02 | +$0.01 | $0.05 | -$0.02 |
Risks
The company's use of generative and agentic AI in its products and internal operations exposes it to evolving AI regulation, including the EU AI Act, which carries administrative fines of up to 35 million euros or 7% of total worldwide annual turnover. It also notes that U.S. copyright and patent protection is unlikely for works or inventions created wholly by generative AI tools, which could limit protection for its source code and other materials.
In connection with the 2026 Iran conflict, multiple availability zones within a cloud service provider's facilities in the United Arab Emirates on which the company relied were damaged by Iranian drone strikes, resulting in the inaccessibility and potential loss of certain customer data. The company incurred an immaterial amount of incremental costs through July 31, 2026 but may incur significant additional costs to relocate data and operations in response to current or future conflicts.
X Corp provides data supporting the Unified-CXM platform under an agreement that expires on December 31, 2026. If the agreement is not renewed on the same or similar terms, or is terminated, the company may not be able to provide the same level of Unified-CXM insights, materially and adversely affecting results.
Gross margin fell to 65.1% in the quarter ended July 31, 2026 from 68.2% a year earlier, a decline of 3.1 percentage points, and subscription gross margin declined three percentage points. MD&A attributes this to increased third-party cloud, network infrastructure, AI, and data costs and expects gross margin to decline in the near term due to higher AI, data, and hosting costs coupled with higher service delivery costs.
Total revenue grew only 0.8% in the quarter ended July 31, 2026 versus the prior-year quarter, with professional services revenue down 20%. MD&A attributes the softness to reductions in contract size and non-renewals, particularly among customers adjusting budgets or deferring investments in response to broader economic pressures, while deferred revenue declined 3.8% year over year.
The company states that guidance is inherently speculative and that a higher than expected provision for credit losses in the second quarter of fiscal year 2025 caused certain operating results to fall below the guidance ranges provided. It cautions that actual results may differ materially from guidance, which has in the past contributed to stock price declines.
The company faces high competition for AI-native software engineers, product managers, and sales talent, and notes that recent decreases in its stock price and market volatility have required it to issue additional equity awards and increased cash compensation, which may impact results of operations or be dilutive to stockholders.
Holders of Class B common stock controlled approximately 88.2% of the voting power as of July 31, 2026, and directors, executive officers, major stockholders and their affiliates controlled approximately 87.3%. The company notes that its largest stockholder, Hellman & Friedman LLC and its associated entities, controlled approximately 49.4% of combined voting power and future conversions could push that above 50%.
SaaS KPIs
All quarters →Free Cash Flow
Non-GAAP Operating Margin
RPO
cRPO
Non-GAAP Operating Income
Summary, forecast, risks and KPIs are extracted from Sprinklr, Inc.'s SEC filings for Q2 FY2027 (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.