Summary
Sprinklr reported fiscal 2023 third quarter results for the period ended October 31, 2022. Total revenue was $157.3 million, up 23.8% from the prior-year quarter. Gross profit was $116.7 million, up 32.1%, and gross margin expanded to 74.2%, up 4.7 percentage points. The company still posted an operating loss of $4.6 million, an 81.4% improvement from a year earlier, and operating margin was -2.9%, up 16.6 percentage points. Net loss narrowed to $5.9 million, with diluted net loss per share of $0.02. Non-GAAP operating income was $6.9 million, compared with a non-GAAP operating loss of $12.0 million in the prior-year quarter. Non-GAAP operating margin was 4%, and non-GAAP net income per share was $0.02.
Operating metrics pointed to steady demand. Remaining performance obligations were $586.1 million, up 27.6% year over year. Current RPO was $420.2 million, up 27% from the prior-year period. Deferred revenue, current portion only, was $257.7 million, up 16.1%. Large customers, defined as those with at least $1.0 million in subscription revenue on a trailing 12-month basis, reached 107, up from 80 a year earlier. Net dollar expansion rate was 125% for the trailing 12 months ending October 31, 2022, against 117% for the prior-year period. The board shifted in early December, with Kevin Haverty appointed and Matthew Jacobson stepping down.
Cash generation turned positive. Operating cash flow was $1.6 million for the quarter, up 250.4% year over year, and $4.6 million for the nine months, up 125.6%. Capital expenditures were $0.6 million in the quarter, down 57.2%, and $2.9 million for the nine months, down 43.8%. On a non-GAAP basis, nine-month free cash flow was negative $6.1 million, and adjusted free cash flow was positive $5.9 million after excluding a $12.0 million litigation settlement payment. Cash, cash equivalents and marketable securities totaled $544.1 million at October 31, 2022. The company had no amounts outstanding under its $50.0 million revolving credit facility, which expires on December 19, 2022.
Guidance covers the fourth fiscal quarter ending January 31, 2023 and the full fiscal year ending January 31, 2023. For the quarter, subscription revenue is expected between $145.5 million and $146.5 million, non-GAAP operating income between $6 million and $7 million, and non-GAAP net income per share between $0.01 and $0.02, assuming 264 million weighted average shares outstanding. For the full year, subscription revenue is guided to between $545.8 million and $546.8 million, a non-GAAP operating loss between $1.3 million and $2.3 million, and a non-GAAP net loss per share between $0.04 and $0.05, assuming 260 million weighted average shares outstanding.
Risks remain. Management pointed to macroeconomic uncertainty, including the COVID-19 pandemic, rising inflation, the U.S. Federal Reserve raising interest rates and the Russia-Ukraine war. Businesses may slow information technology spending during downturns. Sprinklr expects costs and expenses to rise and margins to fall as office activity, travel, hiring and capital expenditures increase. Sales cycles with enterprise and international clients can be long and unpredictable. Revenue is concentrated in a relatively small number of large enterprises. Other listed risks include data privacy and security, dependence on third-party data centers and cloud providers, and the loss of emerging growth company status as of January 31, 2023, which brings large accelerated filer compliance costs. Purchase commitments totaled $156.3 million as of January 31, 2022, and a new data and service provider agreement added a $60.0 million commitment over 5 years, with $57.0 million remaining as of October 31, 2022.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $157.3M | $150.6M | +4.4% | $127.1M | +23.8% |
| Gross profit | $116.7M | $108.5M | +7.6% | $88.4M | +32.1% |
| Gross margin | 74.2% | 72.0% | +2.2 pp | 69.5% | +4.7 pp |
| Research & development | $19.2M | $20.0M | -3.9% | $16.6M | +15.6% |
| Sales & marketing | $79.5M | $86.9M | -8.5% | $76.2M | +4.4% |
| General & administrative | $22.6M | $23.2M | -2.7% | $21.8M | +3.5% |
| Total operating expenses | $121.3M | $130.1M | -6.8% | $114.6M | +5.8% |
| Operating income (loss) | -$4.6M | -$21.7M | +78.8% | -$26.3M | +82.5% |
| Operating margin | -2.9% | -14.4% | +11.5 pp | -20.7% | +17.8 pp |
| Net income (loss) | -$5.9M | -$23.9M | +75.5% | -$29.2M | +80.0% |
| Net margin | -3.7% | -15.9% | +12.2 pp | -23.0% | +19.3 pp |
| Diluted EPS | -$0.02 | -$0.09 | +$0.07 | -$0.11 | +$0.09 |
Risks
MD&A cites rising inflation, U.S. Federal Reserve interest rate increases and the Russia-Ukraine war as creating global economic uncertainty, and says businesses may slow information technology spending. If economic uncertainty increases, the filing states business, financial condition and results of operations may be harmed.
The business depends on continued availability of data partners, including Twitter data under an agreement expiring February 28, 2025. If key data partnerships lapse, terminate or are not renewed, the company may not provide the same level of Unified-CXM insights and results may be materially and adversely affected.
The company identified a material weakness in internal controls over ASC 606 revenue recognition and capitalization of costs to obtain customer contracts. Remediation controls have not operated for a sufficient period to demonstrate the weakness is remediated, creating risk of inaccurate or untimely financial reporting.
Risk Factors state revenue growth rate may decline again as the customer base grows and market penetration increases, and near-term subscription revenue growth rates may be lower than comparable prior-year periods. The current quarter's revenue rose 23.8% year over year to $157.3 million, but the filing cautions not to rely on prior growth.
The business depends on customers renewing subscriptions and expanding use, and customers are not obligated to renew. Net dollar expansion rate was 125% for the trailing 12 months ended October 31, 2022 compared to 117% in the prior-year period, but renewal and expansion rates may fluctuate due to satisfaction, pricing or economic conditions.
Risk Factors state artificial intelligence serves a key role in many services and presents emerging ethical issues. Potential government regulation of AI ethics may increase the burden and cost of research and development and subject the company to brand, reputational, competitive or legal harm.
Success depends on the management team, including Founder, Chairman and CEO Ragy Thomas, and the company has no key man insurance on executive officers. Competition for experienced software engineers and sales professionals is intense, and the filing notes greater than usual employee turnover in recent years.
Because non-affiliate market value of Class A common stock exceeded $700 million as of July 31, 2022, the company will be a large accelerated filer as of January 31, 2023 and will lose emerging growth company status. This triggers auditor attestation under Section 404(b), expanded executive compensation disclosure and higher legal and financial compliance costs.
Top 10 customers accounted for 14% and 19% of subscription revenue in fiscal years ended January 31, 2022 and 2021, respectively, and the majority of the customer base is large enterprises. Loss of any one large customer could have a relatively higher impact on business and results of operations.
MD&A says continued increases in office activity, travel, in-person meetings, hiring and capital expenditures for office space may increase costs and expenses and cause margins to decrease in future quarters.
SaaS KPIs
All quarters →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 Q3 FY2023 (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.