What Happened?
Shares of customer experience software provider Sprinklr (NYSE: CXM) jumped 5.4% in the afternoon session after stocks extended their rebound, led by strong gains in the technology sector, as renewed optimism surrounding U.S.–China trade negotiations lifted investor sentiment.
Contributing to the bullish tone was a standout earnings report from enterprise software leader ServiceNow, which topped Wall Street's expectations on RPO, profit, and earnings. More importantly, the company's remaining performance obligations (RPO), a key forward-looking metric for future revenue, gave investors confidence that enterprise customers were not pulling back spending amidst uncertain macro.
This optimism was further reinforced by solid results from Texas Instruments and Lam Research. Their performance was especially encouraging for semiconductor stocks, which had been under pressure due to their exposure to global trade tensions. These earnings results suggested that, despite macroeconomic uncertainties, demand in key tech verticals remained resilient.
After the initial pop the shares cooled down to $7.50, up 4.7% from previous close.
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What The Market Is Telling Us
Sprinklr’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 24.2% on the news that the company reported the first quarter earnings results and provided full-year revenue guidance below expectations after being lowered. Also, its revenue guidance for next quarter missed Wall Street's estimates.
The company called out a soft demand environment with longer sales cycles and heightened budgetary scrutiny. In addition, it observed higher churn in its core product suites due to reduced marketing spend, elimination of programs, and seat reductions. These issues contributed to the weak guidance as management expects the elevated churn level to continue for the full year FY'25.
On the other hand, Sprinklr recorded significant improvement in new large contract wins this quarter. Overall, the guidance was quite bad and is weighing on the stock. Following the results, D.A. Davidson downgraded the stock's rating from Buy to Neutral, while Cantor Fitzgerald also lowered the rating from Overweight to Neutral.
Sprinklr is down 12.2% since the beginning of the year, and at $7.50 per share, it is trading 41.5% below its 52-week high of $12.82 from May 2024. Investors who bought $1,000 worth of Sprinklr’s shares at the IPO in June 2021 would now be looking at an investment worth $426.14.
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