What Happened?
Shares of customer experience software provider Sprinklr (NYSE: CXM) jumped 19.1% in the afternoon session after the company reported decent fourth-quarter 2024 results: Sales beat by a modest margin while EPS beat more convincingly. The key highlight for the quarter was the 18% increase in high-value customers spending over $1 million annually, which continued to help the more modest subscription revenue growth (up 3% year-over-year).
Looking ahead, revenue guidance told a similar story, with projected growth of just over 3%, a deceleration from the 9% increase in 2024. On a more positive note, full-year EPS guidance exceeded expectations, hinting at management's confidence in cost controls or efficiency improvements to offset weaker sales growth.
Overall, this was a decent yet mixed quarter: while bottom-line performance was solid, the revenue outlook points to slowing demand.
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What The Market Is Telling Us
Sprinklr’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Sprinklr and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 24.2% on the news that the company reported weak first quarter results and provided full-year revenue guidance below expectations. 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 expected 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. Overall, the guidance was quite bad and weighed 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 up 10.1% since the beginning of the year, but at $9.41 per share, it is still trading 31.7% below its 52-week high of $13.77 from March 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 $534.37.
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