Customer experience management platform Sprinklr (NYSE: CXM) beat Wall Street’s revenue expectations in Q2 CY2025, with sales up 7.5% year on year to $212 million. Guidance for next quarter’s revenue was better than expected at $209.5 million at the midpoint, 1.4% above analysts’ estimates. Its non-GAAP profit of $0.13 per share was 29.9% above analysts’ consensus estimates.
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Sprinklr (CXM) Q2 CY2025 Highlights:
- Revenue: $212 million vs analyst estimates of $205.4 million (7.5% year-on-year growth, 3.2% beat)
- Adjusted EPS: $0.13 vs analyst estimates of $0.10 (29.9% beat)
- Adjusted Operating Income: $38.25 million vs analyst estimates of $33.75 million (18% margin, 13.3% beat)
- The company lifted its revenue guidance for the full year to $838 million at the midpoint from $826 million, a 1.5% increase
- Management raised its full-year Adjusted EPS guidance to $0.43 at the midpoint, a 7.6% increase
- Operating Margin: 7.7%, up from 0% in the same quarter last year
- Free Cash Flow Margin: 14%, down from 39.3% in the previous quarter
- Market Capitalization: $2.23 billion
“Our Q2 results reflect the continued and intentional progress we are making in our transformation to better serve our customers and partners. And while we still have work to do, we are encouraged by the increasing quality of our customer engagements, and upcoming impactful R&D innovations,” said Rory Read, Sprinklr President and CEO.
Company Overview
With a proprietary AI engine processing 450 million data points daily across 30+ digital channels, Sprinklr (NYSE: CXM) provides cloud-based software that helps large enterprises manage customer experiences across social, messaging, chat, and voice channels.
Revenue Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last three years, Sprinklr grew its sales at a 13.7% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, Sprinklr reported year-on-year revenue growth of 7.5%, and its $212 million of revenue exceeded Wall Street’s estimates by 3.2%. Company management is currently guiding for a 4.4% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 2.8% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and indicates its products and services will face some demand challenges.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
It’s relatively expensive for Sprinklr to acquire new customers as its CAC payback period checked in at 108.4 months this quarter. The company’s slow recovery of its sales and marketing expenses indicates it operates in a highly competitive market and must invest to stand out, even if the return on that investment is low.
Key Takeaways from Sprinklr’s Q2 Results
We were impressed by Sprinklr’s optimistic full-year EPS guidance, which blew past analysts’ expectations. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its EPS guidance for next quarter slightly missed. Overall, we think this was a mixed quarter. The market seemed to focus on the guidance miss and seemed to be hoping for more, and the stock traded down 2.6% to $8.40 immediately after reporting.
So do we think Sprinklr is an attractive buy at the current price? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here, it’s free.
