Customer experience management platform Sprinklr (NYSE: CXM) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 9.2% year on year to $219.1 million. On top of that, next quarter’s revenue guidance ($217 million at the midpoint) was surprisingly good and 3.1% above what analysts were expecting. Its non-GAAP profit of $0.12 per share was 32% above analysts’ consensus estimates.

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“Our Q3 results reflect continued progress in our transformation to better serve customers and partners. While there’s more work ahead, we’re encouraged by the improving quality of customer engagements and remain focused on closing the year with momentum to establish a strong foundation for FY27,” 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

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Sprinklr grew its sales at a decent 17.7% compounded annual growth rate. Its growth was slightly above the average software company and shows its offerings resonate with customers.

Long-term growth is the most important, but within software, a half-decade historical view may miss new innovations or demand cycles. Sprinklr’s recent performance shows its demand has slowed as its annualized revenue growth of 9.2% over the last two years was below its five-year trend.

This quarter, Sprinklr reported year-on-year revenue growth of 9.2%, and its $219.1 million of revenue exceeded Wall Street’s estimates by 4.5%. Company management is currently guiding for a 7.1% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 2.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and indicates its products and services will see some demand headwinds.

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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 95.4 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 Q3 Results

We were impressed by Sprinklr’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its revenue guidance for next quarter exceeded Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 4.7% to $7.90 immediately following the results.

Indeed, Sprinklr had a rock-solid quarterly earnings result, but is this stock a good investment here? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.