What Happened?
Shares of customer experience software provider Sprinklr (NYSE: CXM) jumped 5.7% in the morning session after the company reported a "beat-and-raise" quarter (Q1 FY-26). Sprinklr raised its full-year revenue and EPS guidance, which blew past analysts' expectations.
The quarter was also solid as its revenue, EPS, and adjusted operating income exceeded Wall Street's estimates. The big win came on margins. Operating margin on a non-GAAP basis climbed to 18% from 11% last year, helped by pulling back on sales and marketing costs. That made a real difference in earnings per share, which jumped more than 30% and blew past Wall Street's estimates. Overall, we think this was a solid "beat-and-raise" quarter.
After the initial pop the shares cooled down to $8.75, up 2.2% 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 12 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 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.
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 2.4% since the beginning of the year, but at $8.75 per share, it is still trading 19.3% below its 52-week high of $10.84 from June 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 $496.87.
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