Sprinklr reports growth in unified customer experience platform and CCaaS transformation
New York tech firm sees 8% revenue rise while focusing on contact center expansion and AI implementation amidst market shifts.
Three days ago, on December 4, 2024, Sprinklr (NYSE: CXM) released its financial results for the third quarter fiscal 2025, revealing both progress and challenges in its strategic transformation.
According to the company's financial statements, total revenue reached $200.7 million, marking an 8% increase compared to $186.3 million in the same quarter last year. Subscription revenue, which forms the core of Sprinklr's business model, grew 6% year-over-year to $180.6 million.
The company's contact center transformation strategy has shown promising early results. According to Ragy Thomas, Sprinklr's Founder and CEO, who met with over 70 customers during the quarter, the excitement around their Contact Center as a Service (CCaaS) offering is reminiscent of "the early days of social." During an earnings call, Thomas provided concrete examples of customer success: "One of our leading telecom customers using Sprinklr's conversational AI bots and AI routing achieved over 90% improvement in the response time and more than 60% reduction in average case handling time after enabling our chatbot."
The financial metrics revealed mixed performance. Operating income under GAAP measures was $7.9 million, lower than the $13.2 million reported in the previous year's quarter. However, the company maintained profitability with a non-GAAP operating margin of 12%, though this represented a decrease from 15% in the same period last year.
Discussing market dynamics, Thomas acknowledged some sector-specific challenges: "Maybe the media sector, right, media publishing channels who have been customers, we're seeing some sort of extra softness there. The streaming wars that have been going on has come down. These social networks are in a very different place than they used to be."
The company's strategic focus on CCaaS has yielded notable customer wins. For instance, Thomas shared during the earnings call that "one of the world's top five cosmetics companies expanded its long-standing partnership with Sprinklr to now include conversational commerce. With over 65 brands working on over 20 channels, the company has integrated Sprinklr Conversational AI and Conversational Commerce to enhance customer interactions."
Looking ahead, Sprinklr provided guidance for the fourth quarter ending January 31, 2025, projecting subscription revenue between $180 million and $181 million, and total revenue between $200 million and $201 million. For the full fiscal year 2025, the company expects subscription revenue between $715.9 million and $716.9 million.
The company's balance sheet remains robust, with cash and marketable securities totaling $476.6 million as of October 31, 2024. During the quarter, Sprinklr generated $9.2 million in operating cash flow and $4.9 million in free cash flow.
Thomas emphasized the company's commitment to artificial intelligence innovation: "We continue to believe that we are at the forefront of a very long-term durable growth opportunity, given our deep investments in AI more than five years ago." He highlighted that customers executed over 170 AI deployments in Sprinklr Service alone during the quarter.
The transformation has not been without challenges. During the earnings call, Thomas acknowledged that the company's focus on CCaaS success "slowed progress with some of our other go-to-market initiatives in our core product suites much more than we had anticipated." This strategic shift requires careful resource reallocation and market positioning adjustments over the coming quarters.
In terms of customer dynamics, Manish Sarin, CFO, noted during the call that while the company isn't seeing customer departures, there is "a reduction in the number of seats as corporations pull back on headcount." This trend reflects broader economic conditions affecting enterprise software spending.
The company maintains its position as a significant player in the enterprise software market, particularly in customer experience management. Sprinklr continues to serve more than 60% of Fortune 100 companies, alongside global brands such as Microsoft, P&G, and Samsung, while expanding its presence in the contact center market.