Why Software Company Sprinklr Shares Are Diving Today

Sprinklr, Inc. CXM shares are trading lower after the company reported first-quarter FY25 results yesterday.

Sales of $196.0 million beat the consensus of $194.4 million, and adjusted EPS of $0.09 beat the consensus of $0.07.

Subscription revenue increased 12% Y/Y to $177.4 million. RPO and cRPO were up 30% and 19% Y/Y, respectively, in the quarter.

Adjusted operating income rose to $20.4 million from $11.0 million a year ago, with a margin of 10% versus 6% in the prior-year quarter.

As of April-end, cash, cash equivalents, and marketable securities stood at $610.1 million.

The company also announced Trac Pham’s appointment as co-CEO, effective immediately. Pham will continue to serve on Sprinklr’s board and is standing for reelection at the 2024 annual meeting of stockholders.

Share Buyback: In June 2024, the company authorized an incremental $100 million to the 2024 Share Repurchase Program.

“Despite operating in a more challenging macro environment, we generated strong free cash flow in Q1 and we’re innovating with new products and AI features. While the changes and initiatives we’re implementing will take several quarters to work through, we believe we have the right strategy and leaders in place,” said Ragy Thomas, Sprinklr founder and co-CEO.

Also See: Sprinklr Shares Fall On Weak Guidance, New Co-CEO Announcement

Outlook: Sprinklr cut its FY25 revenue outlook to $779 million-$781 million (from $804.5 million-$805.5 million earlier), vs. the consensus estimate of $805.088 million. The company projects subscription revenue of $714 million-$716 million.

The company raised its adjusted EPS to $0.40-$0.41 (from $0.38-$0.39 prior) versus the $0.38 estimate.

For the second quarter, the company sees revenue of $194 million – $195 million vs. est. $196.804 million and adjusted EPS of $0.06 – $0.07 (vs. street view of $0.09). The company projects subscription revenue of $177.5 million and $178.5 million.

Analyst Coverage:

• DA Davidson downgraded the stock from Buy to Neutral and lowered the price target from $16 to $9.
• JMP Securities cut the price target from $22 to $17 and maintained a Market Outperform rating.
• Cantor Fitzgerald downgraded the rating from Overweight to Neutral and lowered the price target from $16 to $10.
• Morgan Stanley maintained Sprinklr with a Equal-Weight and lowered the price target from $16 to $12.
• Rosenblatt analyst maintained Sprinklr with a Buy and lowered the price target from $18 to $14.

Today, Sprinklr and Reddit, Inc. RDDT announced an expanded strategic partnership that spans both Reddit’s Data API and its Advertising API, with Sprinklr becoming the first official partner for the latter.

Price Action: CXM shares are down 23.6% at $8.29 premarket at the last check Thursday.

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