On Thursday, KeyBanc Capital Markets adjusted its outlook on Sprinklr Inc (NYSE:CXM), reducing the price target to $12 from the previous $16, while keeping an Overweight rating on the company's shares. The adjustment follows Sprinklr's recent earnings report, which revealed a shortfall in subscription revenue against consensus estimates and a reduced full-year expectation.
Sprinklr, a customer experience management company, has faced challenges as indicated by its latest financial figures. Despite an increase in headline revenue guidance, this rise is attributed solely to the services line, rather than the core subscription business.
The company's total and current bookings showed a sharp decline, with total bookings down 39.7% and current bookings falling 9.7%. This downturn suggests that Sprinklr's issues extend beyond the general market's sluggish demand.
The analyst from KeyBanc highlighted concerns over Sprinklr's customer retention, noting a worrying pattern of existing customers choosing to reduce their spending upon renewal of the software. This trend signals potential deeper issues within the company, beyond the external budget pressures affecting the broader front-office market.
In light of these developments, KeyBanc has revised its estimates for Sprinklr, leading to the lowered price target. Despite these adjustments, the firm expresses a willingness to remain patient with Sprinklr's stock and its new management team, suggesting a period of observation before making further recommendations.
In other recent news, Sprinklr Inc. reported an 11% year-over-year increase in total revenue to $197.2 million for the second quarter of fiscal year 2025. The company's subscription revenue also experienced a 9% growth, reaching $177.9 million.
Despite this, Sprinklr's operating margins and per-share earnings fell short of projections, with the operating margin reported at 8% and the per-share earnings at $0.06. Analyst firm Rosenblatt has subsequently lowered its price target on Sprinklr to $10.50 from the previous $11.00, while maintaining a Buy rating.
The company has updated its revenue guidance for the fiscal year 2025, primarily due to an anticipated increase in Professional Services. However, a downward adjustment in subscription services revenue, decreased by $3.5 million, tempers this positive outlook. Despite near-term challenges, Rosenblatt expressed continued confidence in the long-term potential of Sprinklr.
Sprinklr continues to attract new customers, including UBS, Ford (NYSE:F), T-Mobile, Grupo Bimbo, and Planet Fitness (NYSE:PLNT), demonstrating the company's focus on refining its execution and go-to-market strategy. For the third quarter, Sprinklr projects total revenue to be between $196 million and $197 million, with subscription revenue estimated at $177.5 million to $178.5 million.
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