On Thursday, Sprinklr Inc (NYSE:CXM) experienced a revision in its stock forecast. Rosenblatt has lowered its price target on the company to $10.50 from the previous $11.00, while still maintaining a Buy rating. The adjustment follows Sprinklr's recent quarterly financial report, which presented a mix of outcomes.
The company's revenue for the quarter surpassed expectations by $2.7 million, largely due to a significant 29% year-over-year growth in Professional Services. Despite this revenue uptick, Sprinklr's operating margins and per-share earnings fell short of projections.
The operating margin was reported at 8%, and the per-share earnings were $0.06, both below the anticipated 9% and $0.07, respectively. This underperformance has been attributed to a $10.1 million general and administrative write-off.
Looking forward, Sprinklr has updated its revenue guidance for the fiscal year 2025. The revision is primarily spurred by an anticipated increase in Professional Services, which is expected to enhance customer onboarding for its Cloud Contact Center as a Service (CCaaS).
However, this positive outlook is somewhat offset by a downward adjustment in subscription services revenue, which has been decreased by $3.5 million due to a change in calculated remaining performance obligations. Moreover, the company has moderated its projections for operating margin and per-share earnings.
The firm noted that Sprinklr's internal changes appear to be strategically planned for fostering long-term growth. Nevertheless, it was acknowledged that the path to recovery might be gradual.
In light of these factors, Rosenblatt has revised its expectations for the fiscal years 2025 and 2026 and has consequently reduced the price target for Sprinklr shares. Despite the near-term challenges, the firm expressed continued confidence in the long-term potential of the company.
In other recent news, Sprinklr, Inc. disclosed its second quarter fiscal year 2025 financial results, reporting an 11% year-over-year increase in total revenue to $197.2 million. Subscription revenue also saw a 9% growth, hitting $177.9 million.
The company reported a non-GAAP operating income of $15.2 million, indicating an 8% non-GAAP operating margin. Despite facing a challenging market and increased churn rates, Sprinklr continues to attract new customers, including UBS, Ford (NYSE:F), T-Mobile, Grupo Bimbo, and Planet Fitness (NYSE:PLNT).
These recent developments underscore the company's focus on refining its execution and go-to-market strategy, as well as improving its pricing and packaging to deliver long-term value. 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.
The company also anticipates generating roughly $55 million in free cash flow for the full year. However, Sprinklr has reduced its full-year guidance due to a $6 million reserve for accounts with implementation challenges or geographical issues. Despite these challenges, the company remains committed to its growth strategy.
InvestingPro Insights
In the wake of Sprinklr's revised financial forecasts and Rosenblatt's adjusted price target, a glance at the InvestingPro data and tips provides additional context for investors. With a market capitalization of $2.28 billion and a high P/E ratio of 38.85, Sprinklr is trading at a premium relative to near-term earnings growth.
The company's liquidity position is strong, as reflected by one of the InvestingPro Tips that highlights Sprinklr's cash reserves surpassing its debt load. Furthermore, another tip points out that management has been actively repurchasing shares, which could be indicative of their confidence in the company's value.
From the data, it is evident that Sprinklr has experienced robust revenue growth of over 16% in the last twelve months as of Q1 2023, with a particularly impressive EBITDA growth rate of over 300%. Despite these strong growth metrics, the company's stock has been trading near its 52-week low and has taken a significant hit over the last six months, as noted by a decrease in price total return of 34.13%.
Investors might find these insights from InvestingPro useful for understanding the broader financial health and market sentiment surrounding Sprinklr as they consider the firm's long-term growth strategy and the recent adjustments in financial projections. For those seeking more detailed analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/CXM.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.