On Thursday, DA Davidson assumed coverage of Sprinklr Inc (NYSE:CXM) stock, assigning a Neutral rating while adjusting the price target to $8.00 from a previous figure. The adjustment follows Sprinklr's second-quarter fiscal year 2025 performance, which presented a combination of stronger-than-anticipated top-line growth and a shortfall in operating income, including credit losses.
The company's revenue increase was attributed to robust professional services revenue. Despite the mixed results, Sprinklr's management expressed optimism about the future. They believe that the ongoing changes to go-to-market strategies and updates to pricing and packaging will significantly enhance the company's growth trajectory once they are fully implemented.
However, the revised guidance for the full year suggests a deceleration in subscription growth and a reduction in Non-GAAP operating margins. On the upside, professional service revenue is projected to increase. DA Davidson's revised price target of $8.00 reflects two times the fiscal year 2026 sales projections.
The report from DA Davidson also noted the transition of lead coverage for Sprinklr to analyst Clark Wright. Wright's commentary indicated that while the recent quarterly results were a blend of positive and negative outcomes, the firm's stance remains cautious, maintaining a Neutral rating as the company navigates its strategic updates. Wright emphasized the potential for Sprinklr to position itself for accelerated growth once its current initiatives take effect.
In other recent news, Sprinklr Inc. has been the subject of a revised outlook from Citi, which reduced the company's price target to $9 from $11 while maintaining a neutral stance. This decision follows a challenging second quarter for Sprinklr, marked by declining key performance indicators such as bookings and billings, and a downward revision of the fiscal year 2025 subscription growth forecast.
Despite these challenges, Sprinklr's recent financial results also revealed a mixed picture, with the company's revenue of $197.2 million exceeding expectations, but its adjusted earnings per share of $0.06 falling short of analyst estimates.
These are recent developments in the company's financial performance. Furthermore, Sprinklr provided mixed guidance for the third quarter and the full year, anticipating revenue between $196 million and $197 million, surpassing analyst projections, but falling short on its EPS guidance. The company also adjusted its full-year revenue outlook to a range of $785 million to $787 million, exceeding Wall Street's forecast, while lowering its full-year EPS guidance.
In addition to these financial updates, Sprinklr's subscription revenue grew 9% year-over-year to $177.9 million in Q2, and the company reported an increase in customers contributing over $1 million in annual revenue, up 21% from the prior year. Despite these positive growth indicators, analysts from Citi remain cautious due to ongoing structural changes within the company and uncertainties surrounding the impact of artificial intelligence on enterprise SaaS applications.
InvestingPro Insights
As Sprinklr Inc (NYSE:CXM) navigates through strategic updates with a mix of challenges and growth opportunities, insightful metrics and analyses from InvestingPro can provide valuable context for investors. According to InvestingPro, management's aggressive share buyback strategy underscores their confidence in the company's value proposition. Additionally, Sprinklr's financial health appears robust, as it holds more cash than debt on its balance sheet, which is a positive sign for the company's stability and ability to invest in future growth.
InvestingPro Data reveals a market capitalization of $2.28 billion and a P/E ratio of 38.85, which, when considered alongside the company's recent revenue growth of 16.76% in the last twelve months as of Q1 2025, suggests that investors may be expecting significant future earnings growth. Despite trading near its 52-week low, the company has shown resilience with a gross profit margin of 75.02% in the same period, indicating strong underlying business fundamentals.
For investors seeking a more comprehensive analysis, there are 12 additional InvestingPro Tips available at https://www.investing.com/pro/CXM that can further inform investment decisions. These tips delve into Sprinklr's valuation multiples, profitability projections, and stock performance over various timeframes, all of which are crucial for understanding the company's current position and potential trajectory.
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