Sprinklr (CXM) Stock Forecast & Price Target

Sprinklr Inc. reported significant growth in Professional Services revenue, which increased by 43% year-over-year, while Subscription revenue also showed resilience, topping estimates with a growth of 5% year-over-year and comprising 87% of total revenue at $190.3 million. The company demonstrated strong operational efficiency with non-GAAP operating margins reaching 17.1%, exceeding both internal estimates and consensus expectations, alongside an encouraging net dollar expansion rate increase to 115% in the >$1M cohort. Furthermore, management's revised FY26 revenue guidance of $854 million, up from $838 million, reflects a positive outlook with expected year-over-year growth of approximately 7%, bolstered by a notable increase in adoption of AI services, which contributed to a 50% rise in annual recurring revenue from AI service SKUs.

Sprinklr Inc. has experienced a concerning decline in key financial metrics, with total remaining performances obligation (RPO) growth falling from 4% year-over-year to a negative 5%, primarily driven by an 18% decrease in noncurrent RPO. The company's gross margins have also faced pressure, with total gross margins dropping to 67.2%, reflecting a decline of 180 basis points quarter-over-quarter and 440 basis points year-over-year, attributed to a higher contribution from service revenues and lower subscription margins. Furthermore, the reduction in the >$1M annual recurring revenue (ARR) customer cohort and ongoing macroeconomic challenges raise significant concerns regarding customer retention and competitive positioning in the market.