Sprinklr, Inc. Q3 FY2026 earnings call

• Third quarter total revenue was $219.1M, up 9% y/y; subscription revenue was $190.3M, up 5% y/y. Non-GAAP operating income was $33.5M (15% margin).
• Welcomed new leaders: Anthony Coletta as CFO and Kartik Suri as Chief Product and Corporate Strategy Officer.
• Strategy to leverage AI-powered platform through ambidextrous approach, reenergizing core and expanding disruptive services. First-party data is transforming the customer experience landscape.
• Customer stories: Leading Latin American bank saw 35% case deflection, 50% faster handling times, 500% agent productivity boost with Sprinklr service; global streaming/entertainment company saw improved delivery and new multiyear commitment after addressing initial challenges.
• Project Bearhug focused on deepening engagement with top 700 customers, expecting to improve renewal rates into FY '27.
• Made operational improvements, streamlined processes, modernized systems, and enhanced cross-functional alignment.

Third quarter total revenue grew 9% year over year to $219.1 million. Subscription revenue grew 5% year over year to $190.3 million. Operational services revenue was $28.8 million. Subscription gross margin was 77%, professional services gross margin was 5%, resulting in a total non-GAAP gross margin of 67%. Non-GAAP operating income was $33.5 million (15% margin). The $1 million+ customers cohort revenue grew 9% year over year, and the net dollar expansion for this cohort in Q3 was 113%.

• Q4 total revenue expected to be $216.5M-$217.5M (7% y/y growth midpoint); subscription revenue $191M-$192M (5% y/y growth midpoint); professional services revenue $25.5M (25% y/y growth); non-GAAP operating income $29M-$30M.
• Full-year 2026 subscription revenue expected $754M-$755M (5% y/y growth midpoint); total revenue $853M-$854M (7% y/y growth midpoint); non-GAAP operating income $137.5M-$138.5M (6% margin); maintaining full-year free cash flow estimate of $110M (excluding restructuring costs).

• Forward-looking statements involve assumptions, risks, and uncertainties; actual results may differ materially.
• Execution risks in transformation, including challenges in renewals and ensuring sustained growth.
• Margin management risks due to investments in AI, product, and go-to-market capabilities.

Q: Jackson Ader asked about the sustainability of Q3 performance into next year.

A: Rory Read said it's in the transition execution phase, moving in the right direction but needs several quarters of consistent performance to see sustainability.

Q: Elizabeth Porter asked about leadership stabilization and margin trend.

A: Rory Read said senior leadership changes are mostly complete, and margin is a prudent balance between investments and growth.

Q: Patrick Walravens asked about renewals in Q3 and Q4.

A: Rory Read said renewal rate is key, Q3 renewals met or exceeded expectations, and there are big renewals coming in Q4.

Q: Catharine Trebnick asked about pricing and bundling update.

A: Rory Read said first phase of new pricing and bundling was implemented, next phase is to expand to existing Martech stack customers, then to service later next year.

Q: Arjun Bhatia asked about AI capabilities and margin impact.

A: Rory Read said AI is embedded in the platform, creating holistic customer views, and they'll continue to invest in AI skills and capabilities, with margin impact to be seen over time.

Q: Raimo Lenschow asked about services translating to subscription revenue growth.

A: Rory Read talked about transforming service and support, moving support onto Sprinklr, improving services tracking, and expanding partner relationships.

Q: Matt Van Vliet asked about RPO decline and Bearhug learnings.

A: Anthony Coletta said RPO decline was due to timing of larger deals last year, and Rory Read talked about learnings from Bearhug like building strong account teams and engaging customers regularly.