Sprinklr NYSE: CXM reported second-quarter fiscal 2027 revenue of $213.7 million, up 1% from a year earlier, as subscription revenue growth offset weaker professional services results. The company said it is continuing a broader transformation intended to improve customer retention, operating execution and long-term growth, while addressing service-delivery profitability issues.
Subscription revenue increased 3% year over year to $194.8 million in the quarter. Non-GAAP operating income was $31.3 million, representing a 15% operating margin, while non-GAAP net income was $0.11 per diluted share. Sprinklr generated $13.1 million in free cash flow during the quarter and $79 million during the first half of the fiscal year.
Services Pressure Offsets Subscription Gains
Professional services revenue totaled $18.9 million, lower than management anticipated because of softness in managed services. The business also faced partner-cost overruns and execution challenges in one region, according to Chief Financial Officer Anthony Coletta. Professional services carried a negative 22% non-GAAP gross margin in the second quarter, compared with a 74% non-GAAP subscription gross margin and a 66% total non-GAAP gross margin.
President and CEO Rory Read said the services performance did not reflect weakening demand for large customer deployments. He pointed to a recently completed major implementation and continued large-deal activity, including a five-year agreement valued at more than $20 million with a global sports betting and gaming company.
Read said he will oversee the services organization on an interim basis as Sprinklr works to improve partner utilization, implementation economics, AI use in service delivery and managed-services attachment rates. The company plans to bring in new services leaders and is working toward making services a margin-neutral business “in the near term,” Coletta said.
“Services is an enabler” of subscription growth, Read said during the question-and-answer session. He said Sprinklr intends to use internal services staff on critical projects while relying on partners for additional reach, noting that the company sees a higher win rate when customers have established partner relationships.
Retention, Contracted Demand Show Improvement
Sprinklr reported a subscription revenue-based net dollar expansion rate of 102% for the quarter. The rate for customers with more than $1 million in annual recurring revenue was 112%, remaining above 110% for a fifth consecutive quarter.
Total remaining performance obligations, or RPO, reached $1.03 billion at the end of the quarter, up 11% from the prior-year period. Current RPO was $614 million, up 3%. Coletta said total RPO grew faster than current RPO because several large renewals and expansions included contract terms extending up to five years. Average contract duration increased by more than two months for the second consecutive quarter, he said.
Read said renewal rates improved and completed sales transactions rose 30% year over year. He also cited four deals with more than $1 million in annual recurring revenue closed during the quarter. Management characterized these trends as evidence that its customer-focused “Bear Hug” strategy is improving customer engagement and confidence in the company.
The company also expanded its leadership team, appointing Thomas Addis as chief revenue officer and adding Jordi Ribas, Microsoft’s president of Search and AI, to its board of directors.
AI Engagements and Enterprise Wins
Management said Sprinklr has more than 200 AI engagements underway across its customer base. Annual recurring revenue from AI-native stock-keeping units rose 40% year over year, with particular growth in agentic AI and contact-center intelligence offerings.
Read said customer AI projects have evolved from proof-of-concept work toward operational implementations involving workflows, application programming interfaces and contextual data. He said Sprinklr has more than 300 AI engineers and has deployed forward-deployed engineers across more than 70% of its customer AI engagements.
In addition to the sports betting and gaming agreement, Sprinklr cited a $4 million total contract value expansion with a financial software and services company. The customer expanded from a departmental deployment to an enterprise-wide relationship spanning five brands and eight business units, consolidating three vendors and six contracts onto Sprinklr’s platform.
Guidance Maintained for Total Revenue, Raised for Subscription Revenue
For the third quarter, Sprinklr forecast total revenue of $215 million to $216 million and subscription revenue of $196 million to $197 million, implying 3% year-over-year subscription growth at the midpoint. The outlook assumes $19 million in professional services revenue, down 34% year over year, and a negative 15% professional services gross margin.
The company expects third-quarter non-GAAP operating income of $33.5 million to $34.5 million and non-GAAP earnings of approximately $0.11 per diluted share.
For fiscal 2027, Sprinklr raised its subscription revenue outlook to $782.5 million to $784.5 million, representing 4% growth at the midpoint. It maintained total revenue guidance of $866.5 million to $868.5 million, or 1% growth at the midpoint, while lowering its assumed full-year professional services revenue to $84 million.
Sprinklr expects full-year non-GAAP operating income of $139 million to $141 million, for a 16% non-GAAP operating margin, and non-GAAP earnings of approximately $0.47 per diluted share. It also expects about $135 million in free cash flow, equating to a roughly 16% free-cash-flow margin.
The company ended the quarter with $453 million in cash equivalents and marketable securities and no debt. It completed a $125 million accelerated share repurchase, buying approximately 22 million shares, and had $75 million remaining under its authorized repurchase plan as of Aug. 28.
About Sprinklr (NYSE:CXM)
Sprinklr, Inc NYSE: CXM is a leading enterprise software firm specializing in customer experience management. The company offers a unified, AI-driven platform designed to help organizations engage customers across multiple digital and social channels. By consolidating marketing, advertising, research, care and engagement functions into a single SaaS solution, Sprinklr enables brands to deliver consistent and personalized experiences at scale.
Sprinklr's platform includes modules for social media management, customer service automation, social advertising and market research, supplemented by AI and machine learning capabilities.
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