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CXM
Earnings call · Jul 2026 (Q2 FY27)

Sprinklr Q2 FY27 earnings call CXM

Sep 2, 2026 Source

Executive summary

Sprinklr Q2 FY27 — Strong RPO Growth and Improved Execution Despite Services Headwind

Sprinklr is progressing through its transformation, demonstrating improved execution and customer sentiment, particularly in subscription revenue and RPO growth. While professional services faced challenges, management is addressing them, maintaining focus on driving long-term growth and AI innovation. The company aims to build on its momentum in the second half of FY27 to enter an acceleration phase in FY28.

Highlights

5

  • Total RPO grew 11% year-over-year to $1.03 billion, marking the second consecutive quarter of double-digit growth.

  • Non-GAAP operating income reached $31.3 million, representing a 15% non-GAAP operating margin.

  • Net dollar expansion rate for the $1 million-plus cohort was 112% for the fifth consecutive quarter.

  • Generated $13.1 million in free cash flow in Q2, contributing to $79 million for the first half of FY27.

  • Subscription revenue increased 3% year-over-year to $194.8 million.

Concerns

3

  • Professional services revenue was $18.9 million, lower than anticipated due to softness in managed services and partner costs.

  • Services gross margin was negative 22% in Q2, impacted by partner crossover rents and execution challenges in one region.

  • Higher data and hosting costs, driven by expanded AI capabilities, pressured non-GAAP operating income.

Guidance & targets

CategoryTargetConfidence
Total revenue
$250 million to $260 million
high materiality
High
Subscription revenue
$186 million to $197 million
high materiality
High
Professional services revenue
$19 million
medium materiality
High
Professional services gross margin
negative 15%
medium materiality
High
Non-GAAP operating income
$33.5 million to $34.5 million
high materiality
High
Non-GAAP net income per diluted share
$0.11
high materiality
High
Free cash flow
$10 million
medium materiality
High
Other income
$3 million
low materiality
High
Tax provision
$10 million
low materiality
High
Subscription revenue
$782.5 million to $784.5 million
high materiality
High
Total revenue
$866.5 million to $868.5 million
high materiality
High
Professional services revenue
$84 million
medium materiality
High
Non-GAAP operating income
$139 million to $141 million
high materiality
High
Non-GAAP net income per diluted share
$0.47
high materiality
High
Free cash flow margin
16%
high materiality
High
Total tax provision
$41 million
low materiality
High
Other income
$15 million
low materiality
High

CXM operating KPIs by quarter

CXM operating KPIs stated on its earnings calls, by fiscal quarter
KPI Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Net revenue retention rate
104% Our subscription revenue-based net dollar expansion rate in the first quarter was 104%. Source transcript
102% Our subscription revenue base net dollar expansion rate in the second quarter was 102%. Source transcript
-2 pt
Net revenue retention rate $1 million customer cohort
115% I will note, however, that the net dollar expansion rate for the $1 million customer cohort remained at 115% in Q1, which we view as a better measure of increased share of wallet. Source transcript
112% Net dollar expansion rate for the $1 million cohort was 112% in Q2, which we view as a relevant measure of increased share of wallet. Source transcript
-3 pt
Remaining performance obligation (RPO)
$1.04B At the end of Q1 FY 2027, total RPO was $1.04 billion, up 10% versus Q1 last year and up 5% quarter-over-quarter. Source transcript
$1.03B At the end of Q2 FY '27, total RPO was $1.03 billion, once again above the $1 billion mark for the quarter, reflecting the quality of contracted demand and increasing visibility into the future. Source transcript
-1%
Remaining performance obligation (RPO) Current
$627.1M And current RPO was $627.1 million, up 5% year-over-year and up 1% quarter-over-quarter. Source transcript
$614M In addition, current RPO was $614 million, up 3% year-over-year. Source transcript
-2.1%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total RPO $1.03 billion end of Q2 FY27

up 11% year-on-year

Reflects quality of contracted demand and increasing visibility into the future, marking the second consecutive quarter of double-digit growth.

Current RPO $614 million end of Q2 FY27

up 3% year-over-year

Total RPO grew faster than cRPO primarily due to several large renewals and NAR expansions with contract terms extended up to 5 years, increasing average NAR contract length by over 2 months.

Product announcements

ProductTypeDetails
Sprinklr AI-native platformmilestone

Deals & partnerships

World's largest sports betting and gaming companies 5-year strategic agreement to extend Sprinklr's platform across 35 global brands, supporting 1,500 contact center agents and 2,500 users worldwide. well over $20 million 5 years

Customer selected Sprinklr to unify CCaaS, social engagement, and insights.

Leading financial software and services company TCV expansion, evolving a departmental deployment into an enterprise-wide partnership spanning 5 brands and 8 business units. Consolidated 3 vendors and 6 contracts. $4 million TCV

Unified social listening, publishing customer care, and customer insights.

Risks & headwinds

Professional services revenue softness and negative gross margins Q2 FY27, Q3 FY27

Professional services revenue of $18.9 million (lower than anticipated); services gross margin negative 22% in Q2, guided negative 15% in Q3.

Mitigation:CEO Rory Read taking interim leadership of services, focusing on partner utilization, economics, AI use, and managed service attach rates. Bringing in new leaders to the organization.

Higher data and hosting costs Q2 FY27 and ongoing

Pressuring non-GAAP operating income; AI-native SKUs ARR up 40% year-over-year, driving higher cloud and data costs.

Mitigation:Making strategic investments in AI talent, particularly forward-deployed engineers, and considering this a structural shift for long-term growth.

Macro and geopolitical environment (Middle East) Ongoing

Not explicitly quantified in dollars, but described as a 'fluid structure' and 'a bit choppy' impacting the region's business.

Mitigation:Team showing grit and determination; building capacity in the region (sovereign data access, geofencing) for future strategic demand and opportunities.

What to watch in Q3 FY27

Professional Services Margin Improvement

Q3 FY27
Current negative 22%
Target negative 15%

Why it matters

Improvement in professional services margin is essential for overall profitability and operational efficiency, as management has taken direct oversight to address it.

We expect professional services gross margin to be negative 15% in Q3. And as noted above, we are actively working on making improvements in this area.

Q&A highlights

Is the professional services issue an execution problem or an indicator of reduced large deal demand?

Rory Read clarified that the services issue is a tactical execution problem related to managing partner expenses and transitioning from a large implementation, not a lack of demand. He noted continued large deal wins and a strong pipeline.

“No. Quite the opposite, Jackson. We came off of the largest implementation we had ever done, and it was very successful. And we continue to win large deals here in the second quarter.”

asked by Jackson Ader · answered by Rory Read

2 min read 5 chapters

Detailed narrative

Leadership Appointments and Organizational Strengthening

Sprinklr continued to strengthen its leadership team with the addition of Tom Addis as Chief Revenue Officer, bringing a track record of driving growth and scaling sales organizations. Jordi Ribas, a recognized product, engineering, and AI leader from Microsoft, also joined the Board of Directors. These appointments are part of the ongoing transformation to build a stronger, more customer-centric company.

Professional Services Transformation Under Interim Leadership

Rory Read, President and CEO, has taken interim leadership of the professional services organization to accelerate improvements. The focus areas include optimizing partner utilization and economics, expanding AI use in service delivery for efficiency, and increasing managed service attach rates. This direct oversight aims to drive faster decision-making and implementation of necessary changes to improve performance over the coming quarters.

AI-Native Platform and Innovation Leadership

Sprinklr's AI-native unified platform was recognized as a leader in Gartner's 2026 Magic Quadrant for Social Media Management and Listening, validating its strategic vision and innovation. The platform ingests over 180 billion customer conversations annually, and with more than 200 AI engagements underway, its agentic AI capabilities are helping customers improve productivity and enhance experiences.

Significant Customer Wins and Vendor Consolidation Trend

The company secured a 5-year strategic agreement valued at over $20 million with a major sports betting and gaming company, and a $4 million TCV expansion with a leading financial software firm. Both wins highlight a growing trend among large enterprises to consolidate multiple point solutions onto Sprinklr's unified AI-native platform to reduce complexity, lower costs, and drive measurable business outcomes.

Strategic Outlook and Path to FY28 Acceleration

At the midpoint of the fiscal year, Sprinklr remains on track with its transformation, having achieved three consecutive quarters of improved execution, leading to NAR growth, higher renewal rates, and stronger customer sentiment. The company emphasizes the importance of strong execution in Q3 and Q4 FY27 to build momentum and enter an acceleration phase in fiscal year '28.

AI-generated summary of the company's earnings call. Not investment advice.