Sprinklr, Inc. (CXM) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended July 31, 2026. Sprinklr, Inc. operates a Unified Customer Experience Management (Unified-CXM) platform, leveraging AI to help organizations manage customer interactions across multiple channels. The company is headquartered in New York, NY, and operates as a single reportable segment.
Key Financial Metrics (Six Months Ended July 31, 2026)
| Metric | Value (in millions) |
|---|---|
| Total Revenue | $433.2 |
| Subscription Revenue | $389.6 |
| Professional Services Revenue | $43.6 |
| Gross Profit | $282.2 |
| Gross Margin | 65.1% |
| Operating Income | $20.6 |
| Net Income | $11.3 |
| Diluted EPS | $0.05 |
| Operating Cash Flow | $88.5 |
| Free Cash Flow | $78.9 |
| Cash & Marketable Securities | $452.9 |
| Remaining Performance Obligation (RPO) | $1,026.8 |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 4% year-over-year (YoY) to $433.2 million. Subscription revenue grew 5% to $389.6 million, driven by existing customer expansion and new logos, partially offset by contract reductions and non-renewals due to economic pressures. Professional services revenue declined 3% to $43.6 million.
- Margin Compression: Gross margin decreased to 65% from 69% in the prior year. Subscription gross margin dropped 3 percentage points to 74%, primarily due to a $10.0 million increase in third-party cloud, AI, and data costs.
- Restructuring Impact: The company recorded a restructuring benefit of $1.1 million (vs. $15.3 million expense in the prior year), reflecting insurance recoveries and favorable resolutions related to the workforce reduction implemented in early 2026.
- Share Repurchases: The company completed a $125 million Accelerated Share Repurchase (ASR) agreement in March 2026. As of September 1, 2026, the ASR settled with the delivery of approximately 22.1 million shares. The 2026 Share Repurchase Program has $75 million remaining authorization.
Outlook, Risks, and Management Commentary
- AI Investment: Management continues to invest heavily in AI-native capabilities, including generative and agentic AI. While this drives product value, it has increased cost of revenue due to higher third-party infrastructure and data costs.
- Geopolitical Risks: The filing highlights significant risks related to the 2026 Iran conflict. Operations in the Middle East were disrupted, including damage to third-party data center infrastructure in the UAE, leading to potential data inaccessibility and increased costs for emergency data transfers.
- Customer Metrics: Net Dollar Expansion (NDE) rate remains healthy at 102.4% on a trailing 12-month basis, indicating strong retention and upsell activity despite macroeconomic headwinds.
- Legal Matters: Stockholder derivative actions filed in 2025 were dismissed without prejudice in May 2026. Management does not expect current legal matters to have a material adverse impact.
Investor Verification Checklist
- AI Cost Trajectory: Verify if the increase in third-party AI and data costs is a one-time step-up or a sustained trend that will continue to pressure gross margins.
- Geopolitical Exposure: Assess the long-term impact of the Middle East conflict on Sprinklr's ability to serve customers in the region and the potential for recurring infrastructure costs.
- Share Count Dilution/Accretion: Confirm the final impact of the ASR settlement on the weighted average share count and EPS for subsequent quarters.
- Contract Renewals: Monitor upcoming renewal cycles for large enterprise contracts to gauge the extent of "contract size reductions" mentioned in the MD&A.
- Deferred Revenue: Analyze the $33.7 million decrease in deferred revenue to ensure it reflects normal recognition patterns rather than a slowdown in new billings.