Sprinklr, Inc. (CXM) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended April 30, 2026. Sprinklr, Inc. provides a Unified Customer Experience Management (Unified-CXM) platform powered by artificial intelligence (AI). The company operates as a single reportable segment and serves customers in over 90 countries. As of the reporting date, the company is classified as a large accelerated filer.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $219.5 million | $205.5 million |
| Net Income (Loss) | $4.2 million | ($1.6 million) |
| Operating Income (Loss) | $10.6 million | ($1.8 million) |
| Gross Margin | 65.2% | 69.5% |
| Free Cash Flow | $65.8 million | $80.7 million |
| Cash & Marketable Securities | $442.8 million | N/A |
| Remaining Performance Obligation (RPO) | $1,038.3 million | N/A |
Note: Free Cash Flow is defined as net cash provided by operating activities less purchases of property and equipment and capitalized internal-use software.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 7% year-over-year, driven by a 6% increase in subscription revenue and a 16% increase in professional services revenue.
- Profitability Turnaround: The company returned to profitability with $4.2 million in net income, compared to a net loss of $1.6 million in the prior year. This was primarily due to a significant reduction in restructuring expenses.
- Restructuring Impact: Restructuring charges were a benefit of $0.7 million in Q1 2026 (due to favorable resolution of liabilities), compared to an expense of $16.3 million in Q1 2025. The prior year's expense was related to a global workforce reduction plan.
- Gross Margin Compression: Gross margin declined to 65.2% from 69.5%. Subscription gross margin decreased by 3 percentage points due to higher third-party cloud, data, and network infrastructure costs. Professional services margin turned negative (-4%) due to higher delivery costs for complex implementations.
- Share Repurchases: The company initiated a $200 million share repurchase program in March 2026. During the quarter, it entered into an Accelerated Share Repurchase (ASR) agreement for $125 million, resulting in an initial delivery of approximately 17.1 million shares.
Guidance, Outlook, and Risks
- Outlook: Management expects gross margin to decline in the near term due to rising data and hosting costs. The company continues to invest in AI-native features and platform enhancements.
- Geopolitical Risks: The filing highlights significant risks related to the "2026 Iran conflict," which has caused disruptions to business activities in the Middle East and potential loss of customer data hosted in third-party data centers in the United Arab Emirates.
- Legal Proceedings: A putative securities class action filed in August 2024 was dismissed with prejudice in March 2026. Related stockholder derivative actions were dismissed without prejudice in May 2026.
- AI Risks: The company notes risks associated with the deployment of generative and agentic AI, including potential legal liability, reputational concerns, and regulatory compliance (e.g., EU AI Act).
- Customer Concentration: One large multinational customer represented 10.4% of consolidated revenue for the quarter due to the timing of revenue recognition.
Investor Verification Checklist
- Verify the sustainability of the gross margin decline given the stated increase in third-party cloud and data costs.
- Assess the impact of the 2026 Iran conflict on operations in the Middle East and the potential for future data loss or service disruption.
- Monitor the settlement of the $125 million Accelerated Share Repurchase (ASR) agreement and the final share count impact.
- Review the trajectory of the Net Dollar Expansion (NDE) rate, which was 103.5% for the trailing 12 months ended April 30, 2026.
- Confirm the status of the agreement with X Corp. (formerly Twitter), which expires on December 31, 2026, and its potential impact on data availability.