Sprinklr, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended January 31, 2023. This is an annual filing, not a standalone fourth-quarter report; quarterly results are not clearly provided in the filing text. Sprinklr sells subscriptions to its AI-powered Unified-CXM software platform and related professional services.
Key financial results
| Metric | FY2023 | FY2022 | Change |
|---|---|---|---|
| Revenue | $618.2 million | $492.4 million | Up 26% |
| Subscription revenue | $548.6 million | $427.7 million | Up 28% |
| Professional services revenue | $69.5 million | $64.7 million | Up 8% |
| Gross margin | 74% | 70% | Up 4 percentage points |
| Operating loss | $51.2 million | $99.5 million | Loss narrowed |
| Net loss | $55.7 million | $111.5 million | Loss narrowed |
| Operating cash flow | $26.7 million | $(32.9) million | Improved |
| Free cash flow (non-GAAP) | $10.2 million | $(45.3) million | Improved |
Subscription gross margin was 81%, versus 79%; professional services gross margin was 12%, versus 11%. On a non-GAAP basis, operating income was $6.0 million (1% margin), compared with an operating loss of $35.5 million (7% negative margin) in FY2022. Non-GAAP net income was $1.4 million. These measures exclude specified items, including stock-based compensation.
Cash and cash equivalents were $188.4 million and marketable securities were $390.2 million at year-end, totaling $578.6 million. Current assets were $862.5 million and current liabilities were $458.9 million. The company reported no principal or accrued interest outstanding under its $50 million Silicon Valley Bank revolving facility at January 31, 2023.
Remaining performance obligations were $719.5 million, including $485.2 million expected to be recognized over the next 12 months. Deferred revenue was $325.5 million, current and non-current combined. Stock-based compensation expense, net of capitalized amounts, was $55.5 million.
Changes versus FY2022
- Growth was driven by new customers and increased purchases and add-on products from existing customers. Customers rose to 1,428 from 1,166; customers with at least $1 million in trailing-12-month subscription revenue increased to 108 from 82.
- Net dollar expansion rate increased to 123.9% from 119.8%.
- Sales and marketing expense rose 17% to $336.7 million, while research and development expense rose 27% to $76.7 million. Both increased in dollars, though sales and marketing declined as a share of revenue, from 58% to 54%.
- FY2022 included a one-time $12 million Opal Labs settlement charge. The settlement was paid in March 2022; there was no comparable FY2023 charge.
- Cash and cash equivalents declined from $321.4 million to $188.4 million, while marketable securities increased from $211.0 million to $390.2 million. Investing cash outflow included substantial purchases of marketable securities.
Outlook, risks and unusual items
- Outlook: Management said cash, marketable securities and operating cash flows should be sufficient for working capital, capital expenditures and financing obligations for at least the next 12 months and over the long term. The filing does not provide specific revenue or earnings guidance. Management cautioned that near-term subscription revenue growth rates may be lower than comparable prior-year periods.
- SVB facility: Following SVB’s receivership, Sprinklr gave notice on March 23, 2023 of its intent to terminate the facility and stated it may seek replacement credit arrangements, including to support letters of credit. The filing says $4.6 million of letters of credit would remain outstanding if the facility is terminated.
- Restructuring: In February 2023, the company approved a reduction of its global workforce by approximately 4%. Most related costs were expected in the first half of FY2024.
- Controls: Management concluded disclosure controls and internal control over financial reporting were ineffective at year-end because of a material weakness in commission expense controls. The weakness caused several immaterial errors that were corrected. KPMG issued an adverse opinion on internal control effectiveness, while giving an unqualified opinion on the financial statements. Remediation was underway but not yet established as effective.
- Principal risks: Continued losses and uncertain path to sustained profitability; dependence on subscription renewals and customer expansion; competition and changing technology; cybersecurity, service availability and data privacy; reliance on third-party cloud, data and social-channel partners; macroeconomic pressure on customer IT spending; and international, regulatory and foreign-exchange exposure.
- Other commitments: Minimum guaranteed data and hosting purchase commitments totaled $220.9 million through FY2028 and beyond. Legal proceedings were described as ordinary-course matters, with no current provision for litigation liability at year-end.
Important facts for investors to verify
- Whether commission-control remediation is implemented, tested and formally deemed effective in subsequent filings.
- Post-year-end liquidity and replacement arrangements for the SVB facility and outstanding letters of credit.
- Progress and costs of the workforce reduction, and any effects on growth, execution or customer support.
- Whether customer expansion, renewal trends and RPO conversion support continued subscription growth.
- How much of reported non-GAAP improvement depends on excluding substantial stock-based compensation.
- Whether the $220.9 million data and hosting commitments remain aligned with customer demand and revenue growth.