Sprinklr, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended January 31, 2022; the 10-K reports full-year results, not a separate fourth-quarter income statement. The company provides an AI-powered enterprise customer experience management platform, primarily through subscriptions. Sprinklr completed its IPO in June 2021.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $492.4 million | $386.9 million |
| Subscription revenue | $427.7 million | $339.6 million |
| Professional services revenue | $64.7 million | $47.3 million |
| Gross profit / gross margin | $344.8 million / 70% | $264.8 million / 68% |
| Operating loss | $99.5 million | $25.6 million |
| Net loss | $111.5 million | $38.0 million |
| Cash from operating activities | $(32.9) million | $7.3 million |
| Free cash flow (non-GAAP) | $(45.3) million | $0.8 million |
Revenue grew 27% year over year, driven by subscription growth of 26%, which management attributed to new customers and expansion within existing accounts. Subscription gross margin rose to 79% from 77%; professional services gross margin rose to 11% from 5%. Sales and marketing expense increased 54% to $287.0 million, or 58% of revenue, contributing to the wider operating loss. FY2022 net loss included $50.1 million of stock-based compensation and a $12.0 million Opal litigation settlement charge.
Liquidity, debt and operating indicators
- At January 31, 2022, cash and cash equivalents were $321.4 million and marketable securities were $211.0 million. Current assets were $805.3 million; current liabilities were $395.1 million.
- No debt was outstanding at year-end. A revolving credit facility provides up to $50.0 million, subject to covenants, and was scheduled to expire June 21, 2022. The filing reports no amounts drawn at January 31, 2022.
- Operating cash use reflected the net loss and a $47.1 million increase in accounts receivable, partly offset by a $43.4 million increase in deferred revenue. The company received $276.0 million net from its IPO.
- Remaining performance obligations were $586.4 million, of which approximately $409.2 million was expected to be recognized over the next 12 months. Net dollar expansion rate was 119.8%, versus 118.4% in FY2021; customers increased 15% to 1,166.
- Contractual commitments included $156.3 million of minimum data and hosting purchases through FY2026 and $24.6 million of future minimum operating lease payments.
Changes, outlook and material matters
- Operating loss widened as operating expenses grew faster than revenue, particularly sales and marketing. Cash from operations and free cash flow also declined from positive FY2021 levels.
- Management expects continued investment in research and development, sales and marketing, infrastructure and international expansion. It expects expenses to rise in absolute dollars; it anticipates long-term modest gross-margin improvement and lower sales and marketing expense as a share of revenue. The filing does not provide numeric earnings or revenue guidance.
- Management stated that available cash, marketable securities and operating cash were expected to meet working-capital needs, capital expenditures and financing obligations for at least the next 12 months. Results remain exposed to renewal and expansion rates, competition, sales-cycle variability, economic conditions, COVID-19 effects, data-provider relationships, cybersecurity and evolving privacy regulation.
- Internal controls: The company reported a material weakness in controls over identifying and consistently capitalizing customer contract acquisition costs under ASC 606. It revised prior-period statements for corrections it deemed immaterial, but the new controls had not operated long enough to demonstrate remediation; disclosure controls were therefore not effective at a reasonable assurance level.
- Litigation: A $12.0 million settlement with Opal Labs was recorded as an FY2022 one-time operating expense and paid in March 2022; the claims were dismissed with prejudice. The filing says other pending matters were not expected by management to have a material adverse effect, while acknowledging uncertainty.
- Class B shares carry ten votes per share versus one vote for Class A, concentrating approximately 93% of voting power with Class B holders as of January 31, 2022. The company does not anticipate paying cash dividends in the foreseeable future.
Investor verification checklist
- Review the reconciliation of GAAP losses to non-GAAP results and the extent of recurring stock-based compensation.
- Track operating cash flow, free cash flow, receivables, deferred revenue and customer collections as growth investments continue.
- Confirm remediation and testing of the ASC 606 contract-cost capitalization material weakness, and assess whether any further restatements or control deficiencies arise.
- Verify renewal and expansion trends, large-customer concentration, and the continued availability and terms of key third-party data and cloud services.
- Check the status and terms of the SVB credit facility, including its June 2022 stated expiry, and monitor contractual hosting commitments.