Sprinklr Raises Outlook on $212M Revenue

Sprinklr (NYSE:CXM) reported Q2 FY2026 earnings on September 3, 2025, with revenue rising 8% year over year to $212 million and non-GAAP operating income reaching a record $38.2 million. Management detailed continued challenges with churn and execution but highlighted substantial progress in operational transformation, major leadership hires, and a renewed product and customer engagement focus. The company raised its full-year FY2026 non-GAAP operating income and revenue guidance, and provided specific forward-looking quantitative targets for Q3 FY2026 and FY2026 (non-GAAP).

Transformation accelerates as Sprinklr finalizes phase one

Earlier earnings calls identified fiscal 2026 as a transitional year marked by structural overhaul and operational optimization, following several years of renewal pressures and technical debt. After phase one’s cost realignment, management now shifts resources to growth investments, infrastructure, and deepening customer engagement in phase two, while reiterating its focus on large enterprise relationships as the main revenue driver.

"To date, we have largely completed phase one of the transformation, which has been focused on business optimization. We have established a clear ambidextrous strategy, implemented a new business management system, optimized our cost structure, realigned our go-to-market coverage model, and strengthened our product delivery roadmaps. This is the foundation from which we intend to strategically invest and efficiently run Sprinklr to improve our business and better serve our customers. Given the scope of this necessary and wide-ranging transformation, we anticipated some near-term challenges, especially during the first half of this year, as we've implemented a series of strategic and operational changes to directly address past execution issues and to position the company for the long term."

-- Rory Read, President and CEO

Transitioning from business stabilization to customer-centric growth initiatives signals Sprinklr’s intent to focus on scalable enterprise execution and operational consistency, which may support longer-term improvement in revenue quality and business predictability.

AI-native platform and new pricing model target large enterprise growth

Recent launches include the AI-powered Customer Feedback Management (CFM) tool, Agentic AI products, and an overhauled pricing model for new customers, shifting to seat- and usage-based subscription bundles. Management notes that enterprise adoption of AI features is leading to higher hosting costs. However, they also point to increased usage rates and improved value perception among key accounts, as evidenced by the sequential rise in million-dollar customers to 149 in Q2 FY2026.

"we have now launched our new core pricing and packaging for new logos. This is a hybrid model consisting of seat-based pricing and a commitment model based on consumption. We believe these simplified new bundles will enable us to deliver more transparency and feature sets that help unlock the value and power of the Sprinklr platform for our customers in an easier, seamless way. We also understand that companies are working to determine how to successively deploy AI technology to help their teams move faster and elevate customer experiences. By investing and developing robust AI features and offerings, we are helping our customers realize the impact of AI in a truly meaningful way."

-- Rory Read, President and CEO

The transition to hybrid pricing and significant investment in AI features are intended to reduce complexity for large clients and add value to Sprinklr’s platform.

Churn and down-sell persist, but Project BearHug shows early signs of traction

Sprinklr’s subscription revenue net dollar expansion rate was flat sequentially at 102%, reflecting continued churn and down-sell. The top 700 accounts now represent nearly 90% of revenue, and Project BearHug—a concentrated customer engagement initiative—has reduced the count of “challenged accounts” from several dozen to the teens since peaking in May–June 2025, a key operational metric tracked weekly.

"when I look at challenged accounts, one of the things I did when I got here was put in a program to look at challenged accounts. We have a process each week where we track that. I can tell you that the number of challenged accounts was in the 10s, 10s and 10s at the beginning, and now it's drifted down into the teens. We're seeing an improvement in terms of those really challenged accounts, and I track them each week. They probably peaked back in May, June timeframe, and they've been kind of trending down since then. It's very similar to what I saw at other companies like Vonage, et cetera."

-- Rory Read, President and CEO

Stabilizing churn among large enterprise customers and reducing the number of at-risk accounts could materially improve future renewal rates, with operational rigor around account health management emerging as a core lever for future growth resumption.

Looking Ahead

For Q3 FY2026, management guides total revenue to $209 million to $210 million (up 4% year over year at midpoint), with subscription revenue of $186 million to $187 million (up 3% year over year at midpoint) and professional services revenue of about $23 million (up 15% year over year). Full-year FY26 guidance is raised to $746 million to $748 million in subscription revenue (up 4% year over year at midpoint) (non-GAAP), total revenue of $837 million to $839 million (up 5% year over year at midpoint), and non-GAAP operating income of $131 million to $133 million (16% margin at midpoint). Free cash flow for FY26 is projected at $125 million, with Q3 expected to be slightly negative and Q4 positive, while management explicitly sets expectations for a “bend” in business trajectory beginning in the back half of FY26 into FY27 (Sprinklr reports on a fiscal year basis).

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