Customer experience management platform Sprinklr (NYSE:CXM) met Wall Street’s revenue expectations in Q2 CY2026, but sales were flat year on year at $213.7 million. The company expects next quarter’s revenue to be around $215.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.11 per share was in line with analysts’ consensus estimates.
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Sprinklr (CXM) Q2 CY2026 Highlights:
- Revenue: $213.7 million vs analyst estimates of $214.5 million (flat year on year, in line)
- Adjusted EPS: $0.11 vs analyst estimates of $0.10 (in line)
- Adjusted Operating Income: $31.3 million vs analyst estimates of $29.91 million (14.6% margin, 4.6% beat)
- The company reconfirmed its revenue guidance for the full year of $867.5 million at the midpoint
- Management lowered its full-year Adjusted EPS guidance to $0.47 at the midpoint, a 3.1% decrease
- Operating Margin: 4.7%, down from 7.7% in the same quarter last year
- Billings: $183.5 million at quarter end, down 8.5% year on year
- Market Capitalization: $1.63 billion
StockStory’s Take
Sprinklr’s second quarter was met with a negative market reaction, as revenue growth stalled and billings declined year over year despite meeting Wall Street’s expectations. Management attributed this flat performance primarily to softness in the company’s professional services segment and elevated partner expenses, which CEO Rory Read described as a “tactical execution issue” following a large implementation project. Read also noted that while customer engagement and transaction volume improved, these gains were offset by operational challenges in services and associated short-term costs.
Looking forward, Sprinklr’s updated guidance reflects continued investments in its AI-native platform and a focus on improving services profitability. Management highlighted plans to accelerate the use of AI within services, further optimize the partner ecosystem, and increase managed service attach rates. Read explained that the next two quarters are critical for transitioning from the current execution phase to an acceleration phase, emphasizing, “The key to our turn in getting to the acceleration phase is running 5 good quarters together.”
Key Insights from Management’s Remarks
Management’s remarks highlighted the impact of service execution issues, strategic AI investments, and leadership changes as pivotal themes shaping the quarter’s results and future direction.
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Professional services headwinds: Challenges in the services business, including partner cost overruns and timing around large implementations, weighed on margins and billings. CEO Rory Read clarified these are transitional execution issues rather than signs of weakening customer demand, with remediation underway by increasing direct oversight and focusing on partner/internal resource mix.
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AI engagement momentum: Over 200 active AI-driven customer projects are underway, particularly in Agentic AI and Copilot capabilities. These engagements, spanning large enterprises, are now yielding tangible operational outcomes rather than just proofs of concept, reflecting a maturation in both Sprinklr’s offerings and customer expectations.
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Large enterprise deal traction: The company closed several significant multi-year deals, including a $20 million-plus agreement with a global sports betting company and a $4 million expansion with a financial software client. Both deals involved consolidating multiple vendors and highlight a trend of customers migrating toward unified, AI-powered platforms.
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Leadership additions: The hiring of Tom Addis as Chief Revenue Officer and Jordi Ribas to the board (with deep AI and enterprise experience) is intended to bolster sales execution and product innovation, supporting the next phase of Sprinklr’s growth.
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Improving renewal and contract metrics: Renewal rates and average contract duration increased, particularly among large customers. These trends suggest stronger customer retention and visibility, with Read stating that net dollar expansion rates have remained above 110% in the largest customer cohort for multiple quarters.
Drivers of Future Performance
Sprinklr’s outlook for the rest of the year is shaped by ongoing AI investments, an evolving services strategy, and a focus on operational discipline amid persistent margin pressures.
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AI-driven product investments: Management is prioritizing the expansion of AI capabilities, including forward-deployed engineers and enhanced Agentic AI solutions, which is expected to drive both customer value and higher cloud/data costs. The company believes these investments are necessary for long-term growth, even as they temporarily pressure operating margins.
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Services profitability turnaround: Actions to improve services margins include optimizing the balance between partner and internal resources, leveraging AI to enhance delivery efficiency, and increasing managed service attach rates. Management expects these steps to make the services line margin-neutral over time, though near-term profitability remains a headwind.
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Execution risk and macro factors: Sprinklr’s ability to sustain momentum depends on executing large deal closures, maintaining high renewal rates, and navigating regional uncertainties such as Middle East disruptions. Management cautioned that while leading indicators are improving, successful execution in the next two quarters will determine the pace of transition to accelerated growth.
Catalysts in Upcoming Quarters
Looking ahead, our analysts will be closely tracking (1) the pace of improvement in services profitability and whether partner/internal resource changes yield margin gains, (2) continued growth in large enterprise AI engagements and multi-year deal activity, and (3) sustained high renewal rates and contract duration. The ability to transition from execution to acceleration in subscription growth—especially as new AI-driven products scale—will also be a key focus.
Sprinklr currently trades at $7.05, down from $7.60 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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