Sprinklr (CXM +3.66%), a customer experience management software company, reported Q2 FY2026 earnings on September 3, 2025. GAAP revenue was $212.0 million in Q2 FY2026, surpassing the midpoint of earlier guidance and up 8% year-over-year. Subscription revenue and non-GAAP profits also exceeded expectations. While management highlighted positive momentum in operating discipline and sales execution, the outlook for Q3 FY2026 suggests a slowdown, with slight sequential declines in both revenue and non-GAAP margins. Overall, the period showed operational improvement but the company faces questions about growth sustainability for the coming quarters.
| Metric | Q2 FY26(ended July 31, 2025) | Q2 Guidance (Midpoint) | Q2 FY25(ended July 31, 2024) | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.13 | $0.10 | $0.08 | 62.5 % |
| Revenue | $212.0 million | $205.5 million | $197.2 million | 7.5 % |
| Operating Margin (Non-GAAP) | 18 % | 17 % | 10 % | 8.0 pp |
| Free Cash Flow | $29.8 million | n/a | N/A | N/A |
| Subscription Revenue | $188.5 million | $184.5 million | $177.9 million | 6.0 % |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.
Business Overview and Strategic Focus
Sprinklr operates as a software company specializing in customer experience management, often abbreviated as CXM. It provides a unified platform that helps organizations manage customer interactions across digital and traditional channels, supported by artificial intelligence (AI) features. The company’s software is used by global enterprises to monitor, analyze, and improve customer relationships in real time.
Key areas of focus for Sprinklr include continuous technological innovation, the ability of its platform to scale for demanding enterprise needs, expansion of its customer base, and forming strategic partnerships. Critical success factors often hinge on maintaining a differentiated product through AI-powered features, sustaining a robust partner ecosystem, and deepening customer engagement with new features and services.
Quarterly Developments and Operating Results
Sprinklr delivered total GAAP revenue of $212.0 million in Q2 FY2026, an 8% year-over-year increase and a modest beat compared to prior estimates. Subscription revenue, which measures recurring software income from customers, grew to $188.5 million, up 6%. These gains reversed the slower growth seen earlier in FY2026.
The company reported an 18% non-GAAP operating margin in Q2 FY2026, an increase of 8 percentage points year-over-year. Cash performance also stood out: free cash flow (non-GAAP) nearly doubled from the prior year period, rising from $16.5 million to $29.8 million in Q2 FY2026. Operating income also improved on both a GAAP and non-GAAP basis in Q2 FY2026, with non-GAAP operating income reaching $38.2 million in Q2 FY2026, compared to $19.6 million in Q2 FY2025.
Growth in large enterprise customers—specifically those generating more than $1 million in annual recurring revenue (ARR)—resumed in Q2 FY2026 after stagnating in the previous quarter. The number of such customers increased by three in Q2 FY2026, reaching 149. Management described this as early evidence of renewed sales momentum, following a prior quarter when the number had slipped. Professional services revenue rose 22% year-over-year.
There were no significant one-time events or material partnership announcements in the release. The company did report ongoing leadership changes, including the appointment of a new Chief Revenue Officer and the announced departure of its Chief Financial Officer later in the year. No dividend was declared, and there is no current dividend program. In terms of product developments, management emphasized continued investment in its Unified CXM platform – a software suite powered by AI – and referenced upcoming research and development initiatives, although specifics on new features or releases were not provided during the period.
Looking Forward: Guidance and Investor Considerations
For the third quarter of fiscal 2026, management provided non-GAAP guidance for Q3 FY2026 below the just-reported period, with total revenue projected between $209 million and $210 million, and subscription revenue between $186 million and $187 million. Non-GAAP operating income is forecast at $28.5 million to $29.5 million, with associated non-GAAP net income per share at approximately $0.09. These figures collectively suggest a sequential step down in both growth and margin compared to the strong results posted in Q2 FY2026.
For the full fiscal 2026 year, Sprinklr modestly raised its guidance, now expecting total revenue between $837 million and $839 million, with subscription revenue targeted at $746 million to $748 million. Non-GAAP operating income is now forecast at $131 million to $133 million, compared to the previous range of $129 million to $131 million. Management commentary signaled that transformation efforts are ongoing and that risks related to leadership changes and innovation execution remain. Investors tracking Sprinklr in upcoming quarters may want to focus on the pace of subscription growth, customer retention in the $1 million ARR cohort, and signs of margin consistency as indicators of the health of its business model. CXM does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
