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Why Sprinklr Stock Jumped as Much as 21% on Friday

By Anders Bylund – Dec 10, 2021 at 12:05PM

Key Points

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This under-the-radar software company crushed Wall Street's targets for its fiscal third quarter.

What happened

Shares of software company Sprinklr (CXM 1.04%) closed Friday's trading session 11.3% higher. Earlier in the day, the stock peaked with a gain of 21%. The day's upward surge was powered by the company's impressive fiscal third-quarter earnings report.

So what

For the period, which ended Oct. 31, Sprinklr's sales rose 32% year over year to $127 million. Its adjusted earnings swung from a $0.02 profit in the prior-year period to a net loss of $0.06 per share this time. However, the average analyst was anticipating a loss of $0.09 per share on revenue of about $120 million.

Management also offered revenue guidance for its fiscal fourth quarter that was higher than Wall Street's current average estimate, and boosted the midpoint of its full-year revenue target range from $473 million to $487 million.

Office worker using a smartphone, a tablet, and a laptop simultaneously.

A company's user interfaces should be consistent across platforms. Sprinklr helps its clients make that happen. Image source: Getty Images.

Now what

Sprinklr went public in June, and the stock is still finding its legs, price-wise. The company behind the stock, however, has been around for more than a decade.

The products and services in its portfolio help other companies design and manage the user experiences of their own applications across a wide range of systems and platforms. A unified system for customer experience management (CXM, an acronym found both in Sprinklr's ticker symbol and its flagship software-as-a-service platform) is "an idea whose time has come," according to the management team. The company claims to have contracts with more than half of the Fortune 100.

So the stock may be new, but the business is quite mature. In that light, Sprinklr's growth will depend more on increasing the value of each of its contracts than on finding more clients -- the list of major enterprises that haven't yet started working with Sprinklr is growing short.

On that score, the company's big-ticket growth is impressive. The number of contracts worth at least $1 million on an annual basis rose by 29% year over year last quarter to 80.

I'm intrigued by this under-the-radar SaaS business, and the stock isn't even expensive, trading at 7.8 times trailing sales. This one goes on my watch list for further research. Maybe it should find a place on yours as well.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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