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Sprinklr: Sprinklr's Q3 FY2026 Earnings: A Stronger Than Expected Performance

Sprinklr reported a total revenue of $219.1 million for Q3 FY2026, representing a 9% year-over-year growth, with subscription revenue growing 5% to $190.3 million. The company achieved a non-GAAP operating income of $33.5 million, resulting in a 15% non-GAAP operating margin. The actual EPS came out at $0.01116, missing estimates of $0.09. The company's gross margins on a non-GAAP basis were 77% for subscription and 5% for professional services, resulting in a total non-GAAP gross margin of 67%.

CXM

USD 7.9

1.67%

A-Score: 5.1/10

Publication date: December 3, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Revenue Growth: Q3 total revenue rose 9% YoY to $219.1M, with subscription revenue up 5% to $190.3M.
  • Non-GAAP Profitability: Generated $33.5M in non-GAAP operating income, achieving a 15% margin.
  • Customer Retention & Expansion: Subscription net dollar retention hit 102%, with 145 customers contributing $1M+ in annualized revenue.
  • AI-Driven Growth: Platform’s AI capabilities enabled a Latin American bank to boost agent productivity by 500% and reduce handling times by 50%.
  • Guidance Upside: FY2026 subscription revenue raised to $754–755M, with full-year free cash flow estimated at $110M excluding restructuring costs.

Key Highlights and Customer Engagement Trends

The company's key indicators and customer engagement trends are moving in the right direction, with early momentum from Project Bearhug, an initiative focused on deepening engagement with top 700 customers. The company shared customer success stories, including a leading Latin American bank that expanded its partnership with Sprinklr, achieving a 35% increase in case deflection, 50% faster handling times, and a 500% boost in agent productivity. The subscription revenue-based net dollar retention rate was 102% in Q3, indicating a strong customer retention.

Guidance and Outlook

For Q4 FY2026, the company expects total revenue of $216.5-217.5 million and subscription revenue of $191-192 million. For the full year FY 2026, the company raised its expectations for subscription revenue to $754-755 million and total revenue to $853-854 million, with a non-GAAP operating income of $137.5-138.5 million. The company estimates full-year free cash flow of $110 million, excluding restructuring costs. Analysts estimate next year's revenue growth at 5.4%.

Valuation Metrics

With a P/S Ratio of 2.36 and an EV/EBITDA of 28.22, the market seems to be pricing in a moderate growth expectation. The company's ROE of 19.14% and ROIC of 10.8% indicate a relatively strong profitability. The Free Cash Flow Yield of 7.03% is also attractive, suggesting a potential undervaluation.

Strategic Initiatives and AI Focus

The company is focused on driving durable growth through its AI-native platform, which enables brands to unify customer experience data across channels. Sprinklr has over 300 AI skills and will continue to invest in adding more capabilities. The AI discussion is significant, with the platform being AI-native for the last nine or ten years, and having a strong foundation in social and unstructured data. The company sees opportunities for growth and margin expansion through AI use cases.

Sprinklr's A-Score