Sprinklr Q2 earnings beat estimates, boosts outlook
Sprinklr's (CXM) second quarter results beat Wall Street estimates, thanks in part to a 23% jump in year-over-year growth in subscription revenue. CEO Ragy Thomas talks with Yahoo Finance's Brad Smith and Julie Hyman about the company's results and explains how they "bet the company on AI." Thomas explains that there are three trends the company is benefitting from: companies seeking to unify their tech infrastructure, it's approach to customer service, and its early embrace of AI.
Video Transcript
BRAD SMITH: Sprinklr beat Wall Street expectations in its second quarter results on Wednesday night, seeing $0.90 in adjusted earnings per share on $178.46 million in revenue. The company's growth driven by a 23% year-over-year jump in subscription revenue as the customer experience manager, CXM, now has 120 customers with deals over $1 million. Now they look to grow in the artificial intelligence space with an expanded partnership with Google.
Joining us now is Sprinklr CEO and founder Ragy Thomas. Ragy, great to see you all of these results from the most recent quarter, plus the partnership with Google. First and foremost, let's talk about the quarter any catalysts specifically that stand out to you? Subscription was one of those areas that was mentioned on the call.
RAGY THOMAS: Brad, good to be back and good to see you again. We had a lovely quarter by any metric beat across the board. Especially proud of the 12% non-GAAP operating margin that we posted. And that's for a company of our scale and growth. That's something that we were looking forward to.
JULIE HYMAN: Ragy, where do you see the sort of biggest opportunity going forward here, especially in an environment where we have seen, you know, some discretion, if you will, on the part of business spending?
RAGY THOMAS: Julie, first, let me just, for the benefit of the viewers, set the context. We provide a platform for large global companies to do everything from customer service to advertising and reach engage and listen to customers across any channel. We are in the front office software category. And that's a category that's going through massive transformation. And every company is focused on digital transformation, every company is focused on customer experience and improving it and. We are an essential part of it.
We've got three trends that are helping us on a macro basis. The first one is that all companies that we know of are looking to unify their tech infrastructure. Most companies have tons of point solutions. And it's so much better when they don't have to do 10, 15, 20 RFPs. And we're quickly emerging as the third or fourth large platform in the front office, that's number one.
Number two, our focus and our approach to customer service, and we are a disruptor in the CCaaS space. And as we all know, it's a huge space, only less than 20% of the contacts and the seats have moved to the cloud. And we're approaching that entire stack with a completely fresh perspective and completely built on AI.
And that brings me to the third point, which is the exciting thing that all of us are talking about is AI and generative AI. And we were one of the first companies to in our space to bet the company on AI. And we started five years ago. And that's playing out really well for us.
BRAD SMITH: Companies don't invest in AI solutions or making sure that, you know, it's a part of the offerings that they're bringing to their customers like you are at Sprinklr, unless there is some type of monetization, unless there's some type of trickle through to the margins as well. What type of margin multiple are you expecting that artificial intelligence can provide to Sprinklr?
RAGY THOMAS: Brad, we-- well, let me explain why we don't think about AI that way. We see that everyone's talking about AI today. And we see a difference between companies that embrace AI as a foundational platform strategy and embed AI into everything they do. And then we see a lot of companies take the approach of what we're going to have an AI product or have an AI feature or play into AI and monetize AI. We believe that the right strategy for us is the former.
We deal with conversational data, unstructured data in over 100 languages. We're keeping a copy of all legally available external data for every company. AI is the only way for us to make sense of it. And we apply AI to everything we do. And we're betting on AI being a differentiating strategy for us in the long run, not a short-term monetization approach.
BRAD SMITH: Certainly. Ragy, just lastly while we have here as well, you mentioned the advertising component that so many of your customers rely on Sprinkler for and running campaigns, tracking the effectiveness of those campaigns and across social media entities. One of those social media entities has changed pretty profoundly and under new ownership in Twitter or now formerly Twitter, as X. Have you seen any kind of massive shift in how customers are running campaigns on Twitter or even, you know, engaging or running many of their campaigns on X?
RAGY THOMAS: Brad, we can't comment on any of our partners specifically. But what I can tell you is customers use Sprinklr as a way to normalize their advertising and marketing across channels. And so we see the media mix shift between channels. But regardless of where it goes, it's a good thing for us, because we help them make their [INAUDIBLE] work harder.
BRAD SMITH: Yeah, no. It's a great connection point. And we both know this, having spoken over the years, formally, for me, as a customer, and having seen the company evolve all the way through its IPO and continuing to cover you guys. Ragy, always a pleasure to speak with you and get some of the insights from the top level over at Sprinklr. Sprinklr CEO and founder, Ragy Thomas.
RAGY THOMAS: Thank you, Brad.
