Sprinklr Q3 Results Show Margin Strength and Steady Customer Growth: Non-GAAP Operating Margin Reaches 15%
Margin Expansion Leads the Way Despite Slower Revenue Growth
Sprinklr (NYSE:CXM) reported third quarter fiscal 2026 results that showcased an effective focus on profitability and customer relationships, even as headline revenue growth slowed compared to prior periods. The unified customer experience platform provider saw total Q3 revenue rise 9% year-over-year to $219.1 million, driven mainly by a 5% gain in subscription revenue, which now comprises the vast majority of its business. Notably, non-GAAP operating margin jumped to 15%, up from 11% a year earlier, signaling tighter cost control and improved operational discipline.
Profitability Metrics and Free Cash Flow Show Consistent Execution
For the third quarter, Sprinklr delivered $33.52 million in non-GAAP operating income (up 46% year-over-year), translating to non-GAAP net income per diluted share of $0.12. Free cash flow for Q3 came in at $15.52 million—more than triple the $4.90 million generated a year ago—helping lift total cash, cash equivalents, and marketable securities to $480.35 million. This balance sheet strength underpins management’s confidence heading into year-end and supports continued investment in growth initiatives.
| Q3 FY2026 Metric | Q3 FY2025 | Q3 FY2026 | Year-over-Year Change |
|---|---|---|---|
| Total Revenue ($M) | 200.69 | 219.07 | +9% |
| Subscription Revenue ($M) | 180.63 | 190.30 | +5% |
| Non-GAAP Operating Income ($M) | 23.00 | 33.52 | +46% |
| Non-GAAP Operating Margin | 11% | 15% | +4 pts |
| Free Cash Flow ($M) | 4.90 | 15.52 | +216% |
| GAAP Net Income Per Share, Diluted | 0.04 | 0.01 | -0.03 |
| Non-GAAP Net Income Per Share, Diluted | 0.10 | 0.12 | +0.02 |
Enterprise Focus Evident in Customer Metrics and Recurring Revenue
Sprinklr continued to make inroads with large enterprise customers, reporting 145 accounts with over $1 million in annual contract value—a notable indicator of expanding big-ticket deals and sticky recurring revenue. Remaining performance obligations (RPO), which represent contracted revenues not yet recognized, fell 5% year-over-year, but current RPO (revenues to be recognized within 12 months) increased 3%. These trends suggest a stabilization in forward visibility and the company’s ability to renew and expand within existing enterprise clients.
Financial Outlook Highlights Focus on Sustained Growth and Efficiency
Management guided Q4 subscription revenue between $191–$192 million and total revenue in the $216.5–$217.5 million range. For the full fiscal year, total revenue is expected between $853–$854 million, while non-GAAP operating income should reach $137.5–$138.5 million. Projected non-GAAP net income per share of $0.43–$0.44 underscores a clear commitment to driving profitability alongside moderate growth.
| Outlook Metric | Q4 FY2026 Guidance | FY2026 Full-Year Guidance |
|---|---|---|
| Subscription Revenue ($M) | 191–192 | 754–755 |
| Total Revenue ($M) | 216.5–217.5 | 853–854 |
| Non-GAAP Operating Income ($M) | 29–30 | 137.5–138.5 |
| Non-GAAP Net Income Per Share | 0.09–0.10 | 0.43–0.44 |
Key Takeaways: Margin Improvement and Enterprise Growth Remain in Focus
While Sprinklr’s revenue growth rate has moderated, the company is effectively balancing growth and margin expansion—a pattern that appeals to investors in today’s climate of profitability discipline. Its enterprise focus, with increasing $1M+ customers, sets a solid foundation for further recurring revenue growth in fiscal 2027 and beyond. As the market for AI-driven customer experience platforms evolves, Sprinklr’s healthy cash position and operational progress offer reasons to keep the stock on the radar for anyone watching SaaS or customer engagement leaders.
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