On Thursday, investment bank JPMorgan adjusted its outlook on Sprinklr Inc (NYSE:CXM), lowering the company's price target to $11.00 from the previous $16.00, while keeping an Overweight rating on the shares. The revision follows Sprinklr's announcement of a challenging start to the year, influenced by a difficult macroeconomic climate and internal changes.
Sprinklr, which specializes in customer experience management, has faced headwinds due to a shift in large enterprises' IT budgets towards AI projects. This shift has resulted in longer sales cycles and increased scrutiny over budgets, leading to new business in the first quarter falling short of expectations. Additionally, the company has experienced pressure on renewals, primarily due to price compression from seat reductions and a decrease in marketing spend, which has led to higher dollar churn. However, the company's logo churn has reportedly remained stable over recent quarters.
The company's broad-based go-to-market (GTM) changes, amid the evolving macroeconomic environment, have also contributed to disruptions in booking cadence. Consequently, Sprinklr has significantly lowered its full-year revenue and billings guidance, now setting the growth trajectory at approximately 6.5%, a decrease from the previously anticipated 10%. Despite the slower start, Sprinklr has maintained its pro forma operating income guidance for the full year, suggesting margins around 13%.
JPMorgan expressed disappointment with Sprinklr's performance and execution but noted that the reported macro challenges are consistent with trends observed in larger SaaS companies. The bank anticipates that Sprinklr's stock may experience uncertainty in the coming quarters as the company navigates through the current economic fluctuations and internal GTM changes.
Nevertheless, JPMorgan's Overweight rating persists, largely based on the company's valuation, with shares trading at less than 2.5 times the enterprise value to CY25E revenue, based on after-hours prices.
In other recent news, Sprinklr Inc. has experienced several significant developments. The company's Q1 results for the fiscal year 2025 showed a 13% increase in total revenue, hitting $196.0 million, and a 12% rise in subscription revenue to $177.4 million. However, Cantor Fitzgerald downgraded Sprinklr's stock rating from Overweight to Neutral due to concerns about weakening demand and challenges in maintaining its premium pricing strategy.
Sprinklr's management has forecasted a modest 3% growth for the second half of the year and retracted its fiscal year 2027 subscription revenue target of $1 billion. Amid these developments, Sprinklr has made notable executive moves, appointing Trac Pham as co-CEO, and Amitabh Misra, a former Vice President of Engineering at Adobe (NASDAQ:ADBE), as its new Chief Technology Officer.
Analyst firms have also weighed in on Sprinklr's situation. KeyBanc initiated coverage on Sprinklr with an Overweight rating, while Rosenblatt Securities revised its outlook on Sprinklr, raising the price target while maintaining a Buy rating. These are the recent developments for Sprinklr.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.