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Customer experience management company Sprinklr (CXM) is raining down some big gains today after delivering a surprise beat-and-raise Q4 earnings report as it navigates through a transition year in FY26. Sentiment has been decisively bearish on CXM, as illustrated by the stock's 30% yr/yr decline, primarily as a result of the company's slowing revenue growth, cautious guidance, and expensive valuation. However, the better-than-expected Q4 earnings report is creating some hope that the worst is now in the rearview mirror and that new CEO Rory Read will spearhead a significant turnaround.

• Mr. Read took the helm as President and CEO last November, replacing co-CEOs Trac Pham and Ragy Thomas, who transitioned to Advisor to the CEO and remains as Chairman of the Board. A few months later, CXM announced a global workforce reduction of approximately 15% in an effort to realign its costs with current business trends. The CEO shakeup and restructuring actions, which will free up capital to be invested in CXM's go-to-market resources, did little to help the stock's cause.
• Facing muted Q4 expectations, CXM cleared a low bar, potentially paving the way for improved results in the quarters ahead. On an absolute basis, though, CXM's results reflect a company that's far from firing on all cylinders. For instance, RPO and Current RPO (cRPO) growth slowed to just 2% and 4%, respectively, compared to 10% and 9% in the preceding quarter. In addition to macroeconomic headwinds that have impacted subscription renewals, the company's shift in sales to focus on scaling its Contact Center as a Service (CCaaS) offering led to an over-rotation of sales efforts in that area.
• The company also isn't anticipating an upswing in revenue growth for FY26. The company's revenue guidance of $821.5-$823.5 mln suggests yr/yr growth of approximately 3% compared to 9% growth in FY25. However, CXM's EPS outlook of $0.38-$0.39 indicates stronger growth of about 10%, bolstered by the restructuring efforts and AI-based enhancements to its platform. These AI improvements are expected to continue driving healthy growth in the $1.0+ mln customer cohort, which grew by 18% in Q4 to 149 customers.
• Sprinklr AI+ is one such enhancement that's currently available to customers. This tool enables features such as content summarization and automated call notes, improving agent productivity and ensuring consistent customer interactions. The company is also developing a comprehensive CCaaS product that aims to replace multiple point solutions with a unified platform, featuring workforce management, quality management, and conversational AI.

CXM delivered a better-than-expected Q4 performance, buoyed by subscription revenue growth of 7%, while new CEO Rory Read expressed optimism about the company's transformation, emphasizing efforts to optimize expenses, enhance production innovation through AI, and redefining the go-to-market coverage model.