Sprinklr's Q3 Net Income Plunges 72% Amid Soaring Tax Bill

TL;DR

**Sprinklr's Q3 profit collapse is a major red flag, despite revenue growth, making this stock a risky bet until tax and margin issues are clarified.**

AI Summary

Sprinklr, Inc. (CXM) reported a significant decline in net income for the three months ended October 31, 2025, falling to $2.904 million from $10.455 million in the prior year, a decrease of 72.2%. For the nine months ended October 31, 2025, net income also decreased to $13.951 million from $22.930 million, a 39.1% drop. Despite this, total revenue grew by 9.2% to $219.068 million for the quarter, driven by a 5.3% increase in subscription revenue to $190.295 million and a substantial 43.5% rise in professional services revenue to $28.773 million. The company's provision for income taxes surged to $14.410 million for the quarter, up from $2.929 million, significantly impacting profitability. Operating income, however, improved to $11.551 million from $7.889 million year-over-year. Cash and cash equivalents increased to $189.591 million as of October 31, 2025, from $145.270 million at January 31, 2025, while total assets decreased to $1.053 billion from $1.184 billion over the same period. The company also executed significant Class A common share repurchases totaling $152.263 million during the nine months ended October 31, 2025.

Why It Matters

Sprinklr's sharp decline in net income, despite revenue growth, signals potential margin pressures and increased tax liabilities that investors must scrutinize. The substantial increase in the provision for income taxes, from $2.929 million to $14.410 million quarter-over-quarter, is a critical factor impacting profitability and could be a red flag for future earnings. While subscription revenue shows steady growth, the significant share repurchases of $152.263 million could be a strategic move to boost shareholder value, but its effectiveness is diluted by the profit slump. Competitors in the Unified Customer Experience Management (Unified-CXM) space may capitalize on Sprinklr's profitability challenges, potentially impacting market share and long-term growth prospects.

Risk Assessment

Risk Level: high — The risk level is high due to a 72.2% decrease in net income for the three months ended October 31, 2025, falling to $2.904 million from $10.455 million in the prior year. This significant decline is primarily driven by a massive increase in the provision for income taxes, which jumped from $2.929 million to $14.410 million, representing a 391% increase. This substantial tax burden severely eroded profitability despite revenue growth.

Analyst Insight

Investors should exercise caution and consider holding off on new investments in CXM until the company provides clearer guidance on its tax strategy and how it plans to mitigate the impact of rising tax provisions on net income. Current investors should monitor the next earnings call for explanations regarding the significant increase in income tax provision and its sustainability.

Financial Highlights

debt To Equity

0.89

revenue

$219.068M

operating Margin

5.27%

total Assets

$1.053B

total Debt

$0

net Income

$2.904M

eps

$0.02

gross Margin

66.41%

cash Position

$189.591M

revenue Growth

+9.2%

Revenue Breakdown

Key Numbers

• $2.904M — Net income for Q3 2025 (Decreased by 72.2% from $10.455 million in Q3 2024)
• $190.295M — Subscription revenue for Q3 2025 (Increased by 5.3% from $180.634 million in Q3 2024)
• $28.773M — Professional services revenue for Q3 2025 (Increased by 43.5% from $20.055 million in Q3 2024)
• $219.068M — Total revenue for Q3 2025 (Increased by 9.2% from $200.689 million in Q3 2024)
• $14.410M — Provision for income taxes for Q3 2025 (Increased by 391% from $2.929 million in Q3 2024)
• $11.551M — Operating income for Q3 2025 (Increased from $7.889 million in Q3 2024)
• $152.263M — Payments for repurchase of Class A common shares (For the nine months ended October 31, 2025)
• $189.591M — Cash and cash equivalents (As of October 31, 2025, up from $145.270 million at January 31, 2025)

Key Players & Entities

• Sprinklr, Inc. (company) — filer of the 10-Q
• CXM (company) — ticker symbol for Sprinklr, Inc.
• New York Stock Exchange (regulator) — exchange where Class A common stock is registered
• SEC (regulator) — Securities and Exchange Commission
• Chief Executive Officer (person) — Sprinklr's chief operating decision maker
• Unified-CXM (company) — Sprinklr's platform for unified customer experience management
• Bloomberg (company) — financial news outlet

FAQ

Risk Factors

• Significant Tax Provision Impact [high — financial]: The provision for income taxes surged by 391% to $14.410 million for the quarter ended October 31, 2025, compared to $2.929 million in the prior year. This substantial increase significantly impacted net income, contributing to a 72.2% decline.
• Share Repurchase Program [medium — financial]: The company executed significant Class A common share repurchases totaling $152.263 million during the nine months ended October 31, 2025. While this can return value to shareholders, it reduces cash available for other investments or operations.
• Dependence on Subscription Revenue [medium — operational]: While subscription revenue grew 5.3% to $190.295 million, it remains the core revenue driver. Any slowdown in subscription growth could materially impact overall financial performance.
• Competitive Market Landscape [medium — market]: The customer experience management (CXM) market is highly competitive, with numerous players offering integrated solutions. Maintaining market share and pricing power requires continuous innovation and effective sales strategies.
• Deferred Revenue Decline [medium — operational]: Deferred revenue decreased from $403.483 million at January 31, 2025, to $332.180 million at October 31, 2025. This indicates a potential slowdown in new bookings or a change in billing cycles.

Industry Context

Sprinklr operates in the competitive Customer Experience Management (CXM) software market. This sector is characterized by a growing demand for integrated platforms that can manage customer interactions across various channels. Key trends include the increasing adoption of AI for customer service, the need for unified customer data, and a shift towards cloud-based solutions. Companies in this space face pressure to innovate rapidly and demonstrate strong ROI to clients.

Regulatory Implications

As a publicly traded software company, Sprinklr is subject to SEC regulations and accounting standards. Changes in tax laws or accounting treatments for revenue recognition could impact financial reporting. Compliance with data privacy regulations (e.g., GDPR, CCPA) is also crucial, as any breaches could lead to significant fines and reputational damage.

What Investors Should Do

1. Monitor the trend in the provision for income taxes.
2. Analyze the drivers of professional services revenue growth.
3. Evaluate the impact of share repurchases on cash flow and future growth.
4. Scrutinize the decline in deferred revenue.

Key Dates

• 2025-10-31: End of Third Quarter 2025 — Reporting period for the 10-Q, showing significant net income decline despite revenue growth, impacted by a surge in tax provisions.
• 2025-01-31: End of Fiscal Year 2025 — Previous balance sheet date, used as a comparison point for current assets, liabilities, and equity.

Glossary

Provision for income taxes

The amount of income tax expense recognized by a company during a reporting period. (A significant increase in this provision directly reduced Sprinklr's net income, highlighting a key factor in the profitability decline.)

Deferred revenue

Revenue that has been received by a company but not yet earned. It is recorded as a liability until the services are rendered or goods are delivered. (The decrease in deferred revenue suggests a potential slowdown in future revenue recognition or new sales.)

Operating lease right-of-use assets

Assets recognized under accounting standards for leases, representing the right to use an asset for the lease term. (These assets and their corresponding liabilities are part of the company's long-term financial obligations.)

Accumulated deficit

The total cumulative net losses of a company since its inception, less any cumulative net income. (Sprinklr continues to have a substantial accumulated deficit, indicating it has historically incurred more losses than profits.)

Treasury stock

Stock that a company has repurchased from the open market. (The company holds treasury stock, which reduces total stockholders' equity and is often used for stock-based compensation plans or share buybacks.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Sprinklr reported a significant 72.2% decrease in net income for the three months ended October 31, 2025, falling to $2.904 million. This was largely driven by a 391% surge in the provision for income taxes to $14.410 million. Despite this profitability hit, total revenue saw a healthy 9.2% increase to $219.068 million, fueled by strong growth in professional services (43.5%) and a more modest rise in subscription revenue (5.3%). Operating income improved year-over-year, indicating operational efficiency gains before the tax impact. New risks related to the substantial share repurchase program and a decline in deferred revenue have emerged as key points of focus.

Key Financial Figures

• $0.00003 — stered Class A common stock, par value $0.00003 per share CXM New York Stock Exchange

Filing Documents

• cxm-20251031.htm (10-Q) — 1701KB
• exhibit101-msarinxseparati.htm (EX-10.1) — 87KB
• exhibit102-acolettaemploym.htm (EX-10.2) — 60KB
• q3fy26_ex311.htm (EX-31.1) — 12KB
• q3fy26_ex312.htm (EX-31.2) — 12KB
• q3fy26_ex321.htm (EX-32.1) — 8KB
• image_0.jpg (GRAPHIC) — 6KB
• image_01.jpg (GRAPHIC) — 6KB
• image_1.jpg (GRAPHIC) — 23KB
• image_11.jpg (GRAPHIC) — 12KB
• image_3.jpg (GRAPHIC) — 25KB
• 0001569345-25-000059.txt ( ) — 7853KB
• cxm-20251031.xsd (EX-101.SCH) — 44KB
• cxm-20251031_cal.xml (EX-101.CAL) — 75KB
• cxm-20251031_def.xml (EX-101.DEF) — 235KB
• cxm-20251031_lab.xml (EX-101.LAB) — 629KB
• cxm-20251031_pre.xml (EX-101.PRE) — 447KB
• cxm-20251031_htm.xml (XML) — 997KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financial Statements (unaudited)

Item 1. Financial Statements (unaudited) Condensed Consolidated Balance Sheets 4 Condensed Consolidated Statements of Operations 5 Condensed Consolidated Statements of Comprehensive Income 6 Condensed Consolidated Statements of Stockholders ' Equity 7 Condensed Consolidated Statements of Cash Flows 9 Notes to Unaudited Condensed Consolidated Financial Statements 10

Management ' s Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management ' s Discussion and Analysis of Financial Condition and Results of Operations 25

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 39

Controls and Procedures

Item 4. Controls and Procedures 39

OTHER INFORMATION

PART II. OTHER INFORMATION

Legal Proceedings

Item 1. Legal Proceedings 40

Risk Factors

Item 1A. Risk Factors 41

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 73 Item 5. Other Information 73

Exhibits

Item 6. Exhibits 74

Signatures

Signatures WHERE YOU CAN FIND MORE INFORMATION Investors and others should note that we announce material financial information to our investors using our investor relations website, press releases, SEC filings and public conference calls and webcasts. We also use Sprinklr's blog and the following social media channels as a means of disclosing information about the company, our products, our planned financials and other announcements and attendance at upcoming investor and industry conferences, and other matters. This is in compliance with our disclosure obligations under Regulation FD: Sprinklr Company Blog (http://sprinklr.com/blog) Sprinklr LinkedIn Page (http://www.linkedin.com/company/sprinklr) Sprinklr X (formerly known as Twitter) Account (https://x.com/sprinklr) Sprinklr Facebook Page (https://www.facebook.com/sprinklr/) Sprinklr Instagram Page (https://www.instagram.com/sprinklr) In addition, investors and others can view Sprinklr videos on YouTube (https://www.YouTube.com/c/sprinklr). Information posted through these social media channels may be deemed material. Accordingly, in addition to reviewing our press releases, SEC filings, public conference calls and webcasts, investors should monitor Sprinklr's blog and its other social media channels. The information we post through these channels is not a part of this Quarterly Report on Form 10-Q. The channel list on how to connect with us may be updated from time to time and is available on https://www.sprinklr.com and our investor relations website. 2 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q (this "Form 10-Q") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements contained in this Form 10-Q other than statements of historical fact, including statements regarding our f

-FINANCIAL INFORMATION

PART I-FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. SPRINKLR, INC. Condensed Consolidated Balance Sheets (in thousands, except share data) (unaudited) October 31, 2025 January 31, 2025 Assets Current assets: Cash and cash equivalents $ 189,591 $ 145,270 Marketable securities 290,754 338,189 Accounts receivable, net of allowance of $ 8.2 million and $ 8.1 million, respectively 150,187 285,656 Prepaid expenses and other current assets 105,107 84,982 Total current assets 735,639 854,097 Property and equipment, net 33,023 31,591 Goodwill and other intangible assets 50,176 49,957 Operating lease right-of-use assets 44,848 44,626 Deferred tax asset, non-current 75,952 90,369 Other non-current assets 114,251 113,559 Total assets $ 1,053,889 $ 1,184,199 Liabilities and stockholders' equity Liabilities Current liabilities: Accounts payable $ 22,649 $ 27,353 Accrued expenses and other current liabilities 80,916 79,285 Operating lease liabilities, current 8,318 7,462 Deferred revenue 332,180 403,483 Total current liabilities 444,063 517,583 Deferred revenue, non-current 4,185 6,276 Operating lease liabilities, non-current 40,118 41,243 Other liabilities, non-current 7,438 7,034 Total liabilities 495,804 572,136 Commitments and contingencies (Note 8) Stockholders' equity: Class A common stock, $ 0.00003 par value, 2,000,000,000 shares authorized; 144,546,166 and 139,163,819 shares issued and outstanding as of October 31, 2025 and January 31, 2025, respectively 4 4 Class B common stock, $ 0.00003 par value, 310,000,000 shares authorized; 101,265,562 and 116,278,936 shares issued and outstanding as of October 31, 2025 and January 31, 2025, respectively 3 4 Treasury stock, at cost, 14,130,784 shares as of October 31, 2025 and January 31, 2025 ( 23,831 ) ( 23,831 ) Additional paid-in capital 1,350,506 1,268,920 Accumulated other comprehensive loss ( 5,142 ) ( 6,969 ) Accumulated deficit ( 763,455 ) ( 626,065 ) Total stockholders' equity 558,085 612,063 T

View Full Filing

View this 10-Q filing on SEC EDGAR