On Thursday, Scotiabank (TSX:BNS) analyst Allan Verkhovski increased the price target for Sprinklr Inc (NYSE:CXM) to $9.00, up from the previous target of $8.50, while maintaining a Sector Perform rating on the stock. The company, currently trading at $9.42, maintains a "GOOD" overall financial health score according to InvestingPro analysis. The upward revision follows Sprinklr’s guidance for fiscal year 2026, which anticipates subscription revenue growth aligned with consensus estimates at 3%. Notably, the company’s non-GAAP operating margin guidance of 16% for FY26 surpassed the consensus expectation of 12%, a figure that had not accounted for the impact of a 15% reduction in workforce. This announcement propelled Sprinklr shares to climb by 17% on the day.
Sprinklr’s FY26 is considered a year of transition, with CEO Rory Read at the helm steering operational improvements. The company has introduced a revamped go-to-market (GTM) strategy, concentrating on its top 400 customers. In addition, Sprinklr is in the initial phase of overhauling its pricing and packaging. Management anticipates these changes will lead to improved performance by the end of the year. InvestingPro data shows the company holds more cash than debt on its balance sheet, with a healthy current ratio of 1.74, suggesting strong operational flexibility during this transition period.
Despite the company’s commitment to growth, the guidance for FY26 subscription revenue indicates stability rather than a decline, with a 3% growth projection. This comes in the context of a further slowdown in committed remaining performance obligations (cRPO) growth to 4%. Even after securing an eight-figure, multi-year renewal with one of the largest tech companies, reported performance obligations (RPO) growth slowed to 2%. The company has demonstrated strong historical performance with revenue growth of 12.02% over the last twelve months and maintains an impressive gross profit margin of 73.29%.
In terms of valuation, Sprinklr is currently trading at 14 times its calendar year 2026 estimated enterprise value to free cash flow (EV/FCF), which represents a slight discount when compared to peers that have less than 8% CY25 revenue growth and trade at 16 times EV/FCF. According to InvestingPro analysis, which offers comprehensive valuation metrics and 13 additional ProTips for this stock, Sprinklr appears to be trading near its Fair Value. Investors seeking deeper insights can access the full Pro Research Report, available exclusively to InvestingPro subscribers. Scotiabank sees this discount as justified since Sprinklr is expected to perform below the Rule of 20, while its peers average around the Rule of 32.
Scotiabank’s reiterated Sector Perform rating and new price target of $9.00 are based on a 13 times multiple of CY26E EV/FCF. The firm continues to watch for signs of business stabilization and the potential for growth reacceleration in Sprinklr’s operations.
In other recent news, Sprinklr Inc. reported a robust fourth-quarter performance for fiscal year 2025, with earnings per share (EPS) of $0.10, surpassing the consensus estimate of $0.07. The company’s revenue reached $202.5 million, exceeding the anticipated $200.52 million, marking a 4% year-over-year increase. Subscription revenue rose by 3% year-over-year, indicating steady growth in this segment. Analysts from Rosenblatt Securities and JMP Securities have maintained their positive outlook on Sprinklr, with price targets set at $12 and $17, respectively, following the impressive earnings results. Rosenblatt highlighted the company’s operational efficiency improvements under the new CEO’s leadership, while JMP Securities noted the company’s strong non-GAAP operating margin of 13%.
Sprinklr’s guidance for the first quarter of fiscal year 2026 is also optimistic, with projected revenues between $201.5 million and $202.5 million and an EPS of $0.10, slightly above analyst expectations. The company anticipates continued growth in its subscription services, with revenue expected to rise by 3% year-over-year. Sprinklr’s strategic focus on expanding sales with its top clients and enhancing customer engagement initiatives has been well-received, as evidenced by the 18% increase in customers generating over $1 million in annual subscription revenue.
Despite some challenges in remaining performance obligations growth, Sprinklr’s financial outlook remains positive, with full-year 2026 revenue guidance ranging from $821.5 million to $823.5 million. The company has also implemented a significant workforce reduction to optimize expenses and improve operating margins, which are projected to reach 16% for fiscal year 2026. As Sprinklr navigates the evolving market landscape, analysts and investors will be closely monitoring its ability to maintain momentum and achieve its growth targets.
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