On Thursday, Sprinklr Inc (NYSE:CXM) saw its stock rating downgraded from Overweight to Neutral by Cantor Fitzgerald, with a significant price target reduction to $10.00 from the previous $16.00.
The downgrade follows Sprinklr's first-quarter results for fiscal year 2025, which ended in January. Despite reporting solid performance for the quarter, the company's forward-looking guidance and comments during the earnings call have raised concerns about weakening demand.
The analyst from Cantor Fitzgerald observed that Sprinklr's premium pricing is facing resistance from customers, a challenge for the company in maintaining control over its pricing strategy.
The expectation that Sprinklr's artificial intelligence products would compensate for the loss of seat count has not yet come to fruition, attributed to the company's execution issues.
Sprinklr's management has forecasted a modest 3% growth for the second half of the year, with growth anticipated to slow further into fiscal year 2026. Additionally, the company has retracted its fiscal year 2027 subscription revenue target of $1 billion.
In a notable executive move, Sprinklr announced the appointment of Trac Pham as co-CEO, an uncommon practice in the software industry, which may suggest the beginning of succession planning.
With the company in the early stages of a six-quarter transition period, Cantor Fitzgerald expressed difficulty in identifying a near-term catalyst that could justify investment in Sprinklr's shares at this time. The firm's analysis indicates caution regarding the company's immediate growth prospects and market position.
In other recent news, Sprinklr has reported notable developments. The company has seen a 13% increase in total revenue for its first fiscal quarter, reaching $196.0 million, with subscription revenue also rising by 12% to $177.4 million.
In addition, Sprinklr expanded its 2024 Share Repurchase Program by an additional $100 million and appointed Trac Pham as Co-CEO alongside Founder and Co-CEO Ragy Thomas.
The company anticipates subscription revenue to be between $177.5 million and $178.5 million for the second fiscal quarter, with total revenue projected between $194 million and $195 million.
Sprinklr also appointed Amitabh Misra, a former Vice President of Engineering at Adobe (NASDAQ:ADBE), as its new Chief Technology Officer. On the financial front, Rosenblatt Securities revised its outlook on Sprinklr, raising the price target while maintaining a Buy rating.
KeyBanc initiated coverage on Sprinklr with an Overweight rating, emphasizing its leadership in the Social Media Management software market. These are the recent developments for Sprinklr.
InvestingPro Insights
In light of the recent downgrade by Cantor Fitzgerald, a deeper look at Sprinklr Inc's financial metrics and market performance through InvestingPro reveals a mixed picture. The company currently holds a market capitalization of $2.93 billion and is trading at a P/E ratio of 57.05, which is considered high relative to its near-term earnings growth. However, with a PEG ratio of just 0.31, there may be an argument that the stock's growth potential has not been fully recognized by the market.
InvestingPro Tips highlight that Sprinklr has more cash than debt on its balance sheet, which is a positive sign of financial stability. Additionally, the company's liquid assets exceed short-term obligations, suggesting a strong liquidity position. On the flip side, 13 analysts have revised their earnings downwards for the upcoming period, signaling potential headwinds. With the stock trading near its 52-week low and having taken a significant hit over the last six months, investors may want to consider these factors alongside the broader market context.
For those looking to delve deeper into Sprinklr's financials and future prospects, InvestingPro offers additional insights. There are currently 11 more InvestingPro Tips available for Sprinklr, which can be accessed by visiting InvestingPro. Readers interested in a comprehensive analysis can take advantage of a special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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