Q1 2025 Sprinklr Inc Earnings Call
Operator: Greetings and welcome to the Sprinklr Q1 Full Year 2025 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Eric Scro, VP of Finance. Thank you, Eric. You may begin.
Greetings and welcome to the sprinkler Q1 full year 'twenty 25 earnings call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If any once you require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Eric.
Speaker Change: ROE V P finance. Thank you Eric you may begin.
Eric Scro: Thank you, Alicia, and welcome, everyone, to Sprinklr's first quarter fiscal year 2025 financial results call. Joining us today are Ragy Thomas, Sprinklr's founder and co-chief executive officer, Trak Pham, co-chief executive officer, and Manish Sarin, chief financial officer.
Alicia: Thank you Alicia and welcome everyone to sprinklers first quarter fiscal year 2025 financial results call. Joining us today are Roger Thomas Sprinklers, founder and co Chief Executive Officer, Trac Pham Co Chief Executive Officer, and many Serene Chief Financial Officer, We issued our earnings release, a short time ago filed it.
Eric Scro: We issued our earnings release a short time ago, filed the Form 8K with the SEC, and we've made it available on the investor relations section of our website, along with the supplementary investor presentation. During today's call, we'll be making some forward-looking statements about the business and about the financial results of Sprinklr that involve many assumptions, risks, and uncertainties, including our guidance for the second fiscal quarter and full fiscal year of 2025, the impact of our corporate strategies and changes to our leadership team, the benefits of our platform, and our market opportunity.
Alicia: 8-K, with the SEC and we've made them available on the Investor Relations section of our website along with the supplementary investor patient presentation. During today's call, we'll be making some forward looking statements about the business and about the financial results of sprinkler that involve many assumptions risks and uncertainties, including our guidance for the second fiscal quarter.
Eric Scro: Our actual results might differ materially from such forward-looking statements. Any forward-looking statements that we make on this call are based on our beliefs and assumptions as of today, and we disclaim any obligation to update them. For more details on the risks associated with these forward-looking statements, please refer to our filings with the SEC, also posted on our website, including Sprinklr's quarterly report on Form 10-Q for the quarter ended April 30th, 2024. And with that, I'll now turn it to Ragy. Thank you.
Alicia: And full fiscal year of 'twenty 'twenty five the impact of our corporate strategies and changes to our leadership team the benefits of our platform and our market opportunity our actual results might differ materially from such forward looking statements any forward looking statements that we make on this call are based on our beliefs and assumptions as of today and we disclaim any.
karate: Asian to update them for more details on the risks associated with these forward looking statements. Please refer to our filings with the SEC also posted on our website, including Sprinklers quarterly report on Form 10-Q for the quarter ended April 30th 'twenty, 'twenty, four and with that I'll now turn it karate, Thank you Eric and Hello.
Ragy Thomas: Thank you, Eric, and hello everyone. Q1 total revenue grew 13% year-over-year to $196 million, and subscription revenue grew 12% year-over-year to $177.4 million. We generated $20.4 million in non-GAAP operating income, which resulted in a 10% non-GAAP operating margin for the quarter. We are focused on delivering consistent and repeatable results for our stockholders. As we have shared on recent earnings calls, we've been experiencing lower net bookings over the past few quarters as we transition the company to better support our two distinct market opportunities in our core business and in CCAS.
Speaker Change: Everyone. Our Q1 total revenue grew 13% year over year to 196 million and subscription revenue grew 12% year over year to $177 4 million.
Speaker Change: We generated 24 million in non-GAAP operating income.
Speaker Change: Resulted in a 10% non-GAAP operating margin for the quarter.
We are focused on delivering consistent and repeatable results for our stockholders.
Speaker Change: As we have shared on recent earnings calls we've been experiencing lower net bookings over the past few quarters as we transition the company to better support our two distinct market opportunities in our core business and in sea gas.
Ragy Thomas: To address this, we continue to make broad changes to our go-to-market strategy and hire leaders to help grow and scale the business. This quarter, we made good progress with these leadership changes and operational improvements. However, these changes are significant and will take time to show measurable improvement. Furthermore, implementing these changes during what has become a more challenging macro environment has created more short-term volatility than we expected. In the first quarter, buying behavior was more measured, sales cycles were longer, and budget scrutiny on renewals increased as well.
Speaker Change: To address this we continue to make broad changes to our go to market strategy and hiring leaders to help grow and scale the business.
Speaker Change: This quarter, we made good progress with these leadership changes and operational improvement.
Speaker Change: However, these changes are significant and will take time to show measurable improvement.
Speaker Change: Jim or implementing these changes during what has become a more challenging macro environment has created more short term volatility than we expected.
Speaker Change: In the first quarter buying behavior was more measured sales cycles with longer and budget scrutiny on renewals increased as well.
Ragy Thomas: As a result, Q1 performance reflects lower net new bookings and increased customer churn, based on the current outlook for the year. We are lowering our revenue guidance for FY25 but are committed to diligently managing the business and maintaining our non-GAAP operating income guidance.
Speaker Change: As a result Q1 performance.
Speaker Change: Reflects lower net new bookings and increased customer China.
Speaker Change: Just on the current outlook for the year, we are lowering our revenue guidance for FY 'twenty five but are committed to diligently managing the business and maintaining our non-GAAP operating income guidance and niche will provide more details in his remarks.
Ragy Thomas: Manish will provide more details in his remarks. As you've seen, we're taking decisive actions to address these challenges and remain confident in our long-term vision and our ability to execute again. Our new leadership and an industry-leading AI-powered platform position us well for long-term growth and success. Sprinklr is built on a single code base and operates a multi-channel, multi-function, and multi-market front office platform. Our current focus remains on our go-to-market execution and enhancing stakeholder alignment across both selling and delivering our platform's extensive capabilities.
Speaker Change: As you've seen we're taking decisive actions to address these challenges and remain confident in our long term vision and our ability to execute against it.
Speaker Change: Our new leadership and an industry, leading AI powered platform position us well for long term growth and success.
Speaker Change: Sprinkler is built on a single code base and operate a multichannel multi function in multi market front office platform.
Speaker Change: Our current focus remains on our go to market execution, and enhancing stakeholder alignment across both selling and delivering our platform's extensive capabilities we.
Ragy Thomas: We're making changes internally to elevate our sales and field expertise to focus on the C-suite within our customer base and to better align accounts with skill sets internally. We're also investing in more scalable and repeatable onboarding experiences for our customers. This will require both operational rigor and platform capabilities that we expect will result in faster time to value for our customers and better retention and growth opportunities for Sprinklr. In recent quarters, we have highlighted the experienced leaders we've brought on board from successful companies.
Speaker Change: We're making changes internally to elevate our sales and field expertise to focus on the C suite within our customer base and to better align account with skillsoft skill sets internally.
Speaker Change: We're also investing in more scalable and repeatable onboarding experiences for our customers. This will require both operational rigor and platform capabilities that we expect will result in faster time to value for our customers and better retention and growth opportunities for spring.
Speaker Change: In recent quarters, we have highlighted the experienced leaders we've brought onboard from successful companies.
Ragy Thomas: Scott Harvey, who has been in service now for many years, and Amitabh Misra from Adobe, both known for their ability to scale revenue and profitability, which we believe is a crucial foundational step. These leaders have operated businesses at scale and developed processes and systems to address sophisticated go-to-market needs. And as you saw in today's press release, we are excited to announce that TrackFam has been appointed as the co-CEO of Sprinklr. In the time Track has been with us, he has already made a solid impact on establishing a consistent operating rhythm, fostering strong alignment across our executive team, and leveraging his operational expertise to set us up for our next phase of growth. Track has been an invaluable partner, drawing on his extensive experience
Speaker Change: Got Harvey who was it service now for many years and Amitabh Mishra from Adobe, both known for their ability to scale revenue and profitability, which we believe is a crucial foundational step. These leaders have operated businesses at scale and develop processes and systems to address sophisticate.
Speaker Change: Did go to market needs.
Speaker Change: And as you saw with today's press release, we are excited to announce that Trac Pham has been appointed as the co CEO of sprint.
Speaker Change: And the time track has been with US he has already made a solid impact in establishing a consistent operating rhythm.
Speaker Change: Fostering strong alignment across our executive team and leveraging his operational expertise to set us up for our next phase of growth.
Speaker Change: Track has been an invaluable partner.
Speaker Change: Drawing on his extensive experience at Synopsys.
Ragy Thomas: As a member of the executive leadership team at Synopsys, he led the company through an extended period of strong growth and expanding profitability. In this new structure, we will maintain the effective collaboration that we have established over the last five months and leverage our complementary skill sets to realize our shared vision for Sprinklr. Now, I turn it over to Trac to share a few words.
Speaker Change: As a member of the executive leadership team at Synopsys. He led the company through an extended period of strong growth and expanding profitability in this new structure, we will maintain the effective collaboration that we established over the last five months and leverage our complementary skill set.
Speaker Change: It <unk>.
Speaker Change: To realize our shared vision for sprinkler, let me turn it over to track to share a few words.
Ragy Thomas: Thanks Roger.
Trac Pham: I am deeply excited to partner with Raje as co-CEO and lead Sprinklr through the next phase of growth. Initially, I stepped into the leadership team on an interim basis due to my board exposure and to provide support to the team as the company conducted a search for a permanent operating leader. Sprinklr operates a unique and powerful platform.
Ragy Thomas: Deeply excited to partner with Roger He is co CEO and lead sprinkler through the next phase of growth.
Speaker Change: Initially I stepped into the leadership team on an interim basis due to my board exposure and to provide support to the team at the company conducted a search for a permanent operating leader.
Speaker Change: Sprinkler operates a unique and powerful platform, we work with incredible brands and I believe we have a very good hand to play.
Trac Pham: We work with incredible brands, and I believe we have a very good hand to play. We are working through some major operational changes with new leaders at the helm, and what I've now experienced firsthand is a company that is pioneering a technical vision while the rest of the company must catch up operationally. But my genuine belief in Sprinklr's mission and conviction about our potential motivated me to join the company in a permanent capacity.
Speaker Change: We are working through some major operational changes with new leaders at the helm at what are now experiencing firsthand as a company that is pioneering a technical vision, while the rest of the company must catch up operationally.
Speaker Change: But my genuine belief and sprinklers mission, our conviction for our potential motivated me to join the company and a permanent capacity.
Trac Pham: Raji and I are aligned on how our co-CEO structure can drive our success. Our partnership is built on a strong foundation of complementary skill sets, trust, and mutual respect. And together, we are committed to delivering the best outcomes for our customers, partners, employees, and investors. I look forward to working with you all. Now, I will hand it back to Raj. Thanks, Frank.
Speaker Change: Roger and I are aligned on how our co CEO structure can drive our success.
Speaker Change: Our partnership has built a strong foundation of complementary skill sets trust and mutual respect.
Speaker Change: And together, we are committed to delivering the best outcomes for our customers partners employees and investors I look forward to working with you all let.
Speaker Change: Let me hand, it back to Roger.
Ragy Thomas: Thanks, Rack. I'm excited to work in partnership with you in this new capacity. Now let's shift gears a little bit and focus on some positive developments with our products and customers. Recently, we hosted a few hundred Sprinklr customers, partners, and industry luminaries at our flagship event, CX Unifiers, in New Orleans. This event was an opportunity to share our vision and collaborate on how AI can elevate customer experiences and productivity. Here are a few of the highlights.
Roger: Thanks Frank.
Roger: I'm excited to work in partnership with you in this new capacity.
Speaker Change: Now, let's shift gears, a little bit and focus on some positive developments with our products and customers recently, we hosted a few hundred of sprinkler customers partners and industry luminaries at our flagship event CX Unifiers in New Orleans.
Speaker Change: This event was an opportunity to share our vision and collaborate on how AI can elevate customer experiences and productivity here.
Speaker Change: Here are few of the highlights first is this frankly digital twin which is an AI version of your brand your teams and employees that have access to all the same systems and information as you do but with guard rails should the task can be done with privacy and governance. We believe that this is the next.
Ragy Thomas: First is the Sprinklr Digital Twin, which is an AI version of your brand, your teams, and employees that have access to all the same systems and information as you do, but with guardrails so that tasks can be done with privacy and governance. We believe that this is the next evolution of AI for unified CXM, and we're excited by the definition partnerships that are already underway. Next is Sprinklr surveys, which formally enters us into the customer feedback management market with a comprehensive voice of the customer platform. Customers will now be able to leverage generative AI-powered surveys to gather solicited and unsolicited, structured and unstructured feedback from all customers in one unified platform.
Speaker Change: Evolution of AI Force unified CX Ham and we're excited by the definition partnerships that are already underway.
Speaker Change: Next is sprinkler surveys.
Speaker Change: Which formally enters us into the customer feedback management market with a comprehensive voice of the customer platform sprinkler customers will now be able to leverage generative AI powered surveys to gather solicited and unsolicited structured and unstructured feedback.
Speaker Change: From all cost.
Speaker Change: Consumers in one unified platform.
Ragy Thomas: It's designed to unify insights from all channels and customer touchpoints so they are actionable and available in real time. Another innovation we launched is Sprinklr Voice Connect, our vertically integrated CPaaS solution, which is a powerful contact center connectivity layer that integrates Sprinklr services and telephony to deliver high-quality voice connections. This allows us to be vertically integrated for our CCAS offering and enables us to take full responsibility for end-to-end performance and uptimes required for mission-critical contacts.
Speaker Change: It's designed to unify insights from all channels and customer touch points. So they are actionable and available in real time.
Speaker Change: Another innovation, we launched is sprinkler voice connect our vertically integrated C pass solution.
Speaker Change: <unk> is a powerful contact center connectivity layer that integrates sprinkler service and telephony to deliver high quality voice connections. This allows us to be vertically integrated for our <unk> offering and enables us to take full responsibility for end to end.
Speaker Change: Lummus in up times required for mission critical contact centers for the details about this can be found in the press release, we issued on May seven and my keynote address at the conference which is posted on the sprinkler Dot com website.
Ragy Thomas: Further details about this can be found in the press release we issued on May 7th and my keynote address at the conference, which is posted on the Sprinklr.com website. We also had a good quarter from the perspective of industry analyst reports.
We also had a good quarter from the perspective of industry analyst reports Forrester named sprinkler, a strong performer in conversational AI for customer service report.
Ragy Thomas: Forrester named Sprinklr a strong performer in conversational AI for customer service. Per the report, and I quote. Brands interested in managing their customer self-service as a part of the broader approach to customer experience should give serious thought to Sprinklr, end quote. We believe that the report validates our goal of helping enterprises increase productivity, reduce costs, and drive meaningful conversations with the most advanced conversational AI. We were also named a leader in the 2024 Magic Quadrant for Content Marketing Platforms for the fifth consecutive year. Per the report, and I quote, Sprinklr Marketing is a comprehensive marketing platform that offers a variety of tools and features to organize and optimize marketing efforts.
Speaker Change: Part of the report and I quote.
Speaker Change: Brands interested in managing their customer self service as a part of the broader approach to customer experience should give serious thought to sprinkler and coke.
Speaker Change: We believe that the report validates our goal of helping enterprises move productivity.
Speaker Change: <unk> costs and drive meaningful conversations with the most advanced conversational AI.
We were also named a leader in the 'twenty 'twenty four magic quadrant for content marketing platforms for the fifth consecutive year pretty the report and I quote sprinkler marketing is a comprehensive marketing platform that offers a variety of tools and features to organize optimize marketing efforts.
Ragy Thomas: This end quote, this validates our commitment to providing AI-powered capabilities to help marketing teams achieve improved results and operate in a unified way. During the first quarter, we continued to add new customers and expand with existing ones, such as Alibaba, Audi, IOG Hotels and Resorts, Lululemon, and Vodafone across all our products. I'm also happy to announce that we have signed a new partnership agreement with Reddit. With its broad reach, extensive user base, and unique approach to community and conversations, Reddit is a compelling platform for Sprinklr enterprise customers, and its partnership is significant and spans multiple aspects of the Reddit platform, including social listening and management of ad campaigns, which will empower Sprinklr enterprise customers to leverage Reddit as a business-critical channel for their digital strategy.
Speaker Change: This end quote this validates our commitment to providing AI powered capabilities to have marketing teams achieved improved results and operate in a unified way.
Speaker Change: During the first quarter, we continued to add new customers and expand with existing ones such as Alibaba Audi IHG hotels in resort Lulu Lemon and Vodafone across all our product suite I'm also happy to announce that we have signed a new partnership agreement with read it.
Speaker Change: With its broad reach extensive user base and unique approach to community and conversations read it as a compelling platform, but sprinkler enterprise customers sprinkler and read its partnership is significant and spans multiple aspect of the ready platform, including social.
Speaker Change: Listening and management of AD campaigns, which will empower sprinkler enterprise customers to leverage read it as a business critical channel for their digital strategies.
Ragy Thomas: In closing, FY25 is an important transition year for Sprinklr to further strengthen our foundation with top-tier leadership, product innovation, and enhanced execution capability, all critical elements in the sustained success of our company and our ability to drive value for all our customers and stockholders. We have deep conviction in our belief that the market needs three or four unified and consolidated platforms for the front office, not countless points of contact, and the foundational role that AI will play in the long run.
Sprinkler representative: In closing FY 'twenty five is an important transition year for sprinkler to further strengthen our foundation with top tier leadership product innovation and enhance execution capabilities.
Sprinkler representative: Critical elements and the sustained success of our company and our ability to drive value for all our customers and stockholders, we have deep conviction and a belief that the market needs three or four unified and consolidated platforms for the front office not count at this point solutions.
Sprinkler representative: And the foundational role that AI will play in the long run.
Ragy Thomas: We are confident that our vision is very aligned with this opportunity. Thank you to our customers, partners, and our employees for the hard work. And thank you all for our investors believing in our vision. I'll now hand the call over to Manish.
Sprinkler representative: And are confident that our vision is very aligned with this opportunity. Thank you to our customers partners our employees for their hard work and thank you all to our investors receiving and our vision.
Speaker Change: I'll hand, the call over to Mindy.
Sprinkler representative: [laughter].
Manish Sarin: Thank you, Raji, and good afternoon, everyone. For the first quarter, total revenue was $196 million, up 13% year over year. This was driven by subscription revenue of $177.4 million, which grew 12% year over year. Services revenue for the first quarter came in at $18.6 million. As Raji noted, new business in Q1 was lower than expected, although we did see some good strength in our Sprinklr service offering. However, the broader demand environment has softened with longer sales cycles and heightened budgetary scrutiny.
Mindy: Thank you Rajiv and good afternoon, everyone.
Mindy: First quarter total revenue was $196 million.
Mindy: 13% year over year. This was driven by subscription revenue of 177, 4 million, which grew 12% year over year.
Mindy: Services revenue for the first quarter came in at $18 6 million.
Speaker Change: As Rajiv noted new business in Q1 was lower than expected, although we did see some good strength in our sprinkler service offering.
Speaker Change: However, the broader demand environment has softened with longer sales cycles and heightened budgetary scrutiny.
Manish Sarin: In addition, we continue to experience higher churn in our core product suites driven by reduced marketing spend, elimination of programs, and seed reduction. As such, we now estimate this elevated level of churn to continue for the full year FY25. Our subscription revenue-based net dollar expansion rate for the first quarter was 115%. As a reminder, we calculate NDE on a trailing 12-month subscription revenue basis, which makes it a lagging indicator. While we do not forecast NDE, we expect this number to come down over the next few quarters as the lower quantum of new business and heightened renewal pressure rolls through the revenue waterfall and works its way through the calculation.
Speaker Change: In addition, we continue to experience higher churn in our core product suites, driven by reduced marketing spend elimination of programs and <unk> reductions.
Speaker Change: As such we now estimate this elevated level of churn to continue for the full year FY 'twenty five.
Speaker Change: Our subscription revenue base net dollar expansion late in the first quarter was 115% as a reminder, we calculate N D E. On a trailing 12 month subscription revenue basis, which makes it a lagging indicator.
Speaker Change: While we do not forecast N D E and we expect this number to come down over the next few quarters as the lower quantum of new business and heightened renewal pressure rolls through the revenue waterfall and works its way through the calculation.
Manish Sarin: As of the end of the first quarter, we had 138 customers contributing $1 million or more in subscription revenue over the preceding 12 months, which is a 20% increase year-over-year. Turning to gross margins for the first quarter, on a non-GAAP basis, our subscription gross margin was 82%, and professional services gross margin was 2%, equating to a total non-GAAP gross margin of 74%. Turning to profitability for the quarter, non-GAAP operating income was $20.4 million, or a 10% margin, which drove non-GAAP net income of $0.09 per diluted share.
As of the end of the first quarter, we had 138 customers contributing 1 million or more in subscription revenue over the preceding 12 months, which is a 20% increase year over year.
Speaker Change: Turning to gross margins for the first quarter.
Speaker Change: On a non-GAAP basis, our subscription gross margin was 82% and professional services gross margin was 2% equating to a total non-GAAP gross margin of 74%.
Speaker Change: Turning to profitability for the quarter non-GAAP operating income was $20 4 million or a 10% margin, which drove non-GAAP net income of nine cents per diluted share.
Manish Sarin: Lastly, on the topic of profitability, we posted a Positive Gap Net Income totaling $10.6 million, or $0.04 per diluted share. In terms of free cash flow, we generated $36.2 million during the first quarter, which represents an 18% free cash flow margin compared to $14.3 million in the same period last year. This cash flow generation contributed to our healthy balance sheet, which includes $610.1 million in cash and equivalents, with no debt outstanding. During the first quarter, pursuant to the company's stock buyback program, we purchased 8.3 million shares of our Class A common stock for a total cost of $101.2 million. All the shares repurchased have been retired.
Speaker Change: Lastly on the topic of profitability, we posted positive GAAP net income totaling $10 6 million or four cents per diluted share.
Speaker Change: In terms of free cash flow, we generated $36 2 million during the first quarter, which represents an 18% free cash flow margin compared to a free cash flow of $14 3 million in the same period last year.
Speaker Change: This cash flow generation contributor to our healthy balance sheet, which includes $610 1 million in cash and equivalents with no debt outstanding.
Speaker Change: During the first quarter pursuant to the company's stock buyback program, we repurchased eight 3 million shares of our class a common stock for a total cost of $101 2 million.
Speaker Change: All the shares repurchased have been retired the board has also authorized an incremental 100 million share buyback program.
Manish Sarin: The board has also authorized an incremental 100 million share buyback program. As such, we now have accumulated 300 million share buyback program, of which, as of June 3, 2024, we have 128 million remaining. We intend to complete this buyback by the end of the year. Calculated billings for the first quarter were 191.8 million, an increase of 12% year-over-year. As of April 30, 2024, Total Remaining Performance Obligations, or RPO, which represents revenue from committed customer contracts that have not yet been recognized, was $922.5 million, up 30% compared to the same period last year, and CRPO was $570.4 million, up 19% year-over-year. The sequential decrease in RPO and CRPO is seasonal, with prior year Q1 demonstrating a similar dynamic. The decline this year, however, was more pronounced given the weak demand environment and heightened renewal pressures, as described earlier.
Speaker Change: As such we now have a cumulative 300 million share buyback program of which as of June <unk> 2024, we have $128 million remaining we intend to complete this buyback by the end of the year.
Speaker Change: Calculated billings for the first quarter or $191 8 million, an increase of 12% year over year.
Speaker Change: As of April 30 of 2024.
Remaining performance obligations or RPE L, which represents revenue from committed customer contracts that have not yet been recognized was $922 5 million up 30% compared to the same period last year and see LPL was $517 4 million up nine.
Speaker Change: 10% year over year.
Sequential decrease in IPO NCR P O S seasonal with prior year Q1, demonstrating a similar dynamic.
Speaker Change: The decline this year. However, it was more pronounced given the weak demand environment and heightened renewal pressures as described earlier.
Manish Sarin: Moving now to Q2 and Foliar FY25 Non-GAAP Guidance and Business Outlook. We continue to see elevated churn, and our current assumption is that the macro softness that we are experiencing will continue through the entirety of FY25. Related to some of these market dynamics and performance challenges, we recently concluded an internal review across product areas, regions, and support functions to ensure our resources are best aligned with Sprinklr's priorities. As a result of this review, we restructured our global workforce by approximately 3% in May.
Speaker Change: Moving now to Q2 and full year, FY, <unk> non-GAAP guidance and business outlook.
Speaker Change: We continue to see elevated churn and our current assumption is that the macro softness that we're experiencing will continue through the entire deal.
Speaker Change: Slide 25.
Speaker Change: Related to some of these market dynamics and performance challenges. We recently concluded an internal review across product areas regions and support functions to ensure our resources are best aligned with sprinklers priorities.
Speaker Change: As a result of this review, we restructured our global workforce by approximately 3% in May.
Manish Sarin: Expenses related to this action were approximately $4 million and will be booked here in Q2 FY25. These expenses are included in the guidance figures for both Q2 and the full year FY25. For Q2, we expect total revenue to be in the range of $194 million to $195 million, representing 9% growth year-over-year at the midpoint. Within this, we expect subscription revenue to be in the range of $177.5 million to $178.5 million, also representing 9% growth year-over-year at the midpoint.
Speaker Change: Expenses related to this action would approximately $4 million and will be booked here in Q2, FY 'twenty five.
Speaker Change: These expenses are included in the guidance figures for both Q2 and the full year FY 'twenty five.
Speaker Change: For Q2, we expect total revenue to be in the range of $194 million to $195 million, representing 9% growth year over year at the midpoint.
Speaker Change: Within this we expect subscription revenue to be in the range of 177 5 million to $178 5 million also representing 9% growth year over year at the midpoint.
Manish Sarin: This implies approximately 16.5 million services revenue in Q2. Using the midpoint of the Q2 subscription guide, this equates to a first half subscription growth rate of 11%. As we have signaled on prior earnings calls, we are continuing to invest in our CCAS delivery capabilities given the growth opportunities available to us in that market. As such, we expect services gross margins to decline in Q2 to approximately negative 10%.
Speaker Change: This implies approximately $16 5 million and services revenue in Q2.
Using the midpoint of the Q2 subscription guide this equates to a first half subscription growth rate of 11%.
Speaker Change: As we have signaled on prior earnings calls, we are continuing to invest in our CCAR delivery capabilities, given the growth opportunities available to us in that market.
Speaker Change: As such we expect services gross margins to decline in Q2 to approximately negative 10%.
Manish Sarin: We expect non-GAAP operating income to be in the range of $16.5 million to $17.5 million, and Non-GAAP Net Income per Diluted Share of $0.06 to $0.07 per share, assuming 277 million weighted average shares outstanding. And as noted earlier, this non-GAAP operating income range is impacted by approximately $4 million in costs related to the workforce reduction taken here in Q2 that is included in these numbers.
Speaker Change: We expect non-GAAP operating income to be in the range of $16 5 million to $17 5 million non-GAAP net income per diluted share of <unk> two.
Speaker Change: Two seven cents per share, assuming 277 million weighted average shares outstanding and.
Speaker Change: And as noted earlier this non-GAAP operating income range is impacted by approximately $4 million in costs related to the workforce reduction taken here in Q2 that is included in these numbers.
Manish Sarin: For the full-year FY25, we now expect subscription revenue to be in the range of $714 million to $716 million, representing 7% growth year-over-year at the mid-period. This implies a modest sequential quarterly increase for the remainder of the year. We expect total revenue to be in the range of $779 million to $781 million, representing 7% growth year-over-year at the mid-price. For the full-year FY25, we reaffirm our previous non-GAAP operating income to remain in the range of $104 million to $105 million, equating to a non-GAAP net income per diluted share of $0.40 to $0.41, assuming 276 million weighted average shares are issued.
Speaker Change: For the full year FY 'twenty five we now expect subscription revenue to be in the range of $714 million to $716 million, representing 7% growth year over year at the midpoint. This implies a modest sequential quarterly increase for the remainder of the year.
Speaker Change: We expect total revenue to be in the range of 779 million to $781 million, representing 7% growth year over year at the midpoint.
Speaker Change: For the full year FY 'twenty five we reaffirm our previous non-GAAP operating income to remain in the range of 104 million to one 5 million equating to a non-GAAP net income per diluted share of 40 to 41, assuming too.
Speaker Change: 276 million weighted average shares outstanding.
Manish Sarin: This implies a 13% non-gap operating margin at the midpoint. Recall that the restructuring charge of approximately $4 million in Q2 is included in these numbers. Considering the current operating environment, we have proactively taken steps to reduce our expense base and maintain our operating income.
Speaker Change: This implies a 13% non-GAAP operating margin at the midpoint.
Speaker Change: All the restructuring charge of approximately $4 million in Q2 is included in these numbers.
Speaker Change: Considering the current operating environment, we have proactively taken steps to reduce our expense base and maintain our operating income.
Manish Sarin: Furthermore, we are committed to regularly evaluating our investments and resources to ensure they are commensurate with our near-term growth outlook. In deriving the net income per share for modeling purposes, we estimate $23 million in other income for the full year, with $5 million of that to be earned here in Q2. This other income line primarily consists of interest income.
Speaker Change: Furthermore, we are committed to regularly evaluating our investments and resources to ensure they are commensurate with our near term growth outlook.
Speaker Change: In that I think the net income per share for modeling purposes, We estimate 23 million in other income for the full year with $5 million of that go beyond here in Q2.
Speaker Change: This other income line primarily consists of interest income.
Manish Sarin: Furthermore, a $13.5 million total tax provision for the full year FY25 needs to be added to the non-GAAP operating income ranges provided. We estimate a tax provision of $3.5 million here in Q2. We are tracking to be GAAP net income positive for the full year FY25, consistent with our comments on the Q4 earnings call. While billings grew 12% in Q1, we estimate billings for the full year FY25 to grow in line with the annual subscription revenue growth rate.
Speaker Change: Furthermore, at $13 5 million total tax provision for the full year FY 'twenty five needs to be added to the non-GAAP operating income ranges provided.
Speaker Change: We estimate a tax provision of $3 5 million here in Q2.
Speaker Change: We're tracking to be GAAP net income positive for the full year FY 'twenty five consistent with our comments on the Q4 earnings call.
Speaker Change: While billings grew 12% in Q1, we estimate billings for the full year FY 'twenty five to grow in line with the annual subscription revenue growth rate.
Speaker Change: And we expect that same growth rate for the first half and second half of FY 'twenty five.
Speaker Change: With respect to free cash flow, we now estimate to generate free cash flow of approximately $60 million for the full year.
Speaker Change: Given everything just discussed we are also withdrawing the FY 2007 financial targets to be clear we have conviction that we can achieve the financial targets. We set out at Investor Day. However, we believe this may now take longer than originally planned.
Manish Sarin: And we expect that same growth rate for the first half and second half of FY25. With respect to free cash flow, we now estimate that we will generate free cash flow of approximately $60 million for the full year. Given everything just discussed, we are also withdrawing the FY27 financial target. To be clear, we have conviction that we can achieve the financial targets we set out yesterday. However, we believe this may now take longer than originally planned. Lastly, I would like to thank all our employees for their dedication and passion for what we are building at Sprinklr. And with that, let's open it up to questions. Operator
Speaker Change: Lastly, I would like to thank all our employees for their dedication and passion for what we are building at sprinkler and with that let's open it up for questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.
Speaker Change: Later.
Speaker Change: Thank you.
Speaker Change: We'll now be conducting a question and answer session. If you would.
Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the Q4 participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Operator: One moment, please, while we poll for questions. Thank you. Our first question comes from a line from Raimo Lenschow with Barclays. Please proceed with your question.
Speaker Change: Thank you. Our first question comes from the line of Raimo <unk> with Barclays. Please proceed with your question.
Raimo Lenschow: I have two quick questions. One is, if you think about the macro situation, there is, you know, we've been in a tough macro environment for like, the best part of two years now. What you're seeing out there at the moment, does it feel like it's getting worse? Because it's getting longer.
Raimo Lenschow: I have two quick two quick questions. One is on if you think about the macro situation there is like.
Speaker Change: And then on the tough macro environment for like.
Raimo Lenschow: The best part of two years now what you're seeing out there at the moment does it feel like it's getting worse because it's getting.
Raimo Lenschow: Its longer and so now with people, making kind of when you would kind of decision about something else that they didn't do before or if there's a little bit of sales execution and then more on the financial side for the second half.
Raimo Lenschow: And so now people are making kind of a renewed kind of decision about something else that they didn't do before? Or is this a little bit of sales execution? And then more on the financial side for the second half? If I do then implied guidance for the second half, the second half looks like numbers are coming down a lot more than in the first half. Now, is there anything that we should kind of be aware of that is driving that extra second half headwind for you guys? Okay, thank you.
Speaker Change: I do than implied guidance for the second half second half looks kind of numbers are coming down a lot more than on the first half. So is there anything that we should kind of kind of be aware of that is driving that.
Speaker Change: Extra second half headwind.
Speaker Change: Are you guys. Okay. Thank you.
Ragy Thomas: Yeah, so, hey Raimo, how are you? I'll take the first part of it, and Manish will probably jump on the second.
Speaker Change: Yes, Hey, Raimo, how are you I'll take the first part of it and managed will probably jump on the second.
Ragy Thomas: I have to say that we're seeing a more pronounced squeeze on budgets, more so than we've seen in the last two years. And anecdotally, my suspicion is that companies like ours had a little spillover COVID effect where they got lingering budgets as companies were trying to go digital. You know, in a very, very strong way.
Speaker Change: I have to say that we're seeing a more pronounced squeeze on budget.
Speaker Change: More so than we've seen in the last two years.
Speaker Change: And anecdotally.
My suspicion is that.
Speaker Change: Companies like ours had a little spillover COVID-19 effect, where we got to them.
Speaker Change: Lingering budget as companies were trying to go digital.
Speaker Change: And a very very strong way.
Ragy Thomas: And then the last year, you know, while the budgets were tight, the controls hadn't forced people to go bounce it back up all the way every time. What we're seeing and what I'm anecdotally hearing is that the budget cycles when they got refreshed for this new year came with operational controls of, hey, you're not allowed to spend, everyone's got to find 20, 30% back so that we can invest in AI and other things.
Speaker Change: And then the last year, while the budgets with tight controls had and.
Speaker Change: Force people to Gulf bounce it back up all the way every time, what we're seeing and what Im anecdotally I'm hearing is that the budget cycles. When they got refresh for this new year came with the operational controls have hey, youre not allowed to spend everyone's got to find 2030% back so that we can invest.
Speaker Change: <unk> in AI and other things.
Ragy Thomas: And the budgets weren't growing as much as they had or shrinking in some cases. And I think as the new year rolled in, these controls forced the buying behavior to change, which was not very obvious even going into Q4. I wouldn't say a lot, but it was pronounced enough for us to feel it.
Speaker Change: And budgets wherein grown as much as they did or shrinking in some cases and I think as the new year rolled in these controls.
Speaker Change: For us the buying behavior to change.
Which was not very obvious even going into Q4, I wouldn't say a lot, but it was pronounced enough for us to feel it.
Manish Sarin: Yeah, and let me add that... Raimo, let me address your question around the guide. And I think you're correct in assessing that if you look at the first half of this year, just looking at subscription revenue, it sort of implies an 11% growth year over year. And the second half, by definition, has...
Speaker Change: Yeah, and let me address.
Speaker Change: Well Raimo, let me address your question around the guide and I think.
Speaker Change: Youre correct in assessing if you look at the first half of this year just looking at subscription revenue it sort of implies an 11% growth year over year.
Speaker Change: And the second half.
Manish Sarin: Slower for the full year to be
Speaker Change: Our nation has floor for the full year to be around 7% and I think this is driven by two factors. One is as Raj alluded to earlier, we're just seeing a fairly weak demand environment. We do not have the level of visibility that we had even last year. So demand is definitely weaker.
Manish Sarin: The full year to be around 7%, and I think this is driven by two factors. One is, as Raji alluded to earlier, we're just seeing a fairly weak demand environment. We do not have the level of visibility that we had even last year. So demand is definitely weaker, and then we also address, even compared to a few months ago, we're seeing much more pressure on renewals. I had flagged in prior earnings calls that we expected an elevated level of churn just for the first half, but just given the dynamics we are seeing now, I think the prudent thing for us to assume is that this dynamic continues for the remainder of the year. So I think both of those factors in the act are what is baked into the guide.
Speaker Change: Sure.
Speaker Change: And then we also address even compared to a few months ago, we're seeing much more pressure on renewals.
Speaker Change: I had flagged in prior earnings calls that we expected an elevated level of churn just for the first half, but just given the dynamics. We are seeing now I think the prudent thing for us to assume is that dynamic continues for the yeah. So I think both of those factors in the act.
Speaker Change: Or what is baked into the guide.
Raimo Lenschow: Okay, that makes sense. Thank you. Thanks for the clarification.
Speaker Change: Okay makes sense, thank you and thanks for the clarification.
Speaker Change: Clarification.
Speaker Change: Thank you.
Operator: Thank you. Our next question comes from the line of Arjun Bhatia with William Blair. Please proceed with your question.
Thank you. Our next question comes from the line of Arjun Bhatia with William Blair. Please proceed with your question.
Speaker Change: Perfect. Thank you.
Arjun Rohit Bhatia: Can you guys, maybe just touch a little bit on where you are and going.
Speaker Change: Going through some of the go to market changes.
Speaker Change: You are talking about them as well.
Arjun Rohit Bhatia: And as we're thinking about what to look for to understand that we might be, you know, in later innings on the go-to-market being more stable, like what should we look for to see that, you know, you've kind of adjusted to the go-to-market motion, and things are maybe starting to get better instead of still getting worse?
Speaker Change: We're thinking about what to look for to understand that we might be in.
Speaker Change: And later in a go to market being more stable like what should we look for to see that.
Speaker Change: You've kind of adjusted the go to market motion and things, where maybe it's starting to get better instead of <unk>.
Speaker Change: Yes, so getting worse.
Ragy Thomas: Right. Let me take that, Arjun. Look, there are three things that are super clear to us. One is, as we said, the macro is very expedient to get pronounced.
Speaker Change: Right.
Speaker Change: Let me, let me take that origin.
Speaker Change: Look there are three things that are super clear to US one is as we said the macro is experiencing a pronounced change second.
Ragy Thomas: Second, our go-to-market motion and the transition to the level of maturity that we need to have for a business of this scale and size. We are not there, and it's taking us a long time. And I'm not going to go through all of it.
Speaker Change: Our.
Speaker Change: Go to market motion and the transition to.
So the level of maturity that we need to have for the business of this scale and size.
Speaker Change: We are not there and its taking us longer.
Speaker Change: And I'm not going to go through all of it I'm sure we can follow up in the.
Speaker Change: And the actions, but with the kind of people that we have around us and inside the company what needed to do was fairly clear and what we realized is we went late last year and looked at our own progress Needless to say no one including myself was happy with the.
Ragy Thomas: I'm sure we can follow up on these actions. But with the kind of people that we have around us and inside the company, what needed to be done was fairly clear. And what we realized as we went late last year and looked at our own progress, needless to say, no one, including myself, was happy with the pace of progress. And what we decided to do was to upgrade and make significant upgrades to the leadership, you know, starting at the very top. Right?
Speaker Change: Pace of progress and what we decided to do was to <unk>.
Speaker Change: Great and made significant upgrades to the leadership you know starting at the very top right. That's what the investors and the board would love to see and we brought in track with his rich experience at Synopsys had been there for 16 years.
Ragy Thomas: That's what the investors on the board would love to see, and we brought in Tim with his rich experience at Synopsys. Been there for 16 years in a very hands-on operational role, followed by Scott, who is in service now, is our chief commercial officer, new head of Europe, again, similar pedigree, head of America, similar pedigree, head of global success, head of renewals, head of sales strategy, a brand new role that we never had, had a box.
Speaker Change: It very hands on operational role.
Speaker Change: Followed by Scott.
Speaker Change: Is it service now who's our chief commercial officer.
Speaker Change: Our new head of Europe again, similar pedigree head of Americas of similar category head of global success.
Speaker Change: <unk> had it for a new world had a.
Speaker Change: Sales strategy, a brand new role that we never had head of partnerships.
Ragy Thomas: So this recruiting was done with a very clear filter of proven track record at other companies like us who went through this multi-buyer complex selling process. So at this point, we feel like we've got a handle on it, we have the people, and I'm very cautiously optimistic. But it's going to take time as these leaders settle in, find their own leaders, or upgrade and enable our existing talent, but I'm very encouraged by what we're doing. And it's safe to say, look, I think we have embarked on a four to six quarter transition at least, and we're probably one quarter into it. That's the way I'd characterize it.
Speaker Change: And are these recruiting was done with a very clear filter of proven track record at other companies like US who went through this multi a buyer complex selling prices.
Speaker Change: So at this point, we feel like we've got a handle we've got the people and I'm very I'm cautiously optimistic, but it's going to take time as these leaders settled in.
Speaker Change: And their own leaders or upgrade and enable our existing talent.
Speaker Change: But I'm very encouraged by what we're doing.
Speaker Change: And it's safe to say look I think we had embarked on a four to six quarter transition at least.
Speaker Change: And we're probably one quarter into it is the way I'd characterize it.
Ragy Thomas: Okay, got it. And then I think you're also just called out now that you might expect a little bit more contraction and churn and downfill in some cases. When you think where that might come from, how do you think about just the split between the CCAS and the care opportunity versus your core social?
Speaker Change: Okay got it and then.
Speaker Change: I think you had also called out now that you.
You might expect a little bit more of a contraction in China downtown or in some cases.
Speaker Change: When do you think where that might come from.
Speaker Change: How do you think about the split between the C cap.
Speaker Change: And the care opportunity versus your core social.
Ragy Thomas: I'll acknowledge that we're seeing increased pressure on the core, which is everything outside of CCAS the way we see it. And what we're finding is this board price compression. We're not seeing a crazy amount of logo churn. We're not seeing, I'm sure there'll be a question, we're not seeing the competitive dynamics shift.
Speaker Change: I'll, let knowledge that we're seeing increased pressure on the core which is everything our Tennessee gas the way we see it.
Speaker Change: And what we're finding is more price compression, but we're not seeing like a crazy amount of logo churn, we're not seeing I'm sure there'll be a question we're not seeing.
Speaker Change: The competitive dynamics shift and what we're finding is.
No.
Ragy Thomas: What we're finding is, you know... CIOs and CMOs looking at their top spend and looking to find money. And we're a premium provider. We're able to command premium prices, and we're just getting squeezed. And that I see as the primary driver. And a lot of these, as Arjun, I'm making, you know, more calls than you would ever expect someone like me to be doing to these customers. And I can tell you firsthand, a lot of it is our own execution, which in a little perverse way gives us confidence that once our GTM motion is maturing, we'll see some of that reverse.
Speaker Change: CIO and CMO is looking at the top span and looking to find money and where treatment provider, we weren't able to command premium prices.
Speaker Change: And we're just getting squeezed and that I see as the primary driver and a lot of these as arguing I'm, making.
Speaker Change: More calls than you would ever expect someone like need to be doing to these customers and I can tell the first stand a lot of it is.
Speaker Change: Our own execution, which.
Speaker Change: Little perverse way it gives us confidence that once our GDN motion is maturing we will.
Speaker Change: See some of that reverse.
Arjun Rohit Bhatia: Alright, thank you guys.
Speaker Change: Alright, Thank you guys.
Speaker Change: Okay.
Operator: Thank you. Our next question comes from the line of Elizabeth Porter with Morgan Stanley. Please proceed with your question.
Speaker Change: Thank you.
Speaker Change: Our next question comes from the line of Elizabeth border with Morgan Stanley. Please proceed with your question.
Elizabeth Mary Elliott Porter: Hi, thanks so much for the question. In the prior remarks, lower seats were called out as a pressure. And just given the large concern with AI as the impact on seat-based models, what are you picking up in kind of your conversations that give us comfort that, you know, AI is not pressuring driving fewer seats or any sort of company expectations that fewer seats may be needed as AI expands? Thank you.
Speaker Change: Hi, Thanks, so much for the question.
Speaker Change: Paired remarks see lower seats were called out as a pressure.
Speaker Change: Just given the large concern with II the impact to seat based models.
Speaker Change: What are you picking up and kind of your conversations that give us comfort that AI is not pressuring driving fewer seats or any sort of company expectation that fewer seats may be needed.
Speaker Change: Thank you.
Ragy Thomas: This is a great question Elizabeth, and thank you for that. Look, we are believers that AI is going to dramatically improve productivity in the front office, and if let me say this countless number of times and even at IPO, we'll bet the company on AI. What you're seeing is a shift, and the shift is to consolidation, and the shift is to AI and more generative AI improving productivity. We do have our AI products that are designed to offset any pricing compression that we're going to see on the seed side.
Speaker Change: It's a great question and thank you for that.
Speaker Change: Look we we are believers that AI is going to dramatically improve productivity in the front office and you've heard me say this countless number of times and even at IPO there.
Speaker Change: We bet the company on AI.
Speaker Change: What youre seeing is a shift and this shift is to consolidation and the shift is too.
And more generally do AI improving productivity, we do have our AI products that are designed to offset.
Any pricing compression that we're going to see on the seed side.
Ragy Thomas: We're very early in the transition, and our strategy is to review our pricing and packaging to make sure that we can adapt to it gracefully. So we'll have some transitionary pressures, but I think we're pretty good in the medium and long term. In this quarter, or even last quarter, as we're looking at June, we're not seeing AI impact seed count just yet. And we're preparing our company to deal with that with the pricing shift, as I said, and the AI products that we're ready with. However, what we're seeing is people scrutinizing the current seed count. We're seeing layoffs at many of our customers. We're seeing downsized marketing spans, all of which will impact seed count in core products.
Speaker Change: We're very early in that transition.
Speaker Change: Our strategy is to review, our pricing and packaging to to make sure that we can adapt to it gracefully. So we will have some transition of the pressures, but I think we're pretty good in the medium and long term.
Speaker Change: In this quarter or even last quarter as you are looking at churn we're not seeing.
Jesse: Hi impacts seat count Jesse yet and we're preparing our company to deal with that with the pricing shift as I said in the AI products that we are ready with.
Jesse: However, what we're seeing is people scrutinizing.
Speaker Change: Uh huh.
The current seat count, we're seeing layoffs at many of our customers, how we're seeing downsize marketing span, all which all of which will impact seat counts in core products.
Elizabeth Mary Elliott Porter: Got it. Thank you so much for the color. And then, just as a follow-up, I would love to better understand kind of the co-CEO structure, you know, why is the co-structure, you know, the right one for this time? And Eric, any early thoughts on top priorities as a co-CEO?
Speaker Change: Got it. Thank you so much for the color and then just as a follow up I would love to better understand kind of the co CEO structure why is our cost structure. The right one for this time and jacket.
Speaker Change: Any early thoughts on top priorities as a co CEO.
Ragy Thomas: I'll start, and I'll let Mark pick it up. Look, I think it was clear to me that we needed operational and executional focus at the very top. And so this is sort of me accepting responsibility and looking to find talent that would complement the executive team that we have that has a lot more execution chops than I do. And so we had an open search for a president and COO, as we had disclosed before.
Speaker Change: I'll start and I'll, let him talk.
Speaker Change: Look I think.
Speaker Change: It was clear to me that we needed operational execution focus.
Very top.
Speaker Change: And so this is sort of me.
Speaker Change: Accepting responsibility and looking to find talent that would complement the executive team that we have that has a lot more execution chops than I do and so we had open search out for president and COO.
So as we have disclosed before.
Ragy Thomas: I convinced Track to come and help on an interim basis, and working with him for four months, it was clear to me that this was our dream candidate. And we kept looking for people like Track among our candidates. And it was just very fortunate, and we're very grateful that Track's here and committed to a permanent job. We have extremely complementary skill sets. I love and live and breathe and love being in the product, talking to customers, innovating, and thinking about the future. And Track's very good at all the things I've not been good at. And let me turn it over to him to add a little more color. Certainly.
Speaker Change: Hi, convince factor come and help on a interim basis.
Speaker Change: And working with them with him for four months it was clear to me that.
This was our dream candidate and we kept looking for people like track an hour.
Speaker Change: In our.
Speaker Change: In our among our candidate and it was just very fortunate and we're very grateful that.
Speaker Change: That tracks here and committed to a permanent job we have extremely complementary skill sets.
Speaker Change: And live and breathe and love being in the product talking to customers.
Speaker Change: Innovating and thinking about the future.
Speaker Change: And it tracks.
Speaker Change: Very good at all the things have not been good at and let me turn it over to him to add a little more color.
Trac Pham: Certainly, Elizabeth, what we saw, what we experienced over the last five months with me... Here on an interim basis, Raji and I actually work really well together, and we have found a lot of leverage in terms of our complementary skills, as Raji mentioned. And the partnership evolved very naturally, you know; we both found a lot of value and actually respected and appreciated the partnership and what we both brought to leading the company over the last five months.
Speaker Change: Shirley Elisabeth what we saw what we experienced over the last five months with me.
Speaker Change: Here on an interim basis.
Speaker Change: Roger and I actually worked really well together and we found a lot of leverage in terms of our complementary skills as Rajeev mentioned.
Speaker Change: And the partnership evolve very naturally we both sound a lot of value a nationally respected and appreciated.
Speaker Change: <unk> and what we both brought too.
Speaker Change: Leading the company over the last five months.
Trac Pham: And to Raji's credit, the co-CEO appointment really reflects his acknowledgement of the operational shortcomings and his commitment to making that change. And the structure is really a reflection of what has evolved very naturally in terms of how well we work together. So from our perspective, we're genuinely and super excited about how we're going to proceed forward.
Speaker Change: To <unk> credit.
Speaker Change: CEO appointment really reflects.
Speaker Change: Acknowledgment of of the operational shortcomings.
Speaker Change: And his commitment to making that change and the.
Speaker Change: The structure is really a reflection of what our what has evolved very naturally in terms of how we work together so from our perspective were.
Speaker Change: Generally and Super excited about how we're going to proceed forward.
Elizabeth Mary Elliott Porter: Great, congrats on the role, and thank you for the color.
Speaker Change: Great Congrats on the role and thank you for the color.
Elizabeth.
Operator: Thank you. Our next question comes from the line of Matt VanVliet with VTIG. Please proceed with your question.
Speaker Change: Thank you. Our next question comes from the line of Matt Van Vliet with BPI. Please.
Speaker Change: Please proceed with your question.
Matthew David VanVliet: Yeah, good afternoon. Thanks for taking the questions. I guess I wanted to dig in a little bit on the contact center trends and the modern care solution, and you said you're still seeing solid traction there. So I'm curious how you're finding yourself sort of measuring up against some of the more long-standing competitors, especially some of the cloud competitors, and then maybe more importantly, when you are winning new deals, how much of the footprint are you taking?
Speaker Change: Yeah. Good afternoon, thanks for taking the questions.
Speaker Change: I guess I wanted to dig in a little bit on.
Speaker Change: The contact center trends and in the modern care solution and you said, you're still seeing solid traction there. So I'm curious on how you can you're finding yourself sort of measuring up against some of the more long standing competitors, especially some of the cloud competitors and then maybe more importantly, when you are winning new deals.
Matthew David VanVliet: Are you still winning mostly the digital side and sort of bringing that expertise to existing contact centers? Or how have you done in terms of actually ripping out or replacing the voice component in existing CCAS deployments? Thanks.
Speaker Change: Much of the footprint are you taking are you are you still winning mostly the digital side and sort of bring that expertise to existing contact centers or how have you done in terms of actually ripping and replacing the voice component.
Speaker Change: An existing <unk> deployments. Thanks.
Ragy Thomas: Let me start with the second one, Matt, and then I'll come back to the first. We are currently ripping and replacing. Pretty much the entire riprap of the Contact center. So that's the value prop, the fact that You're replacing 5, 10, 15, 25, and if you have multiple contact centers and disparate stacks of different ones in each country, we're replacing that with one unified system that really works completely on a single unified code base and architecture, so that it completely knows every part works well together.
Speaker Change: Alright, So let me start with the second one Matt and then I'll come back to the first.
We are currently ripping and replacing.
Speaker Change: Pretty much the entire rip rap of.
Ragy Thomas: And in the contact center, that's a big deal, right? If your knowledge base is an independent provider, your learning system, and your workforce management is an independent system that's not plugged in to routing, or if your knowledge base is an independent system that's not plugged in to agent assist with AI, it's just too much work. And the work falls on the shoulders of the IT team to put it all together, and system integrators, and we're able to just put a clean solution in place. Having said that, I'll acknowledge that we're new to this space.
Speaker Change: Contact Center point solutions.
Speaker Change: So.
Speaker Change: That's the value prop the fact that.
Speaker Change: You're replacing 510, 15, 25, and if you have multiple contact center and disparate stacks different wants in each country.
Speaker Change: We're replacing that with one unified system that really.
Speaker Change: Works completely on single Unified code based on architecture. So they are completely knows.
Speaker Change: Every every part works well together and in the contact center that is a big deal right. If your knowledge base as an independent provider.
Speaker Change: You're learning system.
Speaker Change: Workforce management as an independent system, that's now plugged in.
Speaker Change: To routing.
Speaker Change: Or if your knowledge base is an independent system desktop plugged into agent assist with AI.
Too much work and the workforce on on the shoulder of the it team to put together.
Speaker Change: And system integrators, we're able to just just politically and solution in place.
Speaker Change: Having said that I'll acknowledge that we're new to this space, we still have part of our platform modules that we're finishing up.
Ragy Thomas: We still have parts of our platform modules that we're finishing up, but we're seen as a disruptor, and we're able to really, really impress the buyer with what the future can be. And it comes from the power of unification, and it comes from the power of AI. The power of unification shows brilliantly because we're not just approaching the contact center stack as it exists today. We can launch our community. We do our chat. We do our bots. All of those are traditionally independent solutions.
Speaker Change: And but we are seeing.
Speaker Change: We're seen as a disruptor and we're able to really really impressed the buyer with what the future can be and it comes from the power of unification and it comes from the power of AI and the power of unification.
Speaker Change: Shows brilliantly because we're not just approaching the contact center.
Speaker Change: Stack as it exists today.
Speaker Change: Can launch a community we do our chat we do a bought all of those are traditional independents with solutions, we bring our knowledge base and then all of that gets superimposed in a unified way on the contact center and from AI from the beginning to the end right and remember we've got eight year advantage on traditional AI.
Ragy Thomas: We bring our knowledge base, and then all of that gets superimposed in a unified way on the contact center and from AI from the beginning to the end, right? And remember, we've got an eight-year advantage over traditional AI in understanding intent and routing and sentiment and emotions in lots and lots of languages, right? And we have deployed it regionally for many, many years to fine-tune it to the way people naturally speak on social media.
Speaker Change: Of understanding intent and routing incentive amended emotions.
Speaker Change: In lots and lots of languages right over 100.
Speaker Change: And we have deployed regionally for many many years to fine tune it against the way people naturally speak on social media and so those are very powerful advantages that we bring in so.
Ragy Thomas: And so those are very powerful advantages that we bring in. Buyers look at that and go, man, I see the future, and this is where I want to go. Because this contact center decision is very long term, and the difference is very apparent when you look at the traditional incumbent versus Sprinklr solution, although everyone's claiming AI now. We can prove it, we show it in POCs, they test us out, and they buy it.
Speaker Change: Buyers look at that and I see the future and this is where I want to go because there is contact center decisions, it's very long term and differentiated very apparent when you look at the traditional incumbent and purchases strength printless solution, although everyone's claiming AI knowledge, we can prove it.
Speaker Change: We show it in Poc's, they test us out and they buy so we stack really well against traditional competition for.
Ragy Thomas: So we stack really well against traditional competition for the buyer who's willing to look forward, right? But we will acknowledge that the traditional adage is that no one ever got fired for buying IBM. It still exists in contact centers, but we're very bullish that with the reception that we're getting now, after we finish building out the rest of the capabilities, which we should be in a good place by the end of the year, we're really optimistic about what this can do for our business.
Speaker Change: <unk> for the buyer who is willing to.
Speaker Change: To look forward, but we will acknowledge that.
Speaker Change: Traditional outages no one ever got fired for buying IBM.
Speaker Change: <unk> and contact centers.
Speaker Change: We're very bullish that with the reception that we're getting now absolutely finished building out the rest of the capabilities, which we should be in a good place by the end of the year.
Speaker Change: We're really optimistic about what this can do for our business.
Matthew David VanVliet: Okay, very helpful. And then, I guess, when you look at the overall penetration or saturation rate on the social side, do you feel like there are net new opportunities out there? Or is it a matter of consolidating the spend that's sort of already in the system over the next couple years and bringing more of it onto the Sprinklr platform to sort of get the social side of the business back on the growth side? Again, a great question.
Speaker Change: Okay very helpful. And then I guess when you look at the overall penetration of saturation rate on the social side.
Speaker Change: Do you feel like there are net new opportunities out there or is it a matter of consolidating the spend that's that's sort of already in the system over the next couple of years and bringing more of it onto the sprinkler platform to sort of get the social side of the business back on the growth side.
Ragy Thomas: Again, a great question, Matt. I'm super glad that you asked it in this public forum.
Speaker Change: Again, a great question, Matt and I'm Super glad that you asked it in this public Forum look I want to point out.
Ragy Thomas: Look, I want to point out something. I'm a big believer in where socialists go. And we keep talking about social media as a space, and we assume that phase isn't changing when we ask ourselves what's going to, you know, is that going to stay, or are we going to consolidate? Our observation as a company that probably pioneered the concept of social media management in our early years, and, you know, I think lots of people would give us credit for creating that category, is to say the impact of social media is forever.
Speaker Change: Something.
Speaker Change: Im a big believer in <unk>.
Speaker Change: And we keep talking about social media asset space.
Speaker Change: And we assume that's phase isn't changing would be makes them.
Speaker Change: Ask ourselves what is going to is that going to stay or are we going to consolidate.
Speaker Change: Our observation as the company that probably pioneered the concept of social media management in our early years.
Speaker Change: <unk>.
Speaker Change: I think lots of people would give us credit for creating that category is to say the impact of social media is forever.
Ragy Thomas: But that impact is not going to be the way social media management is perceived and was perceived a few years ago. Social media management has got three critical elements. The first is social publishing and engagement. And that has morphed because people were opening up social accounts everywhere and trying to publish and get their own following, and that's slowed down; they've consolidated. And the strategy has changed because reach has gone down.
Speaker Change: But that impact is not going to be the way social media management is perceived and was perceived a few years ago.
Speaker Change: Social media management has got three critical elements. The first is social publishing and engagement and that has morphed because people were opening up social accounts everywhere and trying to publish and get their own following that slowed down they've consolidated.
Speaker Change: And the strategy has changed because reach has gone down.
Ragy Thomas: Second, is social listening, and social listening is expensive because the data sources are demanding a premium to access the data. And social advertising, with the consolidation of ad spend, mostly under the meta roof, has changed as well. So social media, the way we build the category and the first set of capabilities, we're not betting the house on it. And the plan is not to recover the money that you spend with others.
Speaker Change: Second is social listening and social listening is expensive because the data sources.
Speaker Change: Demanding and premium to access the data and social advertising with the consolidation of AD spent mostly.
Speaker Change: Under the meta roof.
Speaker Change: Has changed as well.
Speaker Change: Social media the way, we build the category in the first set of capabilities.
Speaker Change: We're not betting on a house on it and the plan is not to recover.
Speaker Change: Money that they're spending with others.
Ragy Thomas: The plan is to build against where the future of that is. So when you look at social, what should be very clear for everyone is social customer service is here to stay. Social marketing and advertising will change the way marketing and advertising is done. And with AI, it's going to get personalized. It's going to be everywhere.
Speaker Change: Plan is to build against where the future of that is so when you look at social which should be very clear for everyone is social customer service is here to say.
Speaker Change: Social marketing and advertising will change the way marketing and advertising is done and with AI is going to get personalized is going to be everywhere.
Ragy Thomas: Social listening with AI and ad surveys on top of it is going to take on the CFM market, the way we see the likes of Medallia and Qualtrics, and, and, and, Social engagement is going to evolve as we add voice and messaging and email to it. You know, social engagement becomes marketing and will evolve to social selling or conversational commerce, which we see. All of this, Matt, we saw four years ago.
Speaker Change: Listening with AI and add surveys on top of it is going to take on the CFM market. The way, we see the likes of <unk> and earlier in <unk>.
Speaker Change: And.
Speaker Change: Social engagement is going to evolve as we add voice and messaging and and.
Speaker Change: And E mailed to it.
Speaker Change: Social engagement becomes engagement and will evolve to social selling a conversational commerce, which we see all of this is Matt we saw four years ago. So when you saw us take our social customer service and deploy it is see cash it was a manifestation of our.
Ragy Thomas: So when you saw us take our social customer service and deploy it at CCAS, it was a manifestation of our strategy of taking our first product suite, which was the weakest at that time, and that's going to be a frontrunner for us. We have clear strategies for each one. What you are finding is that we are in the middle of a transition, both externally and internally. And this is where you're going to hear us almost speak from both sides of our mouths, right?
Speaker Change: Strategy of taking our first product suite, which was the weakest at that time, and that's going to be a front runner for us we have clear strategies for each one what you are finding us as is in the middle of a transition both externally and internally and this is where even a here is almost speak.
Ragy Thomas: The numbers we're reporting. Admittedly, we aren't proud of them either. But when we look forward, we say, we're executing a strategy that the market needs. And we are pretty optimistic about where it can take us. Long answer, but I know this was a question that was on everybody's mind. All right, great. Thank you. Thank you, Matt. Our next question comes from the line of Jackson Ader with...
Speaker Change: Both sides of that Bob.
Speaker Change: Alright, the numbers, we're reporting admittedly, we are empowered to fit either.
Speaker Change: But when we look forward. We go we are executing on a strategy that the market needs and PR pretty optimistic about where he can take us.
Speaker Change: Long answer, but I know this is a question that was in everybody's mind.
Speaker Change: Alright, great. Thank you.
Matt: Thank you Matt.
Matt: Yes.
Operator: Thank you. Our next question comes from the line of Jackson Ader with Key Bay. Please proceed with your question. Hi, this is Michael Vidovic, I'm on behalf of Jackson, and thanks for taking my question here. You started seeing the disruption back in 3Q, but it seemed like conditions...
Speaker Change #101: Thank you. Our next question comes from the line of Jackson Ader with Keybanc. Please proceed with your question.
Michael: Hi, This is Michael the debit gone for Jackson and Thanks for taking my question here you started seeing the disruption back in <unk>, but it seemed like conditions seem to have stabilized somewhat in <unk>, but I guess, just looking month to months when did you start seeing conditions deteriorate such that.
Michael: Things just werent quite on track.
Michael C. Vidovic: Look, I think this year we're a year broke. We started seeing, you know, all the things just sort of taking a pronounced dip. You know, and so we also have to acknowledge that the fourth quarter traditionally is very seasonal for SAS companies in terms of budgets and flushing through the system. And so I'd say right from the beginning of the year, it's probably when we saw the impact be more pronounced.
Speaker Change #103: Okay I think this year.
Speaker Change #104: You broke we started to seeing is all the things to sort of kick a pronounced dip.
Speaker Change #104: And so.
Speaker Change #105: We also have to acknowledge that fourth quarter traditionally is.
Speaker Change #105: Very seasonal.
Speaker Change #105: And SaaS companies have budgets and flushing through the system and so I'd say right from the beginning of the year is probably when we saw the.
Speaker Change #105: The impact being more pronounced.
Ragy Thomas: Okay, and then you talked about the incremental controls being set around deal renewals, and then Sprinklr is getting squeezed kind of on resigning, but I guess, could you clarify what the customers are spending those incremental dollars on? Because I know you've had numerous conversations with customers around that, right? Generative AI is on everybody's mind. AI and generative AI are on everybody's minds. And some of this is the shift to platforms. And so we have to position ourselves.
Speaker Change #106: Okay, and then you talked about the increments of controls being set around deal renewals and then speakers getting squeezed kind of on re signing but I guess could you clarify what the customers are spending those incremental dollars on because I know you've had numerous conversations with customers around that right.
Ragy Thomas: We've built a platform. We have to position ourselves through go-to-market, right, effort that we are a consolidator, a platform in the CIOs, and the CMOs, and the CTOs, and the CXOs' minds, which we are. But again, it will go back to our go-to-market needing more maturity to market at the C-suite. That's something that we're trying to address.
Speaker Change #106: We generated AI is on everybody's mind and generative AI is on everybody's mind.
Speaker Change #107: And some of this is the shift to platforms and so we have to position ourselves as we have built a platform we have to position ourselves to go to market effort that we are a consolidator of the platform and the <unk> and <unk> and the <unk>.
Speaker Change #107: And the <unk> mine, which we are but again ill go back to our go to market needing more maturity to market at the C. Suite is something that's something that we're trying to address.
Speaker Change #108: Thank you very much.
Speaker Change #109: Thank you.
Operator: Thank you. Our next question comes from the line of Brett Knoblauch with Canthar Fitzgerald. Please proceed with your question.
Speaker Change #110: Thank you. Our next question comes from the line of Brett Knoblauch with Cantor Fitzgerald. Please proceed with your question.
Brett Anthony Knoblauch: Hi guys. Thanks for taking my question. On the comment that you guys are getting squeezed, I guess, you know, what can you do to prevent that? And once some of your bigger customers start exerting that influence, does that have a trickle-down effect on other customers asking for the same thing? And how do you get out of that cycle?
Speaker Change #111: Hi, guys. Thanks for taking my question.
Speaker Change #112: On the comment that you guys are getting squeezed I guess.
Speaker Change #113: What can you do to prevent that and once some of your bigger customers start exerting influence does that have a trickle down effect to other customers asking for the same thing and how do you get out of that cycle.
Ragy Thomas: Um, Brett, we have a very extensive platform. That's between products and solutions, 58 of them, four suites, right?
Speaker Change #114: Brett It is.
Brett Anthony Knoblauch: We have.
Brett Anthony Knoblauch: Very extensive platform.
Brett Anthony Knoblauch: That's between products and solutions 58 of them full suite right.
Ragy Thomas: And we are confident that we can add a lot of value to every one of our customers. Our customers are the biggest companies in the world, as you know. So when we get squeezed, our strategy, when executed properly, is to say, hey, we understand that your ad budget went down, or you just fired 70% of your marketing. But let me show you how our AI capabilities can do more work for you, or our auto optimization can help, or our content marketing can help, or our new project marketing management can help, or find another buyer and say, hey, just help you with the contact capability.
Our confidence that we can add a lot of value to every one of our customers our customers had the biggest companies as well.
Brett Anthony Knoblauch: So when we get squeezed our strategy when executed properly is to say hey, we understand that the AD budget went down or you just buy it 70% of your marketing team.
Brett Anthony Knoblauch: Let me show you, how our AI capabilities, Ken Ken do more work for you or our auto optimization, Ken Hao or our content marketing can help where our new project market management can help or find another buyer. It's eight eight.
With the context.
Ragy Thomas: So all of that requires sort of a multifunction, multiproduct selling motion that's very strategic. And we're not there, and that's the shift we need to make. So the strategy, when there's compression, is to offer more, and the product payload exists, and it's proven. And when execution fails to deliver on that strategy, we teach on. And, you know, when you have leadership, and new leadership, and people transition, it always exacerbates these kinds of situations.
Brett Anthony Knoblauch: Capability.
Brett Anthony Knoblauch: So all of that requires sort of.
Brett Anthony Knoblauch: Multi function multi product selling motion that's very strategic.
Brett Anthony Knoblauch: And we're not there and thats the shift we need to be so the strategy. When there is compression is to offer more and the product payload xs and its proven.
Brett Anthony Knoblauch: And when execution failed to deliver on that strategy, we see China and.
Brett Anthony Knoblauch: When you have leadership and new leadership people transition.
Brett Anthony Knoblauch: Ways exacerbate.
Brett Anthony Knoblauch: These kind of situations.
Ragy Thomas: Perfect. And then just looking at your customer base, I know you have a couple of very large customers with Fortune 500s who are in the Fortune 500, have you seen any outsized impact among those customers relative to churn being more focused at the lower end of your customer base, or is it just more broadly across the entire customer base? I'd say it's more
Brett Anthony Knoblauch: Perfect and then.
Speaker Change #116: Just looking at your customer base and they have a couple of very large customers fortune 500.
Speaker Change #116: Who are in the fortune 500.
Speaker Change #117: Have you seen any outsized impact among those customers relative to churn being more.
Speaker Change #117: Focused on the lower end of your customer base or is it just.
Speaker Change #117: More broadly across the entire customer base.
Ragy Thomas: I'd say it's more broadly across the customer base, and what we have to enable and train our field team on is how to deal with that. Then, I mean, a lot of what we're seeing is, hey, you got to come down on price. And this is a budget. And if you don't, if you don't do it, we're going to do an RFP, and I do think we have had execution issues, and people have not heeded that cry for help, and then they do the RFP and say, hey, we're going to just not worry about those sophisticated things you can do because I'm going to go find the money.
Speaker Change #117: I'd say its more broadly across the customer base.
Speaker Change #118: And we have to enable and train our field team on is is.
Speaker Change #118: How to deal with that.
Brett Anthony Knoblauch: I understand. Thank you so much.
Speaker Change #118: Yes.
Speaker Change #118: A lot of what we're seeing is hey, you got to come down on price.
Speaker Change #118: And this is our budget.
Speaker Change #119: Perfect got it.
Speaker Change #119: If you don't do it we're going to do an RFP.
Speaker Change #119: I do think we have had execution issues and people have not heated to that.
Speaker Change #119: Hi for help and then they do the RFP and say hey, with clear economic just worry.
Speaker Change #119: Worry about the sophisticated things you can do.
Speaker Change #120: I'm going to go find the money.
Speaker Change #120: Okay.
Speaker Change #121: Understood. Thank you so much.
Speaker Change #122: Thank you.
Operator: Thank you. The next question comes from the line of Pat Wall-Ravens with Citizens JMP. Please proceed with your question.
Speaker Change #122: Thank you.
Speaker Change #123: Your next question comes from the line of Pat Walraven with citizens JMP. Please proceed with your question.
Patrick D. Walravens: Oh great, thank you. Trac, congratulations. And Raji, for you, I'm going to ask you to put your shareholder hat on for a second because you own a lot of this business. So, I mean, clearly, public investors are lowering their assessment of the Valued Software Company. But the strategic acquirer seemed to feel differently, right? So Hashy was also trying to figure out their go-to-market, and they ended up selling to IBM, and the HashiBoard decided that was the best outcome.
Speaker Change #124: Oh, great. Thank you track, congratulations and Rajiv for you and ask you to put your your shareholder hat on for a second.
Pat Walraven: Because you own a lot of this business. So I mean, clearly public investors are lowering their assessment.
Pat Walraven: The value of the software companies.
Speaker Change #126: But the strategic acquire seem to feel differently right. So.
Kashi was also trying to figure out their go to market and they ended up selling the IBM.
And has your board decided that was the best outcome.
Patrick D. Walravens: And then just this morning, SAP announced that they would acquire WalkMe. So, how do you think about whether it would make more sense for Sprinklr to be part of a bigger company or whether you should keep going at all?
Speaker Change #126: And then just this morning.
Speaker Change #126: <unk> that they would acquire walked me.
Speaker Change #127: Also about a 40% plus premium.
Speaker Change #127: So how do you think about whether it would make more sense.
Speaker Change #127: For sprinkler to be part of a bigger company or whether you should keep going at alone.
Ragy Thomas: That's a very interesting and good question. Let me first acknowledge that our explicit strategy was to build a platform out of all the things that the big boys were paying attention to. So, as you've talked about before, there's a general understanding that we can be, and we are the third or fourth large front office platform for, large enterprise companies. So that makes us a very interesting, complementary partner for many companies.
Speaker Change #128: That's a very interesting and good question. Let me first acknowledge that are explicit strategy was to build a platform out of all the things that the big boys, we werent paying attention.
Speaker Change #128: So that.
Speaker Change #129: You've talked about before there's a general understanding that we can be and we are the third or fourth large front office.
Speaker Change #129: Platform.
Speaker Change #129: Large enterprise companies, so that makes us a very.
Speaker Change #129: Interesting complementary.
Speaker Change #129: Hi.
Speaker Change #129: Partner for for many companies I also believe that the.
Ragy Thomas: I also believe that the infrastructure, the cloud giants, if you will, are going to have to move into the app layer. And 14 years of building this as a truly unified platform, app layer down, will have tremendous value for them. And most of these companies have very mature, very built-out go-to-market machines and relationships that could make Sprinklr extremely valuable for many of them. It's just a symmetric understanding of what we do and how we do it that may be missing.
Speaker Change #129: The infrastructure the cloud Giants. If you will are going to have to move into the app layer and 14 years of building. This is a truly unified platform app layer down will have tremendous value for them and most of these companies.
Speaker Change #129: Very mature very built out go to market machines and relationships that could make sprinkler extremely valuable for many of them and it's just a symmetric understanding of what we do and how we do it.
Ragy Thomas: Having said that, we're focused on building a company for the long term and doing the right thing for all our shareholders, so these are very interesting questions and decisions. And I think we have a really, really competent board. And we will do the right things at the right time, all acting in the interest of all stakeholders and our shareholders. Great, thanks for that perspective.
Speaker Change #129: That.
Speaker Change #129: That's that may be missing, having said that we're focused on building a company for the long term and doing the right thing for all our shareholders. So these are very interesting questions and decisions and I think we have a really really competent board.
Speaker Change #129: And we will do the right things at the right time, all acting in the interest of all stakeholders and our shareholders.
Great Thanks for that perspective.
Speaker Change #129: Okay.
Pat Walraven: Thank you Pat.
Pat Walraven: Thank you.
Operator: Our next question comes from the line of Katherine Treibink with Rosenblatt. Please proceed with your question.
Speaker Change #130: Our next question comes from the line of Catherine zinc with Rosenblatt.
Speaker Change #131: Please proceed with your question.
Katherine Treibink: Yes, thank you for taking my question and squeezing me in. So, on a CCASP perspective, I mean, are you seeing any of the similar... down, down sell a seat internationally with your customers, but you know, how could you put a finer point on what macros you're seeing on the CCAS side? And then also discuss, you know, what you're seeing between your international and your US markets, and has your go-to market strategy in the US changed from international things?
Catherine zinc: Yes. Thank you for taking my question and squeezing me in.
Speaker Change #132: No I'm not.
C cap perspective, I mean are you seeing any.
Speaker Change #134: Similar C down down sell let's see internationally with your customers that we know what could you put a finer point on what macros you seen on the <unk> side and then also discuss what you're seeing between your international near you asked and has your go to market strategy in the U.
Speaker Change #135: <unk> change from international Thanks.
Ragy Thomas: The first question was seed count on the CCAS side. Actually, interestingly, it's working in our favor because we have companies contracting us primarily for our AI capabilities, with a view to bringing down the seat count, bringing down the employee count, which is what our technology can do. So we have many products that are not priced based on seat. So in Seacast, I think we are positioned pretty well. So that's the answer to that question.
Speaker Change #135: Okay.
So your first question was seat count under CCAR side actually interestingly, it's working in our favor because we have companies contract <unk>, primarily for our AI capabilities.
Speaker Change #135: With a view of bringing down the seat count, bringing down the employee count.
Speaker Change #136: Which which is what our technology can do so we have many products that are not priced based on <unk>. So in <unk> I think we're positioned pretty well.
Speaker Change #136: So that's the answer there U S versus international look I think our go to market.
Ragy Thomas: US versus international, look, I think our go-to-market, there's a lot of foundational things we are working on. There are some theaters that are working better than others. And so there are some theaters that require a little more of the go-to-market reboot, if you will. And so it's more people and theater dependent, not macro or country dependent. So I can confirm that the demand environment and the opportunity we see continues to be global. You know, we might see more opportunities for Seacast in Europe today and more opportunities for marketing in the US, maybe. But as a platform, we're fairly well positioned.
Speaker Change #136: There's a lot of foundational things we are working on.
Speaker Change #136: There are some theaters that are working better than others and so.
Speaker Change #136: There are some theaters that require a little more of the go to market reboot, if you will.
Speaker Change #136: And so.
Speaker Change #136: It's more people and theater dependent not macro or country dependent so I can confirm that.
Speaker Change #136: The demand environment and the opportunity we see continues to be global.
Speaker Change #136: We might see more opportunities for <unk> in Europe.
Speaker Change #136: Day, and more for marketing in the U S, maybe but as a platform.
Speaker Change #137: We're preparing fairly well positioned.
Katherine Treibink: Yes. And then as far as your larger deployments, I mean, sometimes I have found over the course of covering CCAS providers that these large deployments, like, for example, Deutsche Telekom, take a lot longer to negotiate and close a deal. And are you, you know, and it really ties up the organization? Have any of these larger deals you've closed put a strain on the organization such that, you know, maybe you weren't able to tackle some other newer opportunities?
Speaker Change #137: Yes, and then as far as.
Speaker Change #138: Your larger deployments I mean, sometimes I found over the course of covering CES providers that these large deployments like for example, Deutsche Telekom take a lot longer to Russell and close the deal.
Speaker Change #139: And it really ties up the organization and has any of these larger deals you've closed.
I'll put a strain on the organization such that you know, maybe you werent able to tackle some other newer opportunity.
Ragy Thomas: My friend, it's almost like you've been peeking over our shoulders here. But yes, you actually described something that's very important for investors to know. Our success in the CCAS world has put implementation strain on the organization, which we are working through. The good news is that we have been landing planes consistently in each one of these, and we're developing the implementation muscle and building out the partnership. But at this point, one of the things holding us back in CCAS is our inability to scale any faster than we currently are, which we hope over the next couple of quarters through improved institutional learning and best practices and tools and frameworks and partners and playbooks, we can get better at and take on. All right, thank you very much.
Speaker Change #140: My friend, it's almost like you've been peaking over our shoulders here.
But yes, but yes, yes, you actually describe something thats very important for investors to know our success in the sic asphalt.
Speaker Change #140: Put implementation strain on the organization, which we are working through the good news is we've been landing planes consistently in each one of these.
Speaker Change #140: We are developing the implementation muscle and building out the partnership.
Speaker Change #140: This point wanted things holding us back and see cash is.
Speaker Change #140: Our inability to scale any faster than we currently are which we hope over the next couple of quarters through improved and.
Speaker Change #140: <unk> fusion.
Speaker Change #140: Learning and best practices, and tools and frameworks and partners and Playbooks, we can get.
Speaker Change #141: Better and and take on more.
Katherine Treibink: All right. Thank you very much.
Speaker Change #142: Alright, Thank you very much.
Speaker Change #143: Thank you.
Operator: Thank you. Our next question comes from the line of Michael Berg with Wells Fargo. Please proceed with your question.
Speaker Change #144: Thank you. Our next question comes from the line of Michael Birch with Wells Fargo. Please proceed with your question.
Michael H. Berg: Hey, thanks for taking my questions and being here. I want to just ask in terms of budget priority and within your customer base, there's been a lot of discussion today around the budget compression, budget tightening, you know, sales elongation, but I was more curious if you're seeing Either different types of projects or different types of technologies may be either leapfrogging someone like a Sprinklr or how you're viewing how IT budget priorities may be shifting and how it can potentially be hurting the business in the current environment today.
Speaker Change #143: Yes.
Hey, Thanks for taking my questions and being here.
Michael Birch: I wanted to ask in terms of budget priority in within your customer base Theres been a lot of discussion today around the <unk>.
Michael Birch: Budget compression budget timing sales elongation, but it was more curious if youre seeing.
Michael Birch: Are there different types of projects or different types of technologies may be.
Speaker Change #146: Either leapfrogging.
Speaker Change #146: Someone like sprinkler or how you're viewing it.
Budget priorities may be shifting and how it can potentially be hurting the business in the current environment today. Thanks.
Ragy Thomas: Thank You Michael. I can acknowledge and confirm that we see more pressure on the marketing side and on the traditional social side and on the contact center side we're actually on the right side of that equation where we can we can actually deliver a lot more with a lot less right so we usually the not just a better solution but the cheaper solution as well and with agents right we our ability to kind of move some of this into self-service we can go after the 800 billion dollar labor plus tech market right and in contact center so it's a tale of two cities with with our core and our our CCAS and that's how we're seeing the budget pressure.
Michael H. Berg: Thanks. Thank you, Michael. I can acknowledge and
Michael Birch: Thank you Michael I can acknowledge and confirm that we are seeing more pressure on the marketing side.
Michael Birch: And on the traditional social side.
Michael: And on the contact center side, we're actually on the right side of that equation.
Michael: We can we can actually deliver a lot more.
Speaker Change #147: With a lot less right. So we are usually the not just a better solution at the cheaper solution as well.
Speaker Change #147: And with agents right.
Quality to kind of move some of this into self service. We can go after the $800 billion labor plus tech market and contact center.
Speaker Change #147: So it's a tale of two cities with our core and our sea gas and Thats, how were seeing the budget pressure.
Ragy Thomas: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Ragy Thomas for a closing remarks.
Speaker Change #148: Thank you.
Speaker Change #149: There are no further questions at this time I'd like to turn the floor back over to Thomas for closing remarks.
Ragy Thomas: Thank you, Alicia. Thank you all for joining us today. I'd like to thank our employees, our partners, and, most importantly, our customers for their trust and continued business. We look forward to updating all of you again on our next quarterly call as we continue on this exciting journey. We truly believe that the best is yet to come. Thank you very much, and have a wonderful evening.
Thomas: Thank you Alicia thank you.
Thomas: All for joining us today I'd like to thank our employees our partners and most importantly, our customers for their trust and continued business.
Thomas: We look forward to updating all of you again on our next quarterly call as we continue on this exciting journey, we truly believe that divest is yet to come. Thank you very much and have a wonderful evening.
Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Thank you for watching!
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Thomas: Okay.
Yes.
Thomas: Hum.
Thomas: [music].
Thomas: Yes.
Thomas: Hum.
Thomas: [music].
Thomas:
Thomas: Hum.
Thomas: [music].
Thomas: Hum.
Thomas: Okay.
Thomas: Okay.
unknown: Inc. and the WMD. And, of course, there's a whole bunch of other people that are in the audience here that I don't have a chance to talk to. But I'm sure we can all get through this together. So, thank you so much. And I hope that you guys have a great evening, and I'll see you guys later. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye. Bye.
Thomas: Hum.
Thomas: Hello.
Thomas: [music].
Thomas: Hum.
Thomas: [music].
Thomas: Hum.