Sprinklr's AI-Powered Growth Justifies a Buy at Current Levels
28min readSprinklr (NYSE: CXM) has positioned itself at the forefront of the AI-driven customer experience management (CXM) revolution, and its Q1 2025 earnings underscore why investors should take notice. With robust revenue growth, expanding customer metrics, and a valuation that lags behind peers like The Trade Desk (TTD) and AppLovin (APP), Sprinklr presents a compelling opportunity for growth-oriented investors.
A Strategic Bet on AI-Driven CXM
Sprinklr's Unified-CXM platform is designed to unify customer interactions across all touchpoints—from social media and e-commerce to service desks and beyond. In Q1 2025, the company emphasized its AI integration as a core growth lever, enabling clients like Microsoft, P&G, and Samsung to deliver hyper-personalized experiences at scale. While peers in adtech (e.g., The Trade Desk and AppLovin) face headwinds in programmatic advertising, Sprinklr is capitalizing on the $200B CXM market, which is growing at a 10% CAGR.
The appointment of Trac Pham as Co-CEO alongside founder Ragy Thomas signals a renewed focus on execution. Pham's expertise in scaling SaaS businesses (he previously led global sales at Salesforce) aligns with Sprinklr's goal of leveraging AI to automate workflows, predict customer needs, and unify data silos. This strategic shift is already yielding results:
- Subscription revenue rose 12% YoY to $177.4M, driven by enterprise clients spending more than $1M annually (up 20% to 138 customers).
- Remaining Performance Obligations (RPO) jumped 30% YoY, indicating strong demand for its cloud-based solutions.
Valuation: A Discounted Leader in a Growing Market
While peers like AppLovin and The Trade Desk trade at elevated multiples due to their adtech exposure, Sprinklr's valuation remains undervalued relative to its growth trajectory and market position.
Key Metrics vs. Peers:
| Metric | Sprinklr (CXM) | The Trade Desk (TTD) | AppLovin (APP) |
|---|---|---|---|
| Revenue Growth (Q1 2025 YoY) | 13% | 4% | 25% |
| Forward P/S Ratio | 6.5x | 9x | 17x |
| Free Cash Flow (Q1) | $36.2M | $12.1M | $89.4M |
| Stock Price vs. Analyst Target | -18% Undervalued | -23% Undervalued | +12% Overvalued |
Why Sprinklr is Undervalued:
- Sector Misalignment: Investors have rotated into AppLovin's high-growth adtech bets (e.g., AI-driven e-commerce ads), while overlooking Sprinklr's deeper enterprise CXM moat.
- Balance Sheet Strength: With $610M in cash and a $100M share repurchase boost, Sprinklr has flexibility to acquire AI startups or scale its platform—unlike peers constrained by debt or margin pressures.
Risks, but the Upside Outweighs Them
Critics may point to Sprinklr's slower revenue growth (13% vs. AppLovin's 25%) or macroeconomic risks in enterprise spending. However:
1. CXM is recession-resilient: Companies cut discretionary ad spend first, but CXM tools are essential for retaining customers.
2. AI differentiation: Sprinklr's ability to automate 30% of CX workflows (per Q1 demos) creates defensible margins and client stickiness.
The Bull Case: Why Now is the Time to Buy
- Valuation Floor: At $8.24, Sprinklr trades below its $10 average analyst target and offers a margin of safety.
- Peer Catalysts: If The Trade Desk's AI platform issues (mentioned in the research) persist, capital may flow to Sprinklr's proven CXM execution.
- 2025 Guidance: Even conservative targets ($714M subscription revenue, $0.40 EPS) imply 20% upside to current prices.
Final Call: Buy Sprinklr Before the Market Catches On
Sprinklr isn't just a CXM vendor—it's an AI-powered enterprise software leader in a $200B market. With a 6.5x P/S ratio (half AppLovin's multiple) and a platform that's already winning Fortune 100 clients, this is a rare opportunity to buy growth at a value price. The stock's current dip is a buying signal, not a warning.
Action to Take:
- Buy CXM shares at $8.24, aiming for $12–$14 in 12–18 months as AI adoption accelerates.
- Set a stop-loss at $7.00 to protect against macro downturns.
The AI revolution in customer experience isn't a fad—it's a $200B market with Sprinklr leading the charge. This is your chance to invest in a foundational SaaS business at a bargain price.
Disclaimer: This analysis is for informational purposes only. Always conduct your own research before making investment decisions.
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