Sprinklr, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Sprinkler's fourth quarter fiscal 2023 earnings conference call and webcast. At this time, all participants are in listen-only mode. After the speaker's remarks, there will be a question and answer session. Please put your questions to one with one follow-up so we'll have time to go through all the questions. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Mr. Eric Scrove, Vice President of Finance, for introductory remarks. Please go ahead, Eric.

Thank you, Kevin, and welcome everyone to Sprinkler's fourth quarter and fiscal year 2023 financial results call. Joining us today are Raji Thomas, Sprinkler's founder and CEO, and Manish Saran, chief financial officer. We issued our earnings release a short time ago, filed the related form 8K with the SEC, and we've made them available on the investor relations section of our website, along with the supplementary investor presentation. Please note that on today's call, management will refer to certain non-GAAP financial measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. You are directed to our press release and supplementary investor presentation for reconciliation of such measures to GAAP. In addition, during today's call, we'll be making 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 first fiscal quarter of 2024 and full fiscal year 2024, and our actual results might differ materially. 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. With that, let me turn it over to Raji.

Thank you, Eric, and hello, everyone. I hope everyone's doing well, and thank you for joining us today. We're going to share quite a few exciting updates today, so let's get right to it. I'm very pleased that Q4 was another strong quarter that exceeded guidance across all key metrics. Q4 total revenue grew 22% year-over-year to $165.3 million, and subscription revenue grew 26% year-over-year to $148.8 million. With our continued commitment to operational efficiency, we generated a record $14.3 million in non-GAAP operating income for the quarter due to strong revenue growth and greater operational discipline company-wide. While we expect the sales cycles to remain elevated in 24, FY24, we did have a record number of new bookings due to strong expansion deals and exciting new logo growth. Our growth retention was on par with leading enterprise software companies, and we saw continued strong momentum in our sprinkler service suite, formerly known as Modern Care. Sprinkler service represented over 40% of our new bookings for the quarter. Let's start with the go-to-market. On the go-to-market front, we believe that spending environment was largely unchanged in Q4 compared to previous quarters, but we are increasingly confident that the changes we are making and its impact on our business and our ability to execute. Our focus, as you know, has been on making it easier to sell sprinklers. Here are a few examples of the work that is underway. We added dedicated sprinkler service specialists. We created a dedicated team of new logo sales reps. We're leveraging partners now to act more as deal sourcers rather than just deal influencers. We are in the process of developing a verticalized solution-based selling approach as opposed to a product-based approach. And we are moving to a productivity-driven sales model as opposed to just pure capacity-based sales model. I also want to share the progress that we've seen from our expanded partnerships with Salesforce and Accenture that we talked about last quarter. We continue to win enterprise deals with customers transitioning out of social studio. One of those deals, for example, in Q4 led to a seven-figure multi-year contract with a leading global CPG company. Our deep expertise in social combined with the new AI innovations and integrations are just a few reasons why we believe that Sprinklr will continue to remain the leader in enterprise social media management. There are several exciting announcements on the platform side to start with. We renamed our product suite this quarter to simplify them and to align them with our longer-term strategy to mainstream each one of them. We believe this provides better clarity for our customers and reflects the market categories they belong to more accurately to drive awareness and brand recognition in the marketplace. Modern care is now Sprintless service aligned with the CCAS market. Social engagement and sales is now specifically Sprintless social Modern marketing and advertising is now Sprinklr marketing, and modern research is now Sprinklr insight. And finally, our live portfolio, as we roll out more self-service capabilities, will now just be referred to as self-service. Next, let's take a deeper dive into Sprinklr service and why we're seeing success as a radical disruptor in the CCaaS space. Sprinklr Service is a comprehensive AI-powered contact center as a service platform. We are transforming the contact center from an old voice-based cost center to an omni-channel revenue center by unifying marketing and sales for more efficient service and growth for the business. And with Sprinklr Insights, as you know, we have the unique ability to harness publicly available digital data in addition to traditional call transcripts to quickly identify top service issues and reduce overall ticket volume coming in. Our pace of innovation in this phase continues as highlighted in our recent announcement of over 100 features that we have added to our service offering, notably predictive intelligence, AI-based quality management, and outbound voice data. According to a recent Gartner report, $800 billion is going to be spent annually on contact center labor costs, technology and labor. We all know that AI is going to optimize this fairly dramatically. Now, it might surprise you to know that today Sprinklr supports on our platform 75,000 call center agencies with 30 new deployments happening with large brands around the world as we speak. In FY23, we had 11, 1 million or more deals in our service suite alone. And just a few weeks ago, we were named a challenger in the Gartner Magic Quadrant for Enterprise Conversational AI Platforms. Let's switch gears to social now. We are very excited to announce the self-service version of our industry-leading social media management solution called Sprinter Social. Social media teams can now access Sprinter Social on a self-service basis for publishing, engagement, and reporting. It's also integrated with OpenAI's generative AI models to create better content faster and with fewer resources. This out-of-the-box product is simpler, smarter, and better than any other competing social media management tool available in the market today. The self-service and enterprise versions of Sprinklr Social, like with Sprinklr Service before, are both on the same backend code base, which means that teams can start with the self-service version and seamlessly opt for the enterprise offering as their needs grow. Let's talk about AI, which I know is quite a popular topic these days. Five years ago, back in 2018, we issued a press release describing how Sprinklr was the only enterprise software provider in the front office that gives brands the capabilities to reach, engage, and listen to their customers across a growing number of digital channels. So it's not a new buzzword for us. our entire unified CXM platform, and every one of our four robust product suites was built from the ground up with our proprietary AI capabilities. I want to make it clear that in building Sprinklr, we took an operating system approach to our platform, which makes it very easy for us to integrate with any existing or new software product when and where it upgrades our own capabilities. This is one of the reasons we are so excited about our integration with open AI. There's a massive potential and a big market transition happening with generative AI, and we see the potential of how we can work together to truly revolutionize front office for our mutual customers. AI and machine learning will continue to be a cornerstone and a competitive advantage for Sprigman. And we will play our part to help mainstream AI across all customer-facing functions of large companies. We look forward to further integrating OpenAI across our entire platform and in all our product suites. Turn to some customer stories. During the fourth quarter, we continue to add new customers and expand with existing customers. This includes world-class brands like AT&T, Activision, IKEA, Mars, Prudential, and Telefonica. Here are some examples of how customers are currently using Sprinklr. Let's start with Sprinklr Service, our omni-channel customer service solution. Last year, we were chosen to support the large-scale CCaaS transformation of one of the largest banks in the world, HDFC. We've replaced more than 10 point solutions and onboarded over 10,000 agents, including inbound and outbound voice, text, social, and messaging. Our platform now supports more than 5 million interactions on text-based channels every month and more than 12 million voice calls. With a strong focus on AI and unification across channels, And Teams, we've also launched the bank's first voice bot and conversational chatbots. Our AI is able to resolve 70% of customer inquiries and has reduced the average case handling times across all channels by 15%. HDFC has reduced the first response time by more than 50%, 5-0. And Sprinklr is now integrated with eight of the bank's back-end systems across 100 customer journeys, making Sprinklr the single screen for most users and enabling them to provide a consistent and seamless experience to its 71 million customers. Last quarter, we shared a big win in the CCaaS space with one of the world's leading global streaming media companies. This quarter, I'm pleased to announce that they have expanded their partnership with Sprinklr Marketing, The company is consolidating 15 disparate solutions and its entire global marketing team of more than 700 users in 30 countries opt to sprinkler marketing. With a clear real-time view of paid, owned, and earned media performance, the company's marketing team can make faster, more collaborative, and data-driven creative and media investment decisions. Sprinkler's AI-powered insights will enable them to increase their reach, optimize their creative assets, and drive excitement in the market around their title releases. The next example is my favorite, and it demonstrates the true transformational power of a unified customer-facing front office platform. In the very first of its kind for any country that we know of, The Civil Services and Government Development Bureau of Qatar selected Sprinklr as its technology partner to transform how the government provides services to and engages with the public. Qatar national vision for 2020 is focused on building a competitive government with the ability to measure, monitor, and improve its public services. The government aims to meet the demands of Qatari citizens and residents for fast, personalized interactions with government agencies on any communication channel. With Sprinklr, Qatar will now eliminate several fragmented technology solutions and unify approximately 40 public service agencies onto one unified citizen experience management platform. This enables, obviously, this seamless delivery of omni-channel experiences to its citizens, residents, and visitors. I'd like to take a moment to celebrate our incredible engineering team who makes all of this possible. They continue to innovate at a breakneck pace that differentiates us in a big way in the market. In closing, I'd like for you to have three clear takeaways. Number one, we're going to be a disruptive player in CCaaS. That's a 30, 40-year-old industry. We are a digital native company who has created a modern omnichannel approach to integrating 30-plus digital channels that now includes voice. And we're challenging some of the well-known legacy players with an entirely different approach, omnichannel and AI-based for customer service. Number two. We will continue to innovate and win in social. It's where we started as a company, and that foundation has enabled us to build disruptive new opportunities like we are doing in CCaaS. And lastly, number three, we are well-positioned to begin mainstreaming our solutions and AI for customer-facing functions. We have a five-year head start and advantage in building proprietary AI that's integrated into all products across our entire platform, a platform that's built on a highly open, scalable, and flexible architecture. This is a great competitive advantage because it offers our customers a way to connect to any homegrown or in-house systems they build or any other industry solution in the marketplace. I want to thank our customers, partners, and most importantly today, our employees for their incredible hard work and results. I also want to thank all of you and our investors for believing in the vision. Let me hand the call over to Manish.