3 Reasons CXM is Risky and 1 Stock to Buy Instead

3 Reasons CXM is Risky and 1 Stock to Buy Instead

Jabin Bastian

Tue, February 24, 2026 at 1:32 PM GMT+9 3 min read

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CXM

-6.62%

Sprinklr has gotten torched over the last six months - since August 2025, its stock price has dropped 38.1% to $5.33 per share. This might have investors contemplating their next move.

Is there a buying opportunity in Sprinklr, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Why Do We Think Sprinklr Will Underperform?

Even with the cheaper entry price, we’re cautious about Sprinklr. Here are three reasons there are better opportunities than CXM and a stock we’d rather own.

1. Weak Billings Point to Soft Demand

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Sprinklr’s billings came in at $158.4 million in Q3, and over the last four quarters, its year-on-year growth averaged 6.9%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers.

Sprinklr Billings

2. Projected Revenue Growth Is Slim

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Sprinklr’s revenue to rise by 4.1%, a deceleration versus its 17.7% annualized growth for the past five years. This projection doesn’t excite us and implies its products and services will see some demand headwinds.

3. Operating Margin in Limbo

While many software businesses point investors to their adjusted profits, which exclude stock-based compensation (SBC), we prefer GAAP operating margin because SBC is a legitimate expense used to attract and retain talent. This is one of the best measures of profitability because it shows how much money a company takes home after developing, marketing, and selling its products.

Analyzing the trend in its profitability, Sprinklr’s operating margin might fluctuated slightly but has generally stayed the same over the last two years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its operating margin for the trailing 12 months was 4.4%.

Sprinklr Trailing 12-Month Operating Margin (GAAP)

Final Judgment

Sprinklr doesn’t pass our quality test. Following the recent decline, the stock trades at 1.6× forward price-to-sales (or $5.33 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are better investments elsewhere. We’d suggest looking at one of our top digital advertising picks.

Story Continues  

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