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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to                
Commission File Number: 001-40528
Sprinklr, Inc.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
(State or other Jurisdiction of
Incorporation or organization)
29 West 35th Street
New York, NY
(Address of principal executive offices)

47-4771485
(IRS Employer
Identification No.)

10001
(Zip Code)
Registrant’s telephone number, including area code: (917) 933-7800
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class 
Trading
Symbol(s)
 Name of each exchange on which registered
Class A common stock, par value
$0.00003 per share
 CXM New York Stock Exchange
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filerAccelerated filer
 
Non-accelerated filerSmaller reporting company
    
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  ☒
As of June 7, 2022, the registrant had 110,644,564 shares of Class A common stock and 147,505,043 shares of Class B common stock, each with a par value of $0.00003 per share, outstanding.





TABLE OF CONTENTS


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

PART I.FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 6.


i



SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements.

These forward-looking statements include, but are not limited to, statements concerning the following:
our expectations regarding our revenue, expenses and other operating results;
our ability to acquire new customers and successfully engage new and existing customers;
our ability to achieve and maintain our profitability;
future investments in our business, our anticipated capital expenditures and our estimates regarding our capital requirements;
the costs and success of our marketing efforts and our ability to promote our brand;
our growth strategies for our Unified-CXM platform;
the estimated addressable market opportunity for our Unified-CXM platform;
our reliance on key personnel and our ability to identify, recruit and retain skilled personnel;
our ability to effectively manage our growth, including any international expansion;
our ability to obtain, maintain, protect, defend or enforce our intellectual property or other proprietary rights and any costs associated therewith;
the effects of public health crises, such as the ongoing COVID-19 pandemic, and geopolitical events, such as Russia’s ongoing incursion into Ukraine;
our ability to compete effectively with existing competitors and new market entrants; and
the growth rates of the markets in which we compete.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. And, while we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

Unless the context otherwise requires, the terms “Sprinklr,” “the Company,” “we,” “our,” “us” or similar references in this Form 10-Q refer to Sprinklr, Inc. and its subsidiaries.
ii

PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
SPRINKLR, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)

April 30,
2022
January 31,
2022
Assets
Current assets:
Cash and cash equivalents$131,819 $321,426 
Marketable securities399,039 210,983 
Accounts receivable, net of allowance for doubtful accounts of $2.8 million and
$2.7 million, respectively
136,138 163,681 
Prepaid expenses and other current assets105,388 109,167 
Total current assets772,384 805,257 
Property and equipment, net15,503 14,705 
Goodwill and other intangible assets50,703 50,706 
Operating lease right-of-use assets14,756 — 
Other non-current assets46,827 49,378 
Total assets$900,173 $920,046 
Liabilities and stockholders’ equity
Liabilities
Current liabilities:
Accounts payable$21,036 $15,802 
Accrued expenses and other current liabilities76,237 100,220 
Operating lease liabilities, current7,661 — 
Deferred revenue274,633 279,028 
Total current liabilities379,567 395,050 
Deferred revenue less current portion3,410 5,325 
Deferred tax liability, long-term1,096 1,101 
Operating lease liabilities, long-term8,305 — 
Other liabilities, long-term1,437 2,721 
Total liabilities393,815 404,197 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Class A common stock, $0.00003 par value, 2,000,000,000 shares authorized as of April 30, 2022 and January 31, 2022, respectively; and 110,133,550 and 105,929,885 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively
3 3 
Class B common stock, $0.00003 par value, 310,000,000 shares authorized as of April 30, 2022 and January 31, 2022, respectively; and 147,811,383 and 150,551,314 shares issued and outstanding as of April 30, 2022 and January 31, 2022, respectively
5 5 
Treasury stock, at cost, 14,130,784 shares as of April 30, 2022 and January 31, 2022, respectively
(23,831)(23,831)
Additional paid-in capital1,001,102 982,122 
Accumulated other comprehensive loss(4,003)(820)
Accumulated deficit(466,918)(441,630)
Total stockholders’ equity506,358 515,849 
Total liabilities and stockholders’ equity$900,173 $920,046 
See accompanying notes to the unaudited condensed consolidated financial statements
1


SPRINKLR, INC.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended April 30,
20222021
Revenue:
  Subscription $127,320 $96,772 
  Professional services17,65814,207
Total revenue:144,978 110,979 
Costs of revenue:
  Costs of subscription 25,10821,051
  Costs of professional services 16,61310,657
Total costs of revenue41,721 31,708 
Gross profit103,257 79,271 
Operating expenses:
  Research and development 17,33413,088
  Sales and marketing 86,93860,474
  General and administrative 22,11316,207
Total operating expenses126,385 89,769 
Operating loss(23,128)(10,498)
Other income (expense), net295(2,191)
Loss before provision for income taxes(22,833)(12,689)
Provision for income taxes2,4551,804
Net loss$(25,288)$(14,493)
Net loss per share attributable to Class A and Class B common stockholders, basic and diluted$(0.10)$(0.15)
Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted256,90398,217

See accompanying notes to the unaudited condensed consolidated financial statements
2



SPRINKLR, INC.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
Three months ended April 30,
20222021
Net loss$(25,288)$(14,493)
Foreign currency translation adjustments(2,047)(398)
Unrealized losses on investments(1,136)(2)
Total comprehensive loss$(28,471)$(14,893)
See accompanying notes to the unaudited condensed consolidated financial statements

3


SPRINKLR, INC.
Condensed Consolidated Statements of Stockholders' Equity
(in thousands)
(unaudited)
Convertible
Preferred Stock
Class A and Class B Common StockCommon StockAdditional
Paid-in
Amount
Treasury StockAccumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at January 31, 2022
 $ 256,481 $8  $ $982,122 14,131 $(23,831)$(820)$(441,630)$515,849 
Stock-based compensation - equity classified awards— — — — — — 12,462 — — — — 12,462 
Exercise of stock options and release of vested restricted stock units— — 1,464 — — — 6,518 — — — — 6,518 
Other comprehensive loss— — — — — — — — — (3,183)— (3,183)
Net loss — — — — — — — — — — (25,288)(25,288)
Balance at April 30, 2022
 $ 257,945 $8  $ $1,001,102 14,131 $(23,831)$(4,003)$(466,918)$506,358 
Convertible
Preferred Stock
Class A and Class B Common StockCommon StockAdditional
Paid-in
Amount
Treasury StockAccumulated
Other
Comprehensive
(Loss) Income
Accumulated
Deficit
Total
Stockholders
Equity
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at January 31, 2021
120,903 $424,992  $ 95,456 $4 $122,061 14,131 $(23,831)$787 $(330,160)$193,853 
Stock-based compensation - equity classified awards— — — — — — 8,657 — — — — 8,657 
Exercise of stock options— — — — 5,692 — 8,006 — — — — 8,006 
Other comprehensive loss— — — — — — — — — (400)— (400)
Net loss— — — — — — — — — — (14,493)(14,493)
Balance at April 30, 2021
120,903 $424,992  $ 101,148 $4 $138,724 14,131 $(23,831)$387 $(344,653)$195,623 
See accompanying notes to the unaudited condensed consolidated financial statements

4



SPRINKLR, INC.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Three months ended April 30,
20222021
Cash flow from operating activities:
Net loss(25,288)$(14,493)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense2,498 1,592 
Bad debt expense114 (477)
Stock-based compensation expense, net of amounts capitalized12,514 8,906 
Non-cash interest paid in kind and discount amortization 2,015 
Noncash lease expense1,457 — 
Deferred income taxes 1 
Other noncash items, net (547)(519)
Changes in operating assets and liabilities:
Accounts receivable27,418 23,926 
Prepaid expenses and other current assets3,579 (687)
Other noncurrent assets2,411 (14,848)
Accounts payable5,167 (1,182)
Accrued expenses and other current liabilities(11,320)(13,069)
Litigation settlement(12,000) 
Deferred revenue(6,094)(1,457)
Other liabilities(2,819)(109)
Net cash used in operating activities(2,910)(10,401)
Cash flow from investing activities:
Purchases of marketable securities(192,634) 
Sales of marketable securities  
Maturities of marketable securities3,441 20,860 
Purchases of property and equipment(638)(1,164)
Capitalized internal-use software(2,288)(1,034)
Net cash provided by (used in) investing activities(192,119)18,662 
Cash flow from financing activities:
Proceeds from issuance of common stock upon exercise of stock options6,518 8,006 
Net cash provided by financing activities6,518 8,006 
Effect of exchange rate fluctuations on cash and cash equivalents(1,096)(115)
Net change in cash and cash equivalents(189,607)16,152 
Cash and cash equivalents at beginning of period321,426 68,037 
Cash and cash equivalents at end of period$131,819 $84,189 
Three months ended April 30,
20222021
Supplemental disclosure of cash flow information
Cash paid for income taxes$1,256 $877 
Supplemental disclosure for noncash investing and financing
Stock-based compensation expense capitalized in internal-use software198  
Accrued purchases of property and equipment138 317 
Right of use assets obtained in exchange for operating lease liabilities2,763 — 
Accrued for asset retirement obligations 8 
Deferred offering costs included in accounts payable and accrued liabilities 1,850 
See accompanying notes to the unaudited condensed consolidated financial statements

5

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements

1.Organization and Description of Business
Description of Business

Founded in 2009, Sprinklr, Inc. (“Sprinklr” or the “Company”) provides enterprise cloud software products that enable organizations to do marketing, advertising, research, care, sales and engagement across modern channels including social, messaging, chat and text through its unified Customer Experience Management (“CXM”) software platform.

The Company was incorporated in Delaware in 2011 and is headquartered in New York, New York, USA with 17 operating subsidiaries globally.
2.Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, (“U.S. GAAP”), and applicable rules and regulations of the Securities and Exchange Commission, (the “SEC”), regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of January 31, 2022, and related disclosures, have been derived from the audited consolidated financial statements at that date but do not include all of the information required by U.S. GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair presentation of the Company’s condensed consolidated financial information. The results of operations for the three months ended April 30, 2022 are not necessarily indicative of the results to be expected for the year ending January 31, 2023 or for any other interim period or for any other future year.
The accompanying interim unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended January 31, 2022 in the Company’s Annual Report on Form 10-K (the “2022 10-K”) filed with the SEC on April 11, 2022.
Other than the adoption of the lease accounting requirements of Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), there have been no material changes in the significant accounting policies as described in the Company’s consolidated financial statements for the fiscal year ended January 31, 2022 included in the 2022 10-K.
6

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Immaterial Corrections to Prior Periods
In the fourth quarter of fiscal year 2022, the Company identified immaterial corrections to prior periods related to capitalized costs to obtain customer contracts in connection with the adoption of ASC 606, Revenue from Contracts with Customers (“ASC 606”), and the ongoing monitoring of costs to obtain customer contracts considered for capitalization. The Company has evaluated the effects of these corrections on the previously issued condensed consolidated financial statements, individually and in aggregate, in accordance with the guidance in ASC Topic 250, Accounting Changes and Error Corrections, ASC Topic 250-10-S99-1, Assessing Materiality, and ASC Topic 250-10-S99-2, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Although the Company has concluded such corrections to be immaterial to its previously issued financial statements, the cumulative effect would be material if corrected in the fourth quarter of fiscal year 2022. Accordingly, the Company has revised the condensed consolidated financial statements for the prior periods presented herein.
A summary of the effect of the corrections on the condensed consolidated statements of operations for the three months ended April 30, 2021 were as follows (in thousands, except per share data):
Three Months Ended April 30, 2021
As reportedCorrectionsAs Adjusted
Operating expenses:
Research and development$13,128 $(40)$13,088 
Sales and marketing60,638 (164)60,474 
Total operating expenses89,973 (204)89,769 
Operating loss(10,702)204 (10,498)
Loss before provision for income taxes(12,893)204 (12,689)
Net loss(14,697)204 (14,493)
Net loss per share attributable to Class A and Class B stockholders, basic and diluted$(0.15)$ $(0.15)
A summary of the effect of the corrections on the condensed consolidated statements of cash flows for the three months ended April 30, 2021 were as follows (in thousands):
Three Months Ended April 30, 2021
As reportedCorrectionsAs Adjusted
Net loss(14,697)204 (14,493)
Changes in operating assets and liabilities
Prepaid expenses and other current assets(529)(158)(687)
Other non-current assets(14,802)(46)(14,848)
For all periods in which the Company corrected net loss, the Company made corresponding corrections to net loss and comprehensive loss, in the condensed consolidated statements of comprehensive loss and to net loss, accumulated deficit and total stockholders’ equity in the condensed consolidated statements of stockholders’ equity.
Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, common stock valuations and stock-based compensation expense, software costs eligible for capitalization, recoverability of long-lived and intangible assets and the allowance for doubtful accounts. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and on assumptions that it believes are reasonable and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could differ materially from those estimates and assumptions.
7

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Segments
The Company operates in one operating segment because the Company’s offerings operate on its single Customer Experience Management Platform, the Company’s products are deployed in a similar way, and the Company’s chief operating decision maker evaluates the Company’s financial information and assesses the performance of the Company on a consolidated basis. Because the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements.
Leases
On February 1, 2022, the Company adopted the lease accounting requirements of Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842). Under Topic 842, the Company determines if an arrangement is a lease at inception, and leases are classified at commencement as either operating or finance leases. As of April 30, 2022, the Company did not have any finance leases.
Right-of-use (“ROU”) assets and lease liabilities are recognized at commencement based on the present value of the minimum lease payments over the lease term. The Company utilizes certain practical expedients and policy elections available under Topic 842. Leases with an initial term of 12 months or less are not recognized on the balance sheet. Additionally, the Company has elected not to separate lease components from non-lease components for all asset classes. Non-lease components that are not fixed are expensed as incurred as variable lease costs. The Company uses the incremental borrowing rate based on information available at the commencement date in determining the present value of future lease payments. The rate is an estimate of the collateralized borrowing rate the Company would incur on future lease payments over a similar term.
The Company leases facilities under non-cancelable operating lease agreements. Certain of the operating lease agreements contain rent concessions and rent escalations that are included in the present value calculation of minimum lease payments. Topic 842 requires that operating leases recognize expense on a straight-line basis over the lease term. The lease term begins on the date the Company has the right to use the leased property. Lease terms may include options to extend or terminate the lease. These options are included in the ROU asset and lease liability when it is reasonably certain that the option will be exercised. The Company's lease agreements do not contain residual value guarantees or covenants.
Prior to the February 1, 2022 adoption of Topic 842, ROU asset and lease liabilities were not recognized for operating leases. Rent concessions and rent escalation provisions were considered in determining the straight-line rent expense to be recovered over the lease term.
Concentration of Risk and Significant Customers
The Company has no significant off-balance sheet risks related to foreign currency exchange contracts, option contracts or other foreign currency hedging arrangements. The Company’s financial instruments that are potentially subject to credit risk consist primarily of cash and cash equivalents and accounts receivable. Although the Company deposits its cash with multiple financial institutions, its deposits generally exceed federally insured limits. The Company’s accounts receivable are derived from invoiced customers located primarily in North America and Europe. The Company performs periodic credit evaluations of its customers and generally does not require collateral.
No single customer accounted for more than 10% of total revenue in the three months ended April 30, 2022 and 2021.
In addition, the Company relies upon third-party hosted infrastructure partners globally to serve customers and operate certain aspects of its services, such as environments for development testing, training, sales demonstrations, and production usage. Given this, any disruption of or interference at the Company's hosted infrastructure partners would impact the Company’s operations and could adversely impact its business.
Revenue Recognition
The Company accounts for revenue in accordance with ASC 606. For further discussion of the Company’s accounting policies related to revenue see Note 3, Revenue Recognition.
Stock-Based Compensation
The Company accounts for stock-based compensation as an expense in the statements of operations based on the awards’ grant date fair values.

The Company estimates the fair value of service-based options granted using the Black-Scholes option pricing model. Stock options that include service, performance and market conditions are valued using the Monte-Carlo simulation model. The
8

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Black-Scholes option pricing model requires inputs based on certain assumptions, including (a) the fair value per share of the Company's common stock (b) the expected stock price volatility, (c) the calculation of expected term of the award, (d) the risk-free interest rate and (e) expected dividends. A Monte-Carlo simulation is an analytical method used to estimate value by performing a large number of simulations or trial runs and determining a value based on the possible outcomes from these trial runs.
The fair value of stock-based payments is recognized as compensation expense, net of expected forfeitures, over the requisite service period, which is generally the vesting period, with the exception of the fair value of stock-based payments for awards that include service, performance and market conditions which is recognized as compensation expense over the requisite service period as achievement of the performance objective becomes probable.
The Company issued certain performance stock units (“PSUs”), that vest upon the satisfaction of time-based service, performance-based and market conditions. The Company estimates compensation cost based on the grant date fair value and recognize the expense on a graded vesting basis over the vesting period of the award. As the PSUs are subject to a market condition (stock price), the grand date fair value is measured using a Monte Carlo simulation approach, which estimates the fair value of awards based on randomly generated simulated stock-price paths through a lattice-type structure. The performance-based vesting condition was satisfied upon the occurrence of a qualifying event, which was generally defined as a change in control transaction or the effective date of a registration statement of the Company filed under the Securities Act for the sale of the Company's common stock. Upon the effectiveness of the Registration Statement on June 22, 2021, the performance-based vesting condition was satisfied, and therefore, the Company commenced recognition of compensation expense using the accelerated attribution method over the requisite service period.
The Company estimates fair value of its restricted stock units (“RSU”) based on the fair value of the underlying common stock, net of estimated forfeitures. Subsequent to the Company’s initial public offering (“IPO”) in June 2021, the Company determines the fair value using the closing price of its Class A common stock as reported on the date of grant.
Recently Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842), and additional changes, modifications, clarifications or interpretations related to this guidance thereafter (“ASU 2016-02”). ASU 2016-02 requires a reporting entity to recognize ROU assets and lease liabilities on the balance sheet for operating leases to increase transparency and comparability. Effective February 1, 2022, the Company adopted the standard and elected the package of transition practical expedients that allowed the Company to carry forward prior conclusions related to: (i) whether any expired or existing contracts are or contain leases; (ii) the classification for any expired or existing leases; and (iii) initial direct costs for existing leases. Additionally, the Company elected the practical expedient of not separate lease components from non-lease components for all asset classes. The Company also made an accounting policy election not to record ROU assets or lease liabilities for leases with an initial term of 12 months or less and will recognize payments for such leases in its consolidated statement of operation on a straight-line basis over the lease term. The Company recorded lease liabilities and corresponding ROU assets of approximately $14 million upon adoption of this standard.
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, with subsequent amendments, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires immediate recognition of management’s estimates of current expected credit losses. ASU 2016-13 is effective for annual reporting periods beginning after December 15, 2022, and interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the impact of adoption on the consolidated financial statements.

3. Revenue Recognition
The Company derives its revenues primarily from (i) subscription revenue, which consists of subscription fees from customers accessing the Company’s cloud-based software platform and applications, as well as related customer support services; and (ii) professional services revenue, which consists of fees associated with providing services that educate and assist the Company’s customers with the configuration and optimization of the Company’s software platform and applications. Professional services revenue also includes managed services fees where the Company’s consultants work as part of its customers’ teams to help leverage the subscription service to execute on their customer experience management goals.

9

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Contracts with Multiple Performance Obligations

The Company executes arrangements that include multiple performance obligations (consisting of subscription and professional services). Additionally, the Company is often party to multiple concurrent contracts or contracts pursuant to which a client may purchase a combination of services. These situations require judgment to determine whether the multiple promises are separate performance obligations. Once the Company has determined the performance obligations, the Company determines the transaction price. The Company allocates the transaction price to each performance obligation on a relative standalone selling price (“SSP”) basis. The SSP is the price at which the Company would sell promised subscription or professional services separately to a customer. The determination of SSP for each distinct performance obligation requires judgement. The Company determines SSP based on its overall pricing objective, taking into consideration contractually stated prices, size of the arrangement, market conditions, costs, renewal contracts, list prices, internal discounting tables and other observable and unobservable inputs.

Costs to Obtain Customer Contracts

Sales commissions and related expenses are considered incremental and recoverable costs of acquiring customer contracts. These costs are capitalized and amortized on a straight-line basis over the anticipated period of benefit. The Company determines the period of benefit by taking into consideration the length of its customer contracts, customer relationship period, technology lifecycle, and other factors. The Company has historically estimated such period of benefit to be three years. During the first quarter of fiscal 2023, the Company updated the period of benefit, noting that recent customer relationship periods extended to an average period of five years. Accordingly, the Company noted a change in estimate of the amortization period of these costs and will prospectively amortize over a period of benefit of five years. Sales commissions paid for renewals are not commensurate with commissions paid on the initial contract given the substantive difference in commission rates in proportion to their respective contract values. Amortization expense is recorded in sales and marketing expense within the Company’s condensed consolidated statement of operations. The change in amortization period resulted in an immaterial impact to sales and marketing expense for the three months ended April 30, 2022.

Capitalized costs to obtain customer contracts as of April 30, 2022 were $81.7 million, of which $39.9 million is included in prepaid expenses and other current assets and $41.8 million within other non-current assets.

Capitalized costs to obtain customer contracts as of January 31, 2022 were $83.0 million, of which $40.7 million is included in prepaid expenses and other current assets and $42.3 million within other non-current assets.

During the three months ended April 30, 2022 and 2021, the Company amortized $11.0 million and $8.1 million, respectively, of costs to obtain customer contracts, included in sales and marketing expense.
The prior period amounts reflect immaterial corrections related to capitalized costs to obtain customer contracts. Refer to Note 2, Basis of Presentation and Summary of Significant Accounting Policies, for more information regarding immaterial corrections to prior periods.

Deferred Revenue

Deferred revenue consists primarily of customer billings made in advance of performance obligations being satisfied and revenue being recognized. The Company recognized revenue of $113.4 million and $90.5 million for the three months ended April 30, 2022 and 2021, respectively, that was included in the deferred revenue balances at the beginning of the respective periods.

The Company receives payments from customers based on billing schedules as established in its contracts. Contract assets represent amounts for which the Company has recognized revenue in excess of billings pursuant to the revenue recognition guidance. At April 30, 2022 and January 31, 2022, contract assets were $3.6 million and $3.2 million, respectively, and were included in prepaid expenses and other current assets.

Remaining Performance Obligation

Remaining Performance Obligation (“RPO”) represents contracted revenues that had not yet been recognized and includes deferred revenues and amounts that will be invoiced and recognized in future periods. As of April 30, 2022, the Company’s RPO was $585.8 million, approximately $412.5 million of which the Company expects to recognize as revenue over the next 12 months and the remaining balance will be recognized thereafter.

10

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Disaggregation of Revenues
The Company disaggregates its revenue from contracts with customers by geographic location and market, as it believes it best depicts how the nature, amount, timing, and uncertainty of its revenues and cash flows are affected by economic factors. Refer to Note 13, Geographic Information, for revenue by geographic location.

4. Marketable Securities
The following is a summary of available-for-sale marketable securities, excluding those securities classified within cash and cash equivalents on the condensed consolidated balance sheets (in thousands):
April 30, 2022
Amortized CostUnrealized GainUnrealized LossesFair value
Corporate bonds$141,169 $ $(833)$140,336 
U.S. government and agency securities162,416  (348)162,068 
Commercial paper91,807  (154)91,653 
Certificate of deposit4,982   4,982 
Marketable securities$400,374 $ $(1,335)$399,039 
January 31, 2022
Amortized CostUnrealized GainUnrealized LossesFair value
Corporate bonds$124,639 $1 $(163)$124,477 
U.S. government and agency securities37,725  (35)37,690 
Commercial paper48,818  (2)48,816 
Marketable securities$211,182 $1 $(200)$210,983 
As of April 30, 2022 and January 31, 2022, the maturities of available-for-sale marketable securities did not exceed 12 months.

11

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
5. Fair Value Measurements
The following tables present information about the Company’s financial assets and liabilities that have been measured at fair value on a recurring basis as of April 30, 2022 and January 31, 2022, and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands):
April 30, 2022January 31, 2022
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Financial Assets:
Cash Equivalents:
Money market funds$57,273 $ $ $57,273 $281,091 $ $ $281,091 
Marketable Securities:
Corporate bonds 140,336  140,336  124,477  124,477 
U.S. government and agency securities 162,068  162,068  37,690  37,690 
Commercial paper 91,653  91,653  48,816  48,816 
Certificate of deposit 4,982  4,982     
Total financial assets$57,273 $399,039 $ $456,312 $281,091 $210,983 $ $492,074 
The Company classifies its highly liquid money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its commercial paper, corporate debt securities, U.S. government agencies, certificates of deposit, and U.S. government treasury securities within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.
The Company’s primary objective when investing excess cash is preservation of capital, hence the Company’s marketable securities consist primarily of U.S. Treasury securities, high credit quality corporate debt securities and commercial paper. The Company has classified and accounted for its marketable securities as available-for-sale securities as it may sell these securities at any time for use in the Company’s current operations or for other purposes, even prior to maturity.
The Company regularly reviews the changes to the rating of its debt securities by rating agencies as well as reasonably monitors the surrounding economic conditions to assess the risk of expected credit losses. As of April 30, 2022 and January 31, 2022, there were no securities that were in an unrealized loss position for more than 12 months. The Company has not recorded any impairments, as it believes that any such losses would be immaterial based on the high-grade credit rating for each of its marketable securities as of the end of each period.

6. Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
April 30,
2022
January 31,
2022
Prepaid hosting and data costs$41,758 $46,513 
Prepaid software costs6,667 5,765 
Capitalized commissions costs, current portion39,871 40,695 
Prepaid insurance770 2,118 
Contract assets3,591 3,161 
Other 12,731 10,915 
Prepaid expenses and other current assets$105,388 $109,167 

12

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
April 30,
2022
January 31,
2022
Computer equipment$13,628 $13,544 
Office furniture and other1,255 1,256 
Leasehold improvements3,799 3,930 
Less accumulated depreciation and amortization(12,908)(12,433)
Total fixed assets, net5,773 6,297 
Capitalized internal-use software25,551 23,065 
Less accumulated amortization(15,821)(14,657)
Total capitalized internal-use software9,730 8,408 
Property and equipment, net$15,503 $14,705 
Depreciation and amortization expense for property and equipment was $1.2 million and $0.8 million in the three months ended April 30, 2022 and 2021, respectively.
Amortization expense for capitalized internal-use software was $1.1 million and $0.7 million in the three months ended April 30, 2022 and 2021, respectively.
The Company capitalized internal-use software costs, including stock-based compensation, of $2.5 million and $1.0 million in the three months ended April 30, 2022 and 2021, respectively.

Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
April 30,
2022
January 31,
2022
Bonuses$6,740 $22,622 
Commissions8,382 16,496 
Employee liabilities (1)
26,612 21,668 
Accrued litigation settlement (2)
 12,000 
Purchased media costs (3)
2,934 3,227 
Accrued sales and use tax liability5,984 6,935 
Accrued income taxes4,064 2,559 
Professional services1,424 1,062 
Other20,097 13,651 
$76,237 $100,220 
(1) Includes $5.3 million and $2.3 million of accrued employee contributions under the Company's 2021 Employee Stock Purchase Plan (“ESPP”) at April 30, 2022 and January 31, 2022, respectively.
(2) On February 25, 2022, the Company and Opal Labs Inc. (“Opal”) agreed to settle all outstanding claims with respect to Opal's complaints alleging breach of contract and violation of Oregon's Uniform Trade Secrets Acts, among other claims.
(3) Purchased media costs consist of amounts owed to the Company’s vendors for the purchase of advertising space on behalf of its customers.

7. Leases
13

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company has operating leases for corporate offices under non-cancelable operating leases with various expiration dates. There are no finance leases.
The components of lease expense were as follows (in thousands):
Three Months Ended April 30, 2022
Operating lease cost$1,847 
Variable lease cost7 
Short-term lease cost188 
Total lease cost$2,042 
Supplemental cash flow and balance sheet information related to operating leases is as follows (in thousands):
April 30, 2022
Cash flow information
Operating cash flows paid for operating leases$1,678 
Balance sheet information
Operating lease right-of-use assets$14,756 
Operating lease liabilities, current7,661 
Operating lease liabilities, long-term8,305 
Total operating lease liabilities$15,966 
Other information related to leases was as follows:
April 30, 2022
Weighted average remaining lease term2.7 years
Weighted average discount rate10.9 %
As of April 30, 2022, the maturities of lease liabilities under non-cancelable operating leases, net of lease incentives, was as follows (in thousands):
April 30, 2022
Remainder of 2023$6,322 
20246,994 
20252,520 
20261,413 
20271,208 
Thereafter 
Total minimum lease payments18,457 
Less: imputed interest(2,491)
Total$15,966 
Rent expense for operating leases for the three months ended April 30, 2021, which were accounted for under ASC 840, Leases (“ASC 840”), was $1.6 million.
As previously disclosed in the Company's consolidated financial statements as of and for the year ended January 31, 2022 and under the previous lease accounting standard, future minimum lease payments under non-cancelable operating leases were as follows (in thousands):
14

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Fiscal year ended January 31,
2023$9,676 
20248,036 
20253,165 
20262,034 
2027 and thereafter1,726 
Total$24,637 

8. Credit Agreement
The Company maintains a credit agreement with Silicon Valley Bank (the “SVB Credit Facility”). Under the terms of the SVB Credit Facility, the Company can borrow up to $50.0 million on its revolving credit loan facility on its revolving credit loan facility at the higher of prime interest rate plus 0.25% or federal funds effective rate plus 0.50% plus 0.25%. The SVB Credit Facility, which expires on June 21, 2022, requires the Company to maintain certain monthly adjusted quick ratio and quarterly minimum consolidated adjusted earnings before income taxes, depreciation and amortization. As of April 30, 2022 and January 31, 2022, the Company had no amounts outstanding under the SVB Credit Facility.

9. Commitments and Contingencies
Letters of Credit
As of April 30, 2022 and January 31, 2022, the Company had an aggregate availability of $0.7 million and $0.7 million, respectively, under letters of credit primarily related to one of its leases. The Company has not drawn down on these letters of credit as of April 30, 2022.
Legal Matters
From time to time, the Company, various subsidiaries, and certain current and former officers may be named as defendants in various lawsuits, claims, investigations and proceedings arising from the normal course of business. The Company also may become involved with contract issues and disputes with customers. With respect to litigation in general, based on the Company’s experience, management believes that the amount of damages claimed in a case are not a meaningful indicator of the potential liability. Claims, suits, investigations and proceedings are inherently uncertain and it is not possible to predict the ultimate outcome of cases. The Company believes that it has valid defenses with respect to the legal matters pending against the Company and intends to vigorously contest each of them.
The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter.  In management’s opinion, resolution of all current matters is not expected to have a material adverse impact on the Company’s condensed consolidated results of operations, cash flows or financial position. However, if an unfavorable ruling were to occur in any specific period, there exists the possibility of a material adverse impact on the results of operations for that period.

On September 7, 2017, a complaint was filed by Opal against the Company in the Circuit Court of the State of Oregon, alleging breach of contract and violation of Oregon’s Uniform Trade Secrets Act, among other claims. On September 5, 2018, the case was moved from state court to federal court on the Company’s motion. On February 25, 2022, the Company and Opal agreed to settle all outstanding claims with respect to Opal’s complaints. On March 1, 2022, the court dismissed all of Opal’s claims with prejudice. The Company and Opal finalized the settlement on March 15, 2022, which was accrued as of January 31, 2022 and paid on March 30, 2022.

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SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
10. Stock-Based Compensation
Summary of Stock Option Activity
A summary of the Company’s stock option activity for the Plan for the three months ended April 30, 2022 is as follows:
Number of stock optionsWeighted average exercise priceWeighted average remaining contractual life
(in thousands)(in years)
Outstanding as of January 31, 2022
44,355 6.23 7.8
Exercised (1,404)4.56 
Cancelled/forfeited(1,886)7.73 
Outstanding as of April 30, 2022
41,065 6.22 7.4
Exercisable as of April 30, 2022
23,185 $5.07 7.0
Vested and expected to vest as of April 30, 2022
36,146 $5.87 7.3
Restricted Stock Units
A summary of the Company’s RSU award activity was as follows:
Number of restricted sharesWeighted Average Grant Date Fair Value
(in thousands)
Outstanding as of January 31, 2022
1,730 $14.67 
Granted6,537 13.19 
Released (60)9.07 
Cancelled/forfeited(115)13.39 
Outstanding as of April 30, 2022
8,092 $13.56 
Stock-Based Compensation Expense
Stock-based compensation expense included in operating results was allocated as follows (in thousands):
Three Months Ended April 30,
20222021
Costs of subscription $408 $378 
Costs of professional services623 284 
Research and development2,348 1,229 
Sales and marketing5,856 4,201 
General and administrative3,279 2,814 
Stock-based compensation, net of amounts capitalized12,514 8,906 
Capitalized stock-based compensation198  
Total stock-based compensation$12,712 $8,906 

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SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Three Months Ended April 30,
20222021
Equity classified awards $12,462 $8,656 
Other awards (1)
250 250 
$12,712 $8,906 
(1) Nonemployee grant recorded over five years, representing the same period and in the same manner as if the grantor had paid cash for the services instead of paying with or using the share-based payment award.

As of April 30, 2022, total unrecognized compensation cost related to unvested awards not yet recognized under all equity compensation plans, adjusted for estimated forfeitures, was as follows:
April 30, 2022
Unrecognized expenseWeighted average expense recognition period
(in thousands)(in years)
Stock options $36,515 2.6
Performance share units2,110 2.8
Restricted stock units52,714 3.8
ESPP5,460 0.6

11. Net Loss Per Share
The Company computes net loss per share using the two-class method required for participating securities. The two-class method requires income available to ordinary shareholders for the period to be allocated between ordinary shares and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company considers its convertible preferred shares to be participating securities, as the holders of the convertible preferred shares would be entitled to dividends that would be distributed to the holders of ordinary shares on a pro-rata basis assuming conversion of all convertible preferred shares into ordinary shares. These participating securities do not contractually require the holders of such shares to participate in the Company’s losses. As such, net loss was not allocated to the Company’s participating securities.

Basic loss per share is computed by dividing net loss attributable to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. In periods when the Company has income, the Company calculates basic earnings per share using the two-class method, if required, pursuant to ASC 260, Earnings Per Share. The two-class method was required effective with the issuance of convertible preferred stock in the past because this class of stock qualified as a participating security, giving the holder the right to receive dividends should dividends be declared on common stock. Under the two-class method, earnings for a period are allocated on a pro rata basis to the common stockholders and to the holders of convertible preferred stock based on the weighted average number of common shares outstanding and number of shares that could be issued upon conversion. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

Following the Company’s IPO in June 2021, the Company has two classes of common stock: Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting, conversion and transfer rights. All shares of the Company’s capital stock outstanding immediately prior to the Company’s IPO, including all shares held by executive officers, directors and their respective affiliates, and all shares issuable on the conversion of outstanding convertible preferred stock, were converted into shares of the Company’s Class B common stock immediately prior to the completion of the offering. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each class of common stock and the resulting basic and diluted net loss per share attributable to common stockholders are, therefore, the same for both Class A and Class B common stock on both individual and combined basis.

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SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):

Three Months Ended April 30,
20222021
Net loss per share - basic and diluted:
Numerator:
Net loss attributable to Class A and
Class B common stockholders
$(25,288)$(14,493)
Denominator:
Weighted-average shares outstanding used in computing net loss per share attributable to Class A and Class B common stockholders - basic and diluted256,903 98,217 
Net loss per common share attributable to Class A and Class B common stockholders - basic and diluted$(0.10)$(0.15)

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands):
20222021
Convertible Preferred Stock 120,902 
Options to purchase common stock41,065 48,310 
Convertible note 9,113 
Performance share units2,625 3,100 
Restricted stock units8,092 450 
ESPP388  
Deferred stock compensation plan 1,628 
Warrants to purchase common stock2,500 2,731 
Total shares excluded from net (loss) income per share54,670 186,234 

12. Income Taxes
The Company computes its year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pretax income or loss and adjusts the provision for discrete tax items recorded in the period. During the three months ended April 30, 2022 and 2021, the Company recorded an income tax expense of $2.5 million and $1.8 million, respectively.
The Company’s effective tax rate generally differs from the U.S. federal statutory tax rate primarily due to a full valuation allowance related to the Company’s U.S. deferred tax assets, partially offset by state taxes and the foreign tax rate differential on non-U.S. income.

The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all the deferred tax assets will not be realized. In making such a determination, the Company considers all available positive and negative evidence. As of April 30, 2022, the Company continues to maintain a full valuation allowance against the deferred tax assets for the U.S. and certain international entities.

During the three months ended April 30, 2022, the Company recorded a $0.1 million reserve related to unrecognized tax benefits.

13. Geographic Information
The Company operates in one segment. The Company’s products and services are sold throughout the world. The Company’s chief operating decision maker (the “CODM”) is the chief executive officer. The CODM makes operating performance assessment and resource allocation decisions on a global basis. The CODM does not receive discrete financial information about asset allocation, expense allocation or profitability by product or geography.
18

SPRINKLR, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table summarizes the revenue by region based on the shipping address of customers who have contracted to use the cloud-based software platform (in thousands):
Three Months Ended April 30,
20222021
Americas$93,538 $71,312 
EMEA40,733 30,565 
Other10,707 9,102 
$144,978 $110,979 
The United States was the only country that represented more than 10% of the Company’s revenues in the three months ended April 30, 2022 and 2021, respectively, comprising of $87.6 million and $66.6 million, respectively.
Long-lived assets by geographical region are based on the location of the legal entity that owns the assets. As of April 30, 2022 and January 31, 2022, long lived assets by geographic region were as follows (in thousands):
April 30,
2022
January 31,
2022
Americas (1)
$11,637 $10,472 
EMEA1,344 1,551 
Other2,522 2,682 
$15,503 $14,705 
(1) Includes $11.4 million and $10.2 million of fixed assets