Sprinklr, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Net (Loss) Income Per Share

Net (Loss) Income Per Share

6 Months Ended

Jul. 31, 2021

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) income 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, 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.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except per share amounts):


	Three Months Ended July 31,				Six Months Ended July 31,
	2021		2020		2021		2020
Net (loss) income per share - basic:
Numerator:
Net (loss) income	$	(33,247)	$	3,009	$	(47,944)	$	(8,198)
Less: amounts allocated to participating securities	—		(1,625)		—		—
Net (loss) income attributable to Class A and Class B common stockholders - basic	(33,247)		1,384		(47,944)		(8,198)


Weighted-average shares outstanding used in computing net loss per share attributable to Class A and Class B common stockholders - basic	167,590		87,196		133,479		86,787
Net (loss) income per common share attributable to Class A and Class B common stockholders - Basic	$	(0.20)	$	0.02	$	(0.36)	$	(0.09)
Net (loss) income per share - diluted:
Net (loss) income Per Share available to Class A and Class B common stockholders - diluted	(33,247)		3,009		(47,944)		(8,198)
Weighted-average shares outstanding (basic)	167,590		87,196		133,479		86,787
Preferred stock	—		102,408		—		—
Stock options	—		11,138		—		—
Restricted stock	—		165		—		—
Common stock warrants	—		227		—		—
Convertible note	—		—		—		—
Weighted-average shares outstanding used in computing net loss per share attributable to Class A and Class B common stockholders - diluted	167,590		201,134		133,479		86,787

Net (loss) income per common share attributable to Class A and Class B common stockholders - diluted	$	(0.20)	$	0.01	$	(0.36)	$	(0.09)

Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows (in thousands):


	Three Months Ended July 31,		Six Months Ended July 31,
	2021	2020	2021	2020
Convertible Preferred Stock	—	—	—	102,408
Options to purchase common stock	46,811	—	46,811	47,243
Convertible note	—	7,283	—	7,283
Performance share units	3,175	—	3,175	—
Restricted stock units	506	—	506	300
ESPP	79	—	79	—
Deferred stock compensation plan	—	317	—	317
Warrants to purchase common stock	2,500	—	2,500	231
Total shares excluded from net (loss) income per share	53,071	7,600	53,071	157,782

There were 4,637,333 and 6,956,000 stock option awards associated with the Chief Executive Officer Stock Option Agreement excluded from our diluted net loss per share calculations for the six months ended July 31, 2021 and 2020, as such awards were contingently issuable based on market or performance conditions, and such conditions has not been achieved during the period.