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Greetings, and welcome to the Sprinklr Q4 Fiscal Year 2025 Earnings Call. At this time, all participants are in listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to introduce your host, Eric Scro, Vice President of Finance. Eric, please go ahead.

Thank you, operator and welcome, everyone to Sprinklr's fourth quarter and fiscal year 2025 financial results call. Joining us today are Rory Read, Sprinklr's President and CEO, and Manish Sarin, Sprinklr's Chief Financial Officer. We issued our earnings release a short time ago, filed the related Form 8-K 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 financial information presented in accordance with GAAP. You are directed to our press release and supplementary investor presentation for a reconciliation of such measures to GAAP. In addition, during today's call we'll be making some 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 and full fiscal year of 2026, the impact of our corporate strategies and changes to our leadership, the benefits of our platform and our market opportunity. Our actual results might differ materially from such forward-looking statements. 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 Rory.

Thank you, Eric and hello, everyone. It's nice to be with you today. I'll start by providing a few 4Q financial highlights before covering some of my thoughts on the progress we are making in transforming our business. Fourth quarter total revenue grew 4% year-over-year to $202.5 million and subscription revenue grew 3% year-over-year to $182.1 million. We generated $25.9 million in non-GAAP operating income which resulted in 13% non-GAAP operating margin for the quarter. I want to thank Sprinklr team members around the globe and our customers and partners for trusting us to help them solve some of their most important business needs. We believe we have a strong hand with growing markets, a leading-edge AI platform and gold standard customers with a mission to help them deliver next generation unified engagement journeys that reimagine the customer experience. We now have the clear ambidextrous strategy and execution plan in place to re-energize and grow our Sprinklr core while hardening and expanding Sprinklr service to enable our customers to realize the full value of our AI based unified customer experience platform. However, there is much more work to do on our journey and FY '26 will be an important transition year as we stabilize the business. As I have acknowledged, there are still challenges ahead as we strengthen our teams, simplify our offerings and resolve the operational and technical debt that has hindered us in the past. While we still see important areas needing focus and improvement, the transformation of Sprinklr is well underway. We defined a well-focused customer wide business strategy, we've implemented a well-established business management system, BMS to track and drive execution and we took swift action to optimize our expense base and rebalance our investment and resources. We have also redefined our go-to-market coverage model to land and develop our ideal customer set and enhancing our product innovation roadmaps. We have also strengthened our leadership team and board with accomplished leaders who have deep expertise and a strong track record of driving growth. In early January, we announced the appointment of Joy Corso as our Chief Administrative Officer. Joy's extensive experience in the B2B tech industry as well as her focus on delivering operational efficiencies, business transformation and scale will be critical to supporting our next phase. We also announced the addition of Jan Hauser and Stephen Ward to our Board of Directors. Jan will assume the chair of our Audit Committee and Steve brings a wealth of technology and enterprise experience to the Board and as a member of our Compensation Committee. Each of these executives have technology and SaaS experience with a long history of demonstrating results and building growth businesses at scale. I'd also like to thank and Ed Gillis who is stepping down from the Board in June, for his service on the Board and dedication to Sprinklr. As we move into the next phase of our Strategic Plan, we are now taking critical steps designed to transform our business for durable growth and improve profitability. On our 3Q call in December, we noted that you will first see an improvement in our operating margin given that this is in our direct control. This action would also create the capacity to reinvest, add critical talent and refocus on areas to drive better performance. On February 6, we filed an 8-K with the SEC which detailed the decisive actions we took to better optimize and rebalance our expense base. This has included an approximate 15% reduction in our workforce. While changes like these are hard to make, it is essential to allocate our investments, talents and resources to better serve our customers and partners. Most actions associated with this workforce reduction are now complete with a few smaller areas to be completed in 2Q based on regulatory requirements. Manish will provide further financial details on this in his remarks in just a few minutes. Sprinklr intends to deliver a portion of our cost savings to improve operating margins this year. We will also leverage some of this gained efficiency to hire and invest in prioritized areas. We will strategically add talent across the globe in such areas as go-to-market sales pods, customer implementations, AI, core product skills and service R&D skills, which these may take one to three quarters to execute. Additionally, our new go-to-market coverage model was implemented at the beginning of our fiscal year in February and launched in detail during our sales kickoff three weeks ago. Territories are assigned, compensation plans are rolled out and coverage ratios are set. This structure will cultivate deeper customer relationships within the C suite. Our initial focus will be on our top 400 customers. We believe these efforts will enable us to deliver more value through year-round engagement and deeper account planning. At the end of FY '25 we had 149 customers generating at least $1 million in annual subscription revenue which grew by 18% year-over-year. Furthermore, we had an impressive group of customers generating $10 million to $20 million in subscription revenue over the last 12 months. We have built sophisticated products that address complex needs of the world's largest companies. It's clear that when we get it right and execute effectively and consistently, our customers value these solutions and the expertise we provide. We are most successful in the enterprise segment with the Global 2000 to Global 5000 being our sweet spot. This will now be the primary focus of our go-to-market and marketing efforts driven by the recent changes and initiatives I have mentioned previously. Now, on the R&D front, we are maturing our operational rigor to continue to deliver innovation in a more consistent, reliable manner. Our FY '26 technology and product innovation roadmaps are focused on improving product delivery, functionality, security and reliability of our broader platform. Additionally, we are still in early phases of revamping our pricing and packaging, but our focus on solutions selling with aligned incentives for multiyear deals and emphasis on the C suite. We believe the combination of the actions we have taken including one, establishing a clear ambidextrous strategy; two, implementing a well-established business management system to track and drive execution; three, optimize a more efficient cost structure allowing for sustained and improved operating margin and strategic investments. Four, realigning our go-to-market coverage model and five, strengthening our product delivery roadmaps will be a significant step forward in Sprinklr's transformation plan. Now I'd like to shift gears a little bit and talk about our customers, one of our most important and powerful assets here at Sprinklr. I have met with approximately 100 customers and partners over the past three months and while we have experienced some inconsistent implementations leading to pressure on customer renewals and satisfaction, we are actively addressing this. During the fourth quarter, we continue to land and expand with many leading brands, companies such as Delta Airlines, Ford Motor Company, MSCI, Live Nation and Ralph Lauren to name a few. While we've had several large customer deals across Sprinklr core and service this quarter, I'd like to highlight two that demonstrate what we are capable of when we get it right. We're excited about the work we are doing with one of the world's premier specialty coffee retailers. Through deep discovery, relationship building and consistent tech validation, our platform's core offerings, Sprinklr Social and Sprinklr Insights are already providing value to their international customer experience. We are delivering a scalable, unified solution that meets their global business needs to proactively monitor their brand, protect brand reputation and through social, publishing and engagement effort, they are leveraging customer insights to inform and optimize their marketing performance. This is the kind of transformation we drive, connecting brands with their customers in a smarter, more impactful way. Our second story is one of the largest technology companies in the world. We closed an eight figure multi year renewal with them this quarter, which is a powerful testament to our long-standing partnership and relentless focus on innovation. Sprinklr has become mission critical for them to deliver seamless, scalable and highly personalized customer service. Our platform powers their shift from costly channels like voice and email to efficient AI driven support on digital channels, accelerating their goal of 50% plus coal deflection by 2027. With Sprinklr the company has already reduced their service costs by millions of dollars while improving resolution speed and customer satisfaction, and they continue to expand their investments with Sprinklr, leveraging our full suite across marketing, social and insights to drive engagement and operational efficiency at scale. We're working closely with them to push the boundaries of AI innovation, automation and digital transformation, ensuring that they don't just stay ahead of the evolving landscape, but in fact they define it. In closing, while there is plenty of work to do and this transformation will take time, we are making real and tangible progress with swift, clear actions. Looking at FY '26 as a transitional year, we intend to stabilize the company and burn in our execution over the first two quarters, which we hope will drive better results throughout the year. It's never a perfectly straight line and there will be challenges along the way, but I continue to be optimistic of the opportunity in front of us. We have clarity about the way forward and what we have to fix and we will get there step by step, day by day, quarter by quarter. The world is moving from transactional customer engagement to unified 360-degree customer experiences and we believe our vision to define the world's ability to make every customer experience extraordinary, position us well to capitalize on this opportunity. Sprinklr is the platform where it all comes together for customer activities around discovery, commerce, support and service. We will leverage our AI based unified platform, execute an ambidextrous approach to re-energize and grow our Sprinklr core while we harden and expand Sprinklr service in our march on the Rule of 40. Thank you again to the Sprinklr team members around the world who are passionate about our future and creating powerful value for our customers and embracing this transformational journey with urgency and commitment. Now I'd like to turn the call over to Manish to go through the numbers in a bit more detail. Manish?

Thank you, Rory, and good morning, everyone. For the fourth quarter, total revenue was $202.5 million, up 4% year-over-year while subscription revenue was $182.1 million, up 3% year-over-year. Professional services came in at $20.5 million. All metrics meet the guidance range provided for the quarter. Our subscription revenue based net dollar expansion rate in the fourth quarter was 104%. Given the trailing nature of this calculation, this quarter's metric reflects the full impact of elevated churn we experienced during FY '25. At the end of the fourth quarter, we had 149 customers contributing $1 million or more in subscription revenue over the preceding 12 months, which is an 18% increase year-over-year. We believe our continued success in winning and growing seven figure customers is a testament to the value of the platform we deliver for our customers. These are some of the leading enterprises in the world and a targeted focus of ours with the changes we have made in our go-to-market efforts. Regarding gross margins for the fourth quarter, on a non-GAAP basis, our subscription gross margin was 79% and professional services gross margin was break even resulting in a total non-GAAP gross margin of 71%. As noted on previous calls, we are experiencing higher data and hosting costs as we launch new cloud environments in response to new business opportunities, especially in Sprinklr service. We acknowledge professional services margins are not optimal at this level and we are working to address this as part of our overall work on becoming more efficient. Turning to profitability for the quarter, non-GAAP operating income was $25.9 million or a 13% margin which drove non-GAAP net income of $0.10 per diluted share. I want to address one point regarding taxes and our non-GAAP EPS number for the quarter. In Q4 FY '25, based on recent and forecasted profitability in our Sprinklr U.S. legal entity, we concluded that it is more likely than not that our U.S. Federal and state deferred tax assets are realizable and we have therefore released the valuation allowance on our U.S. Federal and state deferred tax assets. This valuation release resulted in a discrete U.S. GAAP non cash deferred tax benefit of approximately $87 million. We still have approximately $335 million in U.S. annuals remaining for FY '26 and beyond. Given this, we do not expect a material near term impact on cash taxes paid. With respect to free cash flow, we generated $1.5 million during the fourth quarter. This free cash flow generation contributed to our healthy balance sheet which now stands at $483.5 million in cash and marketable securities with no debt outstanding. Calculated billings for the fourth quarter were $298.6 million, an increase of 10% year-over-year. As of January 31, 2025, total remaining performance obligations or RPO, which represents revenue from committed customer contract that has not yet been recognized, was $987.7 million, up 2% compared to the same period last year and current RPO or CRPO was $612.5 million, up 4% year-over-year. Turning to a quick summary of financial results for the full year, FY '25 total revenue was $796.4 million, up 9% year-over-year with subscription revenue of $717.9 million, up 7% versus the prior year. Calculated billings for the full year were $831.1 million, up 6% year-over-year. We reported non-GAAP operating income for the full year of $84.8 million, equating to a non-GAAP net income per diluted share of $0.35 and a non-GAAP operating margin of 11%. In terms of free cash flow, we generated $59.2 million in free cash flow for the year equating to a free cash flow margin of 7%. Before moving to guidance, I would like to provide more information on the restructuring we recently concluded as part of our overall efficiency efforts. We recently completed a companywide internal review across product areas, regions and support functions. We concluded that significant structural changes were necessary to better execute our ambidextrous strategy and our objective to get to the Rule of 40. As a result of this review and as we disclosed in the 8-K filed with the SEC on February 6, 2025, we reduced our global workforce by approximately 15%. These reductions impacted teams and functions across every department. This restructuring is intended to help position the company for long-term success by realigning employee costs with the current business and freeing up capital for incremental investments. We expect that these incremental investments will include hiring in key strategic areas that best align with our growth objectives, notably additional go-to-market and R&D resources to both grow the core products and to harden our service product. Expenses related to this action are expected to be approximately $22 million. We estimate $16 million of these expenses will be booked as a restructuring charge here in Q1 FY '26. The balance will be booked in Q2. These restructuring charges are not included in the non-GAAP guidance figures we provide here and going forward for FY '26. Now moving to our official guidance for Q1, we expect total revenue to be in the range of $201.5 million to $202.5 million, representing 3% growth year-over-year at the midpoint. Within this, we expect subscription revenue to be in the range of $182 million to $183 million, representing 3% growth year-over-year at the midpoint. The Q1 guide implies $19.5 million in professional services revenue. As we have signalled on prior earnings calls, we will continue to invest in our professional services delivery capabilities and expect gross margins here to be approximately breakeven in Q1. We expect non-GAAP operating income to be in the range of $31.5 million to $32.5 million, resulting in non-GAAP net income for diluted share of approximately $0.10 assuming $269 million diluted weighted average shares outstanding, this equates to a 16% non-GAAP operating margin at the midpoint. Note that we are now applying a 30% non-GAAP tax rate for computation of the EPS number driven by the release of the U.S. valuation allowance. However, it should be noted that the actual cash taxes paid are expected to be substantially lower given the NOL position described earlier. For full year FY '26 we expect subscription revenue to be in the range of $741 million to $743 million, representing 3% growth year-over-year at the midpoint and we expect total revenue to be in the range of $821.5 million to $823.5 million, representing 3% growth year-over-year at the midpoint. These guidance ranges imply a FY '26 professional services revenue of $18.5 million. As we mentioned on prior earnings calls, we are experiencing higher data and hosting costs and expect that to continue into FY '26. Our initial estimate is these incremental costs will negatively impact subscription gross margins by approximately 400 basis points or 4% for the full year FY '26 and are baked into the guidance ranges provided. Our professional services gross margins are expected to be breakeven for the full year FY '26. With respect to billings, we estimate total billings of approximately $863 million here in FY '26, which would imply a billings growth rate of 4% year-over-year. For modeling purposes, we anticipate a billing seasonality pattern in FY '26 similar to that of FY '25. For the full year FY '26 we estimate our non-GAAP operating income to be in the range of $129 million to $131 million, equating to non-GAAP net income per diluted share of $0.38 to $0.39 assuming $277 million diluted weighted average shares outstanding. This implies a 16% non-GAAP operating margin at the midpoint. When modeling the spread of non-GAAP operating income throughout the year, you can assume a midpoint of $32 million for both Q1 and Q2 and then $33 million each for Q3 and Q4. As part of the restructuring we just announced, we will see a lower OpEx level in the first half of the year, but our investments will begin to ramp up in the second half. In terms of the operating expense profile, we expect both R&D and G&A to be approximately 10% of revenue with the remainder being for sale and marketing. In deriving the net income per share for modeling purposes, we estimate $16 million in other income for the full year, with $4 million of that to be earned here in Q1. This other income line primarily consists of interest income. Furthermore, a $39 million total non-GAAP tax provision for the full year FY '26 needs to be added to the non-GAAP operating income ranges provided. We estimate a non-GAAP tax provision of $9.6 million here in Q1. Due to the recent release of the U.S. valuation allowance, we are now applying a 30% tax rate on our non-GAAP operating income. But as noted previously, given our NOLs, we estimate our cash taxes paid to be significantly less than the non-GAAP tax provision. We also expect to be GAAP net income positive for the full year FY '26, consistent with our performance over the last two years. Regarding free cash flow, we believe we can achieve approximately a 15% free cash flow margin for FY '26, which would equate to a free cash flow generation of approximately $120 million for the full year. This excludes the cash outflow as part of the restructuring exercise announced earlier this year. This metric would be 100% increase in free cash flow generation versus FY '25. Note that we will not be providing a quarterly free cash flow guidance metric, but will update this annual metric throughout the year as needed. Lastly, I would like to thank all our employees for their dedication and passion for what we are building at Sprinklr and I'm grateful for the confidence that our customers have placed in us. And with that, let's open it up for questions. Operator?

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question is coming from Pinjalim Bora from JPMorgan. Your live is now live.

Great. Thank you so much for taking the questions. Rory, you have obviously put a lot of changes in motion. It's great to see kind of the improvement in the operating margin that you saw in Q4 as well as what you're guiding towards. Maybe talk about the avenues that is driving the cost efficiency. I'm trying to understand how we should think about that cost efficiency versus growth? Is that largely low hanging fruits or is there an element that it could actually be coming at an expense of some growth?

Yeah, that's a great question. Absolutely. We're focused 100% on making the business more efficient. That's crucial. I think over the past several years there was growth in investments in areas and organizations kind of expand. It was time to really focus on where were our critical customers, where were the most important product structures, where did we have to make the right investments. So, we did an analytic and looked at the business end to end. That's how we began to redo the go-to-market. That's how we restructured into a POD coverage model. Then we did work on the roadmaps for this year to make sure the right innovations were prioritized first. And we looked at where we were taking our marketing and our go-to-market dollars. Where is our ideal customer? Our ideal customer is the top of commercial to very large enterprise. So we understood that and then we optimized the business structure to capture that and to prioritize the investments in product areas. So, we streamline the business and we take a significant tens of millions of dollars of cost out. That's a tough decision and always difficult to do. And I want to, emphasize we did that with respect and care for everyone that was affected and we spoke to every individual directly. What that allows us then do is to flow some of that return to the bottom line. Our business should be returning in that 15% to 20% range over the next couple of years. That's what it should look like as an enterprise software player in this space. To your question, did we sacrifice growth? Absolutely not. That's never what we want to do. You can improve the bottom line and what we did was free up additional dollars in this action that we're going to invest over the next one to three quarters in additional talent, additional coverage to improve our product innovation, to accelerate activities, to improve our delivery and implementation. Sprinklr has to become much more consistent. The way we deliver to our customers and how we implement our solutions, the way we deliver our innovations and how our customers receive them, and even how we communicate with you and our investors. We need to make sure that we're executing in a very consistent way. Growth in the Rule of 40 is an important factor. So, as you look, you'll see us work through this FY '26 as a transitional year to position us to burn in our execution, improve our consistency, deliver on our better implementations, our better innovations. And then to allow us to bend the business. It's all about driving durable long-term growth. And we freed up cash so that we can make those investments, expenses throughout the year. So, we have degrees of freedom to capture that as we uncover those opportunities and we see needs of the customers and remember when we get it right with our customers. As I mentioned in a couple of the examples in the prepared remarks, the solution is deeply valued. We've shot ourselves in the foot over the past several years with inconsistent execution, inconsistent delivery, inconsistent implementation. We are going to use FY '26 as a year to transition and to create very much more predictability and consistent implementation. And that will then bend the business and return to growth. And to get to a Rule of 40 into the 30s, we have to return to a better growth level. And we wanted to be prudent with our guidance. There's a macro environment that's a bit choppy right now. We have a pristine balance sheet. Let's make sure that we execute these changes over the first two quarters and then position ourselves to bend throughout the year. But again, to answer your question, no, we had definitely focused on taking the actions that sure improve the bottom line. That's the low hanging fruit that's easier to do. But it was with the intent to free up the ability to invest and to create that durable, that bend in execution as well as investment to capture that longer term durable growth.

Thank you. Understood. Thanks for the clarity. And one for Manish. Manish, I was a little bit surprised with the 400-basis point negative impact seems like to subscription gross margin. Is there a way to understand how much of that is coming from higher data cost versus hosting?

Yeah, we don't break it out. But you remember in the Q3 call we spoke about renewing the Twitter license and I'd also mentioned that came with a commensurate increase. Data cost across every vendor are going up only because you're using these data feeds for training, AI models and such. And I think every data vendor has realized that there is value in the data that they provide. We don't really break down the hosting side either. But you also remember we've said as we've spun up new data centers, there's an initial setup cost to each one of these. It's close to $2 million per Pop. So, as we see more growth in Sprinklr service, we're obviously going ahead and investing in the hosting capabilities. And that all in the aggregate is what's impacting gross margins here in the short term.

Got it. Thank you very much.

Thank you. Next question is coming from Arjun Bhatia from William Blair. Your line is now live.

Perfect. Thank you so much. Rory, one for you to start off with. As you think about just the growth potential going forward, it seemed like a lot of your commentary was focused on the installed base and some of the changes that you can make there. How are you thinking about focusing go-to-market resources on new customer acquisition versus the opportunity that exists within your existing customers? Is there one that's a bigger priority? And I'd be curious how you’re thinking about that. Thank you.

Sure. I think the way to think about that in the tactical time frame is to make sure that the base is solid. We want to solidify the base and we have huge opportunities to expand. A software company of our size to have $149 million customers is pretty unusual. I mean that's a big number. And then to have a group of those customers in the $10 million, $20-plus million purchasing range is, I think, extremely unusual. We have an opportunity to grow those customers and we need to make sure that renewals improve, and it's really about creating a go-to-market that nurtures and keeps those relationships 365 degrees and that moves up into the C level. We're absolutely moving into more mission-critical capabilities. And as this convergence of the customer experience applications evolve the platform play of unifying the social activities across all vectors of engagement, discovery, commerce, support service. That's why the CCaaS business is so important. And then using AI to knit that experience and to create that value, that's going to grow. So yes, in the tactical time frame, protect and stabilize the base expand on that base, grow that $149 million into larger account. You always want to feed the engine. So net new logos are super important. But let's not go to the bottom and go to mom-and-pop stores and do $12,000 or $5,000 deal. That's going to be a distraction. This is an enterprise software company with gold standard customers. Our top 500 accounts are the most important in the world. Adding a couple of mom-and-pop shops, regional little play, that's going to be a distraction. We can double back on that in a couple of years let's grow with the place that our ideal customer set is. Our customers value Sprinklr when we knit these solutions together and we create a differentiated customer experience. That's why we're seeing this uptake. And if we execute FY '26, the transitional year, to improve the consistency of our implementation and our delivery, we will see improved growth. That's 100%. So answer the question straightforward, tactically and in the midterm focus on the base, solidify it, expand it. There's a lot of opportunity to grow it, and we prove that when we get it right, they see value. Two, of course, feed the engine with net new but make sure it's those ideal customer sets. We want a great one that I mentioned in the prepared remarks. I mean that's a huge coffee player around the world and to get in there and getting in a significant way, I think we can expand that four, five-fold over the next three, four years. But we've got to continue to focus on the base and get that solidified and then keep beating the engine with net new. I'd slant it 70/30 toward the base right now.

Perfect. That's great to hear. And then maybe just following up on that piece a little bit. But you mentioned, I think, historical implementation challenges a few times in your prepared remarks. Just curious how prevalent is that? And how challenging is that to remedy? And as you go back to these customers, where maybe -- you for implementations. Is there an opportunity to go and upsell and cross-sell as you're doing that? Or -- and I'm curious, just like on a timing -- from a timing perspective as well, how long this might how long some of this might take with your minimal base?

Sure. I think around implementation challenges, it's that the organization never really matured those functions. Those functions were almost done in a one-off manner. If you got the right team the implementation went very well. If it was a new team or they didn't have the proper documentation, it might be a bit of an adventure. The idea here, and I've just -- I've moved the service and support function under me now. So, I'm going to spend a fair amount of time on this. We need to trade -- treat implementation as a product. We have to productize it, get it consistent, have it very well documented. Our product documentation is getting up to speed. Documenting our implementations and then enabling our teams to do it consistently and to have that training done time and time again. That's all work that's being done right now. And as part of this transitional year, it's really not going back and fixing old ones. They're up and running. It's the ones that are in motion right now is doubling down, making sure we get them through the installation, make them successful and then creating that long-term relationship with the new coverage model so we can continue to enhance and expand. Your question about is there an opportunity to upsell, always. Every engagement with a customer is an opportunity to show value and to show how they can use the rest of the Sprinklr platform to expand. That's why we're doing a very focused set of work around our top 400, 500 account. We call it Project bear hug. We're going to really target and build account plans across every one of those in the first and second quarter. That will drive it. In parallel, we're working with our service teams to make sure that our implementations are almost productized and they're consistent. I think that will take two or three quarters to get there. I think -- but we're improving every day. I could even take four quarters. We want to make sure we do it right. But every day, we're improving. We're improving the knowledge base, we're sharing the experience, we're putting in the discipline so that it's much more predictable and that's how we've got to think about these implementation challenges. And in the short term, cover the accounts, make sure -- and I'm involved in a lot of them. So that's where I'm getting a lot of feedback and knowledge to understand exactly what it is. And when we have a challenge, get on top of it, solve that and get that customer to successfully implement. And I think the customer appreciates that we're getting better each day, we're not done. We have work to do no question. It took several years to get here. It's going to take more than three or four months to get it fixed, but we know what to do.

Okay, very helpful. Thank you very much.

Thank you. Next question today is coming from Elizabeth Porter from Morgan Stanley. Your line is now live.

Great. Thank you so much. I wanted to go back to the reinvestment in hiring, particularly around kind of the go-to-market strategy? And just how should we think about the timing of these hires in the typical time period for a rep to ramp? I'm really looking to get additional color on kind of what the implications are for when you feel like sales capacity will be durably operating at these higher levels. Thank you.

Yes, Elizabeth, that's a great question. One of the things that I'm trying to think about right now is what's my sales capacity for FY '27? And it takes us about six to nine months to be at a rep to be ramped. So, what we're trying to do now is actually hire in the second middle of the year kind of the hiring for the beginning of next year because we want to bring them on now so that they're ready. We have tried to think about that and try to make a structure. Now of course, you've got to deal with attrition and make sure there's performance. But our whole mindset it's to be hiring in the late second quarter, early third quarter for FY '27 so that we're building that out. What we want to see is an improvement year-over-year of our ramped AEs as we exit the year compared to the previous two or three years. The whole focus here -- and it's not just AEs, it's also about building the ratios within the coverage model. We will continue to invest. We had some technical mismatches. It's a technical solution and customers value the technical experience. If we slant too administratively in terms of skills and our success managers or in our solution architects, I think we missed the mark a bit. So we've really tried to rebalance that. And I think you'll see us also invest in those parts of the pod as well. both at the A level to get ready for FY '27 to make sure that we have the capacity in terms of the success managers. And I plan to add success managers most of the year. Especially technical success managers that really have those right skills and then to add the solution architect. It's all in mind that we'll then have the products hardened and we'll have the implementations more consistent so we can move to the third phase of the transformation to FY '27, which we like to refer to as acceleration. I hope that helps, Elizabeth.

Yes, that definitely does. And just as a follow-up, I understand that really the focus right now is around company-specific execution. But I did want to ask just about Macrel. It felt like exiting the year, we had a bit more clarity post-election, some optimism but certainly like the recent headlines around trade and tariffs that heightened some of the uncertainty. So, what are you guys hearing in terms of your conversations with customers or seeing in terms of deal cycles? And how should we think about the prioritization of spend around customer experience?

Sure. So, I think the macro environment is a bit unpredictable and a bit choppy right at the moment. A couple of answers from our perspective, tariffs don't really affect us directly. So that's not the issue. Will customers look to be more prudent on their spending? Yes, that's possible. I think that people are a little bit of wait and see. There's a bit of a correction that's going on in the market right now. We've got a pristine balance sheet. We've taken the cost actions and we've given you guidance that we think is very prudent. And we think that we can pretty much handle whatever the macro throws at us within reason. I mean if there is some gigantic shock to the market, that affects everybody. But I think we've positioned how we've laid out this year, and this is a transitional year to think about that. Customers are always going to be -- when there's a bit of uncertainty, but we're seeing a good pipeline. I mean, that's -- we're not seeing any huge issues there. Our issues, and there's plenty of businesses is not a gigantic company. I mean it's just under $1 billion. Our issue is making ourselves much more consistent, reliable and predictable. I think there's business to be won. I think it's both in our core as we reenergize and grow that. And in the services space, we have plenty of demand. But we have to harden that to make sure that's consistently delivered. Yes, if there are going to be some chop in the macro, I think we've got the balance sheet at the right place. I think we've got our costs at the right place. And we set our guidance prudently so that we can move through this. But we're not seeing anything major at this point, but we'll watch it. We'll watch it. Thanks, Elizabeth.

Thank you.

Thank you. Next question today is coming from Patrick Walravens from Citizens JMP. Your line is now live.

Oh, great. Thank you and congratulations on the start, Rory. Can you address federal, like how big is the federal government for Sprinklr? If I just look on USA spending, it looks like defense, commerce and asset health and human services all seem to use Sprinklr in some place. And we're hearing from salespeople and some other companies, they can't even get their phone calls and e-mails return for different parts of the federal government right now given everything that's going on. So, I'm just wondering if you can address what you're saying, that would be great.

Yes. What I would comment on that is it's very small for our business, Pat. It's not material in any way. Very small. You're right. We do have toeholds in a couple of those spots. But because we're at the beginning of like a Fed ramp approval, that limits how far we can do. So, you shouldn't factor that in any way as a negative or positive for us. You are not exposed on the federal side. While we have a few relatively small implementations in the millions of dollars? It's not material.

That's great. And then as a follow-up, can I ask, you had a very specific sort of algorithm and plans coming into this role. Has anything been harder than you expected?

No. I mean, what you see in transformations, it's pretty consistent. I mean, what's great about this company is the technology is quite good. The platforms, I think, is highly scalable. The AI is real, and it's truly infused. It's been in place for eight years. I think that's kind of differentiated. I think the market is moving towards unified customer experiences. We see this in the demand of our CCaaS solutions, where it knits together with our digital and our social activities. These are big brands, and they see this as a truly differentiated experience. If we get this right, it could be kind of a game-changing play in that space. I think we're -- when you look at this business, the maturity of some of the execution and processes feels like a startup, okay? And it's a compliment to the team that they grew it so big with such amazing customers. but we have to clean up those processes, get consistent implementation so that it's done, get the documentation properly done, get the coverage model properly done. These are basic fixable things. I've not come across anything catastrophic. Part of the reason we have some customer renewal pressure and satisfaction issue is because we've neglected some of the relationships or we didn't do some of the innovations or the implementation wasn't as clean as others. But then on the other hand, when we get it right, the customer grows and grows and grows. So, what we have to do is do it in a consistent way. This is that kind of -- we've done the first part, the business optimization, that's Phase I. All those five things I listed in the prepared remarks are done, and they're in the books now. Now we're moving to the second phase, which is burning in and improving execution. The next two six-month periods are important. They are transitional. We've got to stabilize the go-to-market. We've got to improve the implementation processes. We've got to get the execution on the delivery of product. We have to make the right investments over the next one to three months. That should begin to bend the business on the performance side. We should leave this year performing better than we started the year, and we should see an improvement on the Rule of 20 as we move through the year -- Rule of 40 as we move through the year. okay? I think that's really important. And I think moving into the 20s is it something that we should try and do as soon as possible because then we get ourselves positioned for that better state. So I think it's going pretty much to plan. There's a lot of work to do. There's going to be some unknowns that emerged, and we have to execute better every day, and that takes time -- that this transformation will take time. But I feel good about where we are. I think we know what to do, and we'll get there step-by-step, month by month, quarter by quarter.

All right, great. Thank you, Rory.

Thank you. Next question is coming from Jackson Ader from KeyBanc Capital Markets. Your line is now live.

Great. Good morning, everybody. Thanks for taking our questions. The first one is just on the bookings activity in the fourth quarter. Were there any deals that maybe slipped or duration adjustments that you weren't expecting? Or were there any of the changes that you've been looking to implement, Rory, that might have impacted some of the performance there in that fourth quarter?

So, Jackson, I think on the fourth quarter, the activity was stronger than expected. So, I thought that was a good sign we saw a good mix of small and large deals, expansion and new logos, and we saw them both in core and service. So, I thought it was a good finish to the year. Nothing about that was an issue. As you go through changing the whole go-to-market, we have to watch that in 1Q and 2Q. That's obviously the period when you have the most change. And we're -- I'm spending a truly disproportional amount of time in the field on the road in all three geographies. My frequent flyer miles are adding up because we need to manage that and work that during that transitional period as we improve our execution. So no, I didn't see anything about fourth quarter it was a bit better than expected. But it really matters where we get to as we move through the next four quarters.

Okay. And then, I guess, relatedly, can you give us a sense for the pipeline of either large renewals or large deals in terms of like when they're coming up for renewal and the seasonality? I don't want to lead the witness too much, but like if it's a big first half renewal cycle, right? When you're implementing, as you said, when all these changes could potentially -- that are going into effect, you prefer kind of a later renewal cycle this year. But I'm curious what the seasonality would look like.

The seasonality has been documented on this one. We do hundreds of millions of renewals each year. We're moving more and more to three-year deals, but we have still a lot of one-year deals. So, you see that. Our largest amount of renewals are in the fourth quarter and our second largest is in the second quarter. And so, its slightest in third quarter, but it doesn't look any different this year than each year. But the total number may be a little bit lower this year because of more three-year deals. But we're trying to move more and more with the go-to-market team to the three-year structure but that's a historical trend looks very similar. We've changed our incentives this year for the sales team and make sure that they are properly rewarded for renewals and renewals on time.

Okay. Thank you.

Thank you. In the interest of time, our final question today is coming from Parker Lane from Stifel. Your line is now live.

Hi. Thanks, guys, for taking the question here. Rory, there's a lot of talk about go-to-market changes and what you're doing from an implementation standpoint, but you also referenced technical debt and removing some of that from the platform. Just wondering if there's any particular area of the platform that you think that technical debt is most pronounced. And what's the ideal time line for resolving some of those issues and getting the platform on better footing in your eyes?

Yes, -- that's a great question, Parker. And that was one of the five areas. We spent a lot of time on over the past three, four months, working with Amitabh, the CTO and the team. We built the road maps for all of towers in the platform. We've been adding talent to the team. We have roadmaps in place for this year. We have our metrics in place. We've improved our documentation. We're improving our test coverage we're improving our PLM, or product life cycle and our new product introduction processes. You're going to see improvement as we go through the year. Some of the changes will take one -- sort of two quarters, some will take the whole year. You'll see improved delivery and execution as we move through this FY '26 transitional year. You'll see the focus in the core being around innovation. We're going to have a new product introduction with a very interesting innovation around customer feedback management this year that's going to be very, I think, disruptive in the marketplace, really leveraging AI. I think you're going to see us continue to focus to add value in that space. In the space of CCaaS and service, it's really about completing the work around telephony, so that we have expansive technology telephony options, both with partners and with our own Voice Connect Solution. We have a large number of customers and agents that are already on our solution, and we continue and expect to double that and triple that as we move forward. I think there's work that you're going to see throughout the year on workforce management, which is, I think, will be in a very good space as we get through our July and November releases. I think there's work on reporting on that side. I think we made an architectural decision that wasn't right. We created point-to-point reporting, which causes you almost at right report. I mean it seems like 1990 kind of a solution. We have to create more of a data lake and then a kind of a tableau type solution on top of that so that people can easily do the point and click, we'll fix that this year. There's work around security and reliability that we'll build out throughout the year to make sure that we're robust and that we're highly scalable. But you should watch that. It will be each quarter and as it will improve throughout this year and into next year. And we're making sure that we're not going crazy on the pipeline. We're not going to take every deal we can take. I mean, we want to make sure we harden this before we add too many new major implementation. We're still taking good deals. We're still adding new winners, but we've got to do it in an orderly fashion as we clean all of this debt up. It's this year. FY '26 is the main focus.

Appreciate all the feedback, Rory.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Well, I want to thank everyone for joining the call today. I appreciate everyone across the Sprinklr team around the globe and the hard work that they're doing, they're focused on creating value for our customers. Hey, this is never a straight line. We have -- there will always be new challenges that emerge, but I believe that we've taken the right initial actions. We're positioning ourselves to improve. We know what to improve. We've improved the bottom line. We've now created the capacity to invest to move forward. And then we'll look at FY '26 as a transitional year. We should see the business begin to bend, and we want to improve our growth rate as we move through the year and into next year. It all comes down to better execution. And when we get this right, our customers truly value the solutions we create and the AI solution we've built here on this amazing platform. So, give us time. Let us focus on our execution. We're going to get there day by day, quarter by quarter and throughout this year. We know what to do and we're going to work on it. Thank you for everyone's time today. Have a great day.