การแถลงผลประกอบการไตรมาส 2 ปีงบประมาณ 2027 ของ Sprinklr (CXM): การเติบโตของ RPO, แรงกดดันด้านธุรกิจบริการ และการปรับเพิ่มแนวโน้มรายได้จากบริการสมัครสมาชิก

ประเด็นสำคัญ

• รายได้รวมในไตรมาส 2 ปีงบการเงิน 2027 เพิ่มขึ้น 1% เมื่อเทียบรายปี สู่ระดับ 213.7 ล้านดอลลาร์ โดยรายได้จากการสมัครสมาชิก (Subscription revenue) เพิ่มขึ้น 3% สู่ระดับ 194.8 ล้านดอลลาร์ ขณะที่รายได้จากบริการวิชาชีพ (Professional services revenue) อยู่ที่ 18.9 ล้านดอลลาร์
• กำไรจากการดำเนินงานแบบ Non-GAAP อยู่ที่ 31.3 ล้านดอลลาร์ คิดเป็นอัตรากำไร 15% โดยกระแสเงินสดอิสระอยู่ที่ 13.1 ล้านดอลลาร์ในไตรมาสนี้ และอยู่ที่ 79 ล้านดอลลาร์ในช่วงครึ่งปีแรก
• บริการวิชาชีพยังคงเป็นจุดกดดันหลัก โดยอัตรากำไรขั้นต้นแบบ Non-GAAP ลดลงสู่ระดับติดลบ 22% ส่งผลให้อัตรากำไรขั้นต้นแบบ Non-GAAP รวมอยู่ที่ 66%
• ภาระผูกพันตามสัญญาที่เหลืออยู่ทั้งหมด (RPO) เพิ่มขึ้น 11% สู่ระดับ 1.03 พันล้านดอลลาร์ ขณะที่ RPO ปัจจุบันเพิ่มขึ้น 3% สู่ระดับ 614 ล้านดอลลาร์ ซึ่งได้รับปัจจัยหนุนจากการต่อสัญญาขนาดใหญ่และสัญญาที่มีระยะเวลายาวนานสูงสุดถึง 5 ปี
• ฝ่ายบริหารได้ปรับเพิ่มคาดการณ์รายได้จากการสมัครสมาชิกสำหรับปีงบการเงิน 2027 ขึ้นเป็น 782.5 ล้าน - 784.5 ล้านดอลลาร์ พร้อมกับคงคาดการณ์รายได้รวมไว้ที่ 866.5 ล้าน - 868.5 ล้านดอลลาร์
• รายได้ประจำรายปี (ARR) จาก SKU กลุ่ม AI-native เพิ่มขึ้น 40% เมื่อเทียบรายปี โดย Sprinklr มีโครงการ AI ที่อยู่ระหว่างดำเนินการมากกว่า 200 โครงการ ซึ่งรวมถึงเอเจนต์ AI (Agentic AI) และโครงการระบบอัจฉริยะสำหรับศูนย์บริการลูกค้า (Contact center intelligence)

ผลประกอบการทางการเงินหลัก

ผลการดำเนินงานทางธุรกิจและการปฏิบัติการ

Sprinklr ระบุว่า NAR เติบโตมากกว่า 50% เมื่อเทียบรายปี ขณะที่ธุรกรรมการขายที่เสร็จสมบูรณ์เพิ่มขึ้น 30% โดยบริษัทสามารถปิดดีลที่มี ARR มากกว่า 1 ล้านดอลลาร์ได้ 4 ดีลในไตรมาสนี้ และอัตราการต่อสัญญาปรับตัวดีขึ้นเมื่อเทียบรายปี

ระยะเวลาของสัญญาก็เพิ่มขึ้นเช่นกัน การต่อสัญญาขนาดใหญ่และการขยายสัญญาส่วนของ NAR หลายรายการมีข้อตกลงยาวนานถึง 5 ปี ส่งผลให้ระยะเวลาสัญญา NAR เฉลี่ยเพิ่มขึ้นมากกว่า 2 เดือนเป็นไตรมาสที่ 2 ติดต่อกัน

ฝ่ายบริหารเน้นย้ำถึงข้อตกลงเชิงยุทธศาสตร์ระยะเวลา 5 ปี มูลค่ามากกว่า 20 ล้านดอลลาร์กับบริษัทการพนันกีฬาและเกมรายใหญ่ โดยการปรับใช้จะครอบคลุมมากกว่า 35 แบรนด์, เจ้าหน้าที่ศูนย์บริการลูกค้า 1,500 ราย และผู้ใช้งาน 2,500 ราย นอกจากนี้ Sprinklr ยังปิดการขยายสัญญามูลค่าสัญญารวม (TCV) เพิ่มขึ้น 4 ล้านดอลลาร์กับบริษัทซอฟต์แวร์และบริการทางการเงินที่รวบรวมผู้ให้บริการ 3 รายและสัญญา 6 ฉบับมาไว้บนแพลตฟอร์มเดียวของบริษัท

บริการวิชาชีพเป็นส่วนงานการดำเนินงานที่อ่อนแอที่สุด โดยฝ่ายบริหารชี้ว่าแรงกดดันเกิดจากค่าใช้จ่ายพาร์ทเนอร์ที่สูงเกินไปในช่วงเปลี่ยนผ่านหลังจากการปรับใช้ระบบขนาดใหญ่ ความซบเซาของบริการจัดการ และปัญหาด้านการดำเนินงานในภูมิภาคหนึ่ง ทั้งนี้ CEO Rory Read กำลังเข้ามากำกับดูแลองค์กรส่วนบริการชั่วคราว

แผนการแก้ไขปัญหารวมถึงการปรับสัดส่วนทรัพยากรภายในและพาร์ทเนอร์ การใช้ AI เพื่อเพิ่มประสิทธิภาพในการส่งมอบบริการ และการเพิ่มอัตราการพ่วงขายบริการจัดการ (Managed services attachment rates) โดยฝ่ายบริหารคาดว่าการจัดการปัญหานี้จะใช้เวลาหลายไตรมาส

AI ยังคงเป็นพื้นที่การลงทุนหลัก โดย ARR จาก SKU กลุ่ม AI-native เติบโต 40% และบริษัทมีวิศวกร AI มากกว่า 300 คน Sprinklr ระบุว่าแพลตฟอร์มของบริษัทประมวลผลการสนทนาของลูกค้ามากกว่า 1.8 แสนล้านครั้งต่อปี และปัจจุบันรองรับโครงการ AI มากกว่า 200 โครงการ

คาดการณ์โดยฝ่ายบริหาร

แนวโน้มปีงบการเงิน 2027

ฝ่ายบริหารคาดว่ารายได้จากการสมัครสมาชิกจะเพิ่มขึ้นเมื่อเทียบกับไตรมาสก่อนหน้าเริ่มตั้งแต่ไตรมาส 3 โดยได้รับปัจจัยหนุนจากอัตราการต่อสัญญาที่สูงขึ้นและการแปลงโอกาสขายในท่อส่งขาย (Pipeline conversion) นอกจากนี้ ยังคาดว่ากำไรจากการดำเนินงานแบบ Non-GAAP จะเพิ่มขึ้นในไตรมาส 4 เนื่องจากประสิทธิภาพปรับตัวดีขึ้น

รายงานการประชุมระบุว่า คาดการณ์รายได้รวมไตรมาส 3 อยู่ที่ 250 ล้าน - 260 ล้านดอลลาร์ และคาดการณ์รายได้จากการสมัครสมาชิกอยู่ที่ 186 ล้าน - 197 ล้านดอลลาร์ ขณะเดียวกันระบุว่าแนวโน้มดังกล่าวสะท้อนถึงรายได้จากบริการวิชาชีพที่ 19 ล้านดอลลาร์ นอกจากนี้ ฝ่ายบริหารยังคาดการณ์กำไรจากการดำเนินงานแบบ Non-GAAP ไว้ที่ 33.5 ล้าน - 34.5 ล้านดอลลาร์, กำไรต่อหุ้นปรับลดแบบ Non-GAAP อยู่ที่ประมาณ 0.11 ดอลลาร์ และอัตรากำไรขั้นต้นจากบริการวิชาชีพติดลบ 15%

แนวโน้มไตรมาส 3 ตั้งอยู่บนสมมติฐานจำนวนหุ้นถัวเฉลี่ยถ่วงน้ำหนักปรับลด 239 ล้านหุ้น โดยฝ่ายบริหารคาดว่าจะมีกระแสเงินสดอิสระประมาณ 10 ล้านดอลลาร์ในไตรมาสนี้

ความเสี่ยงและประเด็นที่ต้องจับตา

• รายได้และอัตรากำไรจากบริการวิชาชีพยังคงอยู่ภายใต้แรงกดดัน โดยฝ่ายบริหารคาดว่าการแก้ไขปรับปรุงการดำเนินงานจะต้องใช้เวลาหลายไตรมาส
• การปรับใช้ผลิตภัณฑ์ AI ที่เพิ่มขึ้นส่งผลให้ต้นทุนระบบคลาวด์ ข้อมูล และโฮสติ้งสูงขึ้น นอกจากนี้ Sprinklr ยังลงทุนในบุคลากร AI และวิศวกรที่ส่งไปปฏิบัติงานในพื้นที่เชิงรุก (Forward-deployed engineers)
• การเรียกเก็บเงินฝั่งบริการที่ลดลงคาดว่าจะทำให้กระแสเงินสดรับในระยะสั้นลดลง ขณะที่การลงทุนในสภาพแวดล้อมโฮสติ้งใหม่จะทำให้กระแสเงินสดจ่ายเพิ่มขึ้น
• ฝ่ายบริหารอธิบายว่าสภาพแวดล้อมในตะวันออกกลางมีความผันผวนและไม่แน่นอน โดยบริษัทกำลังลงทุนในศักยภาพระดับภูมิภาคที่เกี่ยวข้องกับการเข้าถึงข้อมูลของรัฐอธิปไตยและข้อกำหนดการจำกัดขอบเขตทางภูมิศาสตร์ (Geofencing)
• Sprinklr ยังคงต้องดำเนินงานตามดีลและการต่อสัญญาสำคัญ ๆ ในไตรมาส 3 และไตรมาส 4 ให้สำเร็จ เพื่อสนับสนุนการเปลี่ยนผ่านไปสู่ระยะเร่งการเติบโตในปีงบการเงิน 2028 ตามที่วางแผนไว้
• บริษัทยังคงดำเนินการจัดการกับผลกระทบจากอัตราการยกเลิกใช้บริการ (Churn) ที่ระดับสูงจากช่วงครึ่งแรกของปีก่อนหน้า

สรุปประเด็นสำคัญช่วงถาม-ตอบกับนักวิเคราะห์

ฝ่ายบริหารระบุว่าความอ่อนแอในส่วนบริการเป็นปัญหาด้านการดำเนินงานและการจัดสรรทรัพยากร มากกว่าจะเป็นสัญญาณของอุปสงค์ดีลขนาดใหญ่ที่ลดลง โดยบริษัทกล่าวว่าค่าใช้จ่ายพาร์ทเนอร์ที่สูงเกินไปนั้นเกิดขึ้นหลังจากเสร็จสิ้นการปรับใช้ระบบที่ใหญ่ที่สุด และคาดว่าธุรกิจจะเข้าสู่ภาวะปกติในช่วงหลายไตรมาสข้างหน้า

สำหรับตัวชี้วัดล่วงหน้านั้น ฝ่ายบริหารกล่าวว่ายอดเรียกเก็บเงินที่ชะลอตัวลงส่วนใหญ่เกี่ยวข้องกับฝั่งบริการ แต่มุ่งชี้ไปที่การเติบโตของ RPO รวมที่ 11%, ระยะเวลาสัญญาที่ยาวนานขึ้น, การต่อสัญญาที่ดีขึ้น และการขยายตัวในกลุ่มลูกค้าขนาดใหญ่ว่าเป็นตัวชี้วัดถึงแรงขับเคลื่อนพื้นฐานของการสมัครสมาชิก

Sprinklr กล่าวว่าโครงการ AI ของลูกค้าได้ก้าวจากการทดสอบแนวคิด (Proof of concept) ไปสู่การใช้งานจริงที่มุ่งเน้นผลผลิตที่วัดผลได้ การประหยัดต้นทุน และอัตราการลดปริมาณการติดต่อ (Deflection rates) ฝ่ายบริหารข้อสังเกตว่าการปรับใช้เอเจนต์ AI แบบเต็มรูปแบบนั้นต้องมีเวิร์กโฟลว์, API และข้อมูลตามบริบทที่ชัดเจน ซึ่งอาจใช้เวลา 2 ถึง 3 เดือนในการดำเนินการ

ก่อนหน้านี้บริษัทได้ลดการหาลูกค้ารายใหม่ (New logo) ลงเหลือประมาณ 20% ของปริมาณการขาย ขณะที่เสริมความแข็งแกร่งให้แก่ฐานการดำเนินงาน ฝ่ายบริหารกล่าวว่ามีแผนจะเพิ่มสัดส่วนดังกล่าวขึ้นไปอยู่ในช่วง 30% ในปีงบการเงิน 2028 และกำลังเริ่มสร้างท่อส่งโอกาสขายของลูกค้ารายใหม่ขึ้นมาอีกครั้ง ก่อนที่จะเข้าสู่รอบการขายความยาว 6 ถึง 9 เดือน

ฝ่ายบริหารเน้นย้ำว่าการดำเนินงานในไตรมาส 3 และไตรมาส 4 จะเป็นตัวกำหนดทิศทางของบริษัทในปีงบการเงิน 2028 โดยสิ่งสำคัญที่ต้องทำก่อนประกอบด้วยการปิดดีลขนาดใหญ่, การรักษาการปรับตัวดีขึ้นของอัตราการต่อสัญญา, การขยายบัญชีลูกค้าระดับองค์กรที่มีอยู่เดิม และการควบคุมต้นทุนข้อมูล

รายงานการประชุมผลประกอบการฉบับเต็ม

บทถอดเสียงฉบับเต็มของการประชุมทางโทรศัพท์ผลประกอบการ

คำชี้แจงจากฝ่ายบริหาร

Operator

Greetings. Welcome to Sprinklr's Second Quarter Fiscal Year 2027 Call. [Operator Instructions] Please note, this conference is being recorded.

I'll now turn the conference over to Eric Scro, Head of Investor Relations. Thank you. You may begin.

Eric Scro

Thank you, operator, and welcome, everyone, to Sprinklr's Second Quarter Fiscal Year 2027 Financial Results Call. Joining us today are Rory Read, Sprinklr's President and CEO; and Anthony Coletta, 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 third fiscal quarter and full fiscal year of 2027, the impact of our corporate strategies, 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, I'll now turn it over to Rory.

Rory Read

Thank you, Eric, and hello, everyone. It's great to be with you today. In the second quarter, total revenue was $213.7 million, up 1% year-over-year, and subscription revenue grew 3% to $194.8 million. We delivered $31.3 million in non-GAAP operating income, representing a 15% non-GAAP operating margin. I want to thank our global teams, customers and partners for their trust and ongoing support.

We continued to strengthen our leadership during the quarter with the addition of Tom Addis as our Chief Revenue Officer. And just recently, we added Jordi Ribas to our Board of Directors. Tom brings a proven track record of driving growth scaling customer-centric organizations and building high-performance global sales teams. Jordi is a recognized product, engineering and AI leader with decades of experience at Microsoft, where he served as President of Search and AI. We're excited to welcome Tom and Jordi to Sprinklr, and we look forward to their many contributions.

In the second quarter, we continued building a stronger, more customer-centric company. At the midpoint of the fiscal year, our transformation remains on track. We remain firmly in the transition and execution phase of this process, strengthening the foundation needed to drive durable long-term growth.

The business continued to show signs of improvement during the quarter. And compared to the first half of last year, we are operating from a significantly stronger position across several key areas. Our bear hugging mindset and commitment to innovation are resonating with our customers, driving deeper engagement and reinforcing confidence in our strategy.

NAR grew more than 50% year-over-year, and our enterprise momentum remains solid with 4 $1 million-plus ARR deals closed during the quarter. Renewal rates improved, and completed sales transactions for the quarter increased 30% year-over-year. Together, these results reflect stronger execution, healthy demand and the value customers are realizing from our AI-native platform.

While we delivered solid results, we recognize that our professional service and support organization requires greater focus. Optimizing our partner ecosystem and enhancing profitability within the service business are important priorities as we continue our transformation. To accelerate these efforts, I will lead our services organization on an interim basis. We believe with this direct oversight, we'll enable faster decision-making stronger execution and more rapid implementation of the changes needed to improve performance over the coming quarters.

Our efforts will focus on 3 key areas. First, we'll improve the utilization of partners and enhance the economics of customer implementations. Second, we will expand the use of our AI across our service delivery model to drive greater efficiency and scalability. And third, we'll increase managed service attach rates where our data consistently shows stronger platform adoption, greater customer value realization and higher renewal rates for customers that leverage our managed services. We believe these actions will help create a stronger foundation for growth and customer success.

With that, let me turn to another key driver of our long-term growth strategy: our technology and product innovation. Sprinklr's differentiation starts with our AI native unified platform, which helps the world's most iconic brands transform customer intelligence into business outcomes at enterprise scale. This quarter, Gartner recognized Sprinklr as a leader in the 2026 Magic Quadrant for Social Media Management and Listening, positioning us at the highest for the ability to execute and furthest for the completeness of vision. We believe this recognition validates both our strategic vision and our continued innovation leadership.

Underpinning this innovation is a highly scalable, enterprise-grade platform that ingests over 180 billion customer conversations annually and delivers the performance and reliability that global enterprises depend on. As ADI reshapes customer experience, enterprises are increasingly seeking solutions that combine trusted data, domain expertise and intelligent automation to drive measurable business outcomes. With more than 200 AI engagements underway across our customer set, our agentic AI capabilities are helping our customers improve productivity, enhance customer experiences and accelerate results. We believe our unified platform, proprietary customer intelligence and deep enterprise expertise position Sprinklr to be a leader in the next generation of AI-powered customer experience.

Here are a few customer examples that demonstrate how we're delivering results and winning in the marketplace. Following the largest deal in Sprinklr's history in the first quarter, which included significant CCaaS and platform components, our first customer story highlights an expanded partnership with one of the world's largest sports betting and gaming companies. We recently signed a 5-year strategic agreement with this customer valued at well over $20 million. This partnership will extend our platform across more than 35 global brands, supporting 1,500 contact center agents and 2,500 users worldwide.

The customer selected Sprinklr to simplify its technology landscape by consolidating multiple vendors into a single AI native platform. By unifying CCaaS, social engagement and insights, Sprinklr will help improve operational efficiency, strengthen governance and enable greater customer understanding at scale across this global set of operations.

Our second story is a $4 million [ TCV ] expansion with a leading financial software and services company. What began as a departmental deployment has evolved into an enterprise-wide partnership spanning 5 brands and 8 business units. To simplify its technology stack and improve customer experiences, this customer consolidated 3 vendors and 6 contracts into Sprinklr's AI-native platform. By unifying social listening, publishing customer care and customer insights, the company gained greater efficiency, deeper insights and faster responses across the entire enterprise.

These 2 wins highlight a trend we're seeing across large enterprises: customers are increasingly moving away from disconnected point solutions towards enterprise platforms with deep AI capabilities that can reduce complexity, lower cost and drive measurable business outcomes. We believe Sprinklr is uniquely positioned to capitalize on this trend.

So in closing, at the midpoint of the fiscal year, we remain on track to build a stronger, more customer-centric company. We have now achieved 3 consecutive quarters of improved execution, which is driving NAR growth, higher renewal rates and stronger customer sentiment. Our bear hugging efforts and the innovation capabilities of our AI-native platform are resonating with customers and reinforcing that our strategy is working.

While we're making progress, there is more work to do. Executing well in 3Q and 4Q and building upon the recent momentum is the key next step for us to enter the acceleration phase of our strategy in fiscal year '28.

With that, I'll turn it over to Anthony for the financials. Anthony?

Anthony Coletta

Thank you, Rory, and good morning, everyone. First, I want to recognize the commitment and passion for customer success of our teams across the company. We also want to extend a warm welcome to Tom Addis, who recently started a new Chief Revenue Officer and member of our leadership team.

This quarter marks another key milestone in our transformation journey: continue to execute against our road map and strengthen the business. While there is still work to do, our momentum is building and we are moving steadily towards our goals.

Now let me turn to our financial performance. In Q2, total revenue was $213.7 million, up 1% versus prior year with an increase in subscription being offset by services. Subscription revenue was $194.8 million, up 3% year-over-year. We saw a balanced performance across our key markets, underpinned by the continued growth of NAR and quality [indiscernible].

Professional services revenue came in at $18.9 million. It was lower than anticipated due to some softness in managed services.

Our subscription revenue base net dollar expansion rate in the second quarter was 102%. Net dollar expansion rate for the $1 million cohort was 112% in Q2, which we view as a relevant measure of increased share of wallet. Net dollar expansion from this customer cohort stayed north of 110% for the fifth consecutive quarter.

More relevant to how we are transforming the business is our bear hug focus that continues to yield dividends. We believe this will continue to solidify our baseline and contribution from the top-tier customer base over time.

Renewal rates came in exactly as planned and keep showing improvement year-over-year. Furthermore, the average contract duration continues to increase. We like to see this trend as it can compound about time.

At the end of Q2 FY '27, total RPO was $1.03 billion, once again above the $1 billion mark for the quarter, reflecting the quality of contracted demand and increasing visibility into the future. Total RPO was up 11% year-on-year, representing the second consecutive quarter of double-digit growth compared to the prior-year period. In addition, current RPO was $614 million, up 3% year-over-year. Total RPO grew faster than CRPO, primarily driven by several large renewals and [ NAR ] expansions with contract terms extended up to 5 years. This longer duration agreements contributed to a more than 2 months increase in average NAR contract length for the second consecutive quarter. While this can create timing differences between RPO and CRPO growth from quarter-to-quarter, it does not change the underlying level of customer commitment. We consider RPO to be a leading indicator, and we typically pay it with other metrics to better appreciate underlying business momentum. As we post the best total RPO growth on record over the past 1.5 years, it is supporting near-term visibility.

Turning to margins. Second quarter non-GAAP subscription gross margin was 74%, while services gross margin was negative 22%, resulting in a total non-GAAP gross margin of 66%. While we expected some pressure from services during the quarter, margins were further impacted by partner [ crossover ] rents and execution challenges in 1 region. In addition to completion of several large implementation projects over the past year created an elevated baseline. There is no correlation to customer demand. And as Rory noted, we have identified key levels for remediation.

We are bringing in some new leaders in the services organization and are working towards making this margin [ to align ] in the near term. As noted in previous calls, we are experiencing higher data and [ hosting ] costs in response to business opportunities, especially for our expanded AI capabilities. In particular, the ARR for AI-native SKUs was up 40% year-over-year, and we are seeing outsized growth with our agentic and contact center intelligence.

Turning to profitability for the quarter. Non-GAAP operating income was $31.3 million or a 15% margin, which drove non-GAAP net income of $0.11 per diluted share. We generated $13.1 million in free cash flow in Q2. For the first half of this fiscal year, we've now generated $79 million in free cash flow. The strong free cash flow is driven by cost discipline and robust cash collection, resulting in improved cash conversion.

Our balance sheet remained strong with $453 million in cash, cash equivalents and marketable securities, and no debt. The $125 million accelerated share repurchase is now complete, and we have repurchased approximately 22 million shares under the program. By successfully executing this program over the past few months, we believe we optimize the value of capital deployed. As of August 28, we have $75 million remaining in our $200 million authorized repurchase plan to use at our discretion. Even after completing the buyback and the ViralMoment acquisition, we remain very well capitalized with no debt outstanding.

Now I'd like to shift to our financial outlook. As Rory shared in his remarks, we are still in the second phase of our transformation and mindful of the current macro and geopolitical environment. Our expectations as of today regarding these dynamics are factored into the following figures: remain confident in our strategy and are excited about the medium trajectory that is forming for Sprinklr. For Q3, we expect total revenue to be in the range of $250 million to $260 million, which is slightly down versus last year due to a significant reduction in professional services revenue. We had called out some normalized revenue mix due to completion of large services implementation last year.

We expect subscription revenue to be in the range of [ $186 million ] to $197 million, representing 3% growth year-over-year at the midpoint. The Q3 guide implies $19 million in professional services revenue, which is down 34% year-over-year. We expect professional services gross margin to be negative 15% in Q3. And as noted above, we are actively working on making improvements in this area.

We expect non-GAAP operating income to be in the range of $33.5 million to $34.5 million, resulting in non-GAAP net income per diluted share of approximately $0.11, assuming 239 million diluted weighted average shares outstanding.

Our non-GAAP operating income is pressured by lower professional services revenue in Q3, but more importantly, it's a structural shift for the long term. This reflects stronger adoption of our AI products, which is driving higher cloud and data costs, as noted in prior quarters. We are also investing in future growth by expanding AI talent, particularly forward deployed engineers in the field. We continue to make strategic investments to fuel the momentum across our AI product suite with the uptake of our agentic capabilities.

For the full year FY '27, we are following through the beat from Q2 and raising our subscription revenue guide to be in the range of $782.5 million to $784.5 million, representing 4% growth year-over-year at the midpoint. We estimate the sequential increase in quarterly subscription revenue to resume here in Q3 given higher renewal rates and pipeline conversion compared to prior year.

We expect total revenue to still be in the range of $866.5 million to $868.5 million, representing 1% growth year-over-year at the midpoint. This total revenue guide now assumes professional services revenue of $84 million, reflecting a more conservative services outlook. We are affirming full year total revenue guidance because of sales traction and improving overall execution offsetting the impact from services.

For the full year FY '27, we estimate non-GAAP operating income to be in the range of $139 million to $141 million, driving a 16% non-GAAP operating margin. This equates to non-GAAP net income per diluted share of approximately $0.47, assuming 240 million diluted weighted average shares outstanding. We estimate non-GAAP operating income to increase in the fourth quarter as we expect some efficiency gains.

Deriving the net income per share for modeling purposes, a total tax provision of approximately $41 million is to be added to the non-GAAP profit before tax line. To get to non-GAAP profit before tax, start with the non-GAAP operating income ranges provided and add an estimated [ $15 million ] in other income for the full year with $3 million to be earned here in Q3. This other income line primarily consists of interest income. We estimate a tax provision of approximately $10 million in Q3. This equates to approximately a 26% effective tax rate on our non-GAAP profit before tax for both the quarter and the year.

We now expect to generate a full year free cash flow margin of approximately 16%, representing about $135 million of free cash flow with roughly $10 million expected in Q3. This updated outlook reflects 2 factors that became clear during the quarter. First, we now anticipate lower services billings, which reduces near-term cash collections. Second, we expect higher cash outflows for investments we are making in new hosting environments. Importantly, our cash collection efficiency remains strong, and we continue to maintain a disciplined approach to capital allocation.

In summary, Q2 was a stepping stone as we continue positioning the business for the next phase. We're seeing positive signs in renewal rates and customer engagements. We have some headwinds for services, but we are taking action. This is distinct from our subscription growth outlook and from tangible progress of our core operating model. Our fundamentals remain solid with a healthy balance sheet and strong cash conversion.

As we move through this transition, we are building momentum and continue to instill operational discipline as we execute our strategy. Our leading indicators are beginning to firm up and [indiscernible] in contracting demand, which we believe positions FY '27 at the inflection point in our overall trajectory.

Our global customer base continues to embrace our Unified-CXM platform as the operating system for customer expense. Our AI-native platform combines unique data, contacts and situational awareness across the enterprise, enabling customers to turn signals into actions in real time with our agentic capabilities. And that's of paramount relevance in the modern enterprise. This differentiated approach combined with [ actionable context ] serves as the connective tissue across customer-facing functions, helping organizations drive stronger engagement, efficiency and greater outcomes.

As we look ahead, our customer obsession payments intact with continuous focus on the speed of innovation and quality execution for the long run. With that, we'll open the line for questions. Operator?

Operator

[Operator Instructions] And the first question is from the line of Jackson Ader with KeyBanc.

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Jackson Ader

The first one, Rory, is for you on the professional services performance. What's the evidence that this is truly going to be -- is an execution issue or execution fix and not some sort of indicator of activity or large deal demand?

Rory Read

Yes. No. Quite the opposite, Jackson. We came off of the largest implementation we had ever done, and it was very successful. And we continue to win large deals here in the second quarter. I referenced one, the well over $20 million TCV deal. I have very interesting large deals in the second half that are key, as I mentioned. Very important, our execution in 3Q and 4Q to make sure we maintain that momentum.

But basically, the transgression was that we got caught with a bit too much partner expense in the short term. We knew this was coming, and we signaled this to everyone for some time, that this was the transition quarter. I think we could execute it more cleanly. I think that I've now been running it for about 6 weeks. I can see line of sight over the next couple of few quarters to clean it up properly. It's just about having the right mix between partners and internal. And then we have some of the larger deals that will come in the second half that build on top of it. So I want to leverage that experience.

It's really just that transition period. And I think that's the key to execution. I give you updates as we go through the quarters, but that's my proof point.

Jackson Ader

Okay. And then if I think about just the rest of the year and the fourth quarter, obviously, always being important for bookings and deal signings, how are you thinking about not just allocating your time now that professional services is under your kind of direct supervision, but just rightsizing the resource and the attention allocation of the company to make sure that still new deal signings are -- get top priority as we head into like the seasonal strength?

Rory Read

Jackson, you're spot on, 100%. The key to this transformation, we've worked the last 21 months to position ourselves. We're at the halfway point of this year, we are where we wanted to be, minus this service transgression, but that's a tactical execution issue. The key to our turn in getting to the acceleration phase is running 5 good quarters together. We've built 3 in a row now, we need to execute 3Q and 4Q. That means closing deals, managing bear hug, making sure the renewal rates stay where they've been. All indicators have become much more predictable, we believe that we're in a good position. If this was a World Cup soccer game, we're at halftime. And halftime, we're up 1 mill. We are in the game for this year.

Now we have to execute 3Q and 4Q, and we have to stay aggressive and win those deals. Fixing services takes a couple of few quarters. I don't see anything significant about that. It's really just that transition from -- which was a huge implementation, well over 200 people working on it. And then capturing that momentum. I'm going to work on that, sure, but my primary focus is on every major customer, key renewals, key large deals, making sure we negotiate our data costs properly, each of those items.

And I'm excited about adding Tom Addis on the sales side. This guy is a pro. I mean he understands how to build long-term success. He knows how to build the culture. He's deep into the pipeline. That's the kind of discipline and focus.

I'm hopeful that the Middle East will settle down as that's a key part of our business and we'll want to continue. And that group has shown real grit and determination. They have great opportunities. The deals are there, now we have to execute. I think that's the key. And you're spot on, my primary focus is keep building the turn. I can fix service and support, and that's important. And we will. But the key is the next 2 quarters and getting that momentum 5 quarters in a row.

Operator

The next question is from the line of Arjun Bhatia with William Blair.

Arjun Bhatia

Perfect. Rory, for you, can you just maybe let us know how you think about the trade-off in professional services between relying on external partners and your internal organization to better serve your customers? Are you sort of leaning more one way or another now that you're kind of working through some of the challenges in that organization in terms of how you should allocate resources between those 2?

Rory Read

Yes, Arjun, I think it's really straightforward. The key to this business is to grow subscription revenue. That's the key, becoming valuable on all phases of a unified customer experience platform. Services is an enabler of that. Two things. We want to use the strong expertise in our internal service and support organization, augment that. They did a magnificent job on the largest deal we ever won, and the implementation. Really nice work.

What we want to do is we want to make sure when we make this transition, we don't really need to grow that faster than subscription revenue. We'd like to leverage partners to give us more reach. We see a higher win rate when we have customers with a strong trusted relationship with a partner. That troika, the 3-way of Sprinklr, the partner and the customer, wins about 15 points higher win rate. So I like that. And I've always been a channel guy in my entire career, and they're definitely a powerful asset.

We'll be naming a new leader in the partner space that'll be reporting to Tom Addis. He's a pro in this space. I think, though, our services team brings deep, deep expertise. And I want to put them on the most critical projects and I want to bring their skills to bear to truly bring what's next to customers.

This is a software company, a unified customer experience platform company. Services are needed to enable that and to accelerate that. That's how I view it. And partners have to play a key role in this. I don't need to grow services faster. I told everyone that we had that huge deal and we would transition. I gave you the signals. Could we have done it a bit smoother? For sure. I'll straighten that out. But the key for us is to make sure that it's helping us win more of these unified customer experience deals.

Arjun Bhatia

Okay. Perfect. And then just I'd love to hear how you're thinking about profitability here. I know we had -- we had a little bit of a dip in the first half of the year with gross margins and AI investments, which I think makes a lot of sense. But when you look at other items in OpEx, what kind of points of leverage do you see here in the business to drive operating margins higher in fiscal '27 or -- '28 and beyond there?

Rory Read

'28. I think what we've always told everyone is that in the second phase of execution and transition, we have to pay down the technical debt. I'm very pleased with the progress we're making, the work around tokenization. AI and our internal execution is paying real dividends. I really like where that's going. We'll be done with most of that technical deficit this year. That should position us to be more efficient.

And you combine that, if we execute well the next 2 quarters and we run 5 together, we should move into the acceleration phase. And that then will enable us to really focus on that growth. So we're making the investments now to clean up the debt, to accelerate innovation with our [ Project Blitz and Blaze ], which are over 200 customer engagements in AI. I think we're making sure -- we're prudent on the spend right now. As we move into that acceleration phase and we have that debt behind us, we can stretch out some bit of profitability potentially in the next year or 2.

But it's always a trade-off, do we want the growth? And the key for this company is growth. We need to grow faster. And I'm going to make the decisions over the next 2, 6, 8 quarters that drive that long-term durable growth. And we're in the right spot to make those decisions.

Operator

The next question is from the line of Patrick Walravens with Citizens Bank.

Kincaid LaCorte

Great. This is Kincaid on for Patrick. Rory, I just wanted to poke you on this metric. You mentioned that completed sales transactions for the quarter were up 30% year-over-year, but obviously, revenue did not grow at the same rate. How do I think about that number in relation to performance? I mean yes, I think that's where I'd love to be.

Rory Read

Yes, Kincaid, the key there is I'm just trying to give you a sense with anecdotal information that gives you a feel for activity. I keep telling you, I like the pipeline, I like the uptake from the customers. There's no question that customers are seeing Sprinklr as a better company. They're engaging with us. We can see it in the pipeline, we can see it in the larger deals.

I can tell you that when I first got here, we backed down new logo acquisition to about 20% of our volume. We're starting to crank that up. We want to, as we go into FY '28, we want to drive that to a much higher rate next year, probably into the 30s. So that's a key component.

I believe that from a standpoint of the customers, they see this kind of activity, they see the value of the platform, they're moving away from towers and spot solutions. They want to simplify their IT platform. I wanted to get a sense for that. I always talk about the pipeline and the activity.

I want to give you a number. The key to subscription growth is you have to build it over multiple quarters. That's the key. We've seen our RPO come off the bottom of 3Q last year, which was the low point. We've seen it consistently build. We'd see our renewals rate for 3 quarters in a much better spot. We can see that we're building a firmer base to work from.

We're 3 quarters into it. We need to run 2 more quarters together, and that will set the trajectory for next year. I think that gives you an indication that we have good activity on the underpinnings, but now we have to do it, you have to do it 5 quarters. And we're still living with that heightened churn from the first half of last year.

Kincaid LaCorte

Spectacular. And then on the executive side, I'm super excited to hear that you are taking ownership and taking the lead on the services piece. I'm super excited by the addition of Tom. Who else do you need to add into this organization to make sure that you guys are going to be flying?

Rory Read

Yes. We've done a very good job across the board of building out the leadership team, not only at the ELT level, but the next level and 2 levels down. Most all of our VP and SVP positions are complete. I mean there's a handful left out there. So I feel we have that operating organization in place.

I think we want to get the head of partners in place. We're going to shortly announce a new leader in customer success. And I think then it's really just doing the long-term leader for service and support. I'm in no gigantic rush to do that. I want to find that right person, but I also want to get my fingerprints on it before I pass it off to someone. And I don't want to give any sense that I'm not focused on our largest deals, our biggest renewals and our data relationships with our key technology partners. That's always my first priority.

Operator

Our next question is from the line of Raimo Lenschow with Barclays.

Raimo Lenschow

Perfect. Rory, we kind of use billings often as a leading indicator. And I know it can be noisy and I got some of the points today on professional services on billings there. Is that what drove that number? Because if I use that as a [ leading ] number, that obviously, there's some different messages coming from that one. Can you speak to that, please?

Rory Read

Billing? I didn't hear. You kind of dropped a little. Sorry, Raimo, what did you say exactly?

Raimo Lenschow

I said the billings is kind of -- we use that often as a leading indicator for what's coming. I know you have noise from professional services. So is that all professional services or what's going on there?

Rory Read

Yes, yes. There's a big chunk. I'll pass it to Anthony in a second. Sure. There was some in terms of professional service and some timing activity. I like the trajectory year-to-year at the halfway point. I like the RPO trend. I like the fact that we're seeing longer renewals. We're seeing early renewals. I think we're a work in progress. Let's keep going. I think we're at the halfway point of a World Cup game. I think we're tie or we're ahead 1. We got to execute. We got to keep going and deliver 3Q and 4Q. Anthony, any color you want to add on billings?

Anthony Coletta

Yes. No, you're right, Raimo. This is mostly related to services billings. And while we don't guide on billings, we -- it came a bit softer than anticipated for the quarter. But this is no change for the long run. You've seen the total RPO trajectory. And the fact that we've also closed some larger deals with longer periods and terms, et cetera, that's supporting the model. But for the short term, obviously, services billings came a bit softer than anticipated. But that's pretty much it.

Raimo Lenschow

Okay. Perfect. And then the second question was, what are you seeing at the moment in the market in terms of new project starts? I know like you're competing on something, but how does the [indiscernible] in terms of AI, there's a lot of talk about crowding out and things like that, like what are you seeing in the sales engagement?

Rory Read

What I said is the key. I think our bear hugging, Raimo, is definitely working. With our core business, I think we've seen a good uptake in interest. Our pipeline looks good in the second half. We've got more large deals in the next 3 quarters than we've had in my time that I've been here. I think our run rate business looks positive. I think the activity and interest level of customers, and they're seeing a different Sprinklr. Over 200 AI agentic, Copilot engagements, we track every 1 of them. And we've implemented Project Blitz, which we're trying to deliver a code and changes using AI and our own internal processes every week or 2, moving from a quarterly release cycle that we used to go on. This is much faster innovation.

And then Blaze we have forward-deployed engineers on over 70%, the vast majority of those customer AI engagement. So we see good activity and large. We see good activity on run rate. We see good engagement. And then we have, in the must-win AI space, I like -- 200 engagements is a good number. We're growing at over 40-plus percent in that space. This is the right indicators. And if I continue to turn on the [ spigot ] as I harden the infrastructure on new logo acquisition, we should see that next year in FY '28. And that's how we're positioning this transition.

Operator

Our next question is from the line of Catharine Trebnick with Rosenblatt Securities.

Catharine Trebnick

A quick question on net dollar expansion. This is the fourth quarter of north of 110%, 5 consecutive quarters. How sustainable is that level? And is it driven -- what's it driven by? Seat expansion [indiscernible] price? More color on that would be appreciated.

Anthony Coletta

Yes. As you say, Catharine, it's a good trend. So we have been fairly steady on that trend overall. It's been in the right ballpark. It can vary from 1 quarter to the other, but it's still solid. And as I mentioned, we also look closely based on our go-to-market focus and strategy on the $1 million-plus cohort in terms of net dollar expansion. And this is for 5 consecutive quarters north of 110%, as I said.

So it's essentially, we are seeing more renewals and more NAR growth. And we have a customer sentiment that is really close to the bottom now in terms of uptick and firming up. So we expect this to be a metric that will continue to improve over time and to stay steady. But we don't expect this to be lower than where we are. We expect this to firm up actually.

And this is, actually when you look at the leading indicators, this is what those leading indicators are telling us in terms of AR, in terms of total RPO, et cetera. So this is pointing in that direction. But there was a bit of the transition also in the space or across the different segments. And you can see that between -- when you look at the difference between the $1 million cohort and the rest, so you could see that there was some transition happening underneath. But we see it stable and probably coming up as we go.

Rory Read

And by the way, Catharine, I think it reflects on bear hug. I mean as we've addressed some of the issues from the previous 3 or 4 years, our enterprise customers are seeing a different Sprinklr. And as we've taken bear hug lower and lower into the cohorts, we see an improvement in terms of renewal rates and expansion, there's no question. 50 and below is the last space for us to tackle with bear hug. And I believe the work we're doing with Project Cornerstone is going to yield the right outcomes there. I believe that we're seeing the right momentum, the right customer sentiment.

And I think we have the right solution. We have this access to the data that they need in the new buying models that's almost unmatched in the marketplace. And with better execution, better engagement, we're seeing better uptick from our customers.

Operator

The next question is from the line of Mason Marion with Cantor Fitzgerald.

Mason Marion

I want to go back to the Middle East. I think you had a few deals slipped last quarter. Did you see those close? Or are you still seeing ongoing disruptions in the region? Or are you getting back to business as normal there?

Rory Read

Yes. Thanks, Mason. What I see is a gritty, determined team and Sprinklr Middle East. They're doing a great job in a tough environment. We saw yesterday things heat up again. The thing is a fluid structure. We saw the deals that slipped from 1Q, pretty much closed in 2Q, but then we saw some other deals closed. They've done a good job of executing and delivering. They have the pipeline out there to have a quite interesting uptick. I'd like to see this thing -- this macro situation stabilize a bit more so that team could run like I think they can.

They've done a good job. I think they're delivering a strong level. But I think there's much more work to get there once that environment settles down. I still think it's a bit choppy. And so we're not counting on any kind of breakout numbers at this point, but I am counting on that team to show the grit and determination that they've shown through the first half to keep delivering.

Mason Marion

Maybe one more on that topic. I know you had to migrate those customers to your Irish data center. Are you planning on keeping them in the Irish data center, you're going to move them back to the region? And then how is that impacting your gross margins?

Rory Read

Yes. We had to put up a new capability in region. I think that's partial 2 reasons, because we wanted some of our customers need to based on their local legal and regulatory issues return. And two, I think there is good demand in that region on a strategic time line, the next 6, 12, 18, 24 months. So we're building some more capacity on the COGS side both around sovereign data access, geofencing concepts, around the Middle East and around Asia, where we see interesting strategic demand. We'll make those investments now so that we're ready, but we're now starting to move some of those customers back to the Middle East and position ourselves for future opportunities that we see in the pipeline.

Operator

Our next question is from the line of Elizabeth Porter with Morgan Stanley.

Elizabeth Elliott

Great. I want to develop on the subscription revenue guidance. When we're looking at the full year, it looks like the Q4 implies a bit of a deceleration in growth just exiting the year. So I was hoping you could put a finer point on what are some of the measurable metrics, whether it's a net new ARR, CRPO retention that really support the confidence that Sprinklr is moving from the execution phase into the acceleration phase in fiscal '28? And how much of it is rooted in what you're seeing today versus still needing to execute on in the back half of the year?

Rory Read

Yes. Elizabeth, great to talk to you and welcome back. Hey, I think, Elizabeth, the key here is 3Q and 4Q. We're keeping our powder dry. We're making sure we execute. We've done 3 good quarters in a row that are building the foundation. You know in a subscription business and with this kind of software, you have to run 4 quarters. We have to clean up that accelerated churn from the first half of last year. That's starting to get behind us, right? And we've seen 3 very predictable, good quarters on renewals, on NAR, on [ those ] expansion.

But it's only half time. We have to deliver 3Q and 4Q. How we execute 3Q and 4Q sets up the trajectory for next year. The feedback I give you is where we would like to be on the transformation at this midpoint of this fiscal year. We see the deals and the opportunities, now we have to execute and close them in 3Q and 4Q. We will give you an update at the end of 3Q. And then based on that, we'll give you an update on 4Q. That will set the trajectory of next year, that's the key. That's where we sit.

Operator

The next question is from the line of Tyler Radke with Citi.

Tyler Radke

Roy, you talked about 200 active AI engagements, which is great to hear. I'm wondering if you could just compare and contrast the capabilities and use cases that you're seeing in the AI engagements versus, say, earlier this year, a year ago. And for the engagements that initially translate to a deal, what type of uplift or how can you sort of quantify what you're booking in terms of ACV?

Rory Read

Yes, Tyler. That's an awesome question. I think the key here is we have over 300 AI engineers in place, forward-deployed capabilities. We see the application of the AI technology internally, both at our support services and our engineering team, playing real important dividends. As we look at these 200 engagements and we look back maybe 3, 4 quarters, they're in the agentic space, the Copilot space, those are primary, and some of the insight activities. .

In 3, 4 quarters ago, it's a lot of POCs and a lot of concepts. People were excited about it, but they didn't really know how to yield. When you get to the detailed execution, you have to create the workflows, the APIs that link the data, and then you have to have the right contextual data, unlock the agentic power of the solution. [ Copilot], straightforward that gives you the knowledge and the productivity. But full agentic, you really need that data and execution. And that's not a 2-week project. Those projects, to go implement them, they take time. They might take 2 months, 3 months, and really execute them well.

But I think what we're seeing, and we've tracked every single project and we are looking at every project, what went well, what needed to change. The key for us moving forward is making sure that we're after those POCs, which anybody can do and they're fancy and look nice, make sure there's a real understanding of what the workflow that we're going to move to an agentic solution is and how we're going to link the contextual data that creates the yield.

I think the knowledge and experience that our teams and our customer has is at a much higher level than it was 3, 4 quarters ago. I think the practical execution and leveraging this powerful set of data in Sprinklr, it should be part of that acceleration phase next year. We have to win in the agentic space because, otherwise, you just become a pipe. You don't want to be a pipe. You want to be a player in that.

Two under engagement, very nice. Like them. They're a key driver for the growth that comes over the next 2, 3 years. The key here is take the learnings over the past 2, 3, 4 quarters. We keep refining it over the next couple of quarters, and demonstrate those outcomes that we are seeing with customers now. These are not POCs. These are real returns and real deflection rate, real cost savings.

And remember, we've been doing this at scale with some of our largest customers for 7, 8 years, like one of the largest technology companies in Texas. We've had a long relationship in this AI space, and that's what's happening in that space. So very different than 3, 4 quarters ago. And I think both sides of the customer and us have learned how to really turn it into outcomes.

Operator

The next question is from the line of Clark Wright with D.A. Davidson.

Clark Wright

Awesome. I appreciate the added commentary on new logo growth assumptions in the current pipeline. Could you potentially elaborate on from an industry perspective, if you're seeing traction in specific end markets?

Rory Read

Yes. So Clark, great to talk to you. What we did when I got here, and it was 3.5 years of declining activity, we said, hey, we got to back off a little bit and get our house in order. Let's harden the CCaaS space, get it mature, get our processes in order. Let's accelerate our innovation engine and let's start doing what we say. We must be accountable to customers. And that's what bear hug is about: do what we say and own what we do.

What we're seeing traction in the idea across these enterprise customers. We see it in banking, we see it in retail. We see it in pretty much all of the spaces we play. That's not something different in terms of that space. It's really about seeing this take hold and really getting that in place.

Clark Wright

Awesome. Appreciate that commentary. Could you maybe also just talk about the difference in the upper echelon of customers that are utilizing your AI offerings today versus the strategy in order to proliferate our offerings across the broader customer base?

Rory Read

Yes. What we're seeing is we're seeing across these 200 engagements, AI, we're seeing it across our enterprise, these iconic brands. They're very engaged. They know the power of the customer signals that we're able to pull together. They're creating better insights. They're providing better agentic. We're seeing it both in CCaaS and on the core side, both. And we're seeing them have a hunger and desire for outcomes.

I think we're past the flashy part where everybody is like AI is going to change everything and I got to do AI. Now we're into the phase where we've got to drive real efficiency, real outcomes in CCaaS. We've got to create actionable insights in the core and marketing and social spaces. I think contextual data and the data that we bring together across these customer signals is what enables that to happen. Some of the execution and people run around and say, "Oh, you can do it in 10 minutes." Remember, you've got to define the workflows, you've got to link the data, pull it together and let the AI engine, create the outcome. We are seeing it at the top of our stack all the way through the top of commercial. There's definitely a desire, and they have the data there.

So we see this as a key enabler, both for our service business and for our social business. And in terms of new logos, we back that down. I think as we will be ready at the beginning of FY '28, we know it's a 6 to 9-month kind of sales cycle. We're starting to turn the new logo engine on now so that we're ready in the first half. Does that help, Clark?

Clark Wright

No, that's awesome.

Operator

At this time, we've reached the end of our question-and-answer session. I'll turn the floor over to Rory for closing comments.

Rory Read

Yes, I want to thank everyone for joining today. I really appreciate the continued interest. Hey, we are where we expected to be, minus the transgression in terms of services. I think that's a tactical couple of few quarter cleanup. I think it's really just a transition of that 1 large project to be more efficient. I'll oversee that and the tactical or interim time period.

The key for us is we're 3 quarters in of improving momentum, where predictability is getting better. We've hardened the infrastructure. We're becoming much more enterprise mature. We're seeing our customers react to it in terms of activity, engagement and interest. The key for us is execute 3Q and 4Q. That's the setup that gives you the trajectory into FY '28. Those are the key.

I think we'll continue to bear hug. We'll keep focusing, but I like where we're sitting. We have more work to do. Appreciate your interest, and we'll keep you updated as we move forward. Thanks, everybody.

Operator

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time. We thank you for your participation.