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Core Insights - Sprout Social (SPT) reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, and up from $0.13 per share a year ago, representing an earnings surprise of +43.75% [1] - The company achieved revenues of $115.59 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.68% and increasing from $102.64 million year-over-year [2] - Sprout Social has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The earnings surprise of +43.75% indicates strong performance relative to expectations [1] - The company has shown a consistent trend of exceeding revenue estimates, achieving this four times in the last four quarters [2] - Current consensus EPS estimate for the upcoming quarter is $0.19, with expected revenues of $118.75 million, and for the current fiscal year, the estimate is $0.74 on revenues of $454.61 million [7] Market Position - Sprout Social shares have declined approximately 66.8% since the beginning of the year, contrasting with the S&P 500's gain of 15.1% [3] - The Zacks Industry Rank places the Internet - Services sector in the top 38% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The estimate revisions trend prior to the earnings release was mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market [6]

Core Insights - Sprout Social reported strong Q3 2025 earnings with revenue of $115.6 million, reflecting a 13% year-over-year growth and a record non-GAAP operating margin of 11.9% [1][29] - The company experienced a 17% year-over-year growth in remaining performance obligations (RPO), totaling $258.5 million, indicating robust demand and customer commitment [1][30] - The integration of NewsWhip has significantly enhanced Sprout's customer base and product offerings, contributing to a strong pipeline and large deal momentum [4][17] Financial Performance - Total revenue for Q3 was $115.6 million, with subscription revenue at $114.7 million, both up 13% year-over-year [29] - Non-GAAP operating income reached $13.7 million, up from $7.5 million a year ago, marking a non-GAAP operating margin increase of nearly 460 basis points [29][30] - Free cash flow for the quarter was $10.3 million, with a trailing twelve-month free cash flow increase of over 80% [28][29] Customer Growth and Retention - The number of customers contributing over $50,000 in annual recurring revenue (ARR) grew by 21% year-over-year, indicating strong enterprise demand [29] - Multiyear contracts now represent nearly half of Sprout's contract mix, showcasing improved gross retention across customer segments [1][5] - The $50,000+ ARR customer segment is the fastest-growing, approaching 2,000 customers, and now accounts for nearly half of the company's revenue [5][30] Product Development and AI Strategy - Sprout is set to roll out significant AI product expansions in Q4, which are expected to enhance customer value and operational efficiency [7][12] - The company is focusing on integrating social insights into existing tools and platforms, enhancing decision-making capabilities for customers [14][19] - New product features include AI-powered translation for 180 languages and integrations with Canva and Adobe Express, aimed at improving content creation and sharing [19][20] Market Position and Competitive Advantage - Sprout's unique access to social data and partnerships positions it favorably in the evolving AI landscape, allowing for responsible data interpretation and operationalization [10][11] - The company emphasizes its role as a trusted system connecting brands and customers, which is increasingly important as AI reshapes software [15][27] - Sprout's strategy includes deepening customer engagement and expanding partnerships to enhance its ecosystem and drive growth [25][27]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $115.6 million, reflecting a 13% year-over-year growth and a non-GAAP operating margin expansion of almost 460 basis points to nearly 12% [5][24] - Remaining performance obligations (RPO) grew 17% year-over-year to $258.5 million, indicating strong demand and execution [5] - Non-GAAP operating income totaled $13.7 million, up from $7.5 million a year ago, marking a record non-GAAP operating margin of 11.9% [24][26] Business Line Data and Key Metrics Changes - Subscription revenue was $114.7 million, also up 13% year-over-year [26] - The number of customers contributing more than $50,000 in annual recurring revenue (ARR) grew 21% year-over-year, indicating strong performance in the enterprise segment [26] - The $50,000-plus ARR customer cohort is now approaching 2,000 customers, an increase of nearly 700 over the past two years [6] Market Data and Key Metrics Changes - The company reported strong net additions and the inclusion of NewsWeb customers, which has added several large global brands to its customer base [5][6] - The enterprise segment continues to show robust growth, with large deals driving significant revenue contributions [6][23] Company Strategy and Development Direction - The company is focusing on enhancing capabilities to serve larger customers while refining its approach to smaller accounts [7] - The integration of NewsWeb is seen as a key driver for growth, creating new pipelines and increasing deal sizes [14][15] - The company is rolling out a long-term AI strategy, anticipating significant product expansion in Q4 [8][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market size and the value being added to customers, particularly in the enterprise segment [31] - Despite challenges in the SMB and agency sectors, management sees opportunities for growth through pricing, packaging, and AI [32] - The company is optimistic about its ability to lead in the next era of social intelligence, leveraging its unique strengths and partnerships [10][22] Other Important Information - The company launched several new features, including AI-powered translation and integrations with Canva and Adobe Express, aimed at enhancing customer engagement [16][19] - Sprout Social was named a preferred partner in Reddit's official data partner program, highlighting its standing in the social technology space [22] Q&A Session Summary Question: Thoughts on revenue growth and market momentum - Management acknowledged the stable revenue growth and expressed excitement about progress in the enterprise segment, noting distinct business dynamics between larger and smaller customers [30][31] Question: Insights on profitability improvements - Management attributed the profitability increase to revenue overperformance, efficiency gains, and strategic hiring [33][34]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $115.6 million, reflecting a 13% year-over-year growth [5][26] - Non-GAAP operating margin expanded by nearly 460 basis points to 11.9%, marking a record high for the company [5][25] - Remaining performance obligations (RPO) grew 15% year-over-year to $357.1 million, with $258.5 million expected to be recognized as revenue over the next 12 months [25][27] Business Line Data and Key Metrics Changes - Subscription revenue reached $114.7 million, also up 13% year-over-year [26] - The number of customers contributing more than $50,000 in annual recurring revenue (ARR) grew by 21% year-over-year [27] - The 50K+ ARR customer count increased by 21%, indicating strong demand in the enterprise segment [5][27] Market Data and Key Metrics Changes - The company reported strong demand trends consistent with the first half of the year, particularly in large deals [7] - The 50K+ ARR cohort now accounts for nearly half of total revenue, with revenue growth in the high 20s on a year-over-year trailing 12-month basis [8] Company Strategy and Development Direction - The company is focusing on enhancing capabilities to serve larger customers while refining approaches for smaller accounts [8] - A significant emphasis is placed on AI product expansion, with expectations for Q4 to be pivotal for AI strategy rollout [9][12] - The integration of NewsWeb is seen as a key driver for growth, creating new pipelines and increasing deal sizes [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market size and the value being added to customers, particularly in the enterprise segment [32] - The company anticipates continued growth driven by AI advancements and strategic partnerships [12][23] - Management acknowledged challenges in the SMB and agency segments but sees opportunities for improvement through pricing and packaging [34] Other Important Information - The company launched several new features, including AI-powered translation and integrations with Canva and Adobe Express, aimed at enhancing customer engagement [18][19] - Sprout Social was named a preferred partner in Reddit's official data partner program, highlighting its standing in social technology [23] Q&A Session Summary Question: Thoughts on revenue growth and market momentum - Management noted excitement about progress in the enterprise segment and the growth of 50K+ customers, while acknowledging challenges in the SMB sector [32][34] Question: Insights on profitability improvements - Management attributed the increase in profitability to revenue overperformance, efficiency gains, and strategic hiring [36][37]

Financial Data and Key Metrics Changes - Sprout Social reported revenue of $115.6 million for Q3 2025, reflecting a 13% year-over-year growth and a non-GAAP operating margin expansion of nearly 460 basis points to a record high of 11.9% [5][24] - Remaining performance obligations (RPO) grew 17% year-over-year to $258.5 million, indicating strong demand and execution [5][26] - Non-GAAP operating income totaled $13.7 million, up from $7.5 million a year ago, marking a significant increase in profitability [24][26] Business Line Data and Key Metrics Changes - Subscription revenue reached $114.7 million, also up 13% year-over-year, with the number of customers contributing more than $50,000 in annual recurring revenue (ARR) growing by 21% [25] - The $50,000-plus ARR customer segment is now approaching 2,000 customers, accounting for nearly half of total revenue [6][7] - The company launched several new features, including AI-powered translation and integrations with Canva and Adobe Express, enhancing its service offerings [16][20] Market Data and Key Metrics Changes - The company experienced strong go-to-market momentum with the acquisition of NewsWeb, generating more pipeline than any new product in its history [14] - Strategic wins included partnerships with major global brands, indicating a strong market presence and customer commitment [6][14] Company Strategy and Development Direction - Sprout Social is focusing on enhancing its capabilities to serve larger customers while refining its approach to smaller accounts [7] - The company is rolling out a long-term AI strategy, anticipating significant product expansion in Q4 2025 [8][11] - The integration of NewsWeb is expected to create new pipelines and increase deal sizes, demonstrating the effectiveness of the company's social intelligence strategy [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the macro environment and highlighted the strong demand trends observed in Q3 [6][8] - The leadership emphasized the importance of social data and AI in shaping future business strategies, positioning Sprout Social as a leader in the next era of business software [10][11] Other Important Information - The company achieved a 19% automated resolution rate and a 65% reduction in time spent in the help center, showcasing improvements in customer support efficiency [21] - Sprout Social was named a preferred partner in Reddit's official data partner program, enhancing its standing in the social technology landscape [22] Q&A Session Summary Question: How does the company view its revenue growth and market momentum? - Management acknowledged the stable revenue growth and highlighted the progress in moving upmarket, with a focus on larger deals and customer segments [30] Question: What factors contributed to the increase in profitability this quarter? - Management attributed the profitability increase to revenue overperformance, improved efficiency, and strategic hiring [32]

Q3 FY2025 Financial Performance - Total revenue reached $115.6 million, a 13% increase compared to $102.6 million in Q3 FY2024[10] - Average Contract Value (ACV) grew to $16,064, a 15% increase from $13,959 in Q3 FY2024[9, 10] - The company achieved a Non-GAAP Operating Margin of 12%, up from 7% in Q3 FY2024[10] - Subscription revenue accounted for 99% of the total revenue[9] - Gross profit was 78%[9] Customer Growth and Adoption - The company has approximately 30,000 customers across 100+ countries[7] - The number of customers contributing >$10k in ARR increased to 9,756 from 9,119 in Q3 FY2024[10] - The number of customers contributing >$50k in ARR increased to 1,947 from 1,610 in Q3 FY2024[10] Future Outlook - Q4 FY2025 revenue is projected to be between $118.2 million and $119.0 million, leading to a full-year FY2025 revenue between $454.9 million and $455.7 million[53] - Non-GAAP Operating Income for FY2025 is expected to be between $46.1 million and $47.1 million[53] - Non-GAAP Net Income Per Share is projected to be $0.77-$0.79 for FY2025[53] Long Term Goals - The company aims to achieve >$1 billion in revenue in the medium to longer term[62] - The company aims to achieve >80% Non-GAAP Gross Margin in the medium to longer term[62] - The company aims to achieve >20% Non-GAAP Operating Margin in the medium to longer term[62] - The company aims to achieve 20-22% Non-GAAP FCF Margin in the medium to longer term[62]

Revenue Performance - Revenue for Q3 2025 was $115.6 million, representing a 13% increase compared to Q3 2024[5] - Total revenue for Q3 2025 was $115.593 million, up from $102.638 million in Q3 2024, representing a growth of 12.5%[33] - Subscription revenue increased to $114.720 million in Q3 2025 from $101.813 million in Q3 2024, a rise of 12.6%[33] - For Q4 2025, the company expects total revenue between $118.2 million and $119.0 million[13] - For the full year 2025, total revenue is projected to be between $454.9 million and $455.7 million[13] Customer Metrics - The number of customers contributing over $10,000 in ARR grew to 9,756, a 7% increase year-over-year[12] - The number of customers contributing over $50,000 in ARR increased to 1,947, up 21% compared to the previous year[12] - The number of customers contributing more than $10,000 in ARR is a key metric indicating potential for future growth, although specific numbers were not disclosed[27] Profitability and Income - Non-GAAP operating income was $13.7 million, compared to $7.5 million in Q3 2024[5] - The net loss for Q3 2025 was $9.381 million, an improvement compared to a net loss of $17.087 million in Q3 2024, reflecting a reduction of 45.5%[33] - Non-GAAP net income for Q3 2025 was $13,464,000, compared to $7,312,000 in Q3 2024, reflecting an 84.5% increase[49] - Non-GAAP net income per share is expected to be between $0.15 and $0.17 based on approximately 59.3 million weighted-average shares[13] Cash and Cash Equivalents - Cash and cash equivalents totaled $90.6 million as of September 30, 2025, down from $101.5 million as of June 30, 2025[5] - The company ended the period with cash, cash equivalents, and restricted cash totaling $92,572,000, up from $86,855,000 at the end of Q3 2024[47] Operating Expenses and Compensation - Operating expenses for Q3 2025 totaled $98.920 million, slightly up from $96.285 million in Q3 2024, an increase of 2.7%[33] - The total stock-based compensation expense for Q3 2025 was $19.029 million, down from $23.186 million in Q3 2024, a decrease of 18%[34] - Stock-based compensation expense for Q3 2025 was $19,029,000, down from $23,186,000 in Q3 2024[49] Assets and Obligations - Current remaining performance obligations (cRPO) reached $258.5 million, up 17% year-over-year[5] - Total assets increased to $481.396 million as of September 30, 2025, compared to $428.341 million at the end of 2024, marking a growth of 12.4%[40] - Current remaining performance obligations (cRPO) indicate contracted revenue expected to be recognized in the next 12 months, although specific figures were not provided[26] Cash Flow - Net cash provided by operating activities for the nine months ended September 30, 2025, was $32,492,000, compared to $22,179,000 for the same period in 2024, representing a 46.5% increase[49] - Non-GAAP free cash flow for Q3 2025 was $10,339,000, an increase of 10.9% from $9,311,000 in Q3 2024[49] - Cash flows from investing activities resulted in a net cash outflow of $49,635,000 in Q3 2025, compared to a net inflow of $36,714,000 in Q3 2024[47] Strategic Initiatives - The company launched a new Canva integration and expanded its collaboration with Salesforce to enhance social customer care[13] - The company made payments for business acquisitions totaling $50,333,000 in Q3 2025, significantly higher than $1,409,000 in Q3 2024[47]

Core Insights - Sprout Social reported strong financial results for Q3 2025, with a 17% growth in current remaining performance obligations (cRPO) and improved profitability compared to the previous year [2][5]. Financial Performance - Revenue for Q3 2025 was $115.6 million, representing a 13% increase from Q3 2024 [5]. - GAAP operating loss decreased to $9.1 million from $16.9 million in Q3 2024, while non-GAAP operating income rose to $13.7 million from $7.5 million [5]. - GAAP net loss was $9.4 million, down from $17.1 million in the same quarter last year, with non-GAAP net income increasing to $13.4 million from $7.3 million [5]. - Cash and cash equivalents totaled $90.6 million as of September 30, 2025, down from $101.5 million as of June 30, 2025 [5]. Customer Metrics - The number of customers contributing over $10,000 in annual recurring revenue (ARR) grew by 7% to 9,756 as of September 30, 2025 [6]. - Customers contributing over $50,000 in ARR increased by 21% to 1,947 [6]. - Notable new and existing customers include Xerox, NYU, and Hallmark, indicating strong enterprise segment performance [7]. Business Outlook - For Q4 2025, the company expects total revenue between $118.2 million and $119.0 million, with non-GAAP operating income projected between $9.5 million and $10.5 million [13]. - For the full year 2025, total revenue is anticipated to be between $454.9 million and $455.7 million, with non-GAAP net income per share expected to be between $0.77 and $0.79 [13].

Core Insights - Social media is becoming a primary platform for shopping, customer care, and product discovery during the peak retail season, particularly for holiday gifts [1][4] - The Q4 2025 Pulse Survey indicates that 80% of shoppers will utilize social media as much or more than the previous year for holiday gift searches [2][4] Consumer Behavior - Among Gen Z and Millennials, social media is the top source for holiday gift inspiration, surpassing all other channels except in-store shopping [2][4] - 45% of respondents look to social media for product ideas, outpacing friends and family (35%) and other sources [2] Market Dynamics - The social commerce market is valued at $1.5 trillion, positioning social media as a central hub for discovery and customer care [3] - 73% of shoppers intend to contact brands via social media this holiday season, with expectations for quick and personalized responses [3] AI and Customer Care - A significant majority of consumers (69%) and 78% of Gen Z and Millennials are comfortable with brands using AI for faster and personalized customer care on social media [3][4] - The strategic use of AI chatbots is deemed critical for scaling customer care efforts during the holiday season [3] Brand Strategy - Authentic, human-driven content is essential for brands to engage effectively with consumers, as nearly 90% of consumers believe brands listen well on social media, but 55% feel they do not act on insights sufficiently [4] - Data privacy and ad control are key concerns for users as they approach 2026, with Facebook, Instagram, YouTube, and TikTok being the preferred platforms for engagement [4]