Social media management software company Sprout (NASDAQ:SPT) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 12.5% year on year to $111.8 million. Guidance for next quarter’s revenue was better than expected at $114.8 million at the midpoint, 1.1% above analysts’ estimates. Its non-GAAP profit of $0.18 per share was 19% above analysts’ consensus estimates.
Is now the time to buy SPT? Find out in our full research report (it’s free).
Sprout Social (SPT) Q2 CY2025 Highlights:
- Revenue: $111.8 million vs analyst estimates of $110.9 million (12.5% year-on-year growth, 0.8% beat)
- Adjusted EPS: $0.18 vs analyst estimates of $0.15 (19% beat)
- Adjusted Operating Income: $10.33 million vs analyst estimates of $9.03 million (9.2% margin, 14.4% beat)
- The company slightly lifted its revenue guidance for the full year to $454.4 million at the midpoint from $451.4 million
- Management reiterated its full-year Adjusted EPS guidance of $0.73 at the midpoint
- Operating Margin: -11%, up from -16.6% in the same quarter last year
- Customers: 9,517 customers paying more than $10,000 annually
- Annual Recurring Revenue: $458.4 million at quarter end, up 15.8% year on year
- Billings: $109 million at quarter end, up 7.3% year on year
- Market Capitalization: $786.4 million
StockStory’s Take
Sprout Social’s second quarter results were met with a negative market reaction, despite the company surpassing Wall Street’s expectations for both revenue and non-GAAP profit. Management highlighted that enterprise customer wins and growing adoption of premium offerings, such as influencer marketing and customer care modules, were key drivers of performance. CEO Ryan Barretto pointed to continued progress in expanding relationships with large global brands, pointing out that the number of customers spending over $50,000 annually increased by 18%. At the same time, management acknowledged operational discipline contributed to margin improvement, with non-GAAP operating margin expanding nearly 400 basis points year over year.
For the remainder of the year, Sprout Social’s guidance is shaped by early contributions from the NewsWhip acquisition and anticipated momentum in premium modules. Management believes integrating NewsWhip’s AI-powered media intelligence will enable the company to offer enhanced crisis management and trend detection capabilities, positioning Sprout for further enterprise traction. CFO Joseph Del Preto indicated that while there may be some near-term impact on sales productivity as teams are trained on the new offerings, early customer feedback has been positive. Barretto emphasized, “We’re excited about where this is taking us,” as Sprout looks to deepen its competitive advantage in real-time social and media intelligence.
Key Insights from Management’s Remarks
Sprout Social’s management cited the NewsWhip acquisition, growth in enterprise deals, and expansion of premium product modules as central to the quarter’s performance and strategic direction.
- NewsWhip acquisition impact: Management described the $55 million acquisition of NewsWhip as a pivotal move to strengthen Sprout’s AI-driven media intelligence and crisis management capabilities. NewsWhip’s predictive analytics and real-time alerts are expected to open new enterprise opportunities and expand Sprout’s footprint in the PR and communications market.
- Enterprise customer momentum: The company reported significant growth in its enterprise segment, with multiple new seven-figure and high-value expansion deals. Barretto noted that the number of customers spending over $50,000 annually grew by 18%, reflecting successful premium module adoption and longer-term contracts.
- Premium modules drive growth: New and enhanced offerings such as Guardian (for brand safety and compliance), influencer marketing tools, and advanced customer care features contributed to higher attach rates, especially among regulated industries and large brands. These modules are viewed as key differentiators in competitive sales processes.
- Integration and enablement challenges: Management acknowledged the potential for near-term sales disruption as teams are trained on NewsWhip products and new workflows. However, early customer feedback on the integrated value proposition has been encouraging, and go-to-market alignment is underway.
- Macro and go-to-market environment: The company saw stable demand conditions but continued to emphasize customer ROI and pipeline rigor in response to rising digital advertising costs. Management observed that brands are increasingly prioritizing social media discovery and care due to changes in search behaviors and rising paid search costs.
Drivers of Future Performance
Management expects that future performance will be shaped by the integration of NewsWhip, ongoing enterprise expansion, and the scaling of premium modules, while navigating near-term sales enablement and macroeconomic headwinds.
- Integration of NewsWhip: The full impact of NewsWhip is expected to unfold over several quarters, with management focused on product integration and sales team enablement. Early signs indicate high interest from large enterprises and PR teams seeking real-time crisis management and trend detection.
- Enterprise and premium module growth: Sprout plans to expand its reach within existing enterprise accounts and attract new customers by highlighting advanced modules like influencer marketing, Guardian, and customer care. These offerings are expected to drive higher contract values and improve customer retention.
- Macroeconomic and operational risks: Management noted ongoing macro uncertainty and the potential for short-term sales productivity challenges as teams adapt to new products and workflows. However, they continue to emphasize operational discipline and margin expansion as top priorities.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace and effectiveness of NewsWhip’s integration into Sprout’s platform, (2) the rate at which enterprise customers adopt premium modules such as Guardian and influencer marketing, and (3) signs of improved sales productivity following enablement efforts. Progress in international markets and the response to evolving social search trends will also be important indicators of future performance.
Sprout Social currently trades at $13.47, down from $16.03 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
Now Could Be The Perfect Time To Invest In These Stocks
Trump’s April 2025 tariff bombshell triggered a massive market selloff, but stocks have since staged an impressive recovery, leaving those who panic sold on the sidelines.
Take advantage of the rebound by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.
StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.