Sprout Social's Q2 2025 Earnings Call: Contradictions in Pipeline Health, Customer Retention, and AI Impact

Revenue and Growth:
- Sprout Social reported quarterly revenue of $111.8 million, representing a 12% year-over-year growth.
- The growth was driven by an increase in the number of customers contributing more than $10,000 in ARR, which grew 6% year-on-year, and a 18% increase in the number of customers contributing more than $50,000 in ARR.

Acquisition and Strategic Expansion:
- Sprout Social acquired NewsWhip, a leader in AI-powered predictive media intelligence, for $55 million, with potential earn-outs structured over the next 2 years.
- The acquisition aligns with Sprout's strategic focus on enhancing its Listening capabilities and entering the mission-critical PR and crisis monitoring space, opening opportunities for new customer acquisition and retention.

Operating Margin and Cash Flow:
- Sprout Social's non-GAAP operating margin improved by nearly 400 basis points to 9.2%.
- This improvement was supported by a 110% year-on-year increase in non-GAAP free cash flow, which reached $5.2 million, demonstrating strong financial discipline and operational efficiency.

Customer Acquisition and Retention:
- The company secured significant strategic wins with global brands such as Honda, Cigna, and Kimberly-Clark.
- Strong retention and renewal rates, along with increased enterprise customer adoption, contributed to overall business performance, indicating effective customer relationship management.