Sprout Social Q2 CY2025 Results Exceed Expectations with Revenue Up 12.5% YoY and Non-GAAP Profit at $0.18 per Share.

Sprout Social (SPT) reported Q2 CY2025 revenue of $111.8 million, up 12.5% YoY, beating analyst estimates. Non-GAAP profit of $0.18 per share was 19% above consensus estimates. The company lifted its full-year revenue guidance to $454.4 million and reiterated its adjusted EPS guidance of $0.73. Enterprise customer wins and premium offerings drove performance, with the number of customers spending over $50,000 annually increasing by 18%.

Sprout Social Inc. (NASDAQ:SPT) reported its second-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.18 against a forecast of $0.15, marking a 20% surprise. Revenue also exceeded projections, reaching $111.8 million compared to the anticipated $110.93 million. The company's stock experienced a slight decrease of 1.05% in after-hours trading, closing at $16.06, with analysis suggesting the stock is currently undervalued.

Key Takeaways

- EPS Surprise: Sprout Social's EPS exceeded forecasts by 20%, marking a significant improvement over previous quarters.
- Revenue Growth: Revenue grew 12% year-over-year, driven by subscription growth.
- Acquisition and New Products: The company acquired NewsWhip and launched new AI-driven products, enhancing its offerings.
- Stock Performance: Despite strong financial performance, the stock saw a slight decline post-earnings.

Financial Highlights

- Revenue: $111.8 million, up 12% YoY
- Subscription Revenue: $111.1 million, up 13% YoY
- Non-GAAP Operating Margin: 9.2%, up nearly 400 basis points YoY
- Non-GAAP Free Cash Flow: $5.2 million, up 110% YoY
- Customers with $50k ARR: 18% growth YoY
- Average Contract Value: $15,321, up 14% YoY

Market Reaction

Sprout Social's stock experienced a 1.05% decline in after-hours trading, closing at $16.06. This movement places the stock near its 52-week low of $15.94, with technical indicators suggesting the stock is in oversold territory. Despite the decline, analysts indicate potential upside opportunity based on current valuations.

Outlook & Guidance

Sprout Social maintained a positive outlook for the remainder of 2025, projecting full-year revenue between $452.9 million and $455.9 million. The company anticipates non-GAAP operating income in the range of $43.1 million to $45.1 million. The recent acquisition of NewsWhip is expected to contribute $2.5 million in revenue over the next five months, supporting the company's focus on margin expansion and product innovation.

Executive Commentary

CEO Ryan Baretto emphasized the strategic importance of social platforms, stating, "Social has become the new front door for discovery." He also highlighted the company's commitment to leveraging real-time data and intelligence, suggesting a future defined by AI-driven innovation. CFO Joe DelPretto reiterated the focus on growing operating leverage on a fiscal year basis.

Risks and Challenges

Rising paid search costs may impact marketing budgets, and organic website traffic is declining, posing challenges for traditional digital marketing strategies. The competitive landscape in social media analytics and customer service remains intense. Macroeconomic stability is crucial for maintaining strong renewal and retention rates.

References

[1] https://www.investing.com/news/transcripts/earnings-call-transcript-sprout-social-q2-2025-beats-earnings-expectations-93CH-4175367