This article first appeared on GuruFocus.

Revenue: $115.6 million, 13% year-over-year growth.

Non-GAAP Operating Margin: 11.9%, up nearly 460 basis points from the year-ago period.

Non-GAAP Free Cash Flow: $10.3 million for the quarter, up over 80% on a trailing twelve-month basis.

Subscription Revenue: $114.7 million, 13% year-over-year growth.

Customers with $50k+ ARR: 21% growth from a year ago.

Current Remaining Performance Obligations (CRPO): $258.5 million, 17% year-over-year growth.

RPO: $357.1 million, 15% year-over-year growth.

Q4 2025 Revenue Guidance: $118.2 million to $119.0 million.

Full Year 2025 Revenue Guidance: $454.9 million to $455.7 million.

Full Year 2025 Non-GAAP Operating Income Guidance: $46.1 million to $47.1 million.

Full Year 2025 Non-GAAP Net Income Per Share Guidance: $0.77 to $0.79.

Warning! GuruFocus has detected 4 Warning Signs with SPT.

Is SPT fairly valued? Test your thesis with our free DCF calculator.

Release Date: November 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Sprout Social Inc (NASDAQ:SPT) reported a strong quarter with revenue of $115.6 million, representing a 13% year-over-year growth.

The company achieved a record high non-GAAP operating margin of nearly 12%, expanding by almost 460 basis points.

Sprout Social Inc (NASDAQ:SPT) saw a 21% growth in customers with $50k-plus ARR, driven by strong net additions and the inclusion of NewsWhip.

The integration of NewsWhip has generated more pipeline than any new product in the company's history, with initial ACVs at or above traditional enterprise levels.

The company is rolling out a proprietary AI agent for conversational data exploration, which has received positive feedback from beta customers.

The company continues to face pressure on the smaller side of the business, particularly with SMB and agency new business.

Despite strong performance, the overall growth rate is being dragged by the lower gross retention rate in the SMB segment.

There is a noted delay in hiring, which may impact future quarters as hiring picks up.

The macroeconomic environment remains unchanged, posing potential challenges for future growth.

The company's growth in revenue has not fully reflected the momentum seen in product launches and market penetration.

Q: Ryan, with the stable revenue growth and momentum in the market, how do you see the next steps for Sprout Social, especially considering the upmarket movement? A: Ryan Barretto, CEO, explained that Sprout Social is excited about the progress in moving upmarket, as evidenced by the growth in $50k-plus ARR customers. The company sees social media as a primary platform for product discovery, brand awareness, and customer care. While the enterprise segment shows strong growth, the smaller business segment faces challenges, particularly in new business. However, Sprout sees opportunities in pricing, packaging, and AI to evolve its service to this market segment.

Q: Joe, profitability was a highlight this quarter. Can you discuss the factors contributing to this performance? A: Joe Del Preto, CFO, noted that the 460 basis point improvement in non-GAAP operating margin was driven by revenue overperformance and increased efficiency, partly due to internal AI use. Additionally, a delay in hiring until Q4 provided a temporary benefit to Q3 margins.

Q: How is Sprout Social leveraging AI to enhance its platform and customer offerings? A: Ryan Barretto highlighted that Sprout is rolling out a proprietary AI agent for conversational data exploration, automated insights, and recommended actions. This agent is designed to empower brands with trend identification, risk detection, and strategic content delivery. The AI initiatives are expected to drive improved customer expansion and retention.

Q: What impact has the NewsWhip acquisition had on Sprout Social's business? A: Ryan Barretto stated that NewsWhip has generated significant go-to-market momentum, creating a new pipeline and increasing deal sizes when bundled with existing Sprout opportunities. The integration has been smooth, and NewsWhip's real-time intelligence complements Sprout's social intelligence strategy.

Q: Can you elaborate on the strategic enterprise wins and their significance for Sprout Social? A: Ryan Barretto shared that Sprout secured major deals, including a $2 million expansion with a Fortune 500 pharmaceutical company and a $1.2 million new business win with a national convenience store chain. These deals demonstrate Sprout's ability to consolidate marketing workflows and provide comprehensive solutions, leading to efficiency gains and reduced costs for clients.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.