SPROUT SOCIAL INC - CLASS A (NASDAQ:SPT) reported second-quarter results after the close that beat analyst profit expectations by a wide margin, with non-GAAP EPS of $0.26 versus the $0.16 consensus, while revenue of $123.8 million came in essentially in line with the $123.3 million analysts had modeled. The market responded positively, sending shares up roughly 11% in after-hours trading as investors focused on a sharp improvement in profitability and a raised margin outlook.
Headline numbers versus estimates
The quarter is best characterized as an earnings beat driven by operating leverage rather than a major revenue surprise:
- Revenue: $123.8 million, up 11% year over year and about 0.4% above the consensus estimate.
- Non-GAAP EPS: $0.26 versus $0.16 expected and $0.18 reported in the year-ago quarter.
- Non-GAAP operating income: $16.0 million, compared with $10.3 million in Q2 2025; management said the result came in $6.1 million above the top end of its guidance range.
- GAAP operating loss: ($2.7) million, improved from ($12.3) million a year earlier.
- GAAP net loss: ($3.1) million, or ($0.05) per share, versus ($12.0) million, or ($0.21) per share, in Q2 2025.
Subscription revenue was $121.9 million, up roughly 10% year over year, while professional services and other revenue added $2.0 million.
Enterprise customers drive the mix
The company's strategic focus on larger accounts continues to reshape its revenue base:
- Customers contributing $30,000 or more in ARR: 3,926, up 11% year over year.
- Customers contributing $50,000 or more in ARR: 2,127, up 16% year over year.
- Approximated trailing twelve-month subscription revenue from the $30K+ cohort: $291.7 million, up 20%, representing 61.4% of total subscription revenue versus 56.9% a year ago.
- Total remaining performance obligations: $400.8 million, up 16%.
- Current RPO: $282.7 million, up 12%.
The expansion of the high-ARR cohort supports the pricing power and retention story, both of which feed into the margin gains that investors are rewarding.
Guidance: margin outlook raised, revenue roughly in line
For the third quarter, the company guided to revenue of $123.3 million to $124.1 million, with the midpoint modestly below the $124.9 million consensus. Non-GAAP EPS guidance of $0.29 to $0.30 sits comfortably above the $0.25 analysts had penciled in.
For the full year, Sprout Social now expects:
- Revenue of $493.0 million to $495.6 million, versus the $499.3 million consensus.
- Non-GAAP operating income of $68.3 million to $70.3 million, an increase of 20% over the midpoint of the prior-year outlook.
- Non-GAAP EPS of $1.11 to $1.15, compared with the $0.93 consensus.
- Non-GAAP operating margin exiting Q4 of approximately 17%, raised from a prior target of 15%.
- Reiteration of its 30% Rule of 40 framework target by Q4 2027.
The full-year revenue midpoint is about 1% below where analysts were sitting, so the guidance is not uniformly positive. But the magnitude of the EPS and margin upside is what appears to be driving the after-hours move. The improved profitability outlook is supported in part by a workforce reduction plan approved in July, which carries its own execution risk.
Market reaction and risks
The roughly 11% jump in after-hours trading marks a sharp reversal from the stock's recent mixed action; shares were down 3.3% over the past week but up 11.9% over the past two weeks. The market appears to be treating the quarter as evidence that Sprout Social can maintain double-digit revenue growth while expanding margins faster than expected.
Risks to that view include a full-year revenue guide that is slightly below consensus, the possibility that recent price increases weigh on customer demand, and execution risk around the AI product roadmap and the cost reduction plan. The enterprise push reduces exposure to smaller, churn-prone customers, but it also means larger deal cycles and tougher comparisons ahead.
For more historical data on quarterly results, review the earnings history here. Investors who want to see how consensus estimates for Sprout Social evolve following this report can track future projections here.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »
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Sprout Social (NASDAQ:SPT) Beats Q2 Profit Estimates, Raises Margin Outlook
SPROUT SOCIAL INC - CLASS A (NASDAQ:SPT) reported second-quarter results after the close that beat analyst profit expectations by a wide margin, with non-GAAP EPS of $0.26 versus the $0.16 consensus, while revenue of $123.8 million came in essentially in line with the $123.3 million analysts had modeled. The market responded positively, sending shares up roughly 11% in after-hours trading as investors focused on a sharp improvement in profitability and a raised margin outlook.
Headline numbers versus estimates
The quarter is best characterized as an earnings beat driven by operating leverage rather than a major revenue surprise:
Subscription revenue was $121.9 million, up roughly 10% year over year, while professional services and other revenue added $2.0 million.
Enterprise customers drive the mix
The company's strategic focus on larger accounts continues to reshape its revenue base:
The expansion of the high-ARR cohort supports the pricing power and retention story, both of which feed into the margin gains that investors are rewarding.
Guidance: margin outlook raised, revenue roughly in line
For the third quarter, the company guided to revenue of $123.3 million to $124.1 million, with the midpoint modestly below the $124.9 million consensus. Non-GAAP EPS guidance of $0.29 to $0.30 sits comfortably above the $0.25 analysts had penciled in.
For the full year, Sprout Social now expects:
The full-year revenue midpoint is about 1% below where analysts were sitting, so the guidance is not uniformly positive. But the magnitude of the EPS and margin upside is what appears to be driving the after-hours move. The improved profitability outlook is supported in part by a workforce reduction plan approved in July, which carries its own execution risk.
Market reaction and risks
The roughly 11% jump in after-hours trading marks a sharp reversal from the stock's recent mixed action; shares were down 3.3% over the past week but up 11.9% over the past two weeks. The market appears to be treating the quarter as evidence that Sprout Social can maintain double-digit revenue growth while expanding margins faster than expected.
Risks to that view include a full-year revenue guide that is slightly below consensus, the possibility that recent price increases weigh on customer demand, and execution risk around the AI product roadmap and the cost reduction plan. The enterprise push reduces exposure to smaller, churn-prone customers, but it also means larger deal cycles and tougher comparisons ahead.
For more historical data on quarterly results, review the earnings history here. Investors who want to see how consensus estimates for Sprout Social evolve following this report can track future projections here.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Always conduct your own research and consider your risk tolerance before making investment decisions.
Read full article here »