Sign in

You're signed outSign in or to get full access.

SS

Sprout Social, Inc. (SPT)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean beat on both revenue and EPS, with revenue at $109.3M (+13% YoY) versus consensus ~$107.6M and non-GAAP EPS $0.22 versus ~$0.15; non-GAAP operating margin reached a record 11.5%, driven by stronger top-line execution and back-end-loaded hiring that lowered OpEx in the quarter .
  • Remaining performance obligations (RPO) rose to $360.2M (+24% YoY), cRPO to $255.8M (+21% YoY), underscoring demand durability; management cited continued enterprise pipeline strength despite elongated procurement processes .
  • Guidance was raised for FY 2025 (revenue to $448.9–$453.9M; non-GAAP operating income to $40.7–$45.7M; non-GAAP EPS to $0.69–$0.77), and new Q2 2025 guidance points to continued margin discipline; management remains measured on macro (tariffs, federal spending cuts) .
  • Key catalysts: enterprise wins and multiproduct attach (Care, Influencer Marketing, AI Assist), deepening Salesforce Agentforce integration (GA), and product-led differentiation in AI, customer care, and influencer workflows .

What Went Well and What Went Wrong

What Went Well

  • Record quarterly non-GAAP operating margin (11.5%) and non-GAAP free cash flow ($19.5M), reflecting disciplined growth and leverage; “we remain committed to growing operating leverage on a fiscal year basis” .
  • Enterprise momentum: +22% YoY customers >$50k ARR, strategic logos (Fortune 500 medical device, food & beverage) and a $600k expansion with a Fortune 500 restaurant chain; “we’re expanding our sales capacity this year… further momentum” .
  • Product leadership advances: GA of Salesforce Agentforce integration, AI Assist enhancements (generate posts, analyze charts), reimagined Influencer Marketing with AI natural language search; “we’ve made strategic updates… empower [customers] to lead the next era of marketing” .

What Went Wrong

  • Sales cycles remain elongated and procurement processes are protracted; macro environment unchanged versus 2024, warranting measured guidance and caution on demand improvement .
  • Deferred revenue declined sequentially (Q4→Q1), reflecting burn-off after unusually large Q4 annual/multiyear deals; CFO highlighted this seasonality and contract mix dynamic .
  • Legal overhang: ongoing consolidated securities class action and derivative actions; company cannot estimate potential liability and notes outcomes could be material if adverse .

Financial Results

Core P&L (YoY/Sequential, with estimates comparison separately)

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$96.784 $107.090 $109.289
GAAP EPS ($USD)$(0.24) $(0.25) $(0.19)
Non-GAAP EPS ($USD)$0.10 $0.19 $0.22
Non-GAAP Operating Income ($USD Millions)$5.992 $11.438 $12.537

Margins

MetricQ1 2024Q1 2025
Gross Margin %77% 77%
Non-GAAP Operating Margin %—11.5%

Revenue Breakdown

MetricQ1 2024Q4 2024Q1 2025
Subscription Revenue ($USD Millions)$95.789 $105.922 $108.680
Professional Services & Other ($USD Millions)$0.995 $1.168 $0.609

KPIs and Balance Highlights

MetricQ3 2024Q4 2024Q1 2025
Total RPO ($USD Millions)$311.5 $351.5 $360.2
cRPO ($USD Millions)$220.7 $249.4 $255.8
Customers >$10K ARR (count)—9,327 9,381
Customers >$50K ARR (count)—1,718 1,766
Non-GAAP Free Cash Flow ($USD Millions)——$19.480
Non-GAAP Free Cash Flow ($USD Millions)$11.332 (YoY reference) ——
Cash & Equivalents + Marketable Securities ($USD Millions)—$90.2 $101.9

Actual vs Wall Street Consensus (Q1 2025)

MetricConsensus (Q1 2025)*Actual (Q1 2025)
Revenue ($USD Millions)$107.617*$109.289
Primary EPS ($USD)$0.148*$0.22

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY 2025$448.1–$453.1M $448.9–$453.9M Raised
Non-GAAP Operating IncomeFY 2025$38.2–$43.2M $40.7–$45.7M Raised
Non-GAAP EPSFY 2025$0.65–$0.74 $0.69–$0.77 Raised
Total RevenueQ2 2025—$110.4–$111.2M New
Non-GAAP Operating IncomeQ2 2025—$8.4–$9.4M New
Non-GAAP EPSQ2 2025—$0.14–$0.16 New

Management does not guide GAAP operating loss or GAAP EPS due to variability in non-GAAP reconciling items .

Earnings Call Themes & Trends

TopicQ3 2024 MentionsQ4 2024 MentionsQ1 2025 MentionsTrend
AI/TechnologyAI Assist expanded (routing, summaries, sentiment); >100M revenue milestone context 11th AI Assist enhancement (Analyze Chart), strong AI-generated content growth Generate posts via AI Assist; AI-led influencer discovery and vetting Expanding AI features and adoption
Salesforce/AgentforceLaunch partner visibility at Dreamforce; GTM alignment First and only social integration with Agentforce; deepening Service Cloud linkages Agentforce GA; early pipeline signals; more showcases planned Deepening integration; increasing GTM focus
Customer CareHigh-volume care features (automation, sentiment) Enhanced speed, oversight, intelligence for care LinkedIn DMs, Dynamic Role Sync; Care innovations incl. governance, bots, data masking More robust, secure, multi-channel care
Influencer MarketingEarly momentum; cross-industry wins Rebrand to Sprout Social Influencer Marketing; strong growth since Tagger acquisition Reimagined platform with AI natural language discovery, Brand Fit, brand safety Elevated strategic focus, product differentiation
Macro & DemandElongated sales cycles; budget scrutiny Measured FY25 guide; pipeline up YoY; no demand improvement assumed Macro similar to 2024; caution re tariffs/federal spending; enterprise pipeline healthy Persistent headwinds, disciplined posture

Management Commentary

  • CEO framing: “With the rapid shift toward social as a primary channel for discovery and engagement, we believe our investments in customer care, AI, and influencer marketing uniquely position us to lead brands through this transformation” .
  • Enterprise focus: “We are expanding our sales capacity this year… drive further momentum in pipeline generation and enterprise coverage” .
  • Product strategy: “Our reimagined influencer marketing product is grounded in AI… help brands find and vet the most valuable creators faster and safer than ever before” .
  • Care proposition: “Enhanced Agentforce integration… accelerate case resolution with multichannel insights and personalized responses” .
  • CFO on profitability: “Revenue overperformance and back-end-loaded hiring… benefited margins; if we continue to outperform top line, you’ll see more leverage” .

Q&A Highlights

  • Enterprise pipeline health and ICP targeting: Management cited healthy enterprise pipeline creation, stronger hygiene and analytics from trials; customer care is mission-critical for large customers .
  • Profitability drivers: Beat driven by revenue overperformance and back-end-loaded hiring; maintaining flexibility to invest while driving leverage with top-line outperformance .
  • Deferred revenue dynamics: Sequential decline driven by burn-off from large annual/multiyear deals signed in Q4; seasonality flagged .
  • Agentforce adoption: Integration just went GA; early stage, more showcases planned; expanding presence at Salesforce events .
  • Macro/seasonality: Macro unchanged from 2024; business remains back-end weighted; guidance reflects a measured stance .

Estimates Context

  • Q1 2025 beat vs consensus: Revenue $109.3M vs ~$107.6M*, non-GAAP EPS $0.22 vs ~$0.15*; signal of improving operating leverage and healthy enterprise mix .
  • Q4 2024 context: Revenue $107.1M vs ~$106.7M*, non-GAAP EPS $0.19 vs ~$0.15*, foreshadowing sustained margin progress into Q1 .
  • Near-term: Company’s Q2 revenue guide ($110.4–$111.2M) brackets consensus ~$110.94M*, suggesting in-line top-line with continued margin discipline .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Multiproduct platform strategy is gaining traction (Care, Influencer, AI Assist), improving ACV and enterprise mix—supportive of sustained margin expansion and higher cRPO growth .
  • FY 2025 raise on revenue, operating income, and EPS indicates confidence in pipeline conversion and operating leverage, despite unchanged macro assumptions .
  • Watch RPO/cRPO and deferred revenue seasonality: sequential deferred revenue declines from Q4 to Q1 are expected given contract timing; cRPO is converging with revenue over time as annual/multiyear mix grows .
  • Salesforce partnership is a potential accelerant; GA Agentforce + Service Cloud integration elevates care workflows and may open new enterprise doors internationally via resellers .
  • Legal matters remain an overhang; outcomes uncertain and could be material—factor into risk assessment and valuation framework .
  • Near-term trading: Solid beat-and-raise with record margins provides a positive setup; monitor macro commentary and Q2 execution, especially enterprise deal timing and attach of premium modules .
  • Medium term: If multiproduct attach and enterprise wins continue, the model can support improving NDR and durable FCF generation; sustained AI differentiation and care/influencer leadership are key to the thesis .

Non-GAAP Notes

  • Q1 2025 exclusions included $19.8M stock-based compensation, $1.213M amortization of acquired intangibles, and $2.731M restructuring charges; reconciliations provided in the release .
  • Company does not guide GAAP operating loss/EPS due to variability in non-GAAP adjustments (stock comp, amortization, restructuring) .