SPT

Sprout Social (SPT) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving. The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this developer of cloud software, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For Sprout Social, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: The company is expected to earn $0.30 per share for the current quarter, which represents a year-over-year change of +30.4%. Over the last 30 days, three estimates have moved higher for Sprout Social compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 104.76%. For the full year, the earnings estimate of $1.13 per share represents a change of +37.8% from the year-ago number. In terms of estimate revisions, the trend for the current year also appears quite encouraging for Sprout Social. Over the past month, four estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 93.55%. The promising estimate revisions have helped Sprout Social earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. Investors have been betting on Sprout Social because of its solid estimate revisions, as evident from the stock's 19.3% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sprout Social, Inc. (SPT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Sprout Social’s second quarter results were met with a positive market reaction, reflecting both top- and bottom-line outperformance against Wall Street expectations. Management attributed the growth primarily to ongoing momentum with larger enterprise customers and expanded product adoption, especially within the company’s $30,000-and-above annual contract value cohort. CEO Ryan Barretto emphasized that multi-year contracts now represent nearly half of new business, indicating greater customer confidence in Sprout’s platform. The quarter also saw improved retention rates, with Barretto highlighting that “customers using Trellis, our AI offering, retained at a higher rate than others.” Is now the time to buy SPT? Find out in our full research report (it’s free). Revenue: $123.8 million vs analyst estimates of $122.2 million (10.8% year-on-year growth, 1.4% beat) Adjusted EPS: $0.26 vs analyst estimates of $0.16 (62.5% beat) Adjusted Operating Income: $15.98 million vs analyst estimates of $10.13 million (12.9% margin, 57.8% beat) The company slightly lifted its revenue guidance for the full year to $494.3 million at the midpoint from $494 million Management raised its full-year Adjusted EPS guidance to $1.13 at the midpoint, a 22.2% increase Operating Margin: -2.2%, up from -11% in the same quarter last year Annual Recurring Revenue: $506.6 million vs analyst estimates of $518.5 million (8.1% year-on-year growth, miss) Billings: $123 million at quarter end, up 12.9% year on year Market Capitalization: $578.7 million While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Rob Oliver (Baird): Asked how early adoption of Trellis is contributing to growth among high-value customers. CEO Ryan Barretto explained that Trellis usage is associated with higher retention and that the company expects upsell opportunities as power users migrate to the paid Trellis Plus tier. Willow Miller (William Blair & Company): Inquired about customer feedback on new Trellis capabilities and initial paid tier upgrades. Barretto reported strong customer feedback, especially on the speed of insights, and confirmed early upgrades to Trellis Plus, with more data to be shared in future quarters. Lucas Metcalf (Needham & Company): Questioned whether the workforce reductions targeted specific teams. Barretto responded that the cuts were broad-based, focused on removing layers and streamlining decision-making to better align resources with productive business areas. Nate Ruoss (KeyBanc): Asked about drivers of operating margin outperformance. VP of FP&A Erin Graupmann cited disciplined spending and timing of hiring, adding that further leverage is expected as restructuring benefits are realized. Jack McShane (Stifel): Sought clarification on improved renewal rates and the expected impact of the Essentials self-serve product. Barretto attributed retention gains to stronger product value and multi-product adoption, while noting that Essentials is still early but positioned to improve churn among smaller customers over time. Looking ahead, the StockStory team will be tracking (1) customer adoption rates and upsell activity for Trellis, especially in the enterprise segment, (2) the pace and impact of organizational restructuring on operating margins and free cash flow, and (3) the stabilization and growth trajectory of the Essentials product for smaller customers. Additional attention will be paid to ongoing product launches and the integration of AI-driven capabilities across the platform. Sprout Social currently trades at $9.59, up from $8.19 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 13, 2026 at 4:30 p.m. ET Investor Relations Manager - Lexi Johnson CEO - Ryan Barretto Vice President of FP&A - Erin Graupmann Operator: Hello, everyone. Thank you for joining us, and welcome to the Sprout Social second quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Lexi Johnson, Investor Relations Manager. Lexi, please go ahead. Lexi Johnson: Thank you, and welcome to Sprout Social's second quarter 2026 earnings call. We will be discussing the results announced in our press release issued after market close today and have also released an updated investor presentation, which can be found on our website. With me are Sprout Social CEO, Ryan Barretto, and Vice President of FP&A, Erin Graupmann. Today's call will contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. These include, among others, statements concerning our expected future financial performance, including our Q3 and 2026 outlook and business plans and objectives, and can be identified by words such as "expect," "anticipate," "intend," "plan," "believe," "seek," "opportunity," "target," or "will." These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of the risks and other important factors that could affect our actual results, please refer to our annual report on Form 10-K for the year ended December 31st, 2025, as well as our quarterly report on Form 10-Q for the quarter ended June 30th, 2026, to be filed with the SEC. During the call, we will discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures, are included in our second quarter earnings release, which has been furnished to the SEC and is available on our website at investors.sproutsocial.com. As a reminder, we will be referring to the metric approximated subscription revenue contribution for customers contributing $30,000 and above in ARR. This metric is intended to approximate the subscription revenue of a subset of customers over a historical period by using their average ARR as a proxy and annualizing this quarterly estimate on a trailing 12-month basis. For brevity, we'll refer to this metric through the rest of this call as $30,000 and above subscription revenue. Let me turn the call over to Ryan. Ryan? Ryan Barretto: Thank you, Lexi, and welcome to our second quarter earnings call for fiscal 2026. Sprout delivered another strong quarter with revenue of $123.8 million, representing 10.8% year-over-year growth, and we closed out the quarter with a non-GAAP operating margin at 12.9%, up 370 basis points year-over-year. I'm pleased that both CRPO and RPO accelerated this quarter. Current Remaining Performance Obligations grew 12.4% year-over-year to $202.7 million, and total remaining performance obligations grew 15.5%. We continue to see customers making longer-term commitments to Sprout, with multi-year contracts representing almost half of our contract mix, up from about one-third two years ago. This reflects the growing confidence in Sprout as a strategic platform and supports our broader go-to-market motion with larger, more sophisticated customers. Sprout also delivered strong non-GAAP free cash flow in the second quarter at $8.3 million, an improvement of approximately 60% year-over-year. On a trailing 12-month basis, the company has generated approximately $54 million in non-GAAP free cash flow. We believe this improvement underscores our ability to drive leverage in our model. Q2 was an important quarter for AI at Sprout. We expanded the capabilities of Trellis, our proprietary agentic offering, announcing these updates at our Breaking Ground event in May. Alongside listening, Trellis can now deliver insights on demand. Users can query their social data in plain language and receive analyst-quality answers in seconds without configuring complex reports or dashboards. We introduced Trellis Studio, a no-code interface for building and customizing skills that proactively surfaces what matters most so teams can move from insight to action faster. Every Sprout customer receives a base allotment of Trellis usage at no additional cost. For customers with higher usage needs, we introduced Trellis Plus, a paid tier that increases their limits and just went live in July. We've seen healthy growth and adoption trends with monthly active Trellis users. In Q2, those customers retained at a higher rate than customers without active Trellis users, and that held true across all segments. Customer feedback has also been very encouraging. One of the nation's top-ranked health systems asked Trellis for a summary of their listening dashboard and described the output as "Perfect. Vastly better than what I would have done. Reporting and analysis that once took hours now takes seconds." Within NewsWhip, we extended intelligence capabilities, adding predictive scoring across community platforms like Reddit to help identify emerging narratives earlier. We also launched an AI dashboard builder that generates a real-time monitoring dashboard from a plain language prompt. As it relates to integrations, we also expanded network coverage, adding Snapchat scheduling and publishing, direct creator payments with automated tax documentation through PayPal and Lumanu, and consolidated management of TikTok ad comments within Engagement. On the partnership side, we launched an expanded integration with Canva to bring design workflows into the Sprout platform and were represented at the Cannes Lions Festival last month alongside partners like Canva and Snapchat. Across R&D, AI has become the center of gravity for our product investments this year, in addition to strengthening our core platform and delivering on the integrations our most sophisticated customers depend on. Co-Founder Aaron Rankin's recent return as CTO reflects the priority we're placing here. He'll partner closely with our CPO, Srinivas Somayajula, to lead this next chapter of AI investment and enterprise capabilities that we're building into our products. As we announced on July 15th, we made the very difficult but important decision to reduce the size of our team by approximately 20%. We're incredibly grateful for the contributions of our departing colleagues who helped shape Sprout into the company it is today. Our industry and software more broadly is changing quickly, and the way companies need to operate and invest has changed with it. As we step back to examine our own operating model, we saw too many layers and an org structure that was slowing down decision-making, and saw an opportunity to really streamline our work and areas of focus. We believe this reorganization positions us to build a more focused and durable company, and we believe this will deliver improved operating margins, stronger cash flow, a stronger foundation for growth, and greater capacity to invest in the areas of the business with the highest return. I'll outline the expected financial impact of the reduction later when I discuss our financials and outlook. As we look around our market, it's clear that major brands are trying to solve the same problem right now. How do they manage an explosion of social activity across more platforms than ever at the speed customers expect with finite resources? Social is where products get discovered and purchase decisions get made. Customer service has moved there. News breaks there first. Brands are built and destroyed on social media in hours. The most trusted voices talking about a brand are creators and communities, not people on your payroll or under your control. Most companies can't keep up with what that requires. We believe we have built the infrastructure to help brands do exactly that in a way that is differentiated and drives clear ROI. Every day, Sprout ingests more than 2 billion real-time social interactions from hundreds of APIs across more than a dozen networks. That access took 16 years of legal agreements, security certifications, and a track record of delivering customer value. We believe this has built a level of trust and credibility that creates a strong competitive moat, defined by high barriers to entry that are difficult to replicate. As we've been discussing with you for the past few quarters, our strategy is increasingly focused on larger, more sophisticated customers, where our platform breadth, product roadmap, and go-to-market investments are most aligned with their needs. Our progress is visible in the changing mix of our business. This quarter, approximated trailing 12-month subscription revenue for customers contributing $30,000 or more in ARR grew 20% year-over-year and now contributes over 61% of total subscription revenue. This $30,000+ customer segment has stronger unit economics and a better retention and expansion profile, and they tend to adopt more of our strategic products than our smaller customers do. In fact, this cohort carries an average ACV multiples higher than our total average ACV with higher attach rates of products like influencer marketing and NewsWhip. As we look to the remainder of 2026, we continue to expect to see this segment represent an increasing percentage of our subscription revenue. Our logo count for customers contributing $30,000 or more in ARR continues to compound as we added 51 net new customers in this segment during the second quarter and 388 over the trailing 12 months. Looking at the largest of our net adds, we had over 10 customers in Q2 that contributed $150,000 or more in ARR, demonstrating our up-market progress. As we dig into some of our customer wins from the quarter, the trends become more clear as to why we see so much opportunity with our larger customer cohort. I'll start with a seven-figure new business deal with a multinational manufacturer and distributor that is establishing our enterprise suite as the foundational backbone of their global social strategy. By adopting a comprehensive portfolio of Sprout solutions, including premium analytics, social listening, employee advocacy, influencer marketing, NewsWhip, and Premier Success, they consolidated their highly distributed social operations into a single ecosystem. This transition empowers over 125 global users to orchestrate brand conversations across international markets through automated workflows and unified case management. By listening at scale, this customer is shifting away from lagging data to track real-time brand sentiment, critical product launches, and competitive dynamics as they unfold. Sprout streamlines their creator discovery, influencer campaign logistics, and ROI measurement, while NewsWhip empowers them to proactively detect crises and monitor breaking news signals to help protect their brand equity. Following a $1.65 million new business deal last quarter, this Fortune 50 financial services company expanded their footprint in Q2 by an additional $893,000, adding our Service Cloud integration and Guardian product. The deep Salesforce integration optimizes their marketing and care workflows, enabling them to deliver a sophisticated omni-channel social customer care by automatically routing social inquiries directly into their existing environment. Our automated routing is designed to reduce customer response times and eliminate the risk of missed client messages, all while scaling support operations to accommodate 100 Service Cloud users with high-volume agent productivity. This customer further ensures brand safety and financial services regulatory compliance by utilizing Guardian, which monitors channels for compliance risks, regulatory concerns, and real-time brand mentions. Service Cloud is designed to enrich client profiles with high-fidelity social data, connecting social interactions directly to Salesforce to provide a holistic, unified view of client sentiment and engagement. We believe this story highlights Sprout's unique capability to streamline enterprise customer care while upholding the highest standards of security and compliance for one of the world's largest financial institutions. This quarter, we also secured a $250,000 new customer win with a leading North American audio and media publisher, underscoring Sprout's ability to drive intuitive enterprise platform consolidation for massive content ecosystems. By adopting a comprehensive suite including Listening, Premium Analytics, Guardian, NewsWhip, Influencer Marketing, and Premier Success, this customer is consolidating more than three-point solutions into a single enterprise platform. This transition unifies their editorial, social, and events team, streamlining multi-department workflows, improving collaboration, and reducing overall technology complexity. By establishing high-performance enterprise reporting and executive-aligned ROI modeling, Sprout enables them to standardize and scale social operations across 850+ brand channels, supporting high-volume editorial publishing with rigorous enterprise governance. Sprout is driving business value by unlocking deep social intelligence and predictive media insights to assist this customer's editorial team through the real-time analysis of emerging conversations, trends, and fan sentiment. In addition to enriching content strategy, this deployment creates new monetization opportunities by equipping sales and marketing teams with deeper audience, creator, and content insights. These data assets allow the publisher to build more valuable advertising sponsorships and branded partnership offerings while providing unified creator and artist management and reporting. This story highlights Sprout's capacity to handle marketing, creator management, and real-time trend monitoring on a single scalable infrastructure. Next, I'd like to turn to our strategy for customers below $30,000 in approximated subscription revenue. This cohort represented 39% of our approximated subscription revenue in the trailing 12 months ended June 30th, 2026, compared to 59% in the trailing 12 months ended June 30th, 2022. This 20-point shift reflects our multi-year move towards larger, more strategic customers, while also highlighting the opportunity we have to serve this part of the market with a more efficient product and go-to-market motion. As you may recall, last quarter, we outlined two pillars of our strategy for this segment: evolving our self-service motion through automation and AI, and reworking the lower end of the market around a simpler purpose-built product. In April, our Essentials product moved from limited release to general availability, following positive signals from our initial testing. While it's still early, initial cohorts are seeing positive demand trends. Looking ahead, we're also refining our top-of-funnel motion for Essentials, sharpening how we reach and acquire target customers. Additionally, we believe the product simplicity and price point will be well-suited for expansion into non-U.S. markets. The Essentials product is one component of our broader self-serve strategy for the sub $30,000 customer cohort, a fully digital, no sales touch experience. In this segment, we're extending the self-serve model across the full customer lifecycle, from acquisition through onboarding, support, and expansion, with the goal of improving unit economics across the entire lower segment, not just at the point of initial purchase. I'll now run through our quarterly financial results and then discuss our outlook for Q3 in fiscal 2026. Our second quarter results were highlighted by a quarterly non-GAAP operating margin of 12.9%, up 370 basis points year-over-year, an ongoing expansion of our $30,000 above customer segment. Total revenue was $123.8 million, representing 10.8% year-over-year growth. Subscription revenue was $121.9 million, up 9.7% year-over-year. We ended the quarter with 3,926 customers contributing $30,000 or more in ARR, and 2,127 customers over $50,000 in ARR, up 11% and 16% respectively on an annual basis. Since the fourth quarter of 2022, we have added over 1,900 customers contributing $30,000 or more in ARR and over 1,100 customers contributing $50,000 or more in ARR. Growing these more socially sophisticated customers remains a central part of our longer-term strategy. Turning to cash flow, we generated $8.3 million in non-GAAP free cash flow during the quarter, an increase of approximately 60% from the prior year. As we have communicated previously, we expect our non-GAAP free cash flow margin to closely track our non-GAAP operating margin on an annual basis, and we remain committed to growing non-GAAP operating leverage on a fiscal year basis. Q2 ACV increased 14.8% year-over-year, reflecting the continued mix shift toward large, more sophisticated customers, and broader adoption of our higher value products across the platform. Expanding ACV remains a core part of our strategy, and we see continued opportunity to grow customer value through products like Influencer Marketing, Customer Care, Premium Analytics, and NewsWhip. RPO totaled $400.8 million, representing growth of 15.5% year-over-year. We expect to recognize 70.5% or $282.7 million of total RPO as revenue over the next 12 months, representing CRPO growth of 12.4% year-over-year. Note that during Q2, CRPO benefited due to longer contract durations as well as a higher mix from renewals. We ended the quarter with $119.9 million in cash and cash equivalents, up from $101.5 million a year ago. As a reminder, last quarter, we initiated a $50 million share repurchase authorization. Although our restructuring and blackout periods restricted our ability to buy back stock during Q2, we plan to be in the market opportunistically this quarter. We believe that there's a meaningful disconnect between current valuation levels and the long-term value we expect to create. The buyback reflects our confidence in the durability of our business, our ability to generate free cash flow, and the long-term opportunity we see ahead. We believe it represents a disciplined capital allocation strategy that will allow us to return value to shareholders and offset dilution. Before I discuss guidance, I want to review the recent restructuring and its impact on our financials. We believe the reorganization we announced on July 15th will enable us to deliver faster product innovation for customers in the future, while also enabling us to invest in our business. As part of this headcount reduction, we expect to incur pre-tax restructuring charges of approximately $18 million-$20 million. Substantially all of these changes will impact Q3. As a result of our restructuring, we expect to reduce our overall non-GAAP cost structure by at least $50 million on an annualized go-forward run rate. Due to the timing of employee departures and other initiatives related to the reorganization, we expect the annualized run rate will not be fully realized until 2027. With this reduction in cost structure, combined with the continued investments we plan to make, we are increasing our guidance for both non-GAAP operating income and non-GAAP EPS. We will continue our disciplined approach to our spend while maintaining flexibility to invest behind Trellis and AI-driven product expansion. Moving on to guidance. For the third quarter of fiscal 2026, we expect revenue in the range of $123.3 million-$124.1 million, non-GAAP operating income in the range of $17.5 million-$18.3 million, non-GAAP net income per share of between $0.29 and $0.30. This assumes approximately 60.7 million weighted average basic shares of common stock outstanding. For fiscal year 2026, we expect revenue in the range of $493 million-$495.6 million, non-GAAP operating income in the range of $68.3 million-$70.3 million. This is an increase of 20% over the midpoint of our prior outlook. For modeling purposes, we expect to exit Q4 2026 with a non-GAAP operating margin close to 70%, and non-GAAP net income per share between $1.11-$1.15, assuming approximately 60.6 million weighted average basic shares of common stock outstanding. This represents non-GAAP net income per share growth of approximately 22% over our prior outlook. Finally, we are reaffirming our target of reaching 30% under our Rule of 40 framework by the fourth quarter of fiscal 2027. We expect continued growth in our $30,000 and above customer segment, with continued headwind from customers below $30,000. Our focus is improving the quality and durability of growth while continuing to expand non-GAAP profitability. As a reminder, we are lapping the acquisition of NewsWhip beginning in Q3 2026, which will carry an associated headwind on both revenue and RPO growth moving forward. In addition, we are not anticipating an improvement in the demand environment. We expect the backdrop to remain consistent with what we have experienced the last few quarters. Note that our guidance excludes the impact of any potential share repurchases for purposes of our earnings per share outlook, given the timing and amount of repurchases is inherently uncertain and subject to a number of restrictions and other requirements. In conclusion, I'm pleased with the progress we made in Q2. Looking ahead, we believe that our current structure puts us in a fundamentally stronger operational and financial position, with the ability to deliver higher operating margins and stronger cash flow leverage, while at the same time enhancing our ability to invest in what will drive the business forward. With that, Erin and I are happy to open up the call for questions. Operator? Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q and A roster. Your first question comes from the line of Rob Oliver with Baird. Your line is open. Please go ahead. Rob Oliver: Great. Good afternoon, guys. Thanks. Ryan, a couple questions for you. Appreciate it. First is just on Trellis. Obviously, a lot of AI action happening in the departments that you guys sell to, and would love to hear how early indications of Trellis are playing out for you, and how we should think about Trellis potentially contributing or translating to that confidence you have in driving that $30,000+ ARR cohort trajectory. Then I had a quick follow-up as well. Ryan Barretto: Yeah. Thanks, Rob. Appreciate it. We've been really pleased with Trellis so far. Again, we're early here. As we started the year, we started Trellis within listening, then we expanded it across the rest of the platform. Then we just went live in July with our paid tier. The early trends have been encouraging. We've seen healthy growth in the monthly active users in Trellis, and we've seen that in Q2, those customers were retaining at a higher rate than customers without active Trellis usage, and that held true across all segments. We've been feeling pretty good about just the progress that we've been making there. You heard it on the prepared remarks, but really good feedback from customers on the value that they're seeing. This is really the driver behind our social intelligence in our platform With the access to the data that we have for our customers, having something like Trellis, enabling our customers to get to these insights faster than ever before is really a game changer for them. Really good early progress so far from our customers and good feedback. Rob Oliver: Great, helpful. Just quickly, just the implied Q4 guide for you guys on the new Q3 guidance is 3%-4% of the top line. I understand there are a lot of moving parts and there's no reason to be aggressive. Just wanted to get a sense of whether that's indicative of, say, a more assumed pressure on that sub-$30,000 customer cohort. I know you're doing a lot to shore that up and reengage growth there, should we expect that pressure to continue? How to think about that put and take versus, say, more of a Q4 backend loaded enterprise buying cycle. Thanks very much. Ryan Barretto: Appreciate it, Rob. Consistent with our approach to guidance, we're taking a measured view on the year to ensure that we're set up for success. Some of the inputs that are considered here, one, obviously with the restructuring we made, we're going through some important change management and executing well there over Q3 and Q4 will be important. We're halfway through the year. We're not assuming a material improvement in the demand environment. We're lapping the acquisition of NewsWhip, as you shared in the question as well, the headwinds from the sub-$30,000 as well in the low end of the market where remains some pressure in that market that we've been focusing in on. At the same time, we're continuing to see strength in the areas most aligned to our strategy. That's the larger customers in that $30,000 segment. We expect to be leaning in on things like Trellis and AI adoption, we're seeing good interest in our new products like NewsWhip and influencer marketing. I'd just summarize it by the guide reflects a thoughtful approach to how we're going to execute the rest of the year, it takes into account the demand environment and our areas of strength and some of those headwinds. Thanks for the question, Rob. Rob Oliver: Okay. Thanks, Ryan. Appreciate it. Operator: Your next question comes from the line of Arjun Bhatia with William Blair & Company. Your line is open. Please go ahead. Willow Miller: Hey, team, I'm Willow on for Arjun Bhatia. Thanks for taking our question. Ryan, I'm curious to hear more details about the customer feedback of the new Trellis capabilities launched this summer after the Breaking Ground event. Then with Trellis Studio, what are you seeing customers build? Ryan Barretto: Yeah, thanks, Willow. Yeah, the feedback has been really strong. I think that the standard, obviously, we started on the listening side of things. If we think about listening itself, you just have access to so much data, but historically, it was done through dashboards and reports. Then you really relied on having your internal analysts be able to make sense of all that data. With Trellis now, natural language, our customers are going in and they're asking questions of the data, and they're getting immediate responses back, which is really giving them insights. We think about this as taking that data and speeding up the insight to action, and that's the type of feedback that we've been hearing from our customers. On the Trellis Studio side, this goes into the idea of building skills. We've got some templated skills set up for customers, whether that's creating new marketing campaigns, understanding where there may be gaps in their content, understanding the sentiment of customers from a customer care perspective. These are all templated, our customers, again, with natural language, can go in and can create prompts and then set them on schedules so they can get this sort of data and insight happening to them on a regular cycle. For our customers today, again, there's just so much information that's coming to them, and most of the time, the folks that we're working with are practitioners, are understaffed. Being able to have Trellis as a partner to their work really does increase their efficiency and the intelligence that they have in their social execution. Willow Miller: Okay, this is helpful. One more question, if I may. Are you already seeing customers either buy new or more credits, excuse me, or upgrade to Plus? I realize this is early on, but any color there would be super helpful. Ryan Barretto: Yeah, appreciate it. We're pretty early on it. It's a few weeks after, but yes, we're seeing customers who are moving up to the paid Plus tier. For us, again, I'll go back to it's early, but we've been in a beta period for a period of time here. We're really driving towards adoption and usage. That's why Trellis is available across all of our products. We want our customers consuming this, we know that we're going to have a number of paid users that are going to be upgrading to get more access to Trellis. Expect as we come back in Q3, we'll have some more color and context for all of you. Willow Miller: Great. Thank you. Ryan Barretto: Thanks for the question. Operator: Your next question comes from the line of Scott Berg with Needham & Company. Your line is open. Please go ahead. Lucas Metcalf: Hi, everyone. This is Lucas on for Scott. Thank you guys for taking the questions. On CRPO growth and revenue growth, those are getting pretty close to converging. I guess given where contract length stand today, how should we think of CRPO as a good indicator of revenue growth over the next few quarters here? I guess, is it less reliable as contracts potentially get shorter and you move more down market? Thanks. Ryan Barretto: Thanks, Lucas. Appreciate the question. We're pleased with the progress that we've seen there. This has a lot to do with the $30,000 and above customers that we have. That's now 61% of our business growing at 20%. We also saw Just the $50,000 continued to grow faster than our overall business, and ACVs have increased 14.8%. The work for us here is about execution, and that's going to be scaling those higher value customers, driving the multi-product adoption, and the multi-year contracts. I'll have Erin maybe jump in with some of the mechanics behind this. Erin Graupmann: Thanks, RB. I think in addition to what RB said, the CRPO metric accelerated for a couple of reasons in Q2. Renewals were a big piece of this. Not only did we see improved renewal rates in the quarter, but we did benefit from the timing of some renewals as well. Additionally, Q2 carried a mix of longer contract durations and fewer monthly deals, which aren't seen in RPO. This reflects continued strong execution on larger and more strategic deals, to RB's point. That said, we do expect CRPO will moderate in Q3. Lucas Metcalf: Got it. Thank you, guys. Appreciate the color. Then just as a quick follow-up for you, Ryan, on the workforce reductions announced last month. I guess generally, were those fairly broad-based across the organization, or really kind of any certain areas that were impacted more heavily than others? Ryan Barretto: I appreciate it. First off, I want to acknowledge that these decisions are incredibly difficult because it impacts our people and team. We said goodbye to some amazing people who contributed a lot to building this company, which I'm grateful for. The change is really about creating the org structure and focus on financial strength that we believe is going to make Sprout a stronger, more successful company. Of course, alongside of that, we know that there's significant change management and the need to execute as we move forward. If I think about just where this was focused, it certainly was different parts of the organization, but it was really about removing layers, streamlining decision-making, and making sure that we are getting our leaders and our people closer to the work, and ensuring that we had the right investments in our most productive areas of the business. It touched a variety of different spots, but that was a little bit more about the strategy in terms of the decision. Lucas Metcalf: Understood. Thank you. Ryan Barretto: Thanks for the question. Operator: Your next question comes from the line of Matt VanVliet with Cantor. Your line is open. Please go ahead. Matt VanVliet: Hey, good afternoon. Thanks for taking the questions. Maybe following up on a couple of the other comments on Trellis, from a little different angle. I guess, how are you thinking about Trellis Plus, sort of the paid tier impacting results? On the flip side, how should we think about this just being natively integrated in the platform and giving those AI insights around the consumption of so much data to be the biggest value driver of the platform itself, rather than just sort of the publishing and basic listening capabilities. I guess, how are you envisioning AI impacting the business from a value delivered standpoint long term? Ryan Barretto: Yeah, thanks, Matt. I appreciate it. I think there's a few different vectors in which it's going to make an impact and where we think it can help. Certainly from a new business perspective, we think that it really helps us from a competitive standpoint. It should ultimately impact win rates. Because it's available to all of our customers today, we see it as an upsell opportunity for customers that will go from the free tiers to paid as they become power users in it. From a retention standpoint, from a gross retention standpoint, we believe that it makes the product that much more valuable to our customers today. We are seeing and hearing that type of feedback from our customers. To the second part of the point as well, this was certainly a quarter where we were very excited to get it beyond listening. We know that the intelligence that we can deliver goes beyond just the listening part of the platform. We've got marketers that are working within our publishing capabilities every day. They are trying to figure out how do they optimize their organic and paid campaigns, what kind of content should they create. We can help them there. We know from a customer care perspective, more and more customers are showing up on social. There is a ton of volume going to our customer base. Our ability using Trellis to help our customers understand the sentiment, the volume, and to even be able to take that intelligence and share it back into places in their organization like the product org, are all things that really end up adding a tremendous amount of value to the overall product. The way that we think about this today is that it should have a lot of impact across the business. Our focus right now is making sure that we're driving a lot of awareness usage and adoption. We expect to see these things getting pulled through in our metrics in the future. Matt VanVliet: Very helpful. I guess just as you think about the state of the headcount organization today, are there areas where you feel like you could use some additional heads, and sort of reallocating resources here, understanding it was a difficult decision to cut a pretty significant part of the business. Where should we think about heads being added incrementally going forward, and I guess how are you feeling about capacity on the go-to-market team? Ryan Barretto: Yeah, appreciate it. As you might imagine, as we went into such a big decision, there was a ton of thought and modeling and intentionality, and making sure that we were going to have a go-forward team where we expect to see improvements in the efficiency of the way that we're working, to see the right capacity in the areas where we think we have the biggest opportunity to ensure that we were creating enough space in terms of being able to reinvest in parts of our business where we think that there's upside. From where we are today, we feel good about the capacity that we have from a GTM perspective. We've got it focused in and on the right places. I think as we're going through the change management here through this quarter in Q4 and have more visibility into the opportunities in front of us, we'll probably be coming back to all of you with more context and color on where future investments might go. Matt VanVliet: Thank you. Ryan Barretto: Cool. Thanks for the question. Operator: Your next question comes from the line of Nate Ruoss with KeyBanc. Your line is open. Please go ahead. Nate Ruoss: Great. Hey, this is Nate Ruoss on for Jackson Ader. Thanks for taking our questions. It seems like increasingly incremental data points relevant for companies that we cover pop up on social media. I can think of platforms like X and Reddit. Ryan, you talked about Sprout helping customers identify real-time social signals. Are you noticing customers starting to operationalize this capability and fundamentally changing the way they use Sprout? Ryan Barretto: Yeah, thanks for the question, Nate. It is certainly one of the most exciting things and very much baked into everything that we do. More and more, we're seeing more of the signals show up. We've historically thought about this as a marketing-type function, and certainly our customers think about how to perform better from an organic and paid perspective on their marketing campaigns. From a customer care perspective, it's becoming one of the biggest channels where customers are going to engage with brands. These customers expect a higher level of service on social than many other channels. For our customers, they also know that these conversations that are happening are very public in nature, and so response time and the way that you respond matters a lot. There's also just a ton of signal in the type of volume that's coming in. Yes, the answer is we are seeing a lot of our customers pushing in here. We're seeing a lot of our customers having their executive teams asking for more insights on what's happening on social, especially when things are trending. We're seeing more of our customers being asked by their executives for more insights in terms of demand and opportunity. If we go back to Trellis, that social intelligence layer that we've built into Sprout, it is intentionally designed to be able to help these customers get those answers faster than they ever could before. Nate Ruoss: Great. Helpful color there. If I may, one more. Operating margin and guidance was strong in the quarter. Can you talk about where upside specifically came from? Thank you. Erin Graupmann: Yes, I'll be happy to take this question. We're very pleased with the Q2 EBIT performance and the discipline that the team showed on spend. The incremental leverage was driven by diligent efforts around spending, as well as the timing of hiring during the quarter. We expect meaningful operating leverage for the year as we're guiding to a Q4 exit margin near 17%, and we remain committed to the Rule of 30 framework we laid out for Q4 of 2027. Nate Ruoss: Awesome. Thanks so much. Ryan Barretto: Thanks for the question, Nate. Operator: Your next question comes from the line of Raimo Lenschow with Barclays. Your line is open. Please go ahead. Becky Sun: Hi, this is Becky Sun on for Raimo. Thanks for taking the question. Kind of have a more broad question that there have been conflicting results in software this quarter due to AI uncertainty. What are you seeing in terms of customer behavior for both below $30,000 and above $30,000 in general and sales cycles and pipeline in terms of those AI uncertainties? Ryan Barretto: Yeah. Thanks, Becky. Appreciate it. I think for all customers, we certainly see this as we're out there buying software as well, it comes down to a few things, I think, when you're looking at this. One, is the solution truly going to make a big difference in the workflows and the jobs to be done that you need? Two, do you trust the organizations that you're working with and the data that you're getting? Three, is the cost predictable? Certainly I'm playing the CFO as well in the current state from a financial and budget perspective, are these predictable costs? We see this in all the conversations that we're having with our customers. For us, the strategy behind Trellis has been from the very get-go here is drive usage and adoption from a freemium tier. We're allowing our customers to actually touch and feel Trellis and get exposed to it before they ever pay for it. They're getting a chance to ensure that it's actually delivering the value that they need. We've also had the benefit, we've been doing this for 16+ years. You've got tens of thousands of customers that trust us every single day. There's an inherent trust and credibility that we have with our customers to be able to deliver this type of AI and social intelligence for them. From a cost perspective, even the approach that we've taken with our Plus tier is at a predictable rate. I think all of those things make a material difference for customers when they're making decisions. Obviously, we're still early in this journey of being able to monetize and sell Trellis, but we've been seeing good progress thus far and expect that we'll be coming back and giving you all more color as we go through the quarter. Becky Sun: Got it. Helpful color there. Thank you. Ryan Barretto: Thank you, Becky. Operator: Your next question comes from the line of Parker Lane with Stifel. Your line is open. Please go ahead. Jack McShane: Yeah. Hi, this is Jack McShane on for Parker. Thanks for taking the questions today. I wanted to ask about during the Q and A, you called out improved renewal rates during the quarter. Do you have anything particular to call out, whether it be the product resonating better, improvements in the environment, or maybe it's a better upsell environment as it stands today? Ryan Barretto: Yeah. Thanks, Jack. I appreciate it. The color commentary there is we've seen our retention improve again in Q2, both on a quarter-over-quarter and year-over-year, which we're really proud of. I think this speaks to a few things. One, it is certainly just the quality of the product and the value that we're delivering to customers every single day, and a lot of credit to our teams here that are out there building those products and ensuring that we are continuing to ship innovation to our customers. They're feeling that on a weekly basis in terms of the innovation that those customers are seeing. I also want to give a lot of credit to our go-to-market teams and our customer experience teams who are spending a lot of time with our customers to ensure that we're diving deep into the workflows and making sure that they are getting exposure to the many parts of the product. We've really, over time, become a multi-product organization, and there's so many different solutions that we can bring to bear to our customers. We certainly see, especially in the $30,000+, as those customers come in and they're solving more problems, that they become stickier. We had a few examples of that in the prepared remarks, whether it was the manufacturer, the Fortune 50 financial services company, or the media publisher. These are organizations that came in, and that they're buying NewsWhip, and they're buying influencer marketing, and they're using us for marketing and customer care. It's all those things that are really contributing to the work that we're doing here. Erin Graupmann: Yeah, I think the only thing I'd add to this is something we were really pleased with in the quarter is that our gross retention moved in the right direction for both our less than $30,000 customers and our greater than $30,000 customers. While we generally see a benefit from the mix moving towards the larger customers, for this quarter, we benefited from both that and improved renewal rates across the cohort. Jack McShane: Yeah, great. Thanks. Follow-up from me, I wanted to ask about the Essentials package and how we could expect it to impact the financial model here, particularly on timing. It'd be great to hear how soon Essentials can, A, reduce churn, B, open the door to new customers that may be less sophisticated and looking for a lower price point and whether or not it's factored into the guidance at all. Thanks. Ryan Barretto: Yeah, appreciate it, Jack. Just a reminder, Essentials moved to GA in April, so it's still pretty early, but the initial cohorts are showing some positive demand trends. Right now, we're really focused in on sharpening our top of funnel on how we reach and acquire the right customers for this product. We think that the price point and the purpose-built nature of the product is well suited for expansion, not just in the U.S., but in global markets over time. The Essentials is a part of a broader self-service motion strategy for our sub-$30,000. This is going to be fully digital, no sales touch, across the entire life cycle from acquisition to onboarding to support and expansion. Our goal really is to serve these customers, reducing the cost to acquire and cost to serve, and to have better unit economics across the board. I think the other piece I'll maybe just say is, as we've shared with the sub-$30,000, we expect a deceleration going slightly negative this year with the plan to stabilize it in 2027. We'll continue to come back and provide more context and color there, but good early signals and more work to do. Jack McShane: Great. Thanks, Ryan. Ryan Barretto: Thanks for your question. Operator: There are no further questions at this time. I will now turn the call back to Ryan Barretto for closing remarks. Ryan Barretto: Perfect. Thanks very much. Thanks again, everyone, for joining us this evening. Before we close, I wanted to highlight a few takeaways. First, our second quarter financial metrics performed well. We beat across all the outlook across the metrics. Both CRPO and RPO accelerated this quarter. Our Q2 non-GAAP free cash flow surged nearly 60% year-over-year, bringing our trailing 12-month total to approximately $54 million and demonstrating the expanding leverage in our model. Reflecting our confidence in Sprout's durability and cash flow generation, we expect to begin executing against our $50 million share repurchase program this quarter. We believe that there's a disconnect between our current market valuation and our long-term potential, making this a compelling allocation of capital. Every major brand in the world is trying to solve the same problem right now, managing an explosion of social activity across fragmented platforms at the speed customers expect with limited resources. Social is now the primary battleground for discovery, commerce, customer service, and brand reputation, where trust is shaped by creators and communities. We've built the infrastructure to help them do exactly that in a way that we believe creates a strong competitive moat. Every day, Sprout ingests more than 2 billion real-time social interactions from hundreds of APIs across more than a dozen networks. That level of access took 16 years of legal agreements, security certifications, and a track record of delivering customer value. This critical foundation has embedded trust and credibility that comes from years of proven success. We believe this has us incredibly well-positioned for the future. On that note, I want to end by thanking our customers for their continued trust and partnership and the Sprout team for their focus, discipline, and dedication. We appreciate your time tonight and your continued interest in Sprout. Have a great evening. Thanks, everybody. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Sprout Social, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sprout Social wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Sprout Social. The Motley Fool has a disclosure policy. Sprout Social (SPT) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Social media management platform Sprout Social (NASDAQ:SPT) reported Q2 CY2026 results exceeding the market’s revenue expectations , with sales up 10.8% year on year to $123.8 million. The company expects next quarter’s revenue to be around $123.7 million, close to analysts’ estimates. Its non-GAAP profit of $0.26 per share was 62.5% above analysts’ consensus estimates. Is now the time to buy SPT? Find out in our full research report (it’s free). Revenue: $123.8 million vs analyst estimates of $122.2 million (10.8% year-on-year growth, 1.4% beat) Adjusted EPS: $0.26 vs analyst estimates of $0.16 (62.5% beat) Adjusted Operating Income: $15.98 million vs analyst estimates of $10.13 million (12.9% margin, 57.8% beat) The company slightly lifted its revenue guidance for the full year to $494.3 million at the midpoint from $494 million Management raised its full-year Adjusted EPS guidance to $1.13 at the midpoint, a 22.2% increase Operating Margin: -2.2%, up from -11% in the same quarter last year Billings: $123 million at quarter end, up 12.9% year on year Market Capitalization: $492.3 million Sprout Social’s second quarter results were met with a positive market reaction, reflecting both top- and bottom-line outperformance against Wall Street expectations. Management attributed the growth primarily to ongoing momentum with larger enterprise customers and expanded product adoption, especially within the company’s $30,000-and-above annual contract value cohort. CEO Ryan Barretto emphasized that multi-year contracts now represent nearly half of new business, indicating greater customer confidence in Sprout’s platform. The quarter also saw improved retention rates, with Barretto highlighting that “customers using Trellis, our AI offering, retained at a higher rate than others.” Looking ahead, Sprout Social’s updated guidance is underpinned by anticipated efficiency gains from recent organizational restructuring and continued investment in AI-powered product innovation. Management expects that headcount reductions and a more streamlined structure will support operating margin expansion and enable increased investment in high-return areas like Trellis and enterprise capabilities. Barretto noted that the company expects to see “continued growth in our $30,000-and-above customer segment and greater capacity to invest in the areas of the business with the highest return,” while also cautioning that demand headwinds remain for smaller customers. The company believes these efforts will enhance both growth durability and profitability. Management attributed the quarter’s results to successful upsell activity with large customers, strong adoption of AI features, and efficiency gains from targeted cost control measures. Enterprise customer expansion: The $30,000-and-above cohort contributed over 61% of recurring subscription revenue, with these customers adopting multi-year contracts and more advanced products like influencer marketing and NewsWhip, driving higher retention and expansion rates. AI feature adoption: Trellis, Sprout’s proprietary AI offering, saw rising usage across customer segments, with monthly active users retaining at a higher rate and early signals from the new paid Trellis Plus tier indicating willingness to upgrade for expanded access. Product innovation velocity: The launch of Trellis Studio—a no-code interface for building custom AI “skills”—and integration with platforms like Canva, Snapchat, and TikTok broadened the product ecosystem and improved workflow consolidation for enterprise clients. Workforce restructuring: The company reduced its workforce by about 20% to eliminate organizational layers and improve decision-making speed. Management expects this will yield at least $50 million in annualized cost savings and support further investment in high-return product areas. Improved retention and renewals: Higher renewal rates were reported, supported by a shift toward multi-product adoption and more robust customer engagement strategies, especially among large enterprise clients. Sprout Social’s guidance for the next quarter and year is shaped by a focus on scaling AI-driven offerings, operational streamlining, and a continued shift toward enterprise customers. AI monetization and adoption: Management believes expanded deployment of Trellis, including paid tiers, will help drive product upsell and improve customer retention, especially as customers seek faster social insight-to-action workflows. Organizational efficiency gains: The recent workforce reduction is expected to meaningfully lower the cost structure, enabling higher operating margins and freeing up resources for targeted investments in product development and go-to-market initiatives. Mixed demand environment: While larger customers are expected to remain a source of strength, management cautioned that demand from smaller customers (under $30,000 annual contract value) remains pressured, with stabilization efforts for this segment not expected to yield a turnaround until 2027. Looking ahead, the StockStory team will be tracking (1) customer adoption rates and upsell activity for Trellis, especially in the enterprise segment, (2) the pace and impact of organizational restructuring on operating margins and free cash flow, and (3) the stabilization and growth trajectory of the Essentials product for smaller customers. Additional attention will be paid to ongoing product launches and the integration of AI-driven capabilities across the platform. Sprout Social currently trades at $8.99, up from $8.19 just before the earnings. Is the company at an inflection point that warrants a buy or sell? 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Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by the $30,000+ ARR customer segment, which now contributes over 61% of total subscription revenue and grew 20% year-over-year. Management attributed the 14.8% ACV increase to a mix shift toward sophisticated enterprise clients and broader adoption of high-value products like Influencer Marketing and NewsWhip. The 20% workforce reduction was a strategic decision to remove organizational layers, streamline decision-making, and focus investments on high-return areas like AI. Management highlighted a competitive moat built on 16 years of API integrations and security certifications, enabling the ingestion of 2 billion real-time social interactions daily. The 'Essentials' product launch in April marks a pivot toward a fully digital, no-sales-touch model for the sub-$30,000 segment to improve unit economics. Strategic positioning is increasingly focused on 'social intelligence,' moving beyond publishing to provide real-time brand sentiment and crisis detection via AI. Guidance assumes a consistent demand environment with no material improvement in the macro backdrop for the remainder of 2026. The company expects to realize at least $50 million in annualized cost savings from restructuring, though the full run-rate impact will not be achieved until 2027. Management reaffirmed the target of reaching 30% under the Rule of 40 framework by Q4 2027, driven by enterprise growth offsetting sub-$30,000 headwinds. Revenue and RPO growth in the second half of 2026 will face headwinds as the company laps the NewsWhip acquisition starting in Q3. The company plans to opportunistically execute its $50 million share repurchase program in Q3, citing a disconnect between current valuation and long-term value. Restructuring charges of $18 million-$20 million are expected to be incurred primarily in Q3 2026 due to the headcount reduction. The sub-$30,000 customer cohort is expected to see slightly negative growth this year before stabilizing in 2027. Multi-year contracts now represent almost half of the contract mix, up from one-third two years ago, providing increased revenue visibility. The return of Co-Founder Aaron Rankin as CTO signals a prioritized focus on embedding agentic AI capabilities into the core enterprise platform. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management reported that customers using Trellis retained at a higher rate across all segments during Q2 compared to non-users. The paid tier, Trellis Plus, launched in July and is seeing early upgrades from customers seeking higher usage limits. Q2 CRPO benefited from strong execution on larger deals, improved renewal rates, and a higher mix of multi-year contract durations. Management cautioned that CRPO growth is expected to moderate in Q3 following the specific timing benefits seen in Q2. The reduction was not localized to one department but aimed at removing management layers to get leaders closer to the work. Management believes the current capacity is sufficient for their go-to-market strategy focused on larger enterprise accounts. Sprout is mitigating AI budget uncertainty by offering a 'freemium' tier for Trellis, allowing customers to verify value before committing to paid tiers. Management noted that enterprise customers prioritize predictable costs and trusted data, which favors Sprout's established 16-year track record.

Interested in Sprout Social, Inc.? Here are five stocks we like better. Q2 performance improved: Revenue rose 10.8% year over year to $123.8 million, while the non-GAAP operating margin expanded to 12.9% and free cash flow increased about 60% to $8.3 million. Sprout is prioritizing larger customers and AI: Subscription revenue from customers contributing at least $30,000 in ARR grew 20%, while Trellis AI gained usage and began generating early upgrades to its paid tier. Restructuring is expected to lower costs: The planned 20% workforce reduction will generate $18 million–$20 million in charges but is expected to reduce annualized non-GAAP costs by at least $50 million; Sprout raised its full-year operating-income outlook and plans to resume share repurchases. United Natural Foods’ Risk-Reward Tradeoff Looks Appetizing Sprout Social (NASDAQ:SPT) reported second-quarter revenue of $123.8 million, up 10.8% from a year earlier, as the social media management software provider continued to shift its business toward larger customers and expanded its artificial intelligence offerings. Chief Executive Officer Ryan Barretto said the company posted a 12.9% non-GAAP operating margin, an increase of 370 basis points year over year, while non-GAAP free cash flow rose about 60% to $8.3 million. On a trailing 12-month basis, Sprout generated approximately $54 million in non-GAAP free cash flow, he said. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth Sprinklr Gets Targets Raised By Analysts, Here's Why Sprout also reported growth in remaining performance obligations, or RPO, as customers signed longer commitments. Current RPO increased 12.4% year over year to $202.7 million, while total RPO rose 15.5% to $400.8 million. The company said multi-year agreements accounted for nearly half of its contract mix, compared with about one-third two years earlier. The company’s strategy remains centered on customers contributing at least $30,000 in annual recurring revenue. Approximated trailing 12-month subscription revenue from that group grew 20% year over year and represented more than 61% of total subscription revenue, according to Barretto. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High How to Invest in Grocery Stores Sprout ended the quarter with 3,926 customers contributing $30,000 or more in ARR, up 11% from a year earlier, and 2,127 customers contributing more than $50,000 in ARR, up 16%. The company added 51 net new customers in the $30,000-and-above segment during the quarter and 388 over the trailing 12 months. More than 10 net new customers in the quarter contributed at least $150,000 in ARR. Barretto said the larger-customer cohort has stronger unit economics, retention and expansion characteristics than smaller customers, while also showing higher adoption of products including influencer marketing and NewsWhip. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Among the enterprise customer examples discussed on the call, Sprout cited a seven-figure new-business deal with a multinational manufacturer and distributor using products including Premium Analytics, Social Listening, Employee Advocacy, Influencer Marketing and NewsWhip. The company also said a Fortune 50 financial services client expanded a prior $1.65 million deal by $893,000, adding Sprout’s Service Cloud integration and Guardian compliance product. Meanwhile, Sprout said customers below the $30,000 ARR threshold represented 39% of approximated subscription revenue in the trailing 12 months ended June 30, down from 59% four years earlier. The company expects continued pressure in that lower-end segment this year, with Barretto saying it expects the segment to decelerate to slightly negative growth before stabilizing in 2027. Sprout expanded its Trellis AI offering during the quarter. Trellis enables users to query social data in natural language and receive insights without building reports or dashboards, according to the company. Sprout also introduced Trellis Studio, a no-code interface through which customers can create customized skills designed to surface relevant insights on a recurring basis. All customers receive a base allotment of Trellis usage, while the paid Trellis Plus tier, which offers higher usage limits, launched in July. Barretto said the company has seen healthy growth in monthly active Trellis users and that customers with active Trellis usage retained at a higher rate during the second quarter than those without active users across all customer segments. During the question-and-answer session, Barretto said the company has begun seeing customers upgrade to the paid Trellis Plus tier, though he emphasized that the offering remains early in its commercialization. He said Sprout views AI as a potential driver of new-business win rates, paid upsells and retention as customers use the technology across social listening, publishing and customer-care workflows. The company also added predictive scoring for community platforms such as Reddit through NewsWhip, launched an AI dashboard builder, expanded Canva integration, added Snapchat scheduling and publishing, and introduced direct creator payments through PayPal and Lumanu. On July 15, Sprout announced plans to reduce its workforce by about 20%. Barretto said the restructuring is intended to remove organizational layers, accelerate decision-making and focus spending on higher-return areas. The company expects to incur $18 million to $20 million in pretax restructuring charges, substantially all of which are expected in the third quarter. Sprout expects the move to reduce its annualized non-GAAP cost structure by at least $50 million, although it does not expect to realize the full annualized savings until 2027. Barretto said the company believes it has adequate go-to-market capacity following the reductions and will evaluate future investments as it progresses through the organizational changes. For the third quarter, Sprout forecast revenue of $123.3 million to $124.1 million, non-GAAP operating income of $17.5 million to $18.3 million, and non-GAAP earnings per share of $0.29 to $0.30. For full-year 2026, the company projected revenue of $493 million to $495.6 million and non-GAAP operating income of $68.3 million to $70.3 million. The operating-income outlook represents a 20% increase at the midpoint from its prior forecast. Sprout forecast non-GAAP EPS of $1.11 to $1.15 for the year and said it expects to exit the fourth quarter with a non-GAAP operating margin near 17%. The company reiterated its goal of reaching a Rule of 40 metric above 30% by the fourth quarter of 2027. It also said it plans to begin opportunistically repurchasing shares during the current quarter under its previously announced $50 million authorization, after restructuring and blackout periods limited repurchases in the second quarter. Barretto said Sprout is not assuming an improvement in the demand environment and expects the acquisition anniversary of NewsWhip to create headwinds for revenue and RPO growth beginning in the third quarter. Sprout Social (NASDAQ: SPT) is a Chicago-based software company specializing in social media management solutions for businesses of all sizes. The company provides a cloud-based platform designed to help organizations improve their social media presence through a suite of tools for content scheduling, community engagement, social listening and analytics. Sprout Social's platform is built to streamline the workflows of marketing, customer care and public relations teams by providing a centralized hub for managing multiple social channels. The company's product offerings include publishing and scheduling capabilities that allow users to plan and automate social content across networks such as Facebook, Instagram, Twitter, LinkedIn and Pinterest. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Sprout Social Q2 Earnings Call Highlights" was originally published by MarketBeat. 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This article first appeared on GuruFocus. Revenue: Total revenue was $123.8 million, representing 10.8% year-over-year growth. Subscription Revenue: Subscription revenue was $121.9 million, up 9.7% year-over-year. Non-GAAP Operating Margin: Non-GAAP operating margin was 12.9%, up 370 basis points year-over-year. Non-GAAP Free Cash Flow: Non-GAAP free cash flow was $8.3 million, an improvement of approximately 60% year over year. Current Remaining Performance Obligations (CRPO): CRPO grew 12.4% year-over-year to $202.7 million. Total Remaining Performance Obligations (RPO): Total RPO grew 15.5% year-over-year to $400.8 million. Annual Contract Value (ACV): ACV increased 14.8% year-over-year. Customer Count ($30K+ ARR): Ended the quarter with 3,926 customers contributing $30,000 or more in ARR, up 11% annually. Customer Count ($50K+ ARR): Ended the quarter with 2,127 customers over $50,000 in ARR, up 16% annually. Cash and Cash Equivalents: Ended the quarter with $119.9 million in cash and cash equivalents, up from $101.5 million a year ago. Warning! GuruFocus has detected 4 Warning Signs with SPT. Is SPT fairly valued? Test your thesis with our free DCF calculator. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Sprout Social Inc (NASDAQ:SPT) delivered strong Q2 2026 results with revenue of $123.8 million, up 10.8% year-over-year, and non-GAAP operating margin expanding 370 basis points to 12.9%. CRPO and RPO accelerated, with CRPO growing 12.4% and total RPO growing 15.5% year-over-year, reflecting longer-term customer commitments and multi-year contracts now representing nearly half of the contract mix. The $30K+ ARR customer segment continues to drive growth, contributing over 61% of subscription revenue (up 20% year-over-year) with 51 net new customers added in Q2 and strong unit economics. Trellis, the proprietary Agentic AI offering, is gaining traction with healthy adoption trends, and customers using Trellis retain at higher rates across all segments, positioning it as a key differentiator. Non-GAAP free cash flow improved approximately 60% year-over-year to $8.3 million in Q2, with trailing twelve-month free cash flow reaching about $54 million, demonstrating strong operating leverage. The company raised its full-year 2026 non-GAAP operating income guidance by 20% at the midpoint, reflecting the benefits of the restructuring and disciplined cost management. Sprout Social Inc (NASDAQ:SPT) secured several significant enterprise wins, including a seven-figure new business deal and expansions with Fortune 50 financial services, highlighting its ability to consolidate complex social operations. Sprout Social Inc (NASDAQ:SPT) announced a difficult decision to reduce its team by approximately 20%, which will incur pre-tax restructuring charges of $18-20 million, impacting Q3 2026. The company expects continued headwinds from customers below $30K in ARR, with this segment's revenue contribution declining to 39% from 59% two years ago, and plans to stabilize it only by 2027. Guidance for Q3 2026 implies a sequential revenue decline, reflecting a measured approach and no anticipated improvement in the demand environment, with management noting persistent pressure in the lower end of the market. The company is lapping the acquisition of NewsWhip starting in Q3 2026, which will create a headwind on both revenue and RPO growth moving forward. While Trellis Plus, the paid tier, went live in July, monetization is still early, and the company has not yet provided clear metrics on its contribution to revenue or expansion. The restructuring and change management may disrupt execution in Q3 and Q4, as the company works to streamline operations and reallocate resources. The company's share repurchase program was restricted during Q2 due to blackout periods, limiting capital return activity, and the timing of future buybacks remains uncertain. Q: How are early indications of Trellis playing out, and how should we think about it potentially contributing to the confidence in driving the $30K+ ARR cohort trajectory?A: Ryan Barretto (CEO): We've been really pleased with Trellis so far. We're early here, but we've seen healthy growth in monthly active users. In Q2, customers with active Trellis usage retained at a higher rate than those without, and that held true across all segments. Customer feedback has been strong, with users reporting that analysis that once took hours now takes seconds. Trellis is a key driver behind our social intelligence platform, enabling customers to get insights faster than ever before. Q: The implied Q4 guide suggests 3% to 4% top-line growth. Is that indicative of more assumed pressure on the sub-$30K customer cohort, or more of a back-end loaded enterprise buying cycle?A: Ryan Barretto (CEO): Consistent with our approach to guidance, we're taking a measured view. We're not assuming a material improvement in the demand environment, we're lapping the NewsWhip acquisition, and we continue to see headwinds from the sub-$30K segment. At the same time, we're seeing strength in our strategic areaslarger customers in the $30K+ segment, good interest in new products like NewsWhip and influencer marketing, and we're leaning into Trellis and AI adoption. The guide reflects a thoughtful approach to executing the rest of the year. Q: Can you share more details on customer feedback for the new Trellis capabilities launched this summer, and where are customers building with Trellis Studio?A: Ryan Barretto (CEO): Feedback has been really strong. With Trellis, customers can now ask natural language questions of their data and get immediate responses, speeding up insight-to-action. With Trellis Studio, we have templated skills set up for creating marketing campaigns, identifying content gaps, and understanding customer sentiment. Customers can create prompts and set them on schedules to receive regular insights. This is particularly valuable for practitioners who are often understaffedTrellis acts as a partner to their work, increasing efficiency and intelligence in social execution. Q: Are you already seeing customers buy new credits or upgrade to Trellis Plus?A: Ryan Barretto (CEO): We're pretty early onit's only been a few weeksbut yes, we are seeing customers moving up to the paid Plus tier. Our focus is driving adoption and usage, which is why Trellis is available across all products. We want customers consuming it, and we know a number of paid users will upgrade for more access. Expect more color and context when we report Q3. Q: Given where CRPO and revenue growth are converging, how should we think about CRPO as an indicator of revenue growth over the next few quarters?A: Ryan Barretto (CEO) & Aaron Rankin (CTO): We're pleased with the progress. CRPO accelerated due to improved renewal rates, timing of renewals, and a mix of longer contract durations with fewer monthly deals. This reflects strong execution on larger, more strategic deals. However, we do expect CRPO to moderate in Q3. The $30K+ segment is now 61% of our business growing at 20%, and ACVs increased 14.8% year-over-year. Q: Were the workforce reductions broad-based or concentrated in certain areas?A: Ryan Barretto (CEO): These decisions are incredibly difficult, and we said goodbye to amazing people. The change is about creating an org structure and financial strength that will make Sprout stronger. It touched different parts of the organization, but was really about removing layers, streamlining decision-making, and getting leaders closer to the work. We ensured we had the right investments in our most productive areas of the business. Q: How are you thinking about Trellis Plus impacting results, and how should we think about AI impacting the business from a value-delivered standpoint long-term?A: Ryan Barretto (CEO): There are several vectors where AI will make an impact. From a new business perspective, it helps us competitively and should impact win rates. It's an upsell opportunity as customers move from free tiers to paid. From a retention standpoint, it makes the product more valuable. Beyond listening, Trellis helps marketers optimize campaigns, and from a customer care perspective, it helps understand sentiment and volume. Our focus is driving awareness, usage, and adoption, and we expect to see these pulled through in our metrics in the future. Q: Are you noticing customers starting to operationalize real-time social signals and fundamentally changing the way they use Sprout?A: Ryan Barretto (CEO): Yes, we're seeing a lot of customers pushing in here. Executive teams are asking for more insights on what's happening on social, especially when things are trending. Customer care is becoming one of the biggest channels where customers engage with brands, and these conversations are public, so response time matters. Trellis, our social intelligence layer, is intentionally designed to help customers get answers faster than they ever could before. Q: Where did the upside in operating margin and guidance come from?A: Aaron Rankin (CTO): We're very pleased with Q2 EBIT performance and the discipline the team showed on spend. Incremental leverage was driven by diligent efforts around spending as well as the timing of hiring during the quarter. We expect meaningful operating leverage for the year, guiding to a Q4 exit margin near 17%, and we remain committed to the Rule of 30 framework for Q4 of 2027. Q: What are you seeing in customer behavior and sales cycles given AI uncertainty in software?A: Ryan Barretto (CEO): It comes down to a few things: Is the solution truly going to make a difference? Do you trust the organization and data? And is the cost predictable? Our strategy with Trellis has been to drive usage from a freemium tier, allowing customers to touch and feel it before paying. We have 16+ years of trust with tens of thousands of customers, and our Plus tier is at a predictable rate. All these things make a material difference for customers making decisions. Q: You called out improved renewal rates during the quarter. Anything particular to call out?A: Ryan Barretto (CEO) & Aaron Rankin (CTO): Our retention improved again in Q2, both quarter-over-quarter and year-over-year. This speaks For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Sprout Social (SPT) came out with quarterly earnings of $0.26 per share, beating the Zacks Consensus Estimate of $0.16 per share. This compares to earnings of $0.18 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +62.50%. A quarter ago, it was expected that this developer of cloud software would post earnings of $0.16 per share when it actually produced earnings of $0.23, delivering a surprise of +43.75%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Sprout Social, which belongs to the Zacks Internet - Services industry, posted revenues of $123.85 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.35%. This compares to year-ago revenues of $111.78 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Sprout Social shares have lost about 23.4% since the beginning of the year versus the S&P 500's gain of 12.8%. While Sprout Social has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Sprout Social was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.24 on $123.66 million in revenues for the coming quarter and $0.92 on $494.13 million in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Services is currently in the bottom 38% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. ACM Research, Inc. (ACMR), another stock in the broader Zacks Computer and Technology sector, has yet to report results for the quarter ended June 2026. The results are expected to be released on August 7. This company is expected to post quarterly earnings of $0.30 per share in its upcoming report, which represents a year-over-year change of -44.4%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. ACM Research, Inc.'s revenues are expected to be $268.15 million, up 24.5% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sprout Social, Inc. (SPT) : Free Stock Analysis Report ACM Research, Inc. (ACMR) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Approximated TTM Subscription Revenue Contribution for ≥$30K ARR Customers Grew 20% year-over-year CHICAGO, Aug. 06, 2026 (GLOBE NEWSWIRE) -- Sprout Social, Inc. (“Sprout Social”, the “Company”) (NASDAQ: SPT), a leading AI-powered Social Intelligence Platform, today announced financial results for its second quarter ended June 30, 2026. “We are pleased with our financial performance this quarter, highlighted by 11% year-over-year revenue growth and a 20% year-over-year increase in approximated trailing twelve month subscription revenue contribution from our $30k+ ARR customer cohort,” said Ryan Barretto, CEO of Sprout Social. “We also demonstrated strong discipline in our profitability this quarter - delivering non-GAAP operating income $6.1 million above our guidance range.” Second Quarter 2026 Financial Highlights Revenue Revenue was $123.8 million, up 11% compared to the second quarter of 2025. Total remaining performance obligations (RPO) of $400.8 million as of June 30, 2026, up 16% year-over-year. Current remaining performance obligations (cRPO) of $282.7 million as of June 30, 2026, up 12% year-over-year. Operating Income (Loss) GAAP operating loss was ($2.7) million, compared to ($12.3) million in the second quarter of 2025. Non-GAAP operating income was $16.0 million, compared to $10.3 million in the second quarter of 2025. Net Income (Loss) GAAP net loss was ($3.1) million, compared to ($12.0) million in the second quarter of 2025. Non-GAAP net income was $15.6 million, compared to $10.7 million in the second quarter of 2025. GAAP net loss per share was ($0.05) based on 60.2 million weighted-average shares of common stock outstanding, compared to ($0.21) based on 58.4 million weighted-average shares of common stock outstanding in the second quarter of 2025. Non-GAAP net income per share was $0.26 based on 60.2 million weighted-average shares of common stock outstanding, compared to $0.18 based on 58.4 million weighted-average shares of common stock outstanding in the second quarter of 2025. Cash Cash and cash equivalents totaled $119.9 million as of June 30, 2026, compared to $111.6 million as of March 31, 2026. Net cash provided by operating activities was $8.5 million, compared to $5.1 million in the second quarter of 2025. Non-GAAP free cash flow was $8.3 million, compared to $5.2 million in the second quarter of 2025. See “Use of Non-GAAP Financial Measures” below for definitions of Non-GAAP operating income (loss), Non-GAAP net income (loss), Non-GAAP net income (loss) per share and Non-GAAP free cash flow and the financial tables that accompany this release for reconciliations of our non-GAAP measures to their closest comparable GAAP measures. See “Key Business Metrics” below for how Sprout Social defines RPO, cRPO, the number of customers contributing $30,000 or more in ARR, the number of customers contributing $50,000 or more in ARR and approximated TTM subscription revenue contribution from customers contributing $30,000 or more in ARR. Customer Metrics Grew number of customers contributing $30,000 or more in ARR to 3,926 customers as of June 30, 2026, up 11% compared to June 30, 2025. Grew number of customers contributing $50,000 or more in ARR to 2,127 customers as of June 30, 2026, up 16% compared to June 30, 2025. Beginning in the fourth quarter of 2025, we replaced our disclosure of customers with ARR of $10,000 or more with customers with ARR of $30,000 or more. We believe this metric better reflects our strategic focus on larger customers and aligns with how management evaluates performance and allocates resources. Prior-period amounts have been presented for comparability. Recent Customer Highlights During the second quarter, we had the opportunity to grow with new and existing customers, including Salesforce, Cintas, MillerKnoll, Church & Dwight, Regal Cinemas, Wiley, and CoreWeave. Recent Business Highlights Sprout Social recently: Released the 2026 Influencer Marketing Report (link) Named as a Visionary in the 2026 Gartner Magic Quadrant for Social Media Management and Listening (link) Expanded Snapchat integration, giving brands a direct line to highly engaged audiences (link) Released the Q2 2026 Pulse Survey highlighting social media as the primary channel for brand crisis response (link) Unveiled AI-Powered social intelligence platform and the expansion of proprietary AI Agent, Trellis (link) Third Quarter and 2026 Financial Outlook For the third quarter of 2026, the Company currently expects: Total revenue between $123.3 million and $124.1 million. Non-GAAP operating income between $17.5 million and $18.3 million. Non-GAAP net income per share between $0.29 and $0.30 based on approximately 60.7 million weighted-average shares of common stock outstanding. For the full year 2026, the Company currently expects: Total revenue between $493.0 million and $495.6 million. Non-GAAP operating income between $68.3 million and $70.3 million, an increase of 20% over the midpoint of our prior year outlook. Non-GAAP net income per share between $1.11 and $1.15 based on approximately 60.6 million weighted-average shares of common stock outstanding. The Company raised its outlook for non-GAAP operating margin exiting the fourth quarter of 2026 from 15% to approximately 17%. The Company reiterates its 30% target for a Rule of 40 framework (as defined by year-over-year revenue growth plus current quarter non-GAAP operating margin) by the fourth quarter of fiscal 2027. The Company’s third quarter and 2026 financial outlook is based on a number of assumptions that are subject to change and many of which are outside the Company’s control. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results. The Company does not provide guidance for operating loss, the most directly comparable GAAP measure to non-GAAP operating income, operating margin, the most directly comparable GAAP measure to non-GAAP operating margin, or net loss per share, the most directly comparable GAAP measure to non-GAAP net income per share, and similarly cannot provide a reconciliation between its forecasted non-GAAP operating income, non-GAAP operating margin and non-GAAP net income per share and these comparable GAAP measures without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results. Conference Call Information The financial results and business highlights will be discussed on a conference call and webcast scheduled at 3:30 p.m. Central Time (4:30 p.m. Eastern Time) today, August 6, 2026. Online registration for this event conference call can be found at https://events.q4inc.com/analyst/. The live webcast of the conference call can be accessed from Sprout Social’s investor relations website at http://investors.sproutsocial.com. Following completion of the events, a webcast replay will also be available at http://investors.sproutsocial.com for 12 months. About Sprout Social Sprout Social is a leading AI-powered Social Intelligence Platform, built on the belief that All Business is Social℠. Powered by Trellis, Sprout’s proprietary AI agent, the platform is designed to transform real-time social media signals into actionable insights that drive business forward. Consistently recognized as a top software by G2, Sprout enables brands to deliver smarter, faster business impact through a suite of solutions including comprehensive publishing and engagement, customer care, influencer marketing, advocacy and predictive media intelligence. Sprout’s software operates across all major social networks and digital platforms. For more information about Sprout Social (NASDAQ: SPT), visit sproutsocial.com. Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the use of words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “explore,” “future,” “intend,” “long-term model,” “may,” “might,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or the negative of these terms, and similar expressions intended to identify forward-looking statements, as they relate to Sprout Social, our business and our management. However, not all forward-looking statements contain these identifying words. Forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by Sprout Social and our management based on their knowledge and understanding of the business and industry, are inherently uncertain. These statements may relate to our market size and growth strategy, our estimated and projected costs, margins, revenue, expenditures and customer and financial growth rates, our Q3 2026 and full year 2026 financial outlook, our plans and objectives for future operations, growth, initiatives or strategies, including our investments in research and development, our workforce reduction plan approved in July 2026, and share repurchases, and other statements that are not historical fact. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. These assumptions, uncertainties and risks include that, among others: our workforce reduction plan may not achieve the anticipated benefits and could adversely affect our business, we may not be able to sustain our revenue and customer growth rate in the future, including due to risks associated with our strategic focus on enterprise customers; price increases have negatively impacted and price increases and packaging changes may in the future negatively impact demand for our products, customer acquisition and retention and reduce the total number of customers or customer additions; our business would be harmed by any significant interruptions, delays or outages in services from our platform, our API providers, or certain social media platforms, or if we are unable to renew agreements governing access to the data provided by such APIs on terms acceptable to us or at all; if we are unable to attract potential customers through unpaid channels, or other sources of demand, including expansion opportunities from existing customers and outbound sales efforts or convert prospective customers and expansion opportunities into paid subscriptions, our business and results of operations may be adversely affected; technological advances in AI may in the future disrupt the social media industry, which could significantly reduce the demand for our services or otherwise adversely impact our business or reputation if we are unable to keep pace and navigate this evolving environment; we may be unable to successfully enter new markets, manage our international expansion and comply with any applicable international laws and regulations; we may be unable to integrate acquired businesses or technologies successfully or achieve the expected benefits of such acquisitions and investments; unstable market, economic, and geopolitical conditions, such as recession risks, effects of inflation, tariffs and trade tensions, changes in government spending, labor shortages, supply chain issues, geopolitical instability and uncertainty, and fluctuation in interest rates, have and could continue to adversely impact our business and that of our existing and prospective customers, which may result in reduced demand for our products; we may not be able to generate sufficient cash to service our indebtedness; covenants in our credit agreement may restrict our operations, and if we do not effectively manage our business to comply with these covenants, our financial condition could be adversely impacted; any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business; changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and harm our brand; and risks related to ongoing legal proceedings. These forward-looking statements should not be read as a guarantee of future performance or results, and stockholders should not place undue reliance on forward-looking statements. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption “Risk Factors” and elsewhere in our filings with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 27, 2026, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, filed with the SEC on May 8, 2026, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, to be filed with the SEC, as well as any future reports that we file with the SEC. Moreover, you should interpret many of the risks identified in those reports as being heightened as a result of the current and ongoing instability in market, economic, and geopolitical conditions. Forward-looking statements speak only as of the date the statements are made and are based on information available to Sprout Social at the time those statements are made and/or management's good faith belief as of that time with respect to future events. Sprout Social assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law. Use of Non-GAAP Financial MeasuresWe have provided in this press release certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Our management uses these non-GAAP financial measures internally in analyzing our financial results and believes that these non-GAAP financial measures are useful to investors as additional tools to evaluate ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our non-GAAP financial measures may differ from similarly titled measures presented by other companies and therefore may not be comparable. A reconciliation of our historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations. Non-GAAP gross profit. We define non-GAAP gross profit as GAAP gross profit, excluding stock-based compensation expense, amortization expense associated with the acquired developed technology from the Tagger Media, Inc. (“Tagger”) and NewsWhip Group Holdings Limited (“NewsWhip”) acquisitions, and restructuring and related charges. We believe non-GAAP gross profit provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, amortization expense and restructuring and related charges, which are often unrelated to overall operating performance. Non-GAAP operating income. We define non-GAAP operating income as GAAP loss from operations, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring and related charges, non-cash (gains)/losses from lease modifications and terminations and changes in the fair value of contingent consideration. We believe non-GAAP operating income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring and related charges, non-cash (gains)/losses from lease modifications and termination and changes in the fair value of contingent consideration, which are often unrelated to overall operating performance. Non-GAAP operating margin. We define non-GAAP operating margin as non-GAAP operating income (loss) as a percentage of revenue. Non-GAAP net income. We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring and related charges, non-cash (gains)/losses from lease modifications and terminations and changes in the fair value of contingent consideration. We believe non-GAAP net income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring and related charges, non-cash (gains)/losses from lease modifications and terminations and changes in the fair value of contingent consideration, which are often unrelated to overall operating performance. Non-GAAP net income per share. We define non-GAAP net income per share as GAAP net loss per share attributable to common shareholders, basic and diluted, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring and related charges, non-cash (gains)/losses from lease modifications and terminations and changes in the fair value of contingent consideration. We believe non-GAAP net income per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring and related charges, non-cash (gains)/losses from lease modifications and terminations and changes in the fair value of contingent consideration, which are often unrelated to overall operating performance. Non-GAAP free cash flow. We define non-GAAP free cash flow as net cash provided by operating activities, less expenditures for property and equipment, plus interest payments on our revolving credit facility and payments related to restructuring and related charges. Non-GAAP free cash flow does not reflect our future contractual obligations or represent the total increase or decrease in our cash balance for a given period. We believe non-GAAP free cash flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash provided by our core operations that, after expenditures for property and equipment, interest payments on our revolving credit facility and payments related to restructuring and related charges, is available for strategic initiatives. Non-GAAP sales and marketing expenses, non-GAAP research and development expenses and non-GAAP general and administrative expenses. Non-GAAP sales and marketing expenses, non-GAAP research and development expenses and non-GAAP general and administrative expenses are defined as sales and marketing expenses, research and development expenses and general and administrative expenses, respectively, less stock-based compensation expense, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring and related charges and changes in the fair value of contingent consideration. We believe these non-GAAP measures provide our management and investors with insight into day-to-day operating expenses given that these measures eliminate the effect of stock-based compensation, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring and related charges and changes in the fair value of contingent consideration. Key Business Metrics Remaining performance obligations (“RPO”). RPO, or remaining performance obligations, represents contracted revenue that has not yet been recognized, and includes deferred revenue and amounts that will be invoiced and recognized in future periods. Current remaining performance obligations (“cRPO”). cRPO, or current RPO, represents contracted revenue that has not yet been recognized, and includes deferred revenue and amounts that will be invoiced and recognized in the next 12 months. 30% target for a Rule of 40. We define this target as year-over-year revenue growth plus current quarter non-GAAP operating margin equal to 30%. Number of customers contributing $30,000 or more in ARR. We define number of customers contributing $30,000 or more in ARR as those on a paid subscription plan that had $30,000 or more in ARR as of a period end. We view the number of customers that contribute $30,000 or more in ARR as a measure of our ability to scale with our customers and attract larger organizations. We believe this represents potential for future growth, including expanding within our current customer base. Number of customers contributing $50,000 or more in ARR. We define number of customers contributing $50,000 or more in ARR as those on a paid subscription plan that had $50,000 or more in ARR as of a period end. We view the number of customers that contribute $50,000 or more in ARR as a measure of our ability to scale with large customers and attract sophisticated organizations. We believe this represents potential for future growth, including expanding within our current customer base. Approximated TTM Subscription Revenue Contribution for ≥$30K ARR Customers. This metric depicts our approximation of the trailing twelve month subscription revenue contribution from customers contributing $30,000 or more in ARR. We calculate this metric by averaging the ARR of these customers as of the end of the applicable quarter and the immediately preceding quarter and dividing by four to derive a quarterly revenue contribution estimate for this customer cohort. This quarterly estimate is then summed over the preceding four quarters to approximate a trailing twelve month revenue contribution for this customer cohort, subject to minor adjustments for rounding. We believe that customers contributing $30,000 or more in ARR represent those customers that can benefit the most from our platform given their more sophisticated needs for social media management software as compared to customers below this spending threshold. We believe this metric is useful in measuring our success in serving this particular customer cohort. This metric does not reflect the actual revenue contribution by these customers over the trailing twelve month period, and should not be viewed in isolation as a substitute for revenue or any of our other financial measures presented in accordance with GAAP. We use this metric to approximate revenue contribution over a specified period because the historical data and account mapping is not available to present the actual revenue generated by this cohort of customers over a historical period. While we no longer believe that ARR and number of customers are key performance indicators of Sprout Social’s business, these metrics are necessary for an understanding of how we define number of customers contributing $30,000 or more in ARR and number of customers contributing $50,000 or more in ARR. For this purpose, we define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period and we define a customer as a unique account, multiple accounts containing a common non-personal email domain, or multiple accounts governed by a single agreement or entity. We no longer believe that the number of customers contributing $10,000 or more in ARR is a key performance indicator of Sprout Social’s business due to our evolving customer mix and we will no longer publicly disclose that metric. We believe that customers contributing $30,000 or more in ARR and approximated TTM subscription revenue contribution from customers contributing $30,000 or more in ARR are stronger indicators of Sprout Social’s performance in its target customer segments. Availability of Information on Sprout Social’s Website and Social Media Profiles Investors and others should note that Sprout Social routinely announces material information to investors and the marketplace using SEC filings, press releases, public conference calls, webcasts and the Sprout Social Investors website. We also intend to use the social media profiles listed below as a means of disclosing information about us to our customers, investors and the public. While not all of the information that the Company posts to the Sprout Social Investors website or to social media profiles is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in Sprout Social to review the information that it shares at the Investors link located at the bottom of the page on www.sproutsocial.com and to regularly follow our social media profiles. Users may automatically receive email alerts and other information about Sprout Social when enrolling an email address by visiting "Email Alerts" in the "Shareholder Services" section of Sprout Social's Investor website at https://investors.sproutsocial.com/. Social Media Profiles: www.twitter.com/SproutSocialwww.twitter.com/SproutSocialIRwww.facebook.com/SproutSocialIncwww.linkedin.com/company/sprout-social-inc-/www.instagram.com/sproutsocial Contact Media:Kaitlyn GronekEmail: [email protected]: (773) 904-9674 Investors:Lexi JohnsonTwitter: @SproutSocialIREmail: [email protected]: (312) 528-9166 The following schedule reflects our non-GAAP financial measures and reconciles our non-GAAP financial measures to the related GAAP financial measures (in thousands, except per share data):

Shopify (SHOP) came out with quarterly earnings of $0.42 per share, beating the Zacks Consensus Estimate of $0.39 per share. This compares to earnings of $0.35 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.69%. A quarter ago, it was expected that this cloud-based commerce company would post earnings of $0.32 per share when it actually produced earnings of $0.36, delivering a surprise of +12.5%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Shopify, which belongs to the Zacks Internet - Services industry, posted revenues of $3.58 billion for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 4.36%. This compares to year-ago revenues of $2.68 billion. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Shopify shares have lost about 23.4% since the beginning of the year versus the S&P 500's gain of 13%. While Shopify has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Shopify was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.43 on $3.57 billion in revenues for the coming quarter and $1.84 on $14.72 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Services is currently in the bottom 39% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. One other stock from the same industry, Sprout Social (SPT), is yet to report results for the quarter ended June 2026. The results are expected to be released on August 6. This developer of cloud software is expected to post quarterly earnings of $0.16 per share in its upcoming report, which represents a year-over-year change of -11.1%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Sprout Social's revenues are expected to be $122.2 million, up 9.3% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Shopify Inc. (SHOP) : Free Stock Analysis Report Sprout Social, Inc. (SPT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research