Sprout Social delivered a positive first quarter, with the market responding favorably to its performance. Management attributed the results to strong enterprise customer momentum and increased adoption of premium modules such as influencer marketing and customer care solutions. CEO Ryan Barretto highlighted strategic wins with major brands across diverse industries, pointing to the growing importance of social media as a primary channel for customer engagement and brand discovery. Management credited enhancements in the company’s platform—particularly new AI-powered features—for driving improved customer outcomes and higher retention rates.
Is now the time to buy SPT? Find out in our full research report (it’s free).
Sprout Social (SPT) Q1 CY2025 Highlights:
- Revenue: $109.3 million vs analyst estimates of $107.6 million (12.9% year-on-year growth, 1.6% beat)
- Adjusted EPS: $0.22 vs analyst estimates of $0.15 (48.4% beat)
- Adjusted Operating Income: $12.54 million vs analyst estimates of $9.01 million (11.5% margin, 39.1% beat)
- The company slightly lifted its revenue guidance for the full year to $451.4 million at the midpoint from $450.6 million
- Management raised its full-year Adjusted EPS guidance to $0.73 at the midpoint, a 5% increase
- Operating Margin: -10.2%, up from -13.7% in the same quarter last year
- Customers: 9,381
- Annual Recurring Revenue: $446.4 million at quarter end, up 13.4% year on year
- Billings: $104.5 million at quarter end, up 2% year on year
- Market Capitalization: $1.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are 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.
Our Top 5 Analyst Questions Sprout Social’s Q1 Earnings Call
-
Raimo Lenschow (Barclays) asked for more detail on enterprise pipeline trends. CEO Ryan Barretto explained that pipeline creation is healthy, spread across industries, with large enterprise customers seeking engagement, care, and analytics in one platform.
-
Rob Oliver (Baird) inquired about progress in identifying the ideal enterprise customer profile. Barretto said leveraging data from customer trials and analytics helps refine targeting and ensures Sprout addresses key pain points for large organizations.
-
Elizabeth Porter (Morgan Stanley) asked about pipeline coverage ratios and comfort levels moving through macro uncertainty. Barretto noted strong pipeline hygiene and creation, emphasizing that the team is closely monitoring top-of-funnel metrics without seeing material macro impacts yet.
-
David Hynes (Canaccord Genuity) requested clarification on cRPO bookings as a proxy for enterprise growth and gross retention trends. CFO Joe Del Preto responded that cRPO growth was strong and retention improved across all customer segments, reflecting the platform’s mission-critical nature.
-
Adam Hotchkiss (Goldman Sachs) questioned drivers behind the profitability beat and implications for investment philosophy. Del Preto attributed the beat to revenue outperformance and back-end loaded hiring, while emphasizing investment flexibility based on ongoing business performance.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will monitor (1) the pace of enterprise customer additions and expansion activity, (2) adoption rates of new AI-powered features and influencer marketing enhancements, and (3) the progress of international partnerships and reseller networks. Sustained improvements in retention and successful integration of product updates into customer workflows will also be important indicators of execution.
Sprout Social currently trades at $20.35, down from $21.80 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).
Our Favorite Stocks Right Now
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.