Sprout Social, Inc. Q1 FY2025 earnings call

• Revenue of $109.3 million was reported, with 13% year-over-year growth and a record non-GAAP operating margin of 11.5%.
• Remaining performance obligations reached $255.8 million, a 21% year-over-year growth.
• Secured strategic wins with global brands like Palo Alto, NASCAR, etc.
• Expanded sales capacity and released product updates in AI, customer care, and accessibility.
• Key growth drivers include winning the enterprise, focusing on customer health and adoption, expanding partnerships, and deepening customer engagement through use case expansion.

Total revenue for the first quarter was $109.3 million, representing 13% year-over-year growth. Subscription revenue was $108.7 million, up 13% year-over-year. The number of customers contributing more than $10,000 in ARR grew 6% from a year ago, and the number of customers contributing more than $50,000 in ARR grew 22% from a year ago. RPO totaled $360.2 million, up from $351.5 million exit in Q4 and up 24% year-over-year. The company achieved a record quarterly non-GAAP operating margin of 11.5% and generated a record $19.5 million in non-GAAP free cash flow during the quarter, up $8.1 million from the year-ago period.

• Q2 2025 revenue expected in the range of $110.4 million to $111.2 million. Non-GAAP operating income expected to be between $8.4 million and $9.4 million. Non-GAAP net income per share between $0.14 and $0.16.
• Full year 2025 revenue guidance raised to $448.9 million to $453.9 million. Non-GAAP operating income expected in the range of $40.7 million to $45.7 million. Non-GAAP net income per share between $0.69 and $0.77.

• Elongated procurement and purchasing processes persisting through 2025.
• Uncertainties in the macro environment, including impacts from tariffs and federal spending cuts that could affect the demand environment.

Q: Raimo Lenschow with Barclays asked about enterprise pipeline in early stages.

A: Ryan Barretto said there were healthy pipeline conversations, credit to the enterprise team, and customers are on social needing Sprout's platform for various aspects.

Q: Rob Oliver with Baird asked about enterprise pipeline for the year.

A: Ryan Barretto mentioned focus on ideal customer profile, good sense of opportunities, and using trial data to engage right places.

Q: Elizabeth Porter with Morgan Stanley asked about pipeline coverage ratios.

A: Ryan Barretto said good pipeline hygiene, attention to metrics, and watching macro but no material changes yet.

Q: David Hynes with Canaccord Genuity asked about cRPO and gross retention.

A: Joe Del Preto said cRPO has seasonality and month-to-month aspects, gross retention is strong across customer base.

Q: Greyson Sklba with Goldman Sachs asked about profitability beat and full year investment.

A: Joe Del Preto said revenue overperformance and back-end loaded hiring helped, and full year guide is measured with flexibility.

Q: Rob Morelli with Needham asked about Agentforce integration impact.

A: Ryan Barretto said excited about the partnership, early stage, and will share more customer stories later.

Q: Allan Verkhovski with Scotiabank asked about Q2 revenue guide and deferred revenue.

A: Joe Del Preto said measured guidance assuming macro consistency, deferred revenue impacted by large Q4 deals burning off in Q1.

Q: Arjun Bhatia with William Blair & Company asked about cross-sell penetration.

A: Ryan Barretto said cross-sell is important, training and commission plans in place, both existing customer expansion and new business contribute.

Q: Brian Schwartz with Oppenheimer asked about sales organization.

A: Ryan Barretto said increasing sales capacity, feeling good about sales transition with stability and fast start in Q1.

Q: Jackson Ader with KeyBanc Capital Markets asked about sales cycles and macro.

A: Joe Del Preto said no material macro changes seen, product is mission-critical, and gross retention shows resilience.