Sprout Social, Inc. Q2 FY2025 earnings call

• Second quarter results: Revenue of $111.8M, 12% YOY growth, non-GAAP operating margin expanded by ~400bps. Remaining performance obligations at $251.6M, 18% YOY growth. - Acquisition of NewsWhip: A leader in AI-powered predictive media intelligence, with strategic customers like Nissan, AP, etc. NewsWhip's AI agents proactively scan news and social data. Paul Quigley to lead Listening business. - Product releases: Influencer marketing reimagined with AI-driven features; Care introduced innovations for proactive customer engagement; Governance enhanced with Guardian by Sprout Social. - Strategic enterprise wins: 7-figure deal with global brand management company, $900k expansion with global health tech company, $360k expansion with Fortune 500 health care company. - Industry recognition: 164 leader badges in G2, 8 TrustRadius top-rated awards, Silver for Best Influencer Marketing platform, etc. - Growth drivers: Winning the enterprise, focusing on customer health/adoption, expanding partnerships/ecosystem, deepening customer engagement.

Sprout Social reported second quarter revenue of $111.8 million, representing 12% year-over-year growth. Non-GAAP operating margin expanded by almost 400 basis points. Remaining performance obligations reached $251.6 million, a 18% year-over-year growth. The go-to-market had an 18% growth in the $50,000 and above ARR customer cohort. Revenue contribution breakdown: Subscription revenue was $111.1 million, contributing to the overall 12% growth.

• Q3 2025: Expected revenue $114.4M - $115.2M, non-GAAP operating income $9.3M - $10.3M, non-GAAP net income per share $0.15 - $0.16. - Full-year 2025: Raised revenue guidance to $452.9M - $455.9M, non-GAAP operating income $43.1M - $45.1M, non-GAAP net income per share $0.71 - $0.75. Early contribution from NewsWhip drives guidance increase, but integration is in early stages with measured modeling.

• General market risks: Uncertainties in demand environment and macroeconomic factors that could impact results. - Integration risks: Challenges in integrating NewsWhip, including unknowns around renewal rates, pipeline conversion, and aligning go-to-market motion.

Q: Zoom out and characterize the core business?

A: Ryan noted the business is performing well, tracking to plan, with great wins, growth in customer accounts, strong retention/renewal, and non-GAAP operating margin up nearly 400bps.

Q: Impact of NewsWhip on guidance?

A: Joe explained NewsWhip is projected to contribute ~$2.5M over the final 5 months of the year, with a measured approach due to early integration stage.

Q: Time line to integration of NewsWhip teams and products?

A: Ryan said teams are working closely, with all hands held, and progress on go-to-market strategies, though product integration will develop over quarters.

Q: Macro impact on pipeline and renewals?

A: Ryan stated no material change in pipeline from previous quarters, and good progress on renewals with strong retention/renewal rates.

Q: Premium modules and attach rates?

A: Ryan mentioned strong multiproduct pipeline, with headroom for selling products to new and existing customers, and opportunities to attach more products to the customer base.

Q: NewsWhip technology fit in platform?

A: Ryan said NewsWhip complements the Listening platform, with NewsWhip being real-time action command center vs. Listening's deep analysis for historical trends.

Q: NewsWhip impact on operating income guidance?

A: Joe said guidance contemplated NewsWhip being breakeven for the rest of the year with no additional incremental expenses.

Q: Sales plays for social search shift?

A: Ryan said sales team is enabled on value prop of social search, AI search, and traditional search relationships, helping customers with discovery and care.

Q: Influencer marketing business?

A: Ryan discussed advancements in influencer marketing with AI-driven features, brand safety, and creator vetting, driving good ROI for customers.

Q: NewsWhip price point?

A: Ryan said NewsWhip is an enterprise product, multiples bigger than average deal size, with opportunities in agencies and mid-market.