Sprout Social, Inc. Q3 FY2025 earnings call

• Revenue of $115.6 million, 13% YOY growth, and non-GAAP operating margin expansion of almost 460 basis points to nearly 12%.
• Remaining performance obligations grew 17% YOY to $258.5 million.
• Gross retention improved across all customer segments, with multiyear contracts nearly half the contract mix.
• $50,000-plus ARR customer count grew 21%, with this cohort accounting for nearly half of revenue and growing in the high 20s YOY.
• AI initiatives include a proprietary AI agent for conversational data exploration, MCP to bring social insights into more tools, and embedded models throughout the platform.
• NewsWhip integration has seen strong go-to-market momentum, generating more pipeline than any new product in history, with key wins and trends like creating net new pipeline in larger Sprout accounts and increasing deal size when bundled.
• Key growth drivers: winning the enterprise, driving customer health and adoption, expanding partnerships and ecosystem, and driving improved account penetration.

Sprout delivered revenue of $115.6 million in the third quarter of 2025, representing 13% year-over-year growth. Subscription revenue was $114.7 million, up 13% year-over-year. Remaining performance obligations grew 17% year-over-year to $258.5 million. The $50,000-plus ARR customer count grew 21%. NewsWhip integration has shown strong go-to-market momentum with initial ACVs at or above traditional enterprise levels, nearly 2x the company-wide average.

• Q4 2025 revenue expected in the range of $118.2 million to $119.0 million, non-GAAP operating income $9.5 million to $10.5 million, non-GAAP net income per share $0.15 to $0.17.
• Full year 2025 revenue expected in the range of $454.9 million to $455.7 million, non-GAAP operating income $46.1 million to $47.1 million, non-GAAP net income per share $0.77 to $0.79.

Forward-looking statements are subject to risks and uncertainties; refer to the annual report on Form 10-K for the year ended December 31, 2024, and quarterly report on Form 10-Q for the fiscal quarter ended September 30, 2025, for a discussion of risks affecting actual results.

Q: Congrats on another solid quarter. How do you think about inflections or the next step from here, marrying upmarket momentum with revenue growth?

A: Raimo, thanks for the question. We're excited about upmarket progress seen in $50,000 growth and big deals/logos. Social is becoming primary for product discovery, brand awareness, etc. There are two business sides: enterprise large with high ACV and good net dollar retention, and SMB/agency with smaller business. We see opportunities with pricing, packaging, and AI to evolve serving the SMB/agency side.

Q: Profitability was a main highlight this quarter. Can you talk about the path here?

A: Yes, we're happy about the performance. Overperformance on revenue helped, we're getting more efficient in parts of the business, using AI internally to drive margin, and had a bit of benefit from hiring in Q3 which will pick up in Q4.