Sprout Social (NASDAQ:SPT) reported fourth-quarter fiscal 2025 results highlighted by double-digit revenue growth, expanding operating leverage, and increasing mix of multi-year contracts as the company emphasized its push upmarket and outlined plans to improve efficiency in its smaller-customer segment.
Quarterly results and full-year profitability
For the fourth quarter, Sprout Social posted revenue of $120.9 million, representing 12.9% year-over-year growth. Subscription revenue was $118.5 million, up 12% year-over-year, and the company said Q4 ACV increased 16% from the prior year.
Sprout also generated $10.9 million in non-GAAP free cash flow in the quarter and $45.9 million for fiscal 2025, an improvement of approximately 55% year-over-year. CFO Joe DelPreto reiterated the company’s view that non-GAAP free cash flow margin should “closely track” non-GAAP operating margin annually.
RPO growth supported by multi-year contracts
The company pointed to improving forward visibility as remaining performance obligations expanded and multi-year contract mix increased. Total RPO was $404.0 million, up from $357.1 million exiting Q3 and up 14.9% year-over-year. Current RPO (CRPO) grew 14.2% year-over-year to $284.7 million, which management said represents 70.5% of total RPO expected to be recognized over the next 12 months.
CEO Ryan Barretto said multi-year contracts now represent “nearly half” of Sprout’s contract mix, up from roughly a third two years ago, and tied that shift to the company’s progress moving upmarket.
On the call, management also noted that as multi-year deal volume increases, Sprout expects CRPO and revenue growth rates to “converge” over time, though executives said they are “not there yet.”
Upmarket focus and a new $30K+ revenue cohort metric
Sprout emphasized continued momentum with larger customers and introduced a new disclosure designed to provide more visibility into its “socially sophisticated” customer base. The company created a metric it calls approximated subscription revenue contribution for customers contributing $30,000 and above in ARR, which it will reference as “$30K and above subscription revenue.”
Barretto said the company has been seeing success with its $50K+ focus since 2023, noting 27% growth in approximated subscription revenue contribution for that segment in fiscal 2025. Expanding the view to the broader $30K+ cohort, management said:
- $30K and above subscription revenue grew 22% in FY 2025.
- The $30K+ cohort represented 59% of total subscription revenue.
- Customers above $30K generally show stronger unit economics and higher adoption of strategic products, with a multi-product attach rate “well over 70%,” according to Barretto.
Sprout said it will update investors each quarter on the new $30K+ subscription revenue metric, while continuing to provide the $50K+ customer count. The company’s go-to-market team delivered an 18% year-over-year increase in its $50K+ ARR customer count in Q4, and management cited strategic wins with enterprise brands including GE Aerospace, Archer-Daniels-Midland, PulteGroup, Caesars Entertainment, Cox Enterprises, Gibson Brands, and The Knot Worldwide.
Barretto also shared several large-deal examples from the quarter, including a $1.4 million new business win consolidating tools for 450 users, a $630,000 expansion with a Fortune 50 technology company tied to integrating social intelligence with Salesforce Service Cloud, and a $1.3 million new business deal with a global nonprofit.
AI strategy, Trellis rollout, and platform “moat” discussion
Management spent a significant portion of prepared remarks addressing investor concerns around AI’s impact on software moats and revenue durability. Barretto argued that the difficult part of building in the category is not generating code, but operating reliably at scale with permissioned data access, governed workflows, and enterprise trust. He said Sprout ingests and publishes more than 1 billion social interactions and data points daily across hundreds of APIs and more than a dozen networks, and he emphasized that social data access is becoming “more restricted,” not less.
Sprout highlighted Trellis, its proprietary AI agent, which the company said is currently in early beta within Listening. Barretto said more than 1,000 users are already using Trellis to produce “executive-ready insights” more quickly, and that Sprout plans to expand Trellis across Listening, publishing, reporting, and care in 2026. Management also indicated monetization will be “a bit of both,” describing initial focus on adoption, with Trellis expected to be embedded in advanced plans and supplemented by a usage-based monetization component over time. The company said it will share more about packaging and pricing at its “Breaking Ground” event in May.
Separately, Sprout announced an investor webinar on March 11 featuring CTO Alan Boyce and Distinguished Engineer Kevin Stanton to discuss the platform’s technical foundation and “system of record and action” positioning.
Plans for sub-$30K customers and a Rule of 40 target
While emphasizing the attractiveness of its larger customer segment, Sprout acknowledged that the sub-$30K portion of the business has been a headwind for growth and profitability “over the last several years.” Management said it continues to see healthy inbound interest in that cohort, but characterized its current motion as “too expensive” and not the right product-market fit.
To address this, Sprout outlined two initiatives:
- Self-serve motion powered by automation and AI to reduce human touch in evaluation, onboarding, and support, with an aim to lower CAC and cost to serve.
- A simplified product offering aligned to the needs and willingness to pay of less socially mature customers, with a faster time to value.
Executives said the company has begun work on sub-$30K pricing and packaging, expects a “subdued” growth path as the transition plays out in 2026, and discussed stabilization in 2027.
Sprout also introduced a new company-wide objective using a Rule of 40-style framework, targeting 30% (defined as year-over-year revenue growth plus current quarter non-GAAP operating margin) by Q4 2027. Management said margin expansion will be driven primarily by operating expense leverage rather than major changes in gross margin, with DelPreto indicating gross margins could be “pretty consistent” with potential improvement of 50 to 100 basis points.
For guidance, the company projected Q1 fiscal 2026 revenue of $119.9 million to $120.7 million and fiscal 2026 revenue of $490.2 million to $495.2 million. Sprout also guided to Q1 non-GAAP operating income of $9.2 million to $10.0 million and full-year non-GAAP operating income of $54.2 million to $59.2 million, and said that for modeling purposes it expects Q4 2026 non-GAAP operating margin close to 15%.
Finally, the company noted leadership changes, including the start of new Chief Revenue Officer Lori Jiménez and DelPreto’s planned transition in March to a new opportunity.
About Sprout Social (NASDAQ:SPT)
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.
