Sprout Social (NASDAQ:SPT) Issues Quarterly Earnings Results

Sprout Social (NASDAQ:SPT) released its quarterly earnings results on Thursday. The company reported $0.26 earnings per share for the quarter, topping the consensus estimate of $0.16 by $0.10, FiscalAI reports. The business had revenue of $123.85 million for the quarter, compared to the consensus estimate of $122.19 million. Sprout Social had a negative net margin of 6.13% and a negative return on equity of 9.06%. Sprout Social updated its FY 2026 guidance to 1.110-1.150 EPS and its Q3 2026 guidance to 0.290-0.300 EPS.

Here are the key takeaways from Sprout Social’s conference call:

• Q2 results exceeded expectations: Revenue rose 10.8% year over year to $123.8 million, while non-GAAP operating margin expanded 370 basis points to 12.9%. Non-GAAP free cash flow increased approximately 60% to $8.3 million.
• Sprout continued its shift toward larger enterprise customers. Revenue from customers contributing at least $30,000 in ARR grew 20% year over year and now represents more than 61% of subscription revenue, supported by 14.8% ACV growth and stronger retention and expansion trends.
• Early adoption of the AI-powered Trellis platform has been encouraging, with monthly active users growing and customers using Trellis showing higher retention across segments. Sprout also began monetizing the product through the Trellis Plus paid tier and expects AI to support win rates, upsell, and retention over time.
• The company raised its 2026 profitability outlook, forecasting non-GAAP operating income of $68.3 million to $70.3 million, or 20% above the midpoint of its prior outlook. Sprout also expects at least $50 million in annualized cost savings from its restructuring and plans to begin opportunistic purchases under its $50 million share-repurchase authorization.
• Sprout reduced its workforce by approximately 20%, expecting $18 million to $20 million in restructuring charges and acknowledging execution and change-management risks. Management also expects continued pressure from customers below $30,000 in ARR, no material improvement in demand, and a deceleration in that segment to slightly negative growth in 2026.

Sprout Social Price Performance

Shares of NASDAQ SPT traded up $2.15 during midday trading on Friday, reaching $10.34. The stock had a trading volume of 3,394,785 shares, compared to its average volume of 954,699. The company has a market capitalization of $621.54 million, a price-to-earnings ratio of -20.68 and a beta of 0.97. Sprout Social has a 12-month low of $4.92 and a 12-month high of $16.03. The stock has a 50-day moving average of $7.83 and a 200-day moving average of $7.11. The company has a debt-to-equity ratio of 0.15, a quick ratio of 0.95 and a current ratio of 0.95.

Insiders Place Their Bets

In related news, insider Justyn Russell Howard sold 40,000 shares of the company’s stock in a transaction on Friday, July 10th. The shares were sold at an average price of $8.28, for a total value of $331,200.00. Following the completion of the transaction, the insider owned 7,417 shares of the company’s stock, valued at approximately $61,412.76. This represents a 84.36% decrease in their position. The sale was disclosed in a filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Corporate insiders own 9.60% of the company’s stock.

Hedge Funds Weigh In On Sprout Social

Hedge funds have recently made changes to their positions in the business. State Street Corp raised its stake in Sprout Social by 8.2% during the 4th quarter. State Street Corp now owns 1,546,142 shares of the company’s stock valued at $17,425,000 after purchasing an additional 117,757 shares during the period. Geode Capital Management LLC boosted its stake in Sprout Social by 11.0% in the 4th quarter. Geode Capital Management LLC now owns 1,254,451 shares of the company’s stock worth $14,141,000 after purchasing an additional 123,983 shares during the period. First Trust Advisors LP boosted its stake in Sprout Social by 14.5% in the 4th quarter. First Trust Advisors LP now owns 1,028,538 shares of the company’s stock worth $11,592,000 after purchasing an additional 130,447 shares during the period. Qube Research & Technologies Ltd boosted its stake in Sprout Social by 61.0% in the 3rd quarter. Qube Research & Technologies Ltd now owns 1,022,426 shares of the company’s stock worth $13,210,000 after purchasing an additional 387,541 shares during the period. Finally, Federated Hermes Inc. grew its holdings in Sprout Social by 40.0% during the 4th quarter. Federated Hermes Inc. now owns 974,080 shares of the company’s stock valued at $10,978,000 after buying an additional 278,449 shares in the last quarter.

Analyst Ratings Changes

SPT has been the topic of a number of recent research reports. Barclays raised their target price on Sprout Social from $8.00 to $9.00 and gave the stock an “overweight” rating in a report on Monday, May 11th. KeyCorp boosted their price target on Sprout Social from $6.00 to $7.00 and gave the company an “underweight” rating in a report on Friday. Finally, Weiss Ratings restated a “sell (e+)” rating on shares of Sprout Social in a research report on Friday, July 17th. Three analysts have rated the stock with a Buy rating, four have assigned a Hold rating and two have given a Sell rating to the stock. According to MarketBeat, the company has an average rating of “Hold” and an average price target of $10.43.

Key Sprout Social News

Here are the key news stories impacting Sprout Social this week:

• Positive Sentiment: Sprout Social reported second-quarter revenue of approximately $123.85 million, ahead of the $122.19 million analyst consensus. Adjusted earnings were $0.26 per share, beating estimates of $0.16 and improving from $0.18 a year earlier. Sprout Social Surpasses Q2 Earnings and Revenue Estimates
• Positive Sentiment: Management issued notably stronger profitability guidance: third-quarter adjusted EPS of $0.29-$0.30 versus a $0.18 consensus, and full-year 2026 EPS of $1.11-$1.15 versus expectations of $0.68. Full-year revenue guidance of $493.0-$495.6 million was broadly in line with the $494.4 million consensus. Sprout Social Earnings and Guidance
• Positive Sentiment: The earnings presentation and call emphasized continued growth among larger customers, with subscription revenue contribution from customers generating at least $30,000 in annual recurring revenue rising 20% year over year. AI product investment and customer upselling support the case for stronger monetization and operating leverage. Sprout Social Announces Second Quarter 2026 Financial Results
• Neutral Sentiment: Although adjusted results were profitable, Sprout Social remained unprofitable under GAAP, recording an operating loss of approximately $2.7 million and a net loss of $3.1 million. Operating cash flow was positive at $8.5 million, with $119.9 million in cash and equivalents. Sprout Social Q2 2026 Results
• Negative Sentiment: Recent insider activity remains a potential overhang: insiders reported eight sales and no purchases over the past six months, including sales by the executive chair and CFO. This may raise concerns about insider confidence despite the strong quarterly outlook.

Sprout Social Company Profile

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.