Sprout Social, Inc. (SPT) Q1 2025 Earnings Call Transcript
Revenue $109.3 million, representing year-over-year growth of 13%.
Subscription Revenue $108.7 million, up 13% year-over-year.
Remaining Performance Obligations (RPO) $360.2 million, up 24% year-over-year.
Current Remaining Performance Obligations (cRPO) $255.8 million, implying a cRPO growth rate of 21% year-over-year.
Non-GAAP Operating Income $12.5 million, up from $6.0 million a year ago, equating to a non-GAAP operating margin of 11.5%, a quarterly record.
Non-GAAP Free Cash Flow $19.5 million, up $8.1 million from Q1 2024, an increase of 72% year-over-year.
Average Contract Value (ACV) $14,961, up 16% year-over-year.
Customers contributing more than $10,000 in ARR Grew 6% from a year ago.
Customers contributing more than $50,000 in ARR Grew 22% from a year ago.
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This Stock Is One of the Underperformers in Social Media — Here's What Wall Street Anticipates for Its Q4 Earnings Tomorrow
Snap's Stock Performance: Snap's shares have declined nearly 45% over the past year, making it one of the worst-performing major social media firms, with a significant drop in advertising revenue and user engagement.
Upcoming Earnings Expectations: Snap is expected to report Q4 revenue of $1.70 billion, a 9% increase from the previous year, with analysts predicting a profit of $0.15 per share, despite previous misses in profit estimates.
Market Sentiment and Predictions: Retail sentiment around Snap is described as "extremely bullish," with some users predicting the stock could hit $4, while others have reported significant losses from their investments.
Analyst Caution: Analysts remain cautious about Snap's future, citing a sequential decline in users and the potential impact on revenue, while some firms have raised their price targets for Snap's stock.
Sprout Social Price Target Cut to $12 by Morgan Stanley
- Price Target Adjustment: Morgan Stanley lowered Sprout Social's price target from $14 to $12 while maintaining an Equal Weight rating, indicating a cautious optimism towards the software sector's outlook for 2026 as AI-related risks appear to be easing.
- Barclays Analyst Perspective: Barclays analyst Raimo Lenschow significantly cut Sprout Social's price target to $13 from $26, yet maintained an Overweight rating, suggesting a favorable outlook for the software sector due to stable IT spending and macroeconomic conditions.
- Industry Outlook: Despite underperformance in application SaaS for 2025, analysts highlight that the investment environment for software in 2026 is becoming more favorable due to historically low valuations and steady spending, which may attract investor interest.
- Investment Opportunities: While acknowledging Sprout Social's potential, analysts believe that certain AI stocks may offer greater upside potential and lower downside risk, advising investors to consider more attractive short-term AI stock options.
Salesforce CEO Marc Benioff Warns of AI Threats as Stock Drops 14%
- Market Decline: The WisdomTree Cloud Computing Fund has dropped over 8% this year, with major software firms like Salesforce, ServiceNow, and Adobe seeing stock declines exceeding 14%, indicating heightened market concerns that could trigger a wave of acquisitions.
- AI Competitive Pressure: The launch of Anthropic's AI tool Cowork aimed at enterprise customers has shaken investor confidence in software vendors, raising fears that AI could replace critical functions traditionally handled by software, prompting mid-sized firms to seek financing options to navigate these challenges.
- Acquisition Opportunities: Thoma Bravo co-founder Orlando Bravo highlighted that now presents incredible buying opportunities, particularly for companies developing AI solutions that integrate with existing systems, reflecting strong market demand for AI integration.
- Strategic Adjustments: Analyst Rishi Jaluria noted that the recent pullback in software stocks may force certain companies to explore strategic alternatives, especially those lacking effective AI integration, suggesting that future deals will need compelling AI angles to attract investor interest.
Software Stocks Decline, Investors Eye Acquisition Opportunities
- Market Downward Pressure: Cloud software stocks like Salesforce, ServiceNow, and Adobe have dropped over 14% at the start of 2025, while the WisdomTree Cloud Computing Fund has fallen more than 8% year-to-date, indicating increasing market concerns about the software sector.
- Increased Acquisition Opportunities: Orlando Bravo, co-founder of private equity firm Thoma Bravo, noted that there are “incredible buying opportunities” right now, which may lead mid-sized software companies to seek financing and potentially trigger a wave of acquisitions.
- Escalating AI Threats: The launch of AI agent tools has heightened investor anxiety about the software industry's future, with analysts highlighting significant risks for companies like Monday.com, Asana, and Sprout Social, which may be forced to explore strategic alternatives.
- Poor Market Reactions: Despite Salesforce CEO Marc Benioff claiming the latest quarter was the “best of their careers,” the market response has been tepid, with ServiceNow's shares dropping 17% over a week, reflecting investor skepticism towards companies lacking an AI strategy.
Lucidya Recognized as Leading Performer in Growth and Innovation in Frost & Sullivan’s 2025 Radar™ for AI-Driven CX and Media Intelligence Platforms in MENA
Lucidya's Recognition: Lucidya has been ranked as the top company in Frost & Sullivan's 2025 Frost Radar™ for AI-Powered CX & Media Intelligence Platforms in MENA, excelling in both the Growth Index and Innovation Index.
Importance of Arabic NLP: The report emphasizes the significance of mastering Arabic language and dialects for accurate sentiment analysis, highlighting Lucidya's advanced capabilities in Arabic Natural Language Processing (NLP) as a competitive advantage over global competitors.
AI's Role in CX: The convergence of customer experience (CX) and media intelligence is driving organizations in MENA to integrate AI deeply into their operations to remain competitive and deliver timely insights.
Lucidya's Impact: Lucidya is positioned as a MENA-born, AI-native leader in customer experience, capable of operationalizing intelligence throughout the customer journey and setting global standards.
Sprout Social Tops 40 Categories in G2's 2026 Winter Reports
- Industry Leadership: Sprout Social secured the top position in 40 categories in G2's 2026 Winter Reports, including Social Media Listening Tools and Social Customer Service, showcasing its strong influence and market recognition in social media management.
- Customer Feedback Recognition: The company earned a total of 177 leader badges across all business segments and regions, reflecting high customer appreciation for its product excellence and measurable impact, further solidifying Sprout's leadership in the industry.
- Innovation-Driven: Recent launches of AI capabilities and the Trellis agent have enhanced the platform's intelligent analytics, enabling brands to leverage social data for better decision-making, thereby improving customer business outcomes and ROI.
- Market Impact: TrustRadius awarded Sprout the 2026 Buyer’s Choice Award, emphasizing its ability to build trust between brands and their audiences, indicating that Sprout's products are not just software tools but strategic assets driving brand success.
This Stock Is One of the Underperformers in Social Media — Here's What Wall Street Anticipates for Its Q4 Earnings Tomorrow
Snap's Stock Performance: Snap's shares have declined nearly 45% over the past year, making it one of the worst-performing major social media firms, with a significant drop in advertising revenue and user engagement.
Upcoming Earnings Expectations: Snap is expected to report Q4 revenue of $1.70 billion, a 9% increase from the previous year, with analysts predicting a profit of $0.15 per share, despite previous misses in profit estimates.
Market Sentiment and Predictions: Retail sentiment around Snap is described as "extremely bullish," with some users predicting the stock could hit $4, while others have reported significant losses from their investments.
Analyst Caution: Analysts remain cautious about Snap's future, citing a sequential decline in users and the potential impact on revenue, while some firms have raised their price targets for Snap's stock.
Sprout Social Price Target Cut to $12 by Morgan Stanley
- Price Target Adjustment: Morgan Stanley lowered Sprout Social's price target from $14 to $12 while maintaining an Equal Weight rating, indicating a cautious optimism towards the software sector's outlook for 2026 as AI-related risks appear to be easing.
- Barclays Analyst Perspective: Barclays analyst Raimo Lenschow significantly cut Sprout Social's price target to $13 from $26, yet maintained an Overweight rating, suggesting a favorable outlook for the software sector due to stable IT spending and macroeconomic conditions.
- Industry Outlook: Despite underperformance in application SaaS for 2025, analysts highlight that the investment environment for software in 2026 is becoming more favorable due to historically low valuations and steady spending, which may attract investor interest.
- Investment Opportunities: While acknowledging Sprout Social's potential, analysts believe that certain AI stocks may offer greater upside potential and lower downside risk, advising investors to consider more attractive short-term AI stock options.
Salesforce CEO Marc Benioff Warns of AI Threats as Stock Drops 14%
- Market Decline: The WisdomTree Cloud Computing Fund has dropped over 8% this year, with major software firms like Salesforce, ServiceNow, and Adobe seeing stock declines exceeding 14%, indicating heightened market concerns that could trigger a wave of acquisitions.
- AI Competitive Pressure: The launch of Anthropic's AI tool Cowork aimed at enterprise customers has shaken investor confidence in software vendors, raising fears that AI could replace critical functions traditionally handled by software, prompting mid-sized firms to seek financing options to navigate these challenges.
- Acquisition Opportunities: Thoma Bravo co-founder Orlando Bravo highlighted that now presents incredible buying opportunities, particularly for companies developing AI solutions that integrate with existing systems, reflecting strong market demand for AI integration.
- Strategic Adjustments: Analyst Rishi Jaluria noted that the recent pullback in software stocks may force certain companies to explore strategic alternatives, especially those lacking effective AI integration, suggesting that future deals will need compelling AI angles to attract investor interest.
Software Stocks Decline, Investors Eye Acquisition Opportunities
- Market Downward Pressure: Cloud software stocks like Salesforce, ServiceNow, and Adobe have dropped over 14% at the start of 2025, while the WisdomTree Cloud Computing Fund has fallen more than 8% year-to-date, indicating increasing market concerns about the software sector.
- Increased Acquisition Opportunities: Orlando Bravo, co-founder of private equity firm Thoma Bravo, noted that there are “incredible buying opportunities” right now, which may lead mid-sized software companies to seek financing and potentially trigger a wave of acquisitions.
- Escalating AI Threats: The launch of AI agent tools has heightened investor anxiety about the software industry's future, with analysts highlighting significant risks for companies like Monday.com, Asana, and Sprout Social, which may be forced to explore strategic alternatives.
- Poor Market Reactions: Despite Salesforce CEO Marc Benioff claiming the latest quarter was the “best of their careers,” the market response has been tepid, with ServiceNow's shares dropping 17% over a week, reflecting investor skepticism towards companies lacking an AI strategy.
Lucidya Recognized as Leading Performer in Growth and Innovation in Frost & Sullivan’s 2025 Radar™ for AI-Driven CX and Media Intelligence Platforms in MENA
Lucidya's Recognition: Lucidya has been ranked as the top company in Frost & Sullivan's 2025 Frost Radar™ for AI-Powered CX & Media Intelligence Platforms in MENA, excelling in both the Growth Index and Innovation Index.
Importance of Arabic NLP: The report emphasizes the significance of mastering Arabic language and dialects for accurate sentiment analysis, highlighting Lucidya's advanced capabilities in Arabic Natural Language Processing (NLP) as a competitive advantage over global competitors.
AI's Role in CX: The convergence of customer experience (CX) and media intelligence is driving organizations in MENA to integrate AI deeply into their operations to remain competitive and deliver timely insights.
Lucidya's Impact: Lucidya is positioned as a MENA-born, AI-native leader in customer experience, capable of operationalizing intelligence throughout the customer journey and setting global standards.
Sprout Social Tops 40 Categories in G2's 2026 Winter Reports
- Industry Leadership: Sprout Social secured the top position in 40 categories in G2's 2026 Winter Reports, including Social Media Listening Tools and Social Customer Service, showcasing its strong influence and market recognition in social media management.
- Customer Feedback Recognition: The company earned a total of 177 leader badges across all business segments and regions, reflecting high customer appreciation for its product excellence and measurable impact, further solidifying Sprout's leadership in the industry.
- Innovation-Driven: Recent launches of AI capabilities and the Trellis agent have enhanced the platform's intelligent analytics, enabling brands to leverage social data for better decision-making, thereby improving customer business outcomes and ROI.
- Market Impact: TrustRadius awarded Sprout the 2026 Buyer’s Choice Award, emphasizing its ability to build trust between brands and their audiences, indicating that Sprout's products are not just software tools but strategic assets driving brand success.
