Sprout Social Inc. reported fourth‑quarter 2025 results that surpassed analyst expectations, with revenue of $120.9 million—an increase of 13% year‑over‑year from $107.09 million in Q4 2024—and earnings per share of $0.20, beating the consensus estimate of $0.16 by $0.04 or 25%. The earnings beat was driven by a 15% growth in total recurring product orders (RPO) and a 14% rise in current RPO, reflecting strong demand for the company’s enterprise‑grade platform and the continued expansion of multi‑year contracts that improve revenue visibility.
The company highlighted a 22% increase in its $30,000‑plus annual recurring revenue cohort, which now accounts for 59.1% of total subscription revenue. This shift toward higher‑margin customers, combined with the growth of the $30,000+ cohort, underpins the company’s ability to maintain profitability while scaling its enterprise customer base. The $50,000‑plus cohort grew 18% in 2025, a figure that was previously misattributed to the 22% growth.
Non‑GAAP operating margin for Q4 2025 rose to 9.5%, a dramatic improvement from the –9% margin recorded in Q4 2024. For the full year, the margin reached 10.5%, up 306 basis points year‑over‑year, indicating effective cost control and operational leverage as revenue scales. The margin expansion is a direct result of pricing power in the enterprise segment and disciplined expense management.
For FY2026, Sprout Social guided revenue of $490.2 million to $495.2 million, below the consensus estimate of $506.6 million, and adjusted earnings per share of $0.88 to $0.97. The cautious revenue outlook reflects the longer sales cycles associated with enterprise customers, while the guidance for EPS signals confidence that margin expansion will offset the slower growth trajectory. Management reiterated its target of achieving a 30% Rule of 40 score by the fourth quarter of fiscal 2027, underscoring a commitment to balancing growth and profitability.
Management emphasized the strategic importance of AI and data access in its platform. “Access to high‑quality social data has been getting more restricted, not less. Platforms have tightened controls and increased enforcement against unapproved scraping, especially for AI training. We believe this makes reliable, compliant access under the right permissions a true differentiator,” said CEO Ryan Barretto. He added, “We are widening the discussion of our larger customers to now include those over $30K of approximated subscription revenue… In FY 2025, $30K and above subscription revenue grew by 22% and represented 59% of our total subscription revenue across all customers.” Barretto also highlighted the company’s AI initiatives: “Sprout AI, we’re using our differentiated data layer and proprietary agents to help teams move from insight to action faster.”
Investors focused on the cautious revenue guidance, which fell short of consensus estimates, tempering enthusiasm for the earnings beat. The market reaction was muted, reflecting concerns that the slower growth outlook may offset the positive quarterly performance. Nonetheless, the earnings beat and margin improvement demonstrate strong execution and a clear path toward the Rule of 40 target.
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