Sprout Social (NASDAQ:SPT) Announces Quarterly Earnings Results, Beats Estimates By $0.16 EPS

Sprout Social (NASDAQ:SPT) released its quarterly earnings data on Tuesday. The company reported $0.45 earnings per share for the quarter, beating the consensus estimate of $0.29 by $0.16, FiscalAI reports. The firm had revenue of $125.15 million during the quarter, compared to the consensus estimate of $123.83 million. Sprout Social had a positive return on equity of 1.09% and a negative net margin of 5.42%.

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

• Profitability and cash flow improved sharply: Q3 revenue reached $125.1 million, non-GAAP operating margin was a record 21%, and non-GAAP free cash flow rose 158% year over year to $26.7 million. Sprout expects its first GAAP-profitable quarter in Q4 and deployed more than $26 million of its $50 million share-repurchase authorization.
• The company continued shifting toward larger enterprise customers, with subscription revenue from customers generating at least $30,000 in ARR growing 18% year over year to more than 62% of total subscription revenue. Customers above $150,000 in ARR increased 22%, supported by broader adoption of multi-product offerings.
• Trellis adoption is expanding: the AI offering is now available across all plans and in trials, with thousands of customers using it across listening, publishing, inbox management, and reporting. Sprout introduced a shared-credits pricing option aimed at increasing enterprise monetization, although paid adoption remains early.
• Macroeconomic caution continued to weigh on new business and expansion, particularly among customers in the $30,000-$50,000 ARR range; customer adds in the $30,000-plus cohort declined sequentially. Management expects Q4 revenue of $124.2 million-$125.2 million and warned that Q4 bookings could affect fiscal 2027 momentum.

Sprout Social Stock Up 2.0%

Shares of NASDAQ:SPT traded up $0.22 during midday trading on Thursday, reaching $11.00. The company had a trading volume of 438,133 shares, compared to its average volume of 1,380,204. The stock has a market capitalization of $666.49 million, a P/E ratio of -24.44 and a beta of 0.95. The stock’s fifty day moving average price is $11.09 and its 200-day moving average price is $8.29. The company has a debt-to-equity ratio of 0.14, a current ratio of 1.03 and a quick ratio of 1.03. Sprout Social has a one year low of $4.92 and a one year high of $13.35.

Insider Buying and Selling

In other Sprout Social news, insider Justyn Howard sold 40,000 shares of the firm’s stock in a transaction on Friday, October 9th. The shares were sold at an average price of $11.02, for a total transaction of $440,800.00. Following the completion of the transaction, the insider directly owned 7,417 shares of the company’s stock, valued at $81,735.34. This trade represents a 84.36% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. In the last 90 days, insiders have sold 51,612 shares of company stock worth $573,757. Corporate insiders own 9.60% of the company’s stock.

Analyst Ratings Changes

A number of research analysts have recently weighed in on the company. Zacks Research cut Sprout Social from a “strong-buy” rating to a “hold” rating in a research report on Monday, October 12th. KeyCorp boosted their price objective on shares of Sprout Social from $7.00 to $10.00 and gave the stock an “underweight” rating in a research report on Wednesday. Cantor Fitzgerald increased their price objective on shares of Sprout Social from $8.00 to $13.00 and gave the company a “neutral” rating in a research note on Wednesday. Canaccord Genuity Group raised their target price on shares of Sprout Social from $10.00 to $13.50 and gave the company a “hold” rating in a report on Wednesday. Finally, Wall Street Zen upgraded shares of Sprout Social from a “buy” rating to a “strong-buy” rating in a research report on Saturday, August 15th. Four research analysts have rated the stock with a Buy rating, five have assigned a Hold rating and two have issued a Sell rating to the company’s stock. Based on data from MarketBeat, the company presently has an average rating of “Hold” and an average target price of $11.94.

Trending Headlines about Sprout Social

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

• Positive Sentiment: Q3 adjusted earnings were $0.45 per share, above the roughly $0.29 consensus, and revenue of $125.15 million also topped estimates. The company cited record non-GAAP operating income of $26.3 million and a 21% non-GAAP operating margin. Sprout Social Q3 results
• Positive Sentiment: Stifel raised its price target to $15, while Canaccord Genuity lifted its target to $13.50 and kept a Hold rating. These higher targets signal improved valuation expectations from those firms. Stifel target increase
• Neutral Sentiment: Cantor Fitzgerald raised its target to $13 but maintained a Neutral rating, reflecting a more measured view despite the higher estimate. Cantor Fitzgerald analyst update
• Negative Sentiment: Despite the quarterly beat, Sprout Social’s revenue guidance for the coming quarter came in slightly below expectations. That cautious outlook may overshadow the strong reported results and contribute to concerns about near-term growth. Q3 results and outlook
• Negative Sentiment: KeyCorp raised its target to $10 but retained an Underweight rating, leaving its target below the cited share price. Separately, a law firm announced an investigation following a federal court decision allowing a securities-fraud class action to proceed, adding litigation uncertainty. Shareholder investigation notice

About Sprout Social

Sprout Social, Inc is a software company that provides a cloud-based social media management platform for businesses and organizations. Its platform helps customers manage social media publishing, engagement, customer care, analytics, listening and employee advocacy from a centralized environment.

The company’s products are designed to help marketing, communications, sales and customer service teams plan and publish content, monitor conversations, respond to audiences, evaluate social media performance and gain insights from online activity.