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

Sprout Social (NASDAQ:SPT) released its quarterly earnings data on Tuesday. The company reported $0.45 EPS for the quarter, beating analysts’ consensus estimates of $0.29 by $0.16, FiscalAI reports. The firm had revenue of $125.15 million for the quarter, compared to analysts’ expectations of $123.83 million. Sprout Social had a negative return on equity of 8.80% and a negative net margin of 6.13%.

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 1.8%

Sprout Social stock traded up $0.21 during mid-day trading on Wednesday, reaching $12.14. 216,612 shares of the company’s stock were exchanged, compared to its average volume of 1,376,644. The company has a market cap of $735.74 million, a P/E ratio of -24.11 and a beta of 0.95. The company has a quick ratio of 1.03, a current ratio of 1.03 and a debt-to-equity ratio of 0.14. Sprout Social has a twelve month low of $4.92 and a twelve month high of $13.35. The company has a fifty day moving average of $11.09 and a 200-day moving average of $8.28.

Key Stories Impacting 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 up from $0.23 a year earlier. Revenue of $125.15 million also topped estimates of $123.83 million. The company reported record non-GAAP operating income of $26.3 million and a 21% non-GAAP operating margin. Sprout Social Q3 results
• Neutral Sentiment: Cantor Fitzgerald raised its price target from $8 to $13 but maintained a neutral rating, suggesting the improved target did not come with a more bullish view. Cantor Fitzgerald recommendations
• Negative Sentiment: Quarterly revenue guidance was described as slightly below expectations, a potential concern despite the Q3 beat. Q3 results and guidance
• Negative Sentiment: KeyCorp raised its target from $7 to $10 but kept an underweight rating, indicating continued caution about the shares. KeyCorp recommendations
• Negative Sentiment: A law firm said it is investigating potential claims involving company officers and directors after a federal court declined to dismiss a securities-fraud class action. The development could add legal and reputational uncertainty. Shareholder alert

Analyst Upgrades and Downgrades

A number of analysts recently issued reports on the company. Wall Street Zen raised Sprout Social from a “buy” rating to a “strong-buy” rating in a research report on Saturday, August 15th. Stifel Nicolaus raised their price target on Sprout Social from $12.00 to $14.00 and gave the stock a “buy” rating in a research report on Wednesday, October 14th. Cantor Fitzgerald lifted their price objective on Sprout Social from $8.00 to $13.00 and gave the company a “neutral” rating in a research note on Wednesday. Morgan Stanley boosted their price objective on Sprout Social from $10.00 to $11.00 and gave the company an “equal weight” rating in a report on Thursday, August 13th. Finally, Barclays increased their target price on Sprout Social from $9.00 to $12.00 and gave the stock an “overweight” rating in a research note on Tuesday, August 11th. Four equities research analysts have rated the stock with a Buy rating, five have issued a Hold rating and two have issued a Sell rating to the stock. According to data from MarketBeat.com, the stock has an average rating of “Hold” and a consensus price target of $11.44.

Insider Transactions at Sprout Social

In related news, insider Justyn Howard sold 40,000 shares of the business’s stock in a transaction on Friday, October 9th. The stock was 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. The trade was a 84.36% decrease in their position. The transaction was disclosed in a document filed with the SEC, which is available through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders sold 51,612 shares of company stock valued at $573,757 in the last ninety days. Company insiders own 9.60% of the company’s stock.

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.