Sprout Social, Inc. (SPT)
NASDAQ: SPT · Real-Time Price · USD
7.28
+0.16 (2.25%)
Jun 12, 2026, 4:00 PM EDT - Market closed
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Earnings Call: Q1 2025

May 8, 2025

Operator

Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will be placed on a music hold. Thank you for your patience. Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sprout Social First Quarter 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press Star one again. Thank you. I would now like to turn the call over to Alex Kurtz, VP, Investor Relations and Corporate Development. Please go ahead.

Alex Kurtz
VP of Investor Relations and Corporate Development, Sprout Social

Thank you, Operator, and welcome to Sprout Social's First Quarter 2025 Earnings Call. We will be discussing the results announced in our press release issued after market close today and have also released an updated investor presentation, which can be found on our website. With me are Sprout Social's CEO, Ryan Barretto, and CFO, Joe Del Preto. Today's call will contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts are forward-looking. These include, among others, statements concerning our expected future financial performance, including our Q2 and 2025 outlook, and business plans and objectives, and can be identified by words such as expect, anticipate, intend, plan, believe, seek, opportunity, or will.

These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risk and uncertainties that could cause actual results to differ materially. For discussion of the risks and other important factors that could affect our actual results, please refer to our quarterly report on Form 10-Q for the fiscal quarter ended March 31st, 2025, to be filed with the SEC, as well as our most recently filed 10-K. During the call, we will discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with the reconciliations and the most directly comparable GAAP financial measures, are included in our first quarter earnings release.

This has been furnished to the SEC and is available on our website at investors.sproutsocial.com. With that, let me turn the call over to Ryan. Ryan?

Ryan Barretto
CEO, Sprout Social

Thank you, Alex, and welcome to our First Quarter Earnings Call for fiscal 2025. We reported first quarter results with revenue of $109.3 million, representing year-over-year growth of 13%, highlighted by strong revenue execution and operating margin expansion. Our current remaining performance obligations, which reached $255.8 million, represented 21% year-over-year growth. Our go-to-market teams delivered another solid quarter with 22% growth in the 50K to ARR customer cohort. We also landed strategic wins with global brands like Palo Alto, NASCAR, Interscope Records, Avis Budget Car Rental, and Axos Bank. These customers demonstrate our continued execution and strategic fit with the most socially sophisticated enterprise customers. We are expanding our sales capacity this year and will continue to throughout the first half of the year, which we believe will drive further momentum in our pipeline generation and enterprise coverage as we move into FY 2025 and beyond.

We're also excited about the continued momentum in our influencer marketing product, which has become increasingly strategic to how we engage with our most socially sophisticated customers. I also wanted to provide a quick update on the macro environment and what we experienced during the quarter. Q1 tracked as expected, with spending patterns similar to those seen in 2024. We continue to see elongated procurement and purchasing processes that were very similar to the prior year. While we expect these impacts to persist through the remainder of 2025, we were encouraged by the enterprise pipeline generation during the quarter and are seeing the early signs of the improved process and discipline that our new GTM leadership is bringing to the company.

Building on last quarter's discussion about Sprout 's unique position in the social media management market, I want to share how our products are enabling brand discovery in today's rapidly evolving digital landscape. I'll also provide updates on our four key growth drivers before handing the call over to Joe. A growing trend we're seeing and hearing from our customers is the ongoing shift from traditional search engines to social platforms for discovery. Research from Forbes shows 46% of Gen Z now prefer social media over conventional search, a behavior that signals where brand engagement is headed. We believe this isn't a passing trend, but a fundamental rewiring of online behavior that will play out over the next several years. As the majority of search is now zero-click with AI, traditional content strategies face headwinds as their traffic is changing in real time.

Social media's authenticity, immediacy, and community-driven nature fill the gap, offering businesses strong ROI outcomes. Social platforms enable real-time discovery and customer connections, fostering trust and driving conversions. Gen Z's preference for social search provides critical directional data, pointing to a future where brands must view their social presence as a top business priority. This shift amplifies the role of influencer marketing, which is central to social search dynamics. Creators and influencers shape discovery by delivering relatable content that resonates in algorithm-driven feeds, guiding consumers from curiosity to purchase. Nearly 70% of consumers trust influencer recommendations over information from brands according to Marketing Dive. Sprout's research shows just about half of consumers make purchases at least once a month because of influencer posts. This past quarter, we announced the rebrand of our influencer marketing platform, formerly Tagger Media, to Sprout Social Influencer Marketing.

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