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1. Company Snapshot

1.a. Company Description

Sprout Social, Inc.designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.It provides cloud software that brings together social messaging, data, and workflows in a unified system of record, intelligence, and action.


The company offers provides various integrated tools in a range of functions comprising social engagement/response, publishing, reporting and analytics, social listening and business intelligence, reputation management, employee advocacy, and automation and workflows.Its tools serve a range of use-cases within its customers' organizations, including social and community management, public relations, marketing, customer service and care, commerce, sales and customer acquisition, recruiting and hiring, product development, and business strategy.The company also offers professional services, which primarily consist of consulting and training services.


It serves approximately more than 31,000 customers across small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions.The company was incorporated in 2010 and is headquartered in Chicago, Illinois.

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1.b. Last Insights on SPT

The recent 3-month performance of Sprout Social, Inc. has been negatively impacted by ongoing investigations and potential claims against the company. The frequent announcements of investigations by law firms, such as Bronstein, Gewirtz & Grossman, LLC, have likely contributed to the stock's decline. These investigations, which focus on potential securities law violations, have raised concerns among investors and may have led to a decrease in confidence in the company's stock.

1.c. Company Highlights

2. Sprout Social's Q3 2025 Earnings: A Strong Performance

Sprout Social delivered a robust financial performance in its third quarter of 2025, with revenue reaching $115.6 million, representing a 13% year-over-year growth. The company's non-GAAP operating margin expanded by nearly 460 basis points to a record high of 11.9%. Earnings per share (EPS) came in at $0.23, beating analyst estimates of $0.16. The strong financial performance was driven by a 13% year-over-year growth in subscription revenue, which stood at $114.7 million. Non-GAAP operating income was $13.7 million, a quarterly record.

Publication Date: Nov -21

📋 Highlights
  • Revenue Growth: Q3 revenue reached $115.6 million, reflecting 13% YoY growth with subscription revenue at $114.7 million.
  • Non-GAAP Operating Margin: Expanded 460 basis points to a record 11.9%, with operating income hitting $13.7 million.
  • Remaining Performance Obligations: Current RPO grew 17% YoY to $258.5 million, indicating strong demand and execution.
  • High-Value ARR Customer Growth: 21% YoY increase in $50,000+ ARR customers, bolstered by NewsWhip additions.
  • Free Cash Flow Surge: Generated $10.3 million in non-GAAP free cash flow, an 80% rise over the past 12 months.

Customer Expansion and Growth

The company's customer base continued to expand, driven by seat growth and adoption of various products, including Influencer Marketing, Premium Analytics, and NewsWhip. The number of customers contributing more than $50,000 in ARR grew 21% from a year ago. Key wins in the quarter included notable clients such as Xerox, Bentley Motors, and NYU. As CEO Ryan Barretto emphasized, the company's focus on AI transformation is expected to drive future growth, with the release of a proprietary AI agent for conversational data exploration.

Remaining Performance Obligations and Future Guidance

Current remaining performance obligations (RPO) grew 15% year-over-year to $357.1 million, with $258.5 million expected to be recognized as revenue over the next 12 months. For Q4, the company expects revenue in the range of $118.2 million to $119.0 million and non-GAAP operating income between $9.5 million and $10.5 million. For the full year 2025, revenue is expected to be in the range of $454.9 million to $455.7 million.

Valuation and Growth Prospects

With a P/S Ratio of 1.23, the market appears to be pricing in moderate growth expectations. Analysts estimate revenue growth at 11.2% for the next year, indicating a relatively stable outlook. The company's Free Cash Flow Yield of 6.1% is also noteworthy, suggesting a decent return for investors. However, the negative ROE of -26.09% and ROIC of -17.95% indicate that the company's profitability is still a concern.

3. NewsRoom

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Sprout Social Releases First-Ever Social Media Dictionary, Unveiling the Viral Words That Defined Culture in 2025

Dec -03

Source: globenewswire.com

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Sprout Social, Inc. $SPT Shares Bought by Geode Capital Management LLC

Nov -29

Source: defenseworld.net

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Bank of New York Mellon Corp Has $7.33 Million Holdings in Sprout Social, Inc. $SPT

Nov -22

Source: defenseworld.net

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Sprout Social, Inc. (SPT) Discusses Launch of Social-Powered AI Engine and Platform Innovations Transcript

Nov -18

Source: seekingalpha.com

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Sprout Social Unveils Trellis, its AI Agent That Turns Social Data Into Instant Enterprise Intelligence

Nov -18

Source: globenewswire.com

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Sprout Social: Still Growing, Despite Decimated Stock

Nov -09

Source: seekingalpha.com

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Sprout Social, Inc. (SPT) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Sprout Social (SPT) Tops Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.95%)

6. Segments

Subscription

Expected Growth: 11.95%

Sprout Social's 11.95% subscription growth is driven by increasing demand for social media management tools, expansion into new markets, and strategic partnerships. The company's focus on innovation, customer satisfaction, and competitive pricing also contribute to its growth. Additionally, the rise of social media advertising and the need for businesses to manage their online presence effectively are key factors.

Professional Services and Other

Expected Growth: 11.7%

Sprout Social's 11.7% growth in Professional Services and Other is driven by increasing demand for social media management and analytics, expansion into new markets, and strategic partnerships. Additionally, the company's focus on customer success and retention, as well as its investments in innovation and product development, contribute to this growth.

7. Detailed Products

Social Media Management

A comprehensive platform for managing social media presence, including scheduling posts, responding to comments, and analyzing engagement metrics.

Social Listening

A tool for monitoring social media conversations about a brand, competitor, or industry, providing insights into customer sentiment and trends.

Content Calendar

A visual planning tool for scheduling and organizing social media content in advance, ensuring consistent posting and minimizing last-minute scrambles.

Analytics and Reporting

A suite of analytics tools providing in-depth insights into social media performance, including engagement metrics, audience growth, and content performance.

Customer Service and CRM

A platform for managing customer inquiries and issues across social media channels, integrating with CRM systems for seamless customer support.

Employee Advocacy

A tool for empowering employees to become brand ambassadors on social media, amplifying company news and culture.

8. Sprout Social, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Sprout Social, Inc. operates in a niche market, providing social media management and analytics solutions. While there are substitutes available, they are not perfect, and Sprout Social's unique features and customer base provide a competitive advantage.

Bargaining Power Of Customers

Sprout Social, Inc. has a diverse customer base, including large enterprises and small businesses. While customers have some bargaining power, the company's scalable pricing model and high-quality services reduce the bargaining power of individual customers.

Bargaining Power Of Suppliers

Sprout Social, Inc. relies on a few key suppliers for infrastructure and technology. However, the company's strong relationships with suppliers and its ability to negotiate favorable terms reduce the bargaining power of suppliers.

Threat Of New Entrants

While there are barriers to entry in the social media management and analytics market, new entrants can still disrupt the market. Sprout Social, Inc.'s strong brand and customer base provide a competitive advantage, but the company must continue to innovate to stay ahead of new entrants.

Intensity Of Rivalry

The social media management and analytics market is highly competitive, with several established players and new entrants vying for market share. Sprout Social, Inc. must continue to innovate and differentiate its services to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.92%
Debt Cost 3.95%
Equity Weight 66.08%
Equity Cost 9.38%
WACC 7.53%
Leverage 51.34%

11. Quality Control: Sprout Social, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Vacasa

A-Score: 4.4/10

Value: 7.5

Growth: 3.6

Quality: 3.5

Yield: 0.0

Momentum: 10.0

Volatility: 1.7

1-Year Total Return ->

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Expensify

A-Score: 3.7/10

Value: 8.5

Growth: 2.7

Quality: 3.8

Yield: 0.0

Momentum: 5.0

Volatility: 2.3

1-Year Total Return ->

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Sprout Social

A-Score: 3.5/10

Value: 6.7

Growth: 6.0

Quality: 4.6

Yield: 0.0

Momentum: 0.0

Volatility: 3.7

1-Year Total Return ->

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Exela Technologies

A-Score: 3.3/10

Value: 10.0

Growth: 4.2

Quality: 5.3

Yield: 0.0

Momentum: 0.5

Volatility: 0.0

1-Year Total Return ->

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Presto Automation

A-Score: 3.2/10

Value: 10.0

Growth: 3.7

Quality: 5.0

Yield: 0.0

Momentum: 0.5

Volatility: 0.0

1-Year Total Return ->

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Smith Micro Software

A-Score: 3.1/10

Value: 9.4

Growth: 2.6

Quality: 4.5

Yield: 0.0

Momentum: 1.0

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

10.53$

Current Price

10.54$

Potential

-0.00%

Expected Cash-Flows