Social media management software company Sprout (NASDAQ: SPT) announced better-than-expected revenue in Q2 CY2025, with sales up 12.5% year on year to $111.8 million. Guidance for next quarter’s revenue was better than expected at $114.8 million at the midpoint, 1.1% above analysts’ estimates. Its non-GAAP profit of $0.18 per share was 19% above analysts’ consensus estimates.

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“Our team delivered strong results in the second quarter, highlighted by 12% revenue growth and solid profitability," said Ryan Barretto, CEO of Sprout Social.

Company Overview

Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ: SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Sprout Social’s sales grew at a solid 24.9% compounded annual growth rate over the last three years. Its growth beat the average software company and shows its offerings resonate with customers.

This quarter, Sprout Social reported year-on-year revenue growth of 12.5%, and its $111.8 million of revenue exceeded Wall Street’s estimates by 0.8%. Company management is currently guiding for a 11.8% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 10.5% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is above average for the sector and suggests the market sees some success for its newer products and services.

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Billings

Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.

Sprout Social’s billings punched in at $109 million in Q2, and over the last four quarters, its growth slightly outpaced the sector as it averaged 11% year-on-year increases. This alternate topline metric grew slower than total sales, meaning the company recognizes revenue faster than it collects cash - a headwind for its liquidity that could also signal a slowdown in future revenue growth.

Enterprise Customer Base

This quarter, Sprout Social reported 9,517 enterprise customers paying more than $10,000 annually, an increase of 136 from the previous quarter. That’s quite a bit more contract wins than last quarter but also quite a bit below what we’ve observed over the previous year. This indicates the company is optimizing its go-to-market strategy to reinvigorate growth.

Key Takeaways from Sprout Social’s Q2 Results

The quarter was solid, with revenue beating and operating profit exceeding expectations even more convincingly, showing that growth is both stronger and more efficient than projected. It was also good to see Sprout Social provide revenue guidance for next quarter that slightly beat analysts’ expectations. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. On the other hand, its billings fell short of Wall Street’s estimates. Overall, this quarter wasn't perfect, but it was quite good. The stock traded up 14.2% to $18.30 immediately following the results.

Is Sprout Social an attractive investment opportunity right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.