Sprout Social's Q1 Earnings Call: Our Top 5 Analyst Questions
Is now the time to buy SPT? Find out in our full research report (it's free).
Revenue: $109.3 million vs analyst estimates of $107.6 million (12.9% year-on-year growth, 1.6% beat)
Adjusted EPS: $0.22 vs analyst estimates of $0.15 (48.4% beat)
Adjusted Operating Income: $12.54 million vs analyst estimates of $9.01 million (11.5% margin, 39.1% beat)
The company slightly lifted its revenue guidance for the full year to $451.4 million at the midpoint from $450.6 million
Management raised its full-year Adjusted EPS guidance to $0.73 at the midpoint, a 5% increase
Operating Margin: -10.2%, up from -13.7% in the same quarter last year
Customers: 9,381
Annual Recurring Revenue: $446.4 million at quarter end, up 13.4% year on year
Billings: $104.5 million at quarter end, up 2% year on year
Market Capitalization: $1.18 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Raimo Lenschow (Barclays) asked for more detail on enterprise pipeline trends. CEO Ryan Barretto explained that pipeline creation is healthy, spread across industries, with large enterprise customers seeking engagement, care, and analytics in one platform.
Rob Oliver (Baird) inquired about progress in identifying the ideal enterprise customer profile. Barretto said leveraging data from customer trials and analytics helps refine targeting and ensures Sprout addresses key pain points for large organizations.
Elizabeth Porter (Morgan Stanley) asked about pipeline coverage ratios and comfort levels moving through macro uncertainty. Barretto noted strong pipeline hygiene and creation, emphasizing that the team is closely monitoring top-of-funnel metrics without seeing material macro impacts yet.
David Hynes (Canaccord Genuity) requested clarification on cRPO bookings as a proxy for enterprise growth and gross retention trends. CFO Joe Del Preto responded that cRPO growth was strong and retention improved across all customer segments, reflecting the platform's mission-critical nature.
Adam Hotchkiss (Goldman Sachs) questioned drivers behind the profitability beat and implications for investment philosophy. Del Preto attributed the beat to revenue outperformance and back-end loaded hiring, while emphasizing investment flexibility based on ongoing business performance.
Looking ahead, the StockStory team will monitor (1) the pace of enterprise customer additions and expansion activity, (2) adoption rates of new AI-powered features and influencer marketing enhancements, and (3) the progress of international partnerships and reseller networks. Sustained improvements in retention and successful integration of product updates into customer workflows will also be important indicators of execution.
Sprout Social currently trades at $20.35, down from $21.80 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it's free).
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