Sprout Social’s second quarter results were met with a positive market reaction, reflecting both top- and bottom-line outperformance against Wall Street expectations. Management attributed the growth primarily to ongoing momentum with larger enterprise customers and expanded product adoption, especially within the company’s $30,000-and-above annual contract value cohort. CEO Ryan Barretto emphasized that multi-year contracts now represent nearly half of new business, indicating greater customer confidence in Sprout’s platform. The quarter also saw improved retention rates, with Barretto highlighting that “customers using Trellis, our AI offering, retained at a higher rate than others.”
Is now the time to buy SPT? Find out in our full research report (it’s free for active Edge members).
Sprout Social (SPT) Q2 CY2026 Highlights:
- Revenue: $123.8 million vs analyst estimates of $122.2 million (10.8% year-on-year growth, 1.4% beat)
- Adjusted EPS: $0.26 vs analyst estimates of $0.16 (62.5% beat)
- Adjusted Operating Income: $15.98 million vs analyst estimates of $10.13 million (12.9% margin, 57.8% beat)
- The company slightly lifted its revenue guidance for the full year to $494.3 million at the midpoint from $494 million
- Management raised its full-year Adjusted EPS guidance to $1.13 at the midpoint, a 22.2% increase
- Operating Margin: -2.2%, up from -11% in the same quarter last year
- Annual Recurring Revenue: $506.6 million vs analyst estimates of $518.5 million (8.1% year-on-year growth, miss)
- Billings: $123 million at quarter end, up 12.9% year on year
- Market Capitalization: $578.7 million
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is 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.
Our Top 5 Analyst Questions From Sprout Social’s Q2 Earnings Call
- Rob Oliver (Baird): Asked how early adoption of Trellis is contributing to growth among high-value customers. CEO Ryan Barretto explained that Trellis usage is associated with higher retention and that the company expects upsell opportunities as power users migrate to the paid Trellis Plus tier.
- Willow Miller (William Blair & Company): Inquired about customer feedback on new Trellis capabilities and initial paid tier upgrades. Barretto reported strong customer feedback, especially on the speed of insights, and confirmed early upgrades to Trellis Plus, with more data to be shared in future quarters.
- Lucas Metcalf (Needham & Company): Questioned whether the workforce reductions targeted specific teams. Barretto responded that the cuts were broad-based, focused on removing layers and streamlining decision-making to better align resources with productive business areas.
- Nate Ruoss (KeyBanc): Asked about drivers of operating margin outperformance. VP of FP&A Erin Graupmann cited disciplined spending and timing of hiring, adding that further leverage is expected as restructuring benefits are realized.
- Jack McShane (Stifel): Sought clarification on improved renewal rates and the expected impact of the Essentials self-serve product. Barretto attributed retention gains to stronger product value and multi-product adoption, while noting that Essentials is still early but positioned to improve churn among smaller customers over time.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be tracking (1) customer adoption rates and upsell activity for Trellis, especially in the enterprise segment, (2) the pace and impact of organizational restructuring on operating margins and free cash flow, and (3) the stabilization and growth trajectory of the Essentials product for smaller customers. Additional attention will be paid to ongoing product launches and the integration of AI-driven capabilities across the platform.
Sprout Social currently trades at $9.59, up from $8.19 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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