Sprout Social Stock Earnings Reports

Sprout Social reported Q1 FY2026 revenue of $121.5M (11.2% YoY) with subscription revenue of $120M (10.4% YoY). Non‑GAAP operating margin was 11.6%, and non‑GAAP free cash flow reached a company‑record $24.7M for the quarter (~27% YoY improvement). Current remaining performance obligations (CRPO) and total RPO each grew ~10% to $281.7M and $395.3M, respectively. The business mix continues shifting to larger customers: customers contributing ≥ $30,000 ARR grew 21% YoY and now represent >60% of subscription revenue; customers ≥ $50,000 ARR grew 18% YoY. Trellis, Sprout’s AI orchestration framework, moved out of beta to GA in Q1, is seeing rapid adoption (thousands of customers, strong usage in listening and NewsWhip), and will be monetized via a hybrid user‑access + usage model as it expands across the platform. Management launched a $50M share repurchase authorization, citing confidence in free cash flow and valuation dislocation. Guidance: Q2 revenue $121.7M–$122.5M; Q2 non‑GAAP operating income $9.5M–$10.3M and non‑GAAP EPS $0.15–$0.16. Full‑year 2026 revenue $492.5M–$495.5M (note: transcript lists $492.5M to $95.5M—assumed typo; implied range ~$492.5M–$495.5M), full‑year non‑GAAP operating income $54.9M–$60.4M, and exit‑Q4 non‑GAAP operating margin ~15%. Management reaffirmed the target to reach 30% under the Rule of 40 by Q4 FY2027. Key investor takeaways: durable cash flow and disciplined capital allocation (share buyback), accelerating enterprise mix and ACV expansion, Trellis as a strategic AI differentiator with monetization potential, and continued focus on retooling the lower‑end (sub‑$30k ARR) via Essentials and a self‑serve motion to improve unit economics.