Sprout Social Reports Q4 2025 Results, Provides 2026 Guidance, and Sets Rule of 40 Target
SPT is trading near its 52-week low of $6.43 (11% above the low).
Summary
Sprout Social announced its Q4 2025 financial results, reporting 13% revenue growth and increased non-GAAP profitability, alongside providing its financial outlook for Q1 and full-year 2026 and setting a new Rule of 40 target.
Key Events · Earnings and Guidance · SPT
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Q4 2025 Financial Performance
Reported Q4 2025 revenue of $120.9 million, up 13% year-over-year. Non-GAAP operating income increased to $11.5 million, and non-GAAP net income reached $11.6 million. Net cash provided by operating activities was $10.9 million, with non-GAAP free cash flow also at $10.9 million.
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Customer Growth in Key Segments
The number of customers contributing $30,000 or more in Annual Recurring Revenue (ARR) grew 13% to 3,803, and customers contributing $50,000 or more in ARR increased 18% to 2,022. The company has shifted its focus to these larger customer metrics.
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2026 Financial Outlook
Provided Q1 2026 revenue guidance between $119.9 million and $120.7 million, and full-year 2026 revenue guidance between $490.2 million and $495.2 million. Non-GAAP operating income and net income per share guidance were also issued for both periods.
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New Long-Term Profitability Target
Initiated a non-GAAP 30% Rule of 40 target by the fourth quarter of fiscal 2027, indicating a strategic focus on balancing revenue growth with operating margin.
Analysis · SPT · Technology
Sprout Social's Q4 2025 results show continued revenue growth and improved profitability, with non-GAAP operating income and free cash flow increasing. The company's focus on larger customers is evident in the growth of its $30K+ and $50K+ ARR customer segments. While dollar-based net retention rates saw a slight decline, the initiation of a 30% Rule of 40 target by Q4 2027 signals a commitment to balancing growth with profitability. The 2026 guidance provides investors with a clear outlook for the upcoming year.
At the time of this filing, SPT was trading at $7.11 on NASDAQ in the Technology sector, with a market capitalization of approximately $421M. The 52-week trading range was $6.43 to $29.01. This filing was assessed with neutral market sentiment and an importance score of 7 out of 10.