Revenue Growth
Revenue of $121.5M in Q1 fiscal 2026, up 11.2% year-over-year.
Sprout Social
· SPT
May 7th, 2026
Summary
- Earnings Call Date:
- 2026-05-07
- Change Since:
- -1.47%
- Next Earnings Date:
- 2026-08-04
Earnings Call Sentiment
PositiveThe call presented a mix of clear operational and product momentum — double-digit revenue growth (11.2% YoY), expanding enterprise customer mix (30K+ ARR cohort +21% YoY and >60% of subscription revenue), record quarterly free cash flow (+~27% YoY), Trellis moving to GA with strong early adoption, and a $50M buyback authorization — all signaling improving durability and capital discipline. Offsetting these positives are near-term execution challenges: the lower-end (<$30K) cohort remains a drag and will be reworked (with modest deceleration expected), bookings/new-business cadence lags despite durable renewals, and some Q1 margin upside reflected timing; AI cost/monetization execution is also a watch item. Overall, the tone is constructive with manageable near-term headwinds as management invests in AI and repositions the go-to-market motion.
Company Guidance
Sprout guided Q2 FY2026 revenue of $121.7M–$122.5M, non‑GAAP operating income of $9.5M–$10.3M and non‑GAAP EPS of $0.15–$0.16; for FY2026 it expects revenue of $492.5M–$495.5M, non‑GAAP operating income of $54.9M–$60.4M and non‑GAAP EPS of $0.88–$0.97 (assuming ~60.7M weighted average basic shares), expects to exit Q4 with non‑GAAP operating margin near 15%, said non‑GAAP free cash flow margin should track non‑GAAP operating margin annually, is not assuming share repurchases in its EPS outlook, the Board authorized up to $50M of buybacks, and management reaffirmed a Rule‑of‑40 target of 30% by Q4 2027.
Improved Profitability
Non-GAAP operating margin of 11.6% in Q1, up 16 basis points year-over-year; company expects to exit FY2026 with ~15% non-GAAP operating margin and targets 30% under the Rule of 40 by Q4 2027.
Record Free Cash Flow and Strong Cash Generation
Non-GAAP free cash flow of $24.7M in Q1, a ~27% improvement year-over-year and the company's largest non-GAAP FCF quarter on record; trailing 12-month non-GAAP free cash flow exceeded $51M.
Stronger Enterprise Customer Mix
Approximated trailing 12-month subscription revenue from customers contributing $30,000+ ARR grew 21% YoY and crossed 60% of total subscription revenue for the first time; customers contributing $50,000+ ARR grew 18% YoY and that cohort is approaching 50% of subscription revenue.
Customer Additions and ACV Expansion
Added 72 net new customers in the $30K+ ARR segment in Q1 and 424 over the trailing 12 months; Q1 ACV increased 14.5% YoY.
RPO/CRPO Growth and Contract Duration
Total RPO was $395.3M (up ~9.7% YoY) and CRPO was $281.7M (CRPO/next-12-months recognition ~71.3%, CRPO growth ~10% YoY); multiyear contracts now represent nearly half of contract mix (up from ~1/3 two years ago) and monthly customers fell below 10% of mix for the first time.
AI Product Momentum — Trellis GA and Adoption
Trellis (AI orchestration framework) moved out of beta to general availability across Listening and NewsWhip; thousands of customers engaging, Trellis is the most used AI feature on the platform and half of listening customers have discovered it.
Capital Allocation — Share Repurchase Authorization
Board authorized a $50M share repurchase program — management cites confidence in free cash flow generation and view that repurchases are a disciplined use of capital at current valuations.
Product & GTM Initiatives for SMB Market
Introduced 'Essentials' as a simpler, self-serve entry product for customers below $30K ARR; early response encouraging and intended to improve unit economics and lower CAC over time.
Balance Sheet and Liquidity
Cash and equivalents of $111.6M at quarter end, up from $100.9M a year ago.
Operator
Hello, everyone. Thank you for joining us, and welcome to Sprout Social First Quarter 2026 Earnings Call. [Operator Instructions]. I will now hand the conference over to Lexi Johnson, Investor Relations. Lexi, please go ahead.
Alexis Johnson
Thank you, and welcome to Sprout Social's First Quarter 2026 Earnings Call. We will be discussing the results announced in our press release issued after market close today and have also released an updated investor presentation, which can be found on our website. With me are Sprout Social's CEO, Ryan Barretto; and Vice President of Investor Relations and Corporate Development, Alex Kurtz. Today's call will contain forward-looking statements, which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward looking. These include, among others, statements concerning our expected future financial performance, including our Q2 and 2026 outlook and business plans and objectives and can be identified by words such as expect, anticipate, intend, plan, believe, seek, opportunity, target or will. These statements reflect our views as of today only and should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially.
For a discussion of the risks and other important factors that could affect our actual results, please refer to our annual report...
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