Sprout Social (SPT) AI Stock Analysis

• Market Cap: $1.27B
• Dividend Yield: N/A
• Average Volume (3M): 721.77K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.97
• Revenue Growth: 21.66%
• EPS Growth: 8.66%
• Country: US
• Employees: 1,322
• Sector: Technology
• Sector Strength: 39
• Industry: Software - Application
• EPS (TTM): -1.09
• Shares Outstanding: 51,318,325
• 10 Day Avg. Volume: 590,921
• 30 Day Avg. Volume: 721,774
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.58
• Price to Cash Flow (P/CF): 87.80
• P/FCF Ratio: 75.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $31.25
• Price Target Upside: 38.64% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 13

Sprout Social's strong revenue growth and positive earnings call outlook are tempered by ongoing profitability challenges and bearish technical indicators. The company’s strategic initiatives and partnerships are promising, yet valuation concerns and market sentiment suggest caution. Improving profitability remains crucial for enhancing stock performance.

Positive Factors

Enterprise Traction

Enterprise traction continues with Sprout closing its largest new business ACV win in company history.

Partnerships and Expansions

The partnership with Salesforce offers a significant growth opportunity for Sprout Social.

Revenue Growth

Sprout's fourth-quarter results showed a revenue growth of 14%, modestly beating prior guidance at the midpoint.

Negative Factors

Financial Guidance

Sprout set its initial targets for 2025 at about 10-12% revenue growth and about 100-200 bps of margin expansion, both below consensus expectations.

Market Environment

The selling environment in the social media management space remains challenged, causing caution on shares of Sprout.

Revenue Guidance

The stock declined about 6% following the initial 2025 revenue guide, which was for 11% growth at the midpoint versus the Street at 14%.

Sprout Social Business Overview & Revenue Model

Company Description

Sprout Social, Inc. designs, develops, and operates a web-based social media management platform in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. It provides cloud software that brings together social messaging, data, and workflows in a unified system of record, intelligence, and action. The company offers provides various integrated tools in a range of functions comprising social engagement/response, publishing, reporting and analytics, social listening and business intelligence, reputation management, employee advocacy, and automation and workflows. Its tools serve a range of use-cases within its customers' organizations, including social and community management, public relations, marketing, customer service and care, commerce, sales and customer acquisition, recruiting and hiring, product development, and business strategy. The company also offers professional services, which primarily consist of consulting and training services. It serves approximately more than 31,000 customers across small-and-medium-sized businesses, mid-market companies, enterprises, marketing agencies, government, non-profit, and educational institutions. The company was incorporated in 2010 and is headquartered in Chicago, Illinois.

How the Company Makes Money

Sprout Social generates revenue primarily through a subscription-based model, where customers pay for access to its social media management platform. The company offers various pricing tiers and plans based on the number of users and features required, catering to businesses of all sizes. Key revenue streams include monthly and annual subscriptions, with additional revenue coming from premium features and add-ons. Significant partnerships with social media platforms such as Twitter, Facebook, and Instagram enhance Sprout Social's offerings and contribute to its value proposition, ultimately supporting its revenue generation.

Sprout Social Financial Statement Overview

Summary

Sprout Social demonstrates strong revenue growth and solid cash flow management, but faces profitability challenges as reflected by negative net income and EBIT margins. The balance sheet is stable with low leverage, providing financial flexibility. Continued focus on improving profitability will be key to enhancing overall financial health.

Income Statement

Sprout Social has shown consistent revenue growth over recent years, with a revenue increase of 21.7% from 2023 to 2024. Gross profit margins remain strong at 77.5% in 2024. However, the company continues to operate at a net loss, with a net profit margin of -15.3%, indicating ongoing profitability challenges. The EBIT margin remains negative at -14.9%, reflecting persistent operating losses.

Balance Sheet

The balance sheet reflects a solid equity base with an equity ratio of 38.9%, suggesting a relatively strong capital structure. The debt-to-equity ratio is low at 0.11, indicating conservative leverage. However, the return on equity remains negative at -37.2%, highlighting challenges in generating returns for shareholders.

Cash Flow

Cash flow analysis shows positive free cash flow growth, with a substantial increase to $26.3 million in 2024. The operating cash flow to net income ratio is favorable, indicating efficient cash flow management despite accounting losses. The free cash flow to net income ratio is positive, suggesting the company is generating cash flow despite negative net income.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
405.91M	333.64M	253.83M	187.86M	132.95M
	Gross Profit
314.43M	257.38M	193.97M	141.07M	98.03M
	EBIT
-60.36M	-69.28M	-51.68M	-28.09M	-32.00M
	EBITDA
-45.91M	-54.79M	-44.79M	-23.48M	-25.88M
	Net Income Common Stockholders
-61.97M	-66.43M	-50.24M	-28.70M	-31.66M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
90.18M	94.41M	172.85M	176.94M	163.88M
	Total Assets
428.34M	396.58M	293.92M	264.72M	239.67M
	Total Debt
18.29M	74.03M	21.79M	23.64M	25.79M
	Net Debt
-68.15M	24.27M	-58.13M	-83.47M	-88.72M
	Total Liabilities
261.75M	252.39M	151.58M	119.51M	87.57M
	Stockholders Equity
166.59M	144.19M	142.34M	145.21M	152.10M
Cash Flow		Free Cash Flow
26.32M	4.38M	8.84M	13.89M	-15.37M
	Operating Cash Flow
26.32M	6.46M	10.67M	14.82M	-11.35M
	Investing Cash Flow
40.73M	-86.64M	-37.67M	-22.12M	-53.80M
	Financing Cash Flow
-30.32M	53.96M	-193.00K	-100.00K	44.36M

Sprout Social Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 22.54
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SPT, the sentiment is Negative. The current price of 22.54 is below the 20-day moving average (MA) of 23.79, below the 50-day MA of 27.93, and below the 200-day MA of 30.59, indicating a bearish trend. The MACD of -1.46 indicates Positive momentum. The RSI at 23.78 is Positive, neither overbought nor oversold. The STOCH value of 11.14 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SPT.

Sprout Social Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DOCU	77 Outperform	$16.74B	16.31	68.18%	―	7.78%	1345.45%
ZM	77 Outperform	$22.59B	23.43	11.92%	―	3.05%	55.96%
CRM	75 Outperform	$259.66B	42.47	10.26%	0.63%	8.72%	51.47%
HUBS	67 Neutral	$30.35B	6,911.31	0.29%	―	21.07%	―
TEAM	59 Neutral	$56.70B	―	-32.59%	―	23.19%	11.01%
SPT	58 Neutral	$1.27B	―	-39.88%	―	21.66%	8.66%
Sector *	57 Neutral	$20.94B	10.43	-13.41%	2.52%	4.53%	-23.34%

Sprout Social Corporate Events

Sprout Social Reports Strong Q4 2024 Financial Results

On February 25, 2025, Sprout Social announced its fourth quarter 2024 financial results, highlighting a 14% revenue growth and a 26% increase in current remaining performance obligations (cRPO) compared to the previous year. The company reported a GAAP net loss of $14.4 million, but a non-GAAP net income of $10.7 million, showing significant improvement from the previous year. The company also noted growth in its customer base, particularly among those contributing over $50,000 in annual recurring revenue (ARR). Sprout Social’s recent achievements include recognition in various industry awards and the release of new tools and studies to enhance customer engagement and competitiveness. The company provided a positive financial outlook for the first quarter and full year 2025, anticipating continued revenue growth and increased non-GAAP operating income.