Q2 2026 Sprout Social, Inc. Earnings Call Transcript
Key Points
- Sprout Social Inc (SPT) delivered strong Q2 2026 results with revenue of $123.8 million, up 10.8% year-over-year, and non-GAAP operating margin expanding 370 basis points to 12.9%.
- CRPO and RPO accelerated, with CRPO growing 12.4% and total RPO growing 15.5% year-over-year, reflecting longer-term customer commitments and multi-year contracts now representing nearly half of the contract mix.
- The $30K+ ARR customer segment continues to drive growth, contributing over 61% of subscription revenue (up 20% year-over-year) with 51 net new customers added in Q2 and strong unit economics.
- Trellis, the proprietary Agentic AI offering, is gaining traction with healthy adoption trends, and customers using Trellis retain at higher rates across all segments, positioning it as a key differentiator.
- Non-GAAP free cash flow improved approximately 60% year-over-year to $8.3 million in Q2, with trailing twelve-month free cash flow reaching about $54 million, demonstrating strong operating leverage.
- The company raised its full-year 2026 non-GAAP operating income guidance by 20% at the midpoint, reflecting the benefits of the restructuring and disciplined cost management.
- Sprout Social Inc (SPT) secured several significant enterprise wins, including a seven-figure new business deal and expansions with Fortune 50 financial services, highlighting its ability to consolidate complex social operations.
- Sprout Social Inc (SPT) announced a difficult decision to reduce its team by approximately 20%, which will incur pre-tax restructuring charges of $18-20 million, impacting Q3 2026.
- The company expects continued headwinds from customers below $30K in ARR, with this segment's revenue contribution declining to 39% from 59% two years ago, and plans to stabilize it only by 2027.
- Guidance for Q3 2026 implies a sequential revenue decline, reflecting a measured approach and no anticipated improvement in the demand environment, with management noting persistent pressure in the lower end of the market.
- The company is lapping the acquisition of NewsWhip starting in Q3 2026, which will create a headwind on both revenue and RPO growth moving forward.
- While Trellis Plus, the paid tier, went live in July, monetization is still early, and the company has not yet provided clear metrics on its contribution to revenue or expansion.
- The restructuring and change management may disrupt execution in Q3 and Q4, as the company works to streamline operations and reallocate resources.
- The company's share repurchase program was restricted during Q2 due to blackout periods, limiting capital return activity, and the timing of future buybacks remains uncertain.
Hello, everyone.
Thank you for joining us and welcome to the Sprout Social Second Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Lexi Johnson, Investor Relations Manager. Lexi, please go ahead.
Thank you and welcome to Sprout Social's second 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 CEO Ryan Barretto and Vice President FFP&A Aaron Grotman.
Today's call will contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1,995. All statements other than statements of historical fact are forward
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