Sprout Social, Inc.

Q2 revenue was $123.8 million, up 10.8% year over year. Subscription revenue was $121.9 million, up 9.7% year over year. Non-GAAP operating margin was 12.9%, up 370 basis points year over year. Non-GAAP free cash flow was $8.3 million, up approximately 60% year over year, and trailing-12-month non-GAAP free cash flow was approximately $54 million. CRPO increased 12.4% year over year to $202.7 million, and total RPO rose 15.5% to $400.8 million. For Q3 FY2026, guidance calls for revenue of $123.3 million-$124.1 million, non-GAAP operating income of $17.5 million-$18.3 million, and non-GAAP EPS of $0.29-$0.30. For FY2026, revenue is guided to $493 million-$495.6 million, non-GAAP operating income to $68.3 million-$70.3 million, and non-GAAP EPS to $1.11-$1.15. Management said it expects a Q4 exit non-GAAP operating margin close to 17% and reiterated a goal of reaching 30% under Rule of 40 by Q4 FY2027.

Ryan Barretto emphasized that Sprout is leaning into AI, especially Trellis, as a core product priority and said early customer feedback has been strong, with higher retention among Trellis users. He said the company is increasingly focused on larger, more sophisticated customers, highlighting that the $30,000+ ARR cohort grew 20% and now contributes over 61% of subscription revenue. His tone was confident but measured, repeatedly noting that the company is still early in monetizing Trellis and is guiding conservatively amid a soft demand backdrop and continued pressure in the sub-$30,000 segment.

Erin Graupmann focused on margin and cash flow leverage, pointing to Q2 non-GAAP operating margin of 12.9% and $8.3 million of non-GAAP free cash flow. She said the restructuring should reduce the non-GAAP cost structure by at least $50 million on an annualized run rate, with pre-tax restructuring charges of about $18 million-$20 million, most of which will hit Q3. She also noted the cash balance of $119.9 million and said Q2 CRPO benefited from renewal timing and longer contract durations, while CRPO is expected to moderate in Q3.

Analysts focused on Trellis adoption, the durability of CRPO as a revenue signal, the impact of the restructuring, and whether the sub-$30,000 business remains a drag. Management said Trellis usage is growing, customers using it are retaining at higher rates, and some customers are already moving to the paid Plus tier, but it is still early. On CRPO, management said Q2 benefited from stronger renewals and longer durations, but they expect moderation in Q3. On the workforce reduction, Ryan said it was broad-based across parts of the organization and aimed at removing layers and improving decision-making rather than targeting one function.