GET DAILY SIGNALSSprout Social (SPT) Delivers Q3 Revenue of +8.3% with Margin Gains and EPS Beat
Key Takeaways
- Sprout Social reported third quarter 2026 revenue of $125.1 million, up 8.3% year over year and ahead of the roughly $123.7 million consensus estimate.
- Non-GAAP earnings per share (EPS) reached $0.45, far above the $0.29 consensus, while non-GAAP operating margin climbed to 21%, up 910 basis points from a year earlier.
- Net additions among customers contributing $30,000 or more in annual recurring revenue (ARR, the annualized run-rate of subscription agreements) softened, with the count slipping one sequentially to 3,925.
- Momentum at the larger end held firm: customers above $50,000 in ARR rose 11% year over year, and those above $150,000 grew 22%.
- Non-GAAP free cash flow surged to $26.7 million, up 158% year over year, and the company repurchased 2.6 million shares during the quarter.
- Fourth quarter guidance calls for revenue of $124.2 million to $125.2 million and non-GAAP EPS of $0.36 to $0.38.
- For more context, review the company's Major News, Today's Price Move, Price Targets, and Forecast on additional pages.
- Explore Trending AI Robots for AI-driven market insights and trade ideas.
Why the Quarter Matters
Sprout Social’s third-quarter results arrive at an interesting juncture for the AI-focused social media management platform. The company continues shifting its customer base toward larger enterprise accounts while introducing Trellis, its own AI agent, as a new revenue driver. I’m watching closely to see whether this upmarket move can keep revenue growing even as the broader economy makes new customer wins and expansions more challenging. The quarter also comes after an earlier workforce reduction aimed at cutting costs and improving operating leverage. Overall, the report offers a clear test of whether SPT can combine steady top-line results with stronger margins and cash flow.
The Numbers in Detail
Total revenue reached $125.1 million, an 8.3% year-over-year increase that topped the consensus estimate of about $123.7 million. Non-GAAP EPS landed at $0.45, well above both the $0.29 consensus and the company’s own prior guidance range of $0.29 to $0.30. Non-GAAP operating margin expanded to 21%, a 910-basis-point improvement from the prior year, helped by revenue outperformance and certain one-time items such as hiring timing. To compare SPT against peers, I also checked this using Tickeron’s AI Screener.
Customer metrics painted a mixed picture. Customers with $30,000 or more in ARR finished the quarter at 3,925, down one sequentially, with softer additions mainly in the $30,000-to-$50,000 band. In contrast, customers above $50,000 in ARR grew 11% year over year to 2,155, while those above $150,000 rose 22%. Average contract value increased 12.1% year over year. Remaining performance obligations stood at $393.9 million, up 10.3%, and current remaining performance obligations rose 8.4% to $280.2 million.
Non-GAAP free cash flow jumped to $26.7 million, 158% higher than a year earlier, with cash and cash equivalents at $103.7 million. Guidance for the fourth quarter calls for revenue between $124.2 million and $125.2 million and non-GAAP EPS of $0.36 to $0.38. Full-year 2026 targets are revenue of $494.7 million to $495.7 million and non-GAAP EPS of $1.29 to $1.31.
Market Reaction and Sentiment
Shares of SPT had risen about 15% over the three months before the report, reflecting optimism around margin improvement and the AI roadmap. The key question for investors was whether profitability gains could continue even as revenue growth slowed to single digits. The results showed both sides of that picture: the strong EPS and margin beats highlighted accelerating profitability, while the sequential dip in $30,000-plus ARR customers pointed to ongoing softness at the lower end of the enterprise segment. Management noted that the 21% margin included one-time benefits and guided to roughly 18% for the fourth quarter, indicating some of the upside may not repeat.
Key Themes to Follow
Several areas stand out for ongoing attention. First, the performance of larger customers will remain central. Management highlighted strength in accounts above $50,000 and $150,000 in ARR but noted pressure between $30,000 and $50,000. Whether that middle cohort stabilizes next quarter, as expected, will influence views on the upmarket strategy.
Second, AI monetization through Trellis is a notable catalyst. The agent is moving into paid offerings, including Trellis Plus and a pooled-credits model planned for the fourth quarter. Adoption trends here could affect average contract value and overall platform positioning.
Third, margin sustainability deserves monitoring. With the fourth-quarter operating margin guided near 18%, investors will track progress toward the company’s Rule of 40 target of 30% by the end of fiscal 2027.
Finally, capital allocation remains relevant. With more than $26 million of the $50 million buyback authorization already used and free cash flow rising, continued repurchases and spending discipline will be worth watching alongside any shifts in macro demand.
Integrating AI Tools into My Research
When reviewing earnings like these, I often use Tickeron’s AI Screener to quickly filter software-sector names by fundamentals, technical patterns, and AI signals. It helps surface comparable setups without spending hours on manual screens and gives me a clearer sense of where SPT fits within the broader group.
Disclaimer
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
SPT in downward trend: price may drop because broke its higher Bollinger Band on October 20, 2026
SPT broke above its upper Bollinger Band on October 20, 2026. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options. The A.I.dvisor looked at 34 similar instances where the stock broke above the upper band. In 30 of the 34 cases the stock fell afterwards. This puts the odds of success at 88%.
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for SPT moved out of overbought territory on October 27, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 23 similar instances where the indicator moved out of overbought territory. In 17 of the 23 cases, the stock moved lower in the following days. This puts the odds of a move lower at 74%.
The Stochastic Oscillator may be shifting from an upward trend to a downward trend. In 48 of 57 cases where SPT's Stochastic Oscillator exited the overbought zone, the price fell further within the following month. The odds of a continued downward trend are 84%.
The Moving Average Convergence Divergence Histogram (MACD) for SPT turned negative on November 02, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In 36 of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at 84%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where SPT declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 81%.
Bullish Trend Analysis
The Momentum Indicator moved above the 0 level on October 06, 2026. You may want to consider a long position or call options on SPT as a result. In 62 of 80 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 77%.
SPT moved above its 50-day moving average on October 01, 2026 date and that indicates a change from a downward trend to an upward trend.
The 10-day moving average for SPT crossed bullishly above the 50-day moving average on October 12, 2026. This indicates that the trend has shifted higher and could be considered a buy signal. In 13 of 16 past instances when the 10-day crossed above the 50-day, the stock continued to move higher over the following month. The odds of a continued upward trend are 81%.
Following a +4.54% 3-day Advance, the price is estimated to grow further. Considering data from situations where SPT advanced for three days, in 226 of 300 cases, the price rose further within the following month. The odds of a continued upward trend are 75%.
The Aroon Indicator entered an Uptrend today. In 108 of 143 cases where SPT Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 76%.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 13 (best 1 - 100 worst) indicates that the company is seriously undervalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (3.163) is normal, around the industry mean (-1.884). P/E Ratio (-23.860) is within average values for comparable stocks, (15.540). Projected Growth (PEG Ratio) (0.078) is also within normal values, averaging (2.824). Dividend Yield (0.000) settles around the average of (0.072) among similar stocks. P/S Ratio (1.393) is also within normal values, averaging (70.854).
The Tickeron Price Growth Rating for this company is 35 (best 1 - 100 worst), indicating steady price growth. SPT’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Seasonality Score of 50 (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron PE Growth Rating for this company is 86 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron SMR rating for this company is 94 (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is 100 (best 1 - 100 worst), indicating that the returns do not compensate for the risks. SPT’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 94, placing this stock worse than average.
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General Information
a provider of online social media management tools for businesses.
Industry PackagedSoftware