SPT 10-K & 10-Q changes, risk factors and insider trading

•Our platform and products are dependent on APIs built and owned by third parties, including social media networks, and if we cannot renew on commercially reasonable terms or we lose access to data provided by such APIs orfor theany terms and conditions on which we obtain such access become less favorable,reason, our business could suffer.

•If we are unable to attract potential customers through unpaid channels, convertor thisother trafficsources toof freedemand, trialsincluding expansion opportunities from existing customers and otheroutbound leadssales efforts, or convert freeprospective trialscustomers and otherexpansion leadsopportunities tointo paid subscriptions, our business and results of operations may be adversely affected.

•As more of our sales efforts target larger mid-market and enterprise customers,customers and we transition certain lower recurring revenue customers to lower-touch and self-service models, our sales cyclecycles hashave and may continue to become longer and more expensiveexpensive, and we may encounterface increased pricingpricing, pressurepackaging and compliancecustomer challenges.segmentation risks.

•We are subject to stringent and changing laws and obligations related to data privacy and security. Our actual or perceived failure to comply with such laws and obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.

•If our information technology systems or data, or those of third parties with whom we work, are or were compromised, we could experience adverse consequences,consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers; and other adverse consequences.

•Unstable marketmarket, economic and economicpolitical conditions may have serious adverse consequences on our business, financial condition and share price.

•the pricing and packaging of our products and the impact of any future pricechanges increasesto pricing and packaging;

We have previously increased prices in the past and may effectchange additionalour pricepricing increasesand packaging or introduce alternative pricing structures, including consumption-based models, in the future. Any future pricing increaseor packaging changes may not result in additional revenue and may cause our total number of customersrevenue to continuedecline. toWith decreaseany evensuch whenchanges, the average spend per customer increases over time. Wewe may also experience softening demanddemand, longer sales cycles, increased discounting, challenges aligning pricing or packaging with perceived customer value across different use cases or product offerings, or negative sentiment from our customers and prospective customers as a result of our increased pricing,customers, which could impact our brand and competitiveness.

In order for us to maintain or improve our operating results, it is important that our existing customers renew their subscriptions, maintain or increase the level of their plans and add additional users, social profiles and products to their subscriptions. Our customers have no obligation to renew their subscriptions, and we cannot assure you that our customers will renew subscriptions with a similar or increased subscription term or plan level or with the same or a greater number of users, social profiles or products. Some of our customers have elected not to renew their agreements with us and we may not be able to accurately predict renewal rates. Moreover, while our contracts are generally non-cancellable during the contractual subscription term, certain customers have the right to cancel their agreements prior to the expiration of the subscription term. Our renewal rates may decline or fluctuate and our cancellation rates may increase as a result of a number of factors, including customer satisfaction with our platform and products, our customer success and support experience, theour pricepricing and packaging, the functionality of our solutions relative to those of our competitors, mergers and acquisitions affecting our customer base, the effects of global economic conditions, or reductions in our customers’ spending levels. This may also cause our calculation of the lifetime value of our customers to decline or fluctuate between periods as this calculation assumes the subscription renewal rate for a given year will remain consistent in future years. If our customers cancel or do not renew their subscriptions, renew on less favorable terms, fail to add more users or products or fail to purchase additional products, our revenues and growth prospects may decline.

We have experienced revenue growth in the past, but the rate of our growth has varied.varied and has declined in recent years. For example, in 2024,2025, our revenue was $457.5 million, an increase of 13% as compared to our revenue of $405.9 million,million in 2024, which was an increase of 22% as compared to our revenue of $333.6 million in 2023, which was an increase of 31% as compared to our revenue of $253.8 million in 2022.2023. We may not continue to grow at similar or faster rates in the future, and our revenue growth rates may continue to decline. Our revenue growth may slowrate or our revenue may decline for a number of other reasons, including declining customer count, the maturation of our company, reduced demand for our products, increased competition, a decrease in the growth or reduction in size of our overall market, failure to capitalize on growth opportunities, and the impacts to our business from macroeconomic factors such as geopolitical instability and uncertainty, fluctuations in inflationinflation, interest rates and interestcurrency exchange rates, ongoingtariffs overseasand conflict,trade tensions, volatility in the capital markets and related market uncertainty. Our current and prospective customers are impacted by volatile macroeconomic conditions to varying degrees and as a result, in some cases we are experiencing slower growth of existing customers most impacted by these conditions. If we are unable to maintain consistentor revenueincrease orour revenue growth, our stock price could be volatile or decline, and we may not achieve or maintain profitability. You should not rely on our revenue for any prior quarterly or annual periods as any indication of our future revenue or revenue growth.

Our platform and products are dependent on APIs built and owned by third parties, including social media networks, and if we cannot renew on commercially reasonable terms or we lose access to data provided by such APIs orfor theany terms and conditions on which we obtain such access become less favorable,reason, our business could suffer.

To date, we have not relied on negotiated agreements to govern our relationships with most data providers and, in many cases, we rely on publicly available APIs. As a result, we are often subject to the standard terms and conditions for application developers of such providers, which govern the distribution, operation and fees of such integrations and which are subject to change by such providers from time to time. In other cases, we rely on negotiated agreements with social media networks and other data providers. These negotiated agreements may provide increased access to APIs and data that may allow us to provide a more comprehensive solution for our customers. These agreements are subject to pricing and access changes and termination and renewal according to their terms.

There can be no assurance that we will be able to renew any of our agreements with social media networks and other data providers,providers or that theon terms ofacceptable anyto such renewal,us, including pricing and levels ofor service, willor beat favorable.all. For example, we have experienced and may in the future continue to experience price increases. The fees and other economic terms associated with the API access may vary by provider and may continue to increase over time. If these costs increase materially, or if the renewal terms become significantly less favorable from a commercial, operational or strategic perspective, we may limit, discontinue, or charge customers for certain integrations or determine not to renew such agreements. We cannot accurately predict the potential impact of any modificationmodification, non-renewal, or termination of such agreements, including the impact on our access to the related APIs. There can be no assurance that following any such modification or termination, we would be able to maintain our platform’s current level of functionality in such circumstances, as a result of more limited access to APIs or otherwise, which could result in customer dissatisfaction, loss of customers or reduced revenue and adversely affect our results of operations. For example, we are currently a member of the X (formerly known as Twitter) Official Partner Program. There can be no assurance that X will maintain this program in its current form or at allall, or that we will be able to continue our participation on commercially acceptable terms, and any change to the program, our access or the terms of our membership, including pricing, may have a negative impact on our business. In addition, there can be no assurance that we will not be required to enter into new negotiated agreements with data providers in the future to maintain or enhance the level of functionality of our platform, or that the terms and conditions of such agreements, including pricing and levels of service, will not be less favorable, which could adversely affect our results of operations.

•modifies its terms of service or other policies, including fees charged or restrictions on us or application developers;

If we are unable to attract potential customers through unpaid channels, convertor thisother trafficsources toof freedemand, trialsincluding expansion opportunities from existing customers and otheroutbound leadssales efforts, or convert freeprospective trialscustomers and otherexpansion leadsopportunities tointo paid subscriptions, our business and results of operations may be adversely affected.

Our primary go-to-market strategy isrelies anon multiple sources of demand, including inbound marketingmarketing, expansion of existing customer relationships and targeted outbound sales efforts. A significant portion of prospective customers, including larger customers, enter our sales funnel designedthrough tofree drivetrials, trafficproduct todemonstrations or contact-me requests initiated through our web properties that offer prospective customers the ability to sign up for free trials or demonstrations of our platform and certain products.properties. We utilize various unpaid content marketing strategies, including webinars, blogs, thought leadership and social media engagement, as well as paid advertising, and other demand generation activities, to attract visitors to our web properties, free trials and demonstrations. We cannot assure you that these unpaid or paid efforts or our existing customer expansion and outbound initiatives will continue to attract the same volume andvolume, quality of traffictraffic, demand to our web propertiesproperties, free trials, and freedemonstrations. trials and demonstrations and, inIn the future, we may be required to increase our marketingmarketing, sales or customer success spend to maintain the same volume and quality of traffic.pipeline. The conversion rate of free trials and other lead sources to paid subscriptions is impacted by a number of factors, including our ability to promptly demonstrate value to trial and other prospective customers, drive trial customer adoption deeper into our product capabilities and deliver a favorable trial and demonstration customer experience with our sales and customer support teams. The conversion of expansion opportunities from existing customers is similarly dependent on our ability to deliver ongoing value, product adoption and customer experience. Any change in the number or quality of prospective customers entering free trials or requesting demonstrationsdemonstrations, a reduction in expansion opportunities from existing customers, or the conversion rates for such free trials or demonstrations to paid subscriptions could have an adverse impact on our business and results of operations.

Social media and the software industry are each subject to rapid technological change, evolving industry standards and practices, developing and fragmented regulatory requirements and changing customer and user needs, requirements, tastes and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis. A significant example of these changes is the rapid advancement of AI technologies.technologies, which presents both competitive pressure to adopt such technologies and risks associated with their deployment, including security risks, data privacy considerations, and evolving customer expectations regarding AI use. If we are unable to develop and sell new products that satisfy our customers and provide enhancements and new features for our existing platform and products that keep pace with the rapid change in social media and the software industry, our revenue and operating results could be adversely affected. Our platform must also integrate with a variety of network, hardware, browser, mobile and software platforms, and technologies, and we must continuously modify and enhance our products to adapt to changes and innovation in these technologies. If new technologies emerge or our competitors are able to deliver solutions at lower prices or more efficiently, conveniently or securely, such technologies or solutions could adversely affect our ability to compete.

The social media industry has experienced and is likely to continue to experience rapid change due to the evolving trends, tastes and preferences of users, changing policies and the evolving regulatory landscape. If consumers widely adopt new social media networks and other third-party platforms or our customers’ use cases require new integrations with third-party platforms, we may need to develop integrations and functionality related to these new networks and platforms. Existing platforms may also modify the terms, pricing, or availability of API access, which could increase our costs or limit the functionality we can offer. This development effort may require significant research and development and sales and marketing resources, as well as licensing fees, all of which could adversely affect our business and operating results. In addition, new social media networks and other third-party platforms may not provide us with sufficient access to data from their platforms, preventing us from building effective integrations with our platform and products. Regulatory requirements, including potential bans,requirements and changing consumer tastes may also render our current integrations or functionality obsolete and the financial terms, if any, under which we obtain such integrations or functionality unfavorable. Any termination of our relationships with, or failure of our products to operate effectively withwith, the social media networks and other third-party platforms used most frequently by consumers or customers could reduce the demand for our products. If we are unable to respond to these changes in a cost-effective manner, our products may become less marketable and less competitive or obsolete, and our operating results may be negatively affected. In addition, the technology industry has experienced, and may continue to experience, leadership changes, layoffs and other corporate changes that could have a negative impact on our ability to work effectively with these partners.

As more of our sales efforts target larger mid-market and enterprise customers,customers and we transition certain lower recurring revenue customers to lower-touch and self-service models, our sales cyclecycles hashave and may continue to become longer and more expensiveexpensive, and we may encounterface increased pricingpricing, pressurepackaging and compliancecustomer challenges.segmentation risks.

As we continue to target more of our sales efforts toward larger mid-market and enterprise customers, we expect to face continued heightened costs, longer sales cycles, greater competition and less predictability in completing some of our sales. A large customer’s decision to use our services may require broad consensus within their organization, requiring multiple levels of sign off. Such sales require considerable time for the customer to evaluate and test our platform prior to making a purchasing decision. In addition, we may face stronger competition to attract larger customers, resulting in the need to reduce our pricing or offer more attractive packaging, or offer additional incentives in order to complete a sale. Also, such customers may require greater levels of education regarding the use and benefits of our services, as well as addressing concerns regarding data privacy and security obligations, and international law. As a result of these factors, these sales opportunities may require us to devote greater resources to individual customers, driving up costs and time required to complete sales and diverting our resources to a smaller number of larger transactions. If we fail to effectively manage these risks associated with sales cycles and sales to larger enterprise customers, our business, financial condition, and results of operations may be harmed.

To remain competitive, we must continue to develop new product offerings, as well as features and enhancements to our existing platform and products.products, including those incorporating artificial intelligence. Maintaining adequate research and development personnel and resources to meet the demands of the market is essential. If we experience high employee turnover, lack of management ability or a lack of other research and development resources, we may miss market opportunities. The success of our business is dependent on our research and development teams developing a roadmap that allows us to retain and increase the spending of our existing customers and attract new customers.customers, including by appropriately identifying, prioritizing and executing on opportunities related to artificial intelligence and other emerging technologies. Social media is quickly evolving and we may invest significantly in particular functionality or integrations that may become obsolete in the future. In addition, in the future, new functionality may be required or networks may emerge and gain popularity with social media users, requiring us to quickly develop integrations. Further, many of our competitors may expend a considerably greater amount of funds on their research and development programs, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors’ research and development programs. Our failure to maintain adequate research and development resources, to use our research and development resources efficiently or to compete effectively with the research and development programs of our competitors could materially adversely affect our business.

Our customers rely on our customer support organization to respond to inquiries and resolve issues related to their use of our platform quickly and effectively. Our customer support relies on third-party technology platforms, which may become unavailable or otherwise prevent our customers and customer support team from interacting on a timely basis. Our response times to customers and prospects may be impacted for reasons outside our control, such as changes to social media networks and other third-party APIs, which may interrupt aspects of our service to our customers. From time to time, we experience spikes in the number of customer support tickets that we receive, which may result in an increase in customer requests and significant delays in responding to our customers’ requests. We have historically experienced high customer satisfaction (CSAT) scores. WeHowever, achieved a 13% completion rate for our recent CSAT surveys. As a result, the recentpast scores may not be reflectiveindicative of our broaderfuture customer base,satisfaction, in particular due to the relatively low level of customer participation in satisfaction surveys. We have implemented AI-powered customer support capabilities in certain support channels, which have reduced customer reliance on human support, which have enabled us to scale our support function more efficiently. However, if these AI-powered solutions are not implemented effectively, fail to perform as expected, or are not well received by our customers, our customer satisfaction, business reputation and customeroperating satisfaction and the related scoresresults could decreasebe inadversely the future.affected. Increased customer demand for our support services, or a failure of automation and efficiency initiatives to scale as expected, without corresponding revenue increases, could increase our costs and harm our operating results. As we continue to grow our operations and support our global user base, we need to continue to provide efficient and high-quality support that meets our customers’ needs globally at scale. Our sales process is highly dependent on the ease of use of our platform and products, our business reputation and positive recommendations from our existing customers. Any failure to maintain a high-quality customer support organization, or a market perception that we do not maintain such levels of support, could harm our reputation, our ability to sell to existing and prospective customers and our business.

We use machine learning and AI technologies in our business, and we are making investments in expanding AI capabilities in our products, services and tools, including improving existing and developing new AI technologies. In recent periods, we have materially expanded the use of AI-powered features in our platform to include natural language processing, generative AI, and agentic AI-based capabilities. Over time, such AI capabilities will likely become increasingly integrated into our products. However, AI technologies are complex and rapidly evolving, and we face significant competition from other companies as well as an evolving regulatory landscape. The proliferation of new and emerging AI technologies, such as generative AI,technologies may require additional investment in the development of proprietary datasets and machine learning models, new approaches and processes to provide attribution or remuneration to creators of training data and appropriate protections and safeguards for handling the use of customer data with AI technologies, which may be costly and could impact our expenses if we decide to further expand AI technologies in our product offerings.

The introduction of AI technologies into new or existing products may result in new or enhanced governmental or regulatory scrutiny, confidentiality or security risks, ethical concerns, legal liability or other complications that could adversely affect our business, reputation and financial results. For example, our employees and personnel may use AI technologies to perform their work, and the disclosure and use of personal data in AI technologies is subject to various laws, including data privacy and security laws and AI-specific laws and other privacy obligations. We have implemented policies and approved tools governing employee use of AI technologies; however, we may not be able to fully prevent unauthorized or unintended use of unapproved or third-party AI tools, which could result in the improper use or disclosure of confidential, proprietary or personal data, intellectual property, or other sensitive information. Furthermore, AI technologies incorporated into our product offerings may use algorithms, datasets or training methodologies that may be flawed or contain deficiencies that may be difficult or impossible to proactively detect which, in turn, may suggest content that is factually inaccurate, biased or otherwise flawed. We also use AI to assist us in making certain decisions, which is similarly regulated by certain laws, including data privacy laws. Due to inaccuracies or flaws in the inputs, outputs, or logic of the AI, the model could be biased and could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits. If such AI and machine learning-based outputs are deemed to be biased, we could face adverse consequences, including exposure to reputational and competitive harm, customer loss, and legal liability.

Furthermore, AI is subject to data privacy and security laws, as well as increasing regulation and scrutiny. Several jurisdictions around the globe, including Europe and certain U.S. states, have proposed enacted, or are considering laws governing AI, including the EU’s AI Act.Act, which establishes a comprehensive, risk-based regulatory framework for AI systems and may impose significant compliance, transparency, documentation, governance and oversight obligations, as well as material penalties for non-compliance. We expect other jurisdictions will adopt similar laws. Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI technologies and machine learning. These obligations may make it harder for us to conduct our business using AI technologies and machine learning, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI technologies and machine learning, limit or delay the deployment of certain AI features, or prevent or limit our use of AI technologies and machine learning. For example, the U.S. Federal Trade Commission (“FTC”) has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI technologies and machine learning where they allege the company has violated privacy and consumer protection laws. If we cannot use AI technologies and machine learning or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.

Sprout Social is a powerful, centralized platform that provides the critical business layer to unlock the massive commercial value of social media. We have made it increasingly easy to standardize on Sprout Social as the centralized system of record for social and to help customers maximize the value of this mission critical channel. Currently, approximatelytens 30,000of thousands of customers across more than 100 countries rely on our platform.

Introduced in 2011, our cloud software brings together social messaging, data and workflows in a unified system of record, intelligence and action. Operating across major networks, including X (formerly known as Twitter), Facebook, Instagram, TikTok, Pinterest, LinkedIn, Google, Reddit, Bluesky, Glassdoor and YouTube, and commerce platforms Facebook Shops, Shopify and WooCommerce, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions. Virtually every aspect of business has been impacted by social media, from marketing, sales, commerce and public relations to customer service, product and strategy, creating a need for an entirely new category of software. We offer our customers a centralized, secure and powerful platform to manage this broad, complex channel effectively across their organization.

Our tiered subscription-based model allows our customers to choose among threefour core plans to meet their needs. Each plan is licensed on a per user per month basis at prices dependent on the level of features offered. Additional product modules, which offer increased functionality depending on a customer’s needs, can be purchased by the customer on a per user per month basis.

Macroeconomic and Geopolitical Conditions

As a company with a global footprint, we are subject to risks and exposures caused by significant events and their macroeconomic impacts, including, but not limited to, geopolitical instability and uncertainty, fluctuations in inflationinflation, interest rates and interestcurrency exchange rates, ongoing overseas conflict, volatility in the capital marketsmarkets, tariffs and trade tensions, and related market uncertainty. We continuously monitor the direct and indirect impacts, and the potential for future impacts, of these circumstances on our business and financial results, as well as the overall global economy and geopolitical landscape.

On August 2, 2023, we completed our acquisition of all the outstanding equity of Tagger Media, Inc. (“Tagger”), for a total purchase consideration of $144 million. We acquired Tagger in order to expand into the influencer marketing category. Tagger’s platform enables marketers to discover influencers, plan and manage campaigns, analyze competitor strategies, report on trends and measure return on investment. We funded the purchase consideration with a combination of cash on hand and $75 million borrowed under the Facility (as defined below), which is further described in Note 8 - Revolving Line of Credit of the Notes to the Financial Statements (Part I,II, Item 8 of this Annual Report).

We have included the financial results of Tagger in our consolidated financial statements from the date of acquisition. The impact of Tagger’s financial results following the date of acquisition were not significant to Sprout Social’s consolidated financial statements. Refer to Note 4 - Business Combinations of the Notes to the Financial Statements (Part I,II, Item 8 of this Annual Report) for further discussion.

The Repustate acquisition has increased our power, breadth and automation of social listening, messaging, and customer care capabilities with added sentiment analysis, natural language processing (NLP) and artificial intelligence (AI). We have included the financial results of Repustate in our consolidated financial statements from the date of acquisition. The impact of Repustate’s financial results following the date of acquisition were not significant to Sprout Social’s consolidated financial statements. Refer to Note 4 - Business Combinations of the Notes to the Financial Statements (Part I,II, Item 8 of this Annual Report) for further discussion.

We are focused on continuing to organically grow our customer base by increasing demand for our platform and penetrating our addressable market. We have invested, and expect to continue to invest, heavily in expanding our sales force and marketing efforts to acquire new customers. Currently, we have approximatelytens 30,000of thousands of customers. For the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, while our total number of customers decreased, our number of customers contributing over$30,000 $10,000or more in annualized recurring revenue (“ARR”) and $50,000 or more in ARR increased. In addition, as we continue to focus on expanding our enterprise customer base, we have experienced and expect to continue to experience longer and more expansive average sale cycles and increased pricing pressure, which may be exacerbated by the macroeconomic and geopolitical factors described above. We expect these trends to continue as we remain focused on our most sophisticated prospects and customers.

We believe that there is a substantial opportunity for organic growth within our existing customer base. Customers often begin by purchasing a small number of user subscriptions and then expand over time, increasing the number of users or social profiles, as well as purchasing additional product modules. Customers may then expand use-cases between various departments to drive collaboration across their organizations. Our sales and customer success efforts include encouraging organizations to expand use-cases to more fully realize the value from the broader adoption of our platform throughout an organization. We willintend to continue to invest in enhancing awareness of our brand, creating additional uses for our products and developing more products, features and functionality of existing products, which we believe are vital to achieving increased adoption of our platform. WeIn haverecent a history of attracting new customers andyears, we have recently increased our focus on expanding theirour customers’ use of our platform over time.

Our success is dependent on our ability to sustain product and technology innovation and maintain the competitive advantage of our proprietary technology. We continue to invest resources to enhance the capabilities of our platform by introducing new products, features and functionality of existing products.products, either through acquisition or internal development.

We review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. As previously disclosed, we no longer believe that ARR and total number of customers are key performance indicators of Sprout Social’s business due to our evolving customer mix and we will no longer publicly disclose these metrics.

WhileFor we no longer believe that ARR and total numberpurposes of customers are key performance indicators of Sprout Social’s business, the definitionsbelow of these metrics are necessary for an understanding of how we define number of customers contributing over $10,000 in ARR and number of customers contributing over $50,000 in ARR. For this purpose,metrics, we define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified periodperiod, and we define a customer as a unique account, multiple accounts containing a common non-personal email domain, or multiple accounts governed by a single agreement or entity. Beginning in the third quarter of 2025, the metrics below include NewsWhip customers.

Number of customers contributing $30,000 or more than $10,000 in ARR

We define customers contributing $30,000 or more than $10,000 in ARR as those on a paid subscription plan that had $30,000 or more than $10,000 in ARR as of a period end.

We view the number of customers that contribute $30,000 or more than $10,000 in ARR as a measure of our ability to scale with our customers and attract larger organizations. We believe this represents potential for future growth, including expanding within our current customer base. Over time, larger customers have constituted a greater share of our revenue.

Number of customers contributing $50,000 or more than $50,000 in ARR

We define customers contributing $50,000 or more than $50,000 in ARR as those on a paid subscription plan that had $50,000 or more than $50,000 in ARR as of a period end.

We view the number of customers that contribute $50,000 or more than $50,000 in ARR as a measure of our ability to scale with our largest customers and attract more sophisticated organizations. We believe this represents potential for future growth, including expanding within our current customer base. Over time, our largest customers have constituted a greater share of our revenue.

Cost of revenue primarily consists of expenses related to hosting our platform and providing support to our customers. These expenses are comprised ofcomprise fees paid to data providers, hosted data center costs and personnel costs directly associated with cloud infrastructure, customer success and customer support, including salaries, benefits, bonuses and allocated overhead. These costs also include depreciation expense and amortization expense related to acquired developed technologies that directly benefit sales. Overhead associated with facilities and information technology is allocated to cost of revenue and operating expenses based on headcount. Although we expect our cost of revenue to increase in absolute dollars as our business and revenue grows, we expect our cost of revenueit to decrease as a percentage of our revenue over time.

Cost of professional services primarily consists of expenses related to our professional services organization and are comprised ofcomprise personnel costs, including salaries, benefits, bonuses and allocated overhead.

Sales and marketing expenses primarily consist of personnel costs directly associated with our sales and marketing department, online advertising expenses, as well as allocated overhead, including depreciation expense. Sales force commissions and bonuses are considered incremental costs of obtaining a contract with a customer. Sales commissions are earned and recorded at contract commencement for both new customer contracts and expansion of contracts with existing customers. Sales commissions are deferred and amortized on a straight-line basis over the expected period of benefit, which we have determined to be five years. We plan to increase the dollar amount of our investment in sales and marketing for the foreseeable future,future primarilyas forwe increasedcontinue headcountto forscale ourthe sales department.business.

Interest income (expense), net consists primarily of interest expense related to the credit facilityFacility and is offset by interest income earned on our cash and investment balances.

The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers. CustomersThe number of customers contributing over$30,000 $10,000or more in ARR grew 7%17% versus the prior year and the number of customers contributing over$50,000 $50,000or more in ARR grew 23% versus the prior year. The increase in new customers within the highest tiers was primarily driven by prioritizing our customer success and growth resources towards these customers and continuing to grow our sales force capacity to meet market demand.

Personnel costs increased primarily as a result of an increase in headcount as we continue to expand our sales teams to grow our customer base. Headcount in the sales and marketing organization throughout 2024 was on average 14% higher than 2023. The increase in stock-based compensation expense was primarily due to the increased headcount. The increase in other expense was driven by various marketing events and initiatives. The decrease in sales commission expense was driven by updating the period of benefit from three to five yearsyears, which was accounted for as a change in accounting estimate. See Note 1 - “Nature of Operations and Summary of Significant Accounting Policies” of the Notes to the Financial Statements (Part I,II, Item 8 of this Annual Report) for additional information on the change in accounting estimate.

Personnel costs increased primarily as a result of an increase in headcount as we continue to invest in our finance, legal and other administrative functions to support the company’s growth. Headcount in the general and administrative organizations throughout 2024 was on average 11% higher than 2023. The increase in stock-based compensation expense was primarily driven by equity grants made to the executive team. The increase in the amortization expense of intangible assets was primarily driven by the intangible assets recognized as part of the Tagger acquisition in August 2023. The non-cash gain on lease modification was due to the amendment of our Chicago office lease agreement in November 2024. See Note 6 - “Operating Leases” of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for additional information on the lease amendment. The decrease in acquisition-related costs was driven by costs associated with the Tagger acquisition in August 2023.

The decrease in interest income, net was primarily driven by higher interest expense from the credit facility,Facility, partially offset by lower interest income attributable to a lower balance of marketable securities.

Other than the risk factorfactors set forth below, there have been no material changes from the risk factors disclosed in our Annual Report (under the heading “Risk Factors”) in response to Part 1, Item 1A of the Form 10-K.

Sprout Social is a powerful,centralized centralizedsoftware platform that providesenables the critical business layerorganizations to unlockmanage, theanalyze massiveand commercialact valueon oftheir presence across social media.media Weand haverelated madedigital itchannels. increasinglyCustomers easy to standardize onuse Sprout Social as the centralizeda system of record for social media and to help customersrealize maximize thebusiness value offrom this mission criticalthat channel. Currently, tens of thousands of customers across more than 100 countries rely on our platform.

Introduced in 2011, our cloud software brings together social messaging, data and workflows in a unified system of record, intelligence and action.action, and processes more than two billion social interactions per day. In 2026, we introduced Trellis, our proprietary artificial intelligence (“AI”) agent, which is designed to analyze social media data and generate insights for customers. Operating across major networks, including X (formerly known as Twitter), Facebook, Instagram, TikTok, Snapchat, Pinterest, LinkedIn, Google, Reddit, Glassdoor and YouTube, and commerce platforms Facebook Shops, Shopify and WooCommerce, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions. Virtually every aspect of business has been impacted by social media, from marketing, sales, commerce and public relations to customer service, product and strategy, creating a need for an entirely new category of software. We offer our customers a centralized, secure and powerful platform to manage this broad, complex channel effectively across their organization.

We generate revenue primarily from subscriptions to our social media management platform under a software-as-a-service model. Our subscriptions can range from monthly to one-year or multi-year arrangements and are generally non-cancellable during the contractual subscription term. Subscription revenue is recognized ratably over the contract terms beginning on the date the product is made available to customers, which typically begins on the commencement date of each contract. We also generate revenue from professional services related to our platform provided to certain customers, which is generally recognized at the time these services are provided to the customer. This revenue has historically represented less thanapproximately 1% of our revenue and is expected to be immaterial for the foreseeable future.

We generated revenue of $121.5$123.8 million and $109.3$111.8 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively, representing growth of 11%. We generated revenue of $245.3 million and $221.1 million during the six months ended June 30, 2026 and 2025, respectively, representing growth of 11%. In the threesix months ended MarchJune 31,30, 2026, software subscriptions contributed 99% of our revenue.

We generated net losses of $6.3$3.1 million and $11.2$12.0 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively, which included stock-based compensation expense of $18.1$15.9 million and $19.8$20.2 million, respectively. We expect to continue investing in the growth of our business and, as a result, generategenerated net losses forof $9.4 million and $23.2 million during the foreseeablesix future.months ended June 30, 2026 and 2025, respectively, which included stock-based compensation expense of $34.0 million and $40.0 million, respectively.

The purchase price allocation as of the date of acquisition was basedfinalized on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information aboutin the fairsecond valuequarter of assets acquired and liabilities assumed become available. We expect to finalize the allocation of the purchase consideration as soon as practicable, pending any other adjustments to acquired assets or liabilities, but no later than 12 months from the acquisition date.2026. We have included the financial results of NewsWhip in our unaudited condensed consolidated financial statements from the date of acquisition. The impact of NewsWhip’s financial results following the date of acquisition were not significant to our consolidated financial statements.

We are focused on continuing to organically grow our customer base by increasing demand for our platform and penetrating our addressable market. Our growth strategy includes an increased focus on the larger enterprise market. For the threesix months ended MarchJune 31,30, 2026, as compared to the threesix months ended MarchJune 31,30, 2025, while our total number of customers decreased, our number of customers contributing $30,000 or more in annualized recurring revenue (“ARR”) and $50,000 or more in ARR increased. In addition, as we continue to focus on expanding our enterprise customer base, we have experienced and expect to continue to experience longer and more expansive average sale cycles and increased pricing pressure, which may be exacerbated by the macroeconomic and geopolitical factors described above. We expect these trends to continue as we remain focused on our most sophisticated prospects and customers.

We see international expansion as a meaningful opportunity to grow our platform. Revenue generated from non-U.S. customers during the threesix months ended MarchJune 31,30, 2026 was approximately 26% of our total revenue. We have teams in Ireland, Canada, the United Kingdom, Singapore, Australia, the Philippines and Poland to support our growth internationally. We believe global demand for our platform and offerings will continue to increase as awareness of our platform in international markets grows. We will continue supporting our international operations and will evaluate opportunities to invest in local sales, customer support and customer success resources in select markets as appropriate.

We sell professional services consisting of, but not limited to, implementation fees, specialized training, one-time reporting services and recurring periodic reporting services. Professional services revenue is generally recognized at the time these services are provided to the customer. This revenue has historically represented less thanapproximately 1% of our revenue and is expected to be immaterial for the foreseeable future.

Cost of revenue primarily consists of expenses related to hosting our platform and providing support to our customers. These expenses comprise fees paid to data providers, hosted data center costs and personnel costs directly associated with cloud infrastructure, customer success and customer support, including salaries, benefits, bonuses and allocated overhead. These costs also include depreciation expense and amortization expense related to acquired developed technologies that directly benefit sales. Overhead associated with facilities and information technology is allocated to cost of revenue and operating expenses based on headcount. Although we expect our cost of revenue to increase in absolute dollars as our business and revenue grows, we expect it to decreaseremain stable as a percentage of our revenue over time.

Research and development expenses primarily consist of personnel costs, including salaries, benefits and allocated overhead. Research and development expenses also include depreciation expense and other expenses associated with product development. We planexpect to increasecontinue the dollar amount of our investmentinvesting in research and development for the foreseeable future as we focus on developing new features and enhancements to our plan offerings. Due to the recent reduction in our workforce, we expect the dollar amount of our research and development costs to remain relatively flat or decrease in the near term, excluding one-time items. We expect our research and development expenses to decrease as a percentage of revenue over time. Refer to Note 12 of the Notes to the Financial Statements (Part I, Item 1 of this Quarterly Report) for further discussion of the Plan.

Sales and marketing expenses primarily consist of personnel costs directly associated with our sales and marketing department, online advertising expenses, as well as allocated overhead, including depreciation expense. Sales force commissions and bonuses are considered incremental costs of obtaining a contract with a customer. Sales commissions are earned and recorded at contract commencement for both new customer contracts and expansion of contracts with existing customers. Sales commissions are deferred and amortized on a straight-line basis over the expected period of benefit, which we have determined to be five years. We expect that our sales and marketing expenses will decrease as a percentage of total revenue over time as we continue to scale our business and drive operating efficiencies.

General and administrative expenses primarily consist of personnel expenses associated with our finance, legal, human resources and other administrative employees. Our general and administrative expenses also include professional fees for external legal, accounting and other consulting services, amortization of intangible assets, depreciation and amortization expense, as well as allocated overhead. We expect thatthe dollar amount of our general and administrative expenses willto remain relatively flat in the near term, and to decrease as a percentage of revenue over time as we benefit from greater operational scale and efficiency.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

The increase in cost of subscription revenue for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to the following:

Fees paid to our data providers increased due to higher costs of third-party data utilized in our platform. Hosting fees increased due to additional costs associated with the expansion of our highest tier customers and increased utilization of computing and storage needs. The increase in personnel costs was partially driven by additional headcount resulting from the NewsWhip acquisition in July 2025. The increase in the amortization expense of intangible assets was driven by the acquired developed technology recognized as part of the NewsWhip acquisition. Refer to Note 11 of the Notes to the Financial Statements (Part I, Item 1 of this Quarterly Report) for further discussion. In February 2025, we initiated a restructuring plan with the primary focus on our Sales and Customer Experience teams, which resulted in restructuring costs during the three months ended March 31, 2025.

The increase in research and development expense for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to the following:

Personnel costs increased primarily as a result of an increase in headcount as we continued to grow our research and development teams to drive our technology innovation through the development and maintenance of our platform. Headcount in the research and development organization increased 17%18% compared to the same period in the prior year. The decrease in stock-based compensation expense was driven by equity award forfeitures and lower grant values.

The increasedecrease in sales and marketing expense for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to the following:

The decrease in general and administrative expense for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 was primarily due to the following:

The decrease in stock-based compensation expense was driven by equity award forfeitures and lower grant values. The loss on lease termination was incurred in April 2025 following an amendment to our Chicago office lease agreement, which resulted in the early termination of one floor of the leased space. Changes in fair value of contingent consideration were driven by revised revenue estimates utilized in estimating the NewsWhip earnout liability. Refer to Note 10 of the Notes to the Financial Statements (Part I, Item 1 of this Quarterly Report) for further discussion. TheRestructuring decreaseand related costs consist of preliminary expenses incurred in amortization of leasehold improvements was driven by a decrease in leasehold improvements subject to amortization, resulting from the April 2025 early termination of one flooranticipation of the Company’sPlan. leased office space in Chicago. Personnel costs increased as we continuedRefer to investNote in12 ourof finance,the legal and other administrative functionsNotes to support the Company’sFinancial growth.Statements (Part I, Item 1 of this Quarterly Report) for further discussion. The increase in the amortization expense of intangible assets was primarily driven by the intangible assets recognized as part of the NewsWhip acquisition. The decrease in other was partially driven by lower overhead costs and other expenses due to the April 2025 early partial lease termination.

The decrease in interest income, net was driven by higher interest expense as a result of a higher balance on the Facility as compared to the same period in 2025, and lower interest income attributable to maturity of the remaining marketable securities in the second quarter of 2025.

The change in income tax expense was partly driven by a tax benefit related to deferred tax liabilities associated with the NewsWhip acquisition, partially offset by an increase in state income tax expense.

In addition to our results determined in accordance with U.S. generally accepted accounting principles,principles or GAAP,(“GAAP”), we believe the following non-GAAP measures are useful in evaluating our operating performance. We use the below non-GAAP financial information, collectively, to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance by excluding certain items that may not be indicative of our business, operating results or future outlook.

We define non-GAAP gross profit as GAAP gross profit, excluding stock-based compensation expense, amortization expense associated with the acquired developed technology from the Tagger Media, Inc. (“Tagger”) and NewsWhip acquisitions, and restructuring and related charges. We believe non-GAAP gross profit provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, amortization expense and restructuring and related charges, which are often unrelated to overall operating performance.

We define non-GAAP operating income as GAAP loss from operations, excluding stock-based compensation expense, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring chargesand related charges, non-cash losses from lease terminations, acquisition-related expenses and changes in the fair value of contingent consideration. We believe non-GAAP operating income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, amortization expense, restructuring chargesand related charges, non-cash losses from lease terminations, acquisition-related expenses and changes in the fair value of contingent consideration, which are often unrelated to overall operating performance.

We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring chargesand related charges, non-cash losses from lease terminations, acquisition-related expenses and changes in the fair value of contingent consideration. We believe non-GAAP net income provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, amortization expense, restructuring chargesand related charges, non-cash losses from lease terminations, acquisition-related expenses and changes in the fair value of contingent consideration, which are often unrelated to overall operating performance.

We define non-GAAP net income per share as GAAP net loss per share attributable to common shareholders, basic and diluted, excluding stock-based compensation expense, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring chargesand related charges, non-cash losses from lease terminations, acquisition-related expenses and changes in the fair value of contingent consideration. We believe non-GAAP net income per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, amortization expense, restructuring chargesand related charges, non-cash losses from lease terminations, acquisition-related expenses and changes in the fair value of contingent consideration, which are often unrelated to overall operating performance.

As of MarchJune 31,30, 2026, our principal sources of liquidity were cash and cash equivalents of $111.6$119.9 million and net accounts receivable of $69.4$78.1 million. Historically, we have generated losses from operations as evidenced by our accumulated deficit. However, we have generated positive cash flows from operations for the last five fiscal years, from 2021 to 2025. For the threesix months ended MarchJune 31,30, 2026 and 2025, we also generated positive cash flows from operations. We expect to continue to incur operating losses for the foreseeable future as we continue to grow the business. We may experience greater than anticipated operating losses in the short- and long-term due to macroeconomic, financial, geopolitical and other factors that are beyond our control. The impact of these factors on our customers and our operations going forward remains uncertain, and we continue to proactively monitor our liquidity position.

We believe our existing cash and cash equivalents will be sufficient to meet our operating and capital needs for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash and investment balances and potential future equity or debt transactions. Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the impact of macroeconomic and geopolitical conditions on our customers and our operations, the timing and extent of spending to support our research and development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product offerings, and the continuing market acceptance of our product.product, and the successful implementation of cost reduction measures (such as the Plan). We have in the past, and may in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies, including intellectual property rights. We may be required to seek additional equity or debt financing. In the event that additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us, or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations, our business, results of operations and financial condition could be adversely affected.