Sprout Social tops quarterly estimates, raises profit forecast and plans 20% workforce cut

Sprout Social reported second-quarter 2026 results above Wall Street expectations and sharply raised its full-year profit outlook as it unveiled a restructuring plan that includes cutting about 20% of its workforce. Revenue rose 10.8% from a year earlier to $123.8 million, topping the $122.2 million analyst consensus compiled by Zacks, while adjusted earnings per share of $0.26 exceeded the $0.16 expected. On an unadjusted basis, the company posted a net loss of $3.1 million, or $0.05 per share. Chief Executive Officer Ryan Barretto said improved operating discipline and stronger performance among higher-value accounts supported the quarter. Non-GAAP operating margin widened 370 basis points to 12.9%, non-GAAP free cash flow increased about 60% to $8.3 million, and current remaining performance obligations rose 12.4% to $202.7 million. Total RPO climbed 15.5% to $400.8 million. The company said its strategy is increasingly centered on customers generating at least $30,000 in annual recurring revenue. Trailing 12-month subscription revenue from that group grew 20% and accounted for more than 61% of subscription revenue, while the number of customers in that cohort rose 11% to 3,926. Sprout said smaller accounts remain under pressure and does not expect the sub-$30,000 ARR segment to stabilize until 2027. Sprout expects the job cuts to produce annualized non-GAAP cost savings of at least $50 million, despite pre-tax restructuring charges of $18 million to $20 million, mostly in the third quarter. It raised full-year adjusted earnings guidance to $1.11 to $1.15 per share and nudged revenue guidance to $493 million to $495.6 million. The company is also pushing further into AI through its Trellis platform, saying paid adoption and retention trends have been encouraging.