Core Insights - Meridian Growth Fund's third-quarter 2025 performance was impacted by sector positioning and adherence to strict investment discipline, resulting in a return of -1.78% compared to the Russell 2500 Growth Index's 10.73% return [1] Company Analysis - Sprout Social, Inc. (NASDAQ:SPT) reported a one-month return of -4.04% and a significant 68.30% decline in value over the past 52 weeks, closing at $9.97 per share with a market capitalization of $590.118 million as of November 28, 2025 [2] - The company provides a leading social media management platform recognized for its intuitive design and ease of deployment, which contributes to its competitive advantage [3] - Despite exceeding expectations in results, Sprout Social's stock underperformed due to a reduction in forward guidance, overshadowing solid execution in a market that favors "beat and raise" patterns [3] - Meridian Growth Fund views the recent pullback in Sprout Social's stock price as excessive, citing its durable double-digit growth trajectory and expanding margin profile as reasons for a modest increase in their position during the period [3] Financial Performance - In the third quarter of 2025, Sprout Social, Inc. reported revenue of $115.6 million, reflecting a 13% year-over-year growth [4] - The number of hedge funds holding Sprout Social, Inc. increased from 29 to 34 in the third quarter, indicating growing interest among institutional investors [4]

Group 1 - The event "Breaking Ground" is a quarterly launch event focused on social media, strategy sharing, and updates on the Sprout platform [1] - The highlight of this event is the introduction of a significant product innovation related to a social-powered AI engine [1] Group 2 - Attendees are encouraged to engage in a live chat discussing tasks they wish AI could handle, indicating a strong interest in AI's potential to simplify everyday chores [2][3] - Common themes in the chat include cleaning tasks, such as laundry and yard work, showcasing a desire for AI solutions in household management [3][4]

Summary of Sprout Social Update / Briefing (November 18, 2025) Company Overview - **Company**: Sprout Social (NasdaqCM:SPT) - **Event**: Breaking Ground, a quarterly launch event focusing on social media and AI innovations Key Industry Insights - **Social Media Evolution**: The customer journey has shifted to social media, with social search becoming the new SEO and social content acting as the new marketing site map [6][8] - **Data Volume**: 5.4 billion people share hundreds of billions of messages daily, generating tens of petabytes of data on social networks [6] - **Customer Engagement**: 55% of users feel brands are not adequately responding to their interactions on social media, indicating a gap in customer engagement [8] Core Product Innovations - **AI Integration**: Sprout has been investing in AI for over a decade, with over 40 custom AI models in use, enabling features like optimal send times and sentiment analysis [14][15] - **Agentic AI**: Introduction of agentic AI, which can reason and take actions based on social data, enhancing workflows and decision-making processes [10][12] - **Trellis**: A new AI agent designed to facilitate social intelligence across organizations, allowing users to interact conversationally with social data for insights [16][20] Product Features and Enhancements - **Trellis Capabilities**: Users can perform tasks like trend analysis and campaign performance reporting through a conversational interface, significantly reducing the time spent on data analysis [16][19] - **Spam Detection**: New AI model for spam detection that categorizes and auto-completes spam messages, improving team efficiency [28] - **Influencer Marketing**: Enhanced capabilities for influencer matchmaking, including brand fit and safety scores, and upcoming features for analyzing video content [30] Upcoming Features - **Integration with ChatGPT**: Launch of a remote MCP server to connect Sprout with ChatGPT, allowing for deeper content analysis and performance comparisons [24][27] - **New Social Listening Sources**: Introduction of Blue Sky for comprehensive insights and monitoring capabilities across various social networks [39] Customer Engagement and Feedback - **Customer Participation**: Early access to Trellis for qualifying social listening customers, with plans for broader rollout [20] - **User Experience**: Positive feedback from customers on the ease of use and efficiency improvements brought by Trellis [52] Panel Discussion Highlights - **AI in Workflows**: Discussion on the transition from AI as an assistant to AI as a coworker, emphasizing the importance of personalized AI applications [48][56] - **Human Element**: Acknowledgment that while AI enhances efficiency, the human aspect of content creation and customer engagement remains crucial [60] Conclusion - **Future Vision**: Sprout Social aims to leverage AI to unlock social intelligence for businesses, enhancing customer engagement and operational efficiency at an unprecedented scale [31]

Core Insights - Sprout Social has launched Sprout AI, featuring a new proprietary AI Agent named Trellis, aimed at transforming social media data into actionable business insights [1][6] - The introduction of Sprout AI represents a significant shift in how organizations can access and utilize social intelligence, enabling faster and more effective responses to market dynamics [2][6] Company Overview - Sprout Social is a leading provider of social media management and analytics software, serving approximately 30,000 brands globally [6][8] - The company emphasizes that its platform is designed to empower businesses to leverage social data for smarter and faster decision-making [6] Product Features - Trellis, the AI Agent, allows users to query billions of social data points for insights related to market research, competitive analysis, and customer feedback [7] - The AI capabilities include proactive risk management by monitoring sentiment and emerging complaints, enabling early crisis detection [7] - Sprout AI enhances routine workflows, allowing teams to focus on strategic initiatives while showcasing the ROI of social media efforts [7] - Features like Optimal Send Times and AI-generated content aim to maximize engagement and reach for social media campaigns [7] Strategic Partnerships - Sprout AI includes secure connections with leading AI providers, starting with ChatGPT, facilitating the integration of social data into daily AI workflows [4][6]

Core Insights - The Q3 earnings season is causing concern among investors due to high valuations and declining consumer sentiment [1] - Gary Alexander has extensive experience in technology sectors, influencing his insights on current industry trends [1] Group 1: Market Conditions - Valuations are at all-time highs, which is a significant concern for investors as they navigate the upcoming earnings season [1] - Consumer sentiment is sliding, and spending data is weak, indicating potential challenges for companies [1] Group 2: Analyst Background - Gary Alexander has a combined experience of covering technology companies on Wall Street and working in Silicon Valley [1] - He has been a contributor to Seeking Alpha since 2017 and has been quoted in various web publications [1]

Core Insights - The Q3 earnings season is causing concern among investors due to high valuations and declining consumer sentiment [1] - Despite challenges, there is significant industry expertise from analysts with backgrounds in technology and startup advisory roles [1] Group 1: Market Conditions - Valuations are at all-time highs, which is a point of concern for investors [1] - Consumer sentiment is sliding, and spending data is weak, indicating potential economic challenges ahead [1] Group 2: Analyst Expertise - Gary Alexander has extensive experience covering technology companies and advising startups, providing valuable insights into current industry themes [1] - His contributions to platforms like Seeking Alpha and popular trading apps highlight his influence and reach within the investment community [1]

Financial Performance - Total revenue for Q3 2025 was $115.593 million, a 12.5% increase from $102.638 million in Q3 2024[19] - Subscription revenue reached $114.720 million, up from $101.813 million year-over-year, representing a 12.7% growth[19] - Gross profit for Q3 2025 was $89.809 million, compared to $79.406 million in Q3 2024, reflecting a 13.0% increase[19] - Net loss for Q3 2025 was $9.381 million, an improvement from a net loss of $17.087 million in Q3 2024[21] - Operating expenses totaled $98.920 million in Q3 2025, slightly up from $96.285 million in Q3 2024[19] - Revenue recognized during the three months ended September 30, 2025, from deferred revenue at the beginning of the period was $81.2 million, compared to $70.1 million for the same period in 2024[46] - Revenue for the three months ended September 30, 2025, was $115,593,000, representing an increase from $102,638,000 in the same period of 2024, a growth of approximately 12.5%[79] - The net loss attributable to common shareholders for the three months ended September 30, 2025, was $(9,381,000), compared to $(17,087,000) for the same period in 2024, indicating a reduction in losses[81] - Basic and diluted net loss per share for the three months ended September 30, 2025, was $(0.16), an improvement from $(0.30) in the same period of 2024[81] Assets and Equity - Cash and cash equivalents increased to $90.639 million as of September 30, 2025, from $86.437 million at the end of 2024[14] - Total assets grew to $481.396 million as of September 30, 2025, compared to $428.341 million at December 31, 2024[14] - The total stockholders' equity rose to $194.126 million as of September 30, 2025, up from $166.594 million at the end of 2024[16] - The total stockholders' equity increased to $194,126 thousand as of September 30, 2025, up from $158,086 thousand at the same date in 2024, representing a growth of about 22.8%[25] Cash Flow and Operating Activities - Cash provided by operating activities for the nine months ended September 30, 2025, was $32,492 thousand, compared to $22,179 thousand for the same period in 2024, indicating a year-over-year increase of approximately 46.5%[27] - The total cash, cash equivalents, and restricted cash at the end of the period was $92,572 thousand, compared to $86,855 thousand at the end of September 2024, marking an increase of approximately 6.5%[27] - Cash payments related to operating leases for the nine months ended September 30, 2025, were $4.7 million, down from $6.2 million in the same period in 2024[51] Acquisitions and Goodwill - The company incurred $50,333 thousand in payments for business acquisitions during the nine months ended September 30, 2025[27] - The acquisition of NewsWhip was completed on July 30, 2025, for a total purchase consideration of $63.978 million, which includes an upfront cash payment of $52.3 million and contingent consideration valued at $8.5 million[91][92][97] - Goodwill increased significantly to $166.972 million from $121.315 million, indicating potential acquisitions or market expansion[14] - Goodwill resulting from the acquisition of NewsWhip amounted to $45.657 million, increasing the total goodwill balance to $166.972 million as of September 30, 2025[95][104] - The company acquired net operating loss carryforwards of approximately $31.8 million from NewsWhip, with a full valuation allowance recorded on the related deferred tax asset[101] Legal and Regulatory Matters - The company is currently facing multiple legal actions related to alleged securities fraud, which could have material impacts on its financial position[75] - The company has recorded a full valuation allowance on its deferred tax assets related to domestic operations due to historical operating losses[55] Future Expectations - As of September 30, 2025, the company expects to recognize $357.1 million in revenue from remaining performance obligations, with 72% expected to be recognized in the next 12 months[47] Stock and Shares - The company reported a weighted-average share count of 58,930,087 for Q3 2025, compared to 57,179,710 in Q3 2024[19] - The total number of shares outstanding increased from 57,398,808 shares as of September 30, 2024, to 59,175,178 shares as of September 30, 2025[25] - The weighted average common shares outstanding for the three months ended September 30, 2025, was 58,930,087, compared to 57,179,710 for the same period in 2024[81] Contingent Consideration - The company has a contingent consideration liability of $8,450,000 related to the acquisition of NewsWhip Group Holdings Limited, based on future performance metrics[86] - The fair value of contingent consideration in connection with business acquisition was reported at $8,450 thousand as of September 30, 2025[28] - The fair value of the contingent consideration was determined using a scenario-based approach, classified as Level 3 within the fair value hierarchy[100] - The fair value of the acquired intangible assets was estimated at $24.85 million, with significant components including customer relationships valued at $15.2 million and acquired technology at $8.4 million[101] Other Financial Metrics - The company recorded $2.7 million in restructuring charges for the nine months ended September 30, 2025, with cash payments totaling $2.9 million related to these plans[38] - Stock-based compensation expense for the nine months ended September 30, 2025, was $58,990 thousand, slightly lower than $61,850 thousand for the same period in 2024[27] - Total stock-based compensation for the nine months ended September 30, 2025, was $58.99 million, compared to $61.85 million for the same period in 2024[62] - The company recognized $4,622 thousand in amortization of acquired intangible assets for the nine months ended September 30, 2025, compared to $4,677 thousand for the same period in 2024[27] - Amortization of intangible assets for the nine months ended September 30, 2025, totaled $4.6 million, with expected future amortization expenses outlined for the next several years[105]

Group 1 - The article does not provide any relevant content regarding company or industry insights [1]

Core Insights - Sprout Social (SPT) reported quarterly earnings of $0.23 per share, exceeding the Zacks Consensus Estimate of $0.16 per share, and up from $0.13 per share a year ago, representing an earnings surprise of +43.75% [1] - The company achieved revenues of $115.59 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.68% and increasing from $102.64 million year-over-year [2] - Sprout Social has consistently surpassed consensus EPS estimates over the last four quarters [2] Financial Performance - The earnings surprise of +43.75% indicates strong performance relative to expectations [1] - The company has shown a consistent trend of exceeding revenue estimates, achieving this four times in the last four quarters [2] - Current consensus EPS estimate for the upcoming quarter is $0.19, with expected revenues of $118.75 million, and for the current fiscal year, the estimate is $0.74 on revenues of $454.61 million [7] Market Position - Sprout Social shares have declined approximately 66.8% since the beginning of the year, contrasting with the S&P 500's gain of 15.1% [3] - The Zacks Industry Rank places the Internet - Services sector in the top 38% of over 250 Zacks industries, indicating a favorable industry outlook [8] Future Outlook - The sustainability of the stock's price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The estimate revisions trend prior to the earnings release was mixed, resulting in a Zacks Rank 3 (Hold) for the stock, suggesting it is expected to perform in line with the market [6]

Core Insights - Sprout Social reported strong Q3 2025 earnings with revenue of $115.6 million, reflecting a 13% year-over-year growth and a record non-GAAP operating margin of 11.9% [1][29] - The company experienced a 17% year-over-year growth in remaining performance obligations (RPO), totaling $258.5 million, indicating robust demand and customer commitment [1][30] - The integration of NewsWhip has significantly enhanced Sprout's customer base and product offerings, contributing to a strong pipeline and large deal momentum [4][17] Financial Performance - Total revenue for Q3 was $115.6 million, with subscription revenue at $114.7 million, both up 13% year-over-year [29] - Non-GAAP operating income reached $13.7 million, up from $7.5 million a year ago, marking a non-GAAP operating margin increase of nearly 460 basis points [29][30] - Free cash flow for the quarter was $10.3 million, with a trailing twelve-month free cash flow increase of over 80% [28][29] Customer Growth and Retention - The number of customers contributing over $50,000 in annual recurring revenue (ARR) grew by 21% year-over-year, indicating strong enterprise demand [29] - Multiyear contracts now represent nearly half of Sprout's contract mix, showcasing improved gross retention across customer segments [1][5] - The $50,000+ ARR customer segment is the fastest-growing, approaching 2,000 customers, and now accounts for nearly half of the company's revenue [5][30] Product Development and AI Strategy - Sprout is set to roll out significant AI product expansions in Q4, which are expected to enhance customer value and operational efficiency [7][12] - The company is focusing on integrating social insights into existing tools and platforms, enhancing decision-making capabilities for customers [14][19] - New product features include AI-powered translation for 180 languages and integrations with Canva and Adobe Express, aimed at improving content creation and sharing [19][20] Market Position and Competitive Advantage - Sprout's unique access to social data and partnerships positions it favorably in the evolving AI landscape, allowing for responsible data interpretation and operationalization [10][11] - The company emphasizes its role as a trusted system connecting brands and customers, which is increasingly important as AI reshapes software [15][27] - Sprout's strategy includes deepening customer engagement and expanding partnerships to enhance its ecosystem and drive growth [25][27]