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What changed in Sprout Social, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Sprout Social, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+491 added−452 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-26)

Top changes in Sprout Social, Inc.'s 2025 10-K

491 paragraphs added · 452 removed · 372 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

85 edited+31 added−23 removed105 unchanged
Biggest changeWe plan to accomplish this through a product roadmap that is increasingly focused on the requirements of Enterprise customers and within our go-to-market strategy, by driving more awareness with senior executives. We intend to release more features that will allow us to continue to meet the evolving needs of the largest enterprises and drive larger ACV transactions.
Biggest changeWe believe there is substantial opportunity to drive increased pipeline and strategic customer wins in accounts contributing $50,000 or more in annualized recurring revenue (ARR). We plan to accomplish this through a product roadmap that is increasingly focused on the requirements of Enterprise customers and within our go-to-market strategy, by driving more awareness with senior executives.
Additionally, our platform is built to seamlessly integrate social throughout our customers' existing operations. Whether streamlining social workflows, optimizing customer experiences, or enhancing business decision-making, our integrations empower teams to drive measurable results and maximize ROI. By enabling customers to embed social where they need it the most, we help them achieve their strategic objectives and accelerate success.
Additionally, our platform is built to seamlessly integrate social throughout our customers' existing operations. Whether streamlining social workflows, optimizing customer experiences, or enhancing business decision-making, our integrations empower teams to drive measurable results and maximize 10 ROI. By enabling customers to embed social where they need it the most, we help them achieve their strategic objectives and accelerate success.
In general, our customer terms of service state that customers agree not to, nor 21 authorize or permit any third parties to use our products to post, upload, link to, send, distribute, or store any content that is protected by copyright, trademark, or any other proprietary right without first having obtained all rights, permissions, and consents necessary to make such content available on or through our products.
In general, our customer terms of service state that customers agree not to, nor authorize or permit any third parties to use our products to post, upload, link to, send, distribute, or store any content that is protected by copyright, trademark, or any other proprietary right without first having obtained all rights, permissions, and consents necessary to make such content available on or through our products.
We have cultivated strong, strategic relationships with leading social networks—including Facebook, Instagram, Threads, X (formerly Twitter), Pinterest, LinkedIn, YouTube, Reddit, Tumblr and TikTok. These premier partnerships provide access to the most reliable social data and first-in-line API updates, empowering our customers to make informed, confident decisions that drive sustained growth and innovation.
We have cultivated strong, strategic relationships with leading social networks—including Facebook, Instagram, Threads, X (formerly Twitter), Pinterest, LinkedIn, YouTube, Reddit, Tumblr, Bluesky and TikTok. These premier partnerships provide access to the most reliable social data and first-in-line API updates, empowering our customers to make informed, confident decisions that drive sustained growth and innovation.
Thanks to Sprout Social’s proprietary algorithms that easily compare organic and paid reporting, teams can trust their insights are spot-on – essential for igniting adoption for shaping business strategies quickly. • Comprehensive social media reporting . Our customers can measure and analyze their performance across all major social networks through rich experiences designed to extract actionable insights from data.
Thanks to Sprout Social’s proprietary algorithms that easily compare 15 organic and paid reporting, teams can trust their insights are spot-on – essential for igniting adoption for shaping business strategies quickly. • Comprehensive social media reporting . Our customers can measure and analyze their performance across all major social networks through rich experiences designed to extract actionable insights from data.
For enterprise customers and organizations with large-scale social media operations, we offer managed trials that provide personalized support to help them realize the full value of the platform. These 17 enterprises receive white-glove onboarding, a customized implementation plan, dedicated assistance for single sign-on (SSO) setup, and priority customer support.
For enterprise customers and organizations with large-scale social media operations, we offer managed trials that provide personalized support to help them realize the full value of the platform. These enterprises receive white-glove onboarding, a customized implementation plan, dedicated assistance for single sign-on (SSO) setup, and priority customer support.
A failure to solve the challenges posed by the shift to social communication would mean disconnecting from large and growing demographics and losing 8 out on market share and business growth. Organizations seeking to engage and connect with their audience without utilizing social tools and strategies are at a severe disadvantage. • The stakes are incredibly high for brands .
A failure to solve the challenges posed by the shift to social communication would mean disconnecting from large and growing demographics and losing out on market share and business growth. Organizations seeking to engage and connect with their audience without utilizing social tools and strategies are at a severe disadvantage. • The stakes are incredibly high for brands .
We seek to protect our trade secrets and confidential information through a variety of methods, including confidentiality agreements with employees and third parties who may have access to our proprietary information. We also require most employees to sign agreements, pursuant to which such they assign to us any inventions, developments and other technology generated by them on our behalf.
We seek to protect our trade secrets and confidential information through a variety of methods, including confidentiality agreements with employees and third parties who may have access to our proprietary information. We also require most employees to sign agreements, pursuant to which they assign to us any inventions, developments and other technology generated by them on our behalf.
We consider the competitive differentiators in our market to be: • Growth from social : How well the platform helps customers grow their brand or business through social. • Speed of adoption : How quickly users can get started and feel comfortable using the platform. • Human-centric AI and automation : How well the platform uses AI and automation to make tasks easier for teams. 19 • Customer support: The level of partnership and support the vendor provides to help customers succeed. • Comprehensive solution : Whether the platform provides everything teams need to successfully drive ROI from social. • Scalability : How easily the platform can grow with your business as it gets bigger. • Ease of use, security and reliability: How intuitive the platform is, how secure data is, and how reliable the platform is day-to-day. • Cost and deployment: How effortless it is to set up and run the platform, in a way that delivers financial ROI.
We consider the competitive differentiators in our market to be: • Growth from social : How well the platform helps customers grow their brand or business through social. • Speed of adoption : How quickly users can get started and feel comfortable using the platform. 20 • Human-centric AI and automation : How well the platform uses AI and automation to make tasks easier for teams. • Customer support: The level of partnership and support the vendor provides to help customers succeed. • Comprehensive solution : Whether the platform provides everything teams need to successfully drive ROI from social. • Scalability : How easily the platform can grow with your business as it gets bigger. • Ease of use, security and reliability: How intuitive the platform is, how secure data is, and how reliable the platform is day-to-day. • Cost and deployment: How effortless it is to set up and run the platform, in a way that delivers financial ROI.
The integration with Sprout Social's platform provides social teams with the tools that allow them to streamline operations and assess performance through actionable data. 15 Built for quick adoption, the Employee Advocacy solution is designed to support businesses in unlocking new opportunities, accelerating growth, and scaling success in the fast-moving digital landscape.
The integration with Sprout Social's platform provides social teams with the tools that allow them to streamline operations and assess performance through actionable data. Built for quick adoption, the Employee Advocacy solution is designed to support businesses in unlocking new opportunities, accelerating growth, and scaling success in the fast-moving digital landscape.
However, we expect that our current and future growth will likely be driven by outsized contributions from Mid-market and Enterprise. We estimate that less than 5% of businesses have adopted social media management software, providing a large, nascent opportunity to drive significantly increased market adoption of our solution.
However, we expect that our current and future growth will likely be driven by outsized contributions from Mid-market and Enterprise customers. We estimate that less than 5% of businesses have adopted social media management software, providing a large, nascent opportunity to drive significantly increased market adoption of our solution.
For example, we sometimes cannot be certain which laws will be deemed applicable to us given the global nature of our business, including with respect to such topics as data privacy and security, pricing, 20 credit card fraud, advertising, taxation, content regulation and intellectual property ownership and infringement.
For example, we sometimes cannot be certain which laws will be deemed applicable to us given the global nature of our business, including with respect to such topics as data privacy and security, pricing, credit card fraud, advertising, taxation, content regulation and intellectual property ownership and infringement.
Leveraging advanced AI and automation, Sprout Social processes over 1 billion messages daily, enabling customers to access critical insights and drive impactful results from day one. The platform is designed for ease of use, requiring no specialized certifications or expertise in Boolean queries.
Leveraging advanced AI and automation, Sprout Social processes over 1 billion messages daily, enabling customers to access critical insights and drive impactful results from day one. The platform is designed for ease of use, requiring no specialized 11 certifications or expertise in Boolean queries.
When we live our values, we strengthen our culture and move Sprout Social forward, together. 24 Our Website and Availability of SEC Reports and Other Information We maintain a website at the following address: www.sproutsocial.com . The information on our website or our social media profiles is not incorporated by reference in this Annual Report.
When we live our values, we strengthen our culture and move Sprout Social forward, together. Our Website and Availability of SEC Reports and Other Information We maintain a website at the following address: www.sproutsocial.com . The information on our website or our social media profiles is not incorporated by reference in this Annual Report.
With more than ten years of collecting social data and trends across industries and networks and more than 15 years in sentiment and textual analysis powered by natural language processing (NLP), we 12 believe we can uniquely build models that provide precise outputs tailored to our customers’ social media needs.
With more than ten years of collecting social data and trends across industries and networks and more than 15 years in sentiment and textual analysis powered by natural language processing (NLP), we believe we can uniquely build models that provide precise outputs tailored to our customers’ social media needs.
Social media is an invaluable layer that is embedded in the digital technology stack: • Consumer influence has expanded . The ubiquity and ease of social media has enabled a new, public form of casual opinion, observation, endorsement or criticism. Social media has 7 given consumers a powerful, public voice that can reward or penalize organizations.
Social media is an invaluable layer that is embedded in the digital technology stack: • Consumer influence has expanded . The ubiquity and ease of social media has enabled a new, public form of casual opinion, observation, endorsement or criticism. Social media has given consumers a powerful, public voice that can reward or penalize organizations.
Additionally, customers receive exclusive access to The Arboretum, a dynamic 11 community of over 10,000 members, where they receive ongoing support and social expertise needed to drive impact. • Our social media network partner relationships are strong. Sprout Social has established strong relationships with all the leading social media platforms.
Additionally, customers receive exclusive access to The Arboretum, a dynamic community of over 10,000 members, where they receive ongoing support and social expertise needed to drive impact. • Our social media network partner relationships are strong. Sprout Social has established strong relationships with all the leading social media platforms.
Our customers can leverage these consumer insights to upgrade their customer experiences and refine products and services. Influencer Marketing by Sprout Social: streamline end-to-end influencer campaign management Sprout Social’s Influencer Marketing platform is designed to help brands and agencies grow, reach new audiences, and build authentic connections with customers.
Our customers can leverage these consumer insights to upgrade their customer experiences and refine products and services. Influencer Marketing by Sprout Social: streamline end-to-end influencer campaign management 16 Sprout Social’s Influencer Marketing platform is designed to help brands and agencies grow, reach new audiences, and build authentic connections with customers.
Social Media’s Impact on Business Businesses must face the reality that social media is not simply another marketing channel. Social media now plays a crucial role across the entirety of an organization, from marketing and communications to sales, customer relationships, customer service, product feedback, and more.
Social Media’s Impact on Business Businesses must face the reality that social media is not simply another marketing channel. Social media now plays a crucial role across the entirety of an organization, from marketing and 7 communications to sales, customer relationships, customer service, product feedback, and more.
To facilitate rapid adoption and demonstrate the platform’s impact on business growth, we encourage the majority of our customers to participate in an initial 30-day free trial. This allows them to experience firsthand how Sprout Social can drive efficiency and performance.
To facilitate rapid adoption and demonstrate the platform’s impact on business growth, we encourage the majority of our customers to participate in an 18 initial 30-day free trial. This allows them to experience firsthand how Sprout Social can drive efficiency and performance.
See “Risk Factors—Risks Related to Intellectual Property Matters—Inability or failure to protect our intellectual property rights could impair our business.” Government Regulation The legal environment of Internet-based businesses is evolving rapidly in the United States and elsewhere.
See “Risk Factors—Risks Related to Intellectual Property Matters—Inability or failure to protect our intellectual property rights could impair our business.” 21 Government Regulation The legal environment of Internet-based businesses is evolving rapidly in the United States and elsewhere.
This allows our customers to centralize interactions with their audiences 13 and customers and provides the necessary tools and workflows to deliver seamless customer experiences. • Comprehensive case management : Social Customer Care by Sprout Social empowers care teams to overcome organizational complexities and deliver timely, exceptional brand experiences.
This allows our customers to centralize interactions with their audiences and customers and provides the necessary tools and workflows to deliver seamless customer experiences. • Comprehensive case management : Social Customer Care by Sprout Social empowers care teams to overcome organizational complexities and deliver timely, exceptional brand experiences.
Organizations may know they need to adapt to this new reality and adjust their business processes and implement tools to manage this new communication channel, but are unsure how to mine value from social. • The alternative is irrelevance .
Organizations may know they need to adapt to this new reality and adjust their business processes and implement 8 tools to manage this new communication channel, but are unsure how to mine value from social. • The alternative is irrelevance .
We provide reporting and analytics on the performance of content and campaigns to help our customers better understand their performance and increase the effectiveness of their publishing efforts. • Suggested content . We help customers identify compelling content to share with their audience based on global trends.
We provide reporting and analytics on the performance of content and campaigns to help our customers better understand their performance and increase the effectiveness of their publishing efforts. 13 • Suggested content . We help customers identify compelling content to share with their audience based on global trends.
This single codebase architecture not only optimizes performance but also enables our company to maintain a customer-first approach, responding to market changes with agility and enabling scalability without inefficient resource allocation. While solutions such as Employee Advocacy and Influencer Marketing are distinct technologies, they operate on underlying codebases similar to that of Sprout Social.
This single codebase architecture not only optimizes performance but also enables our company to maintain a customer-first approach, responding to market changes with agility and enabling scalability without inefficient resource allocation. While solutions such as Employee Advocacy, NewsWhip by Sprout Social and Influencer Marketing are distinct technologies, they operate on underlying codebases similar to that of Sprout Social.
This allows customers to manage and engage with their social media operations anytime, anywhere, enabling continuous responsiveness and support for their social media strategies. • Chatbot creation and management .
This allows customers to manage and 17 engage with their social media operations anytime, anywhere, enabling continuous responsiveness and support for their social media strategies. • Chatbot creation and management .
Sales and Marketing Our go-to-market strategy continues to be driven by the strength and innovation of our platform, complemented by an expanded multi-product approach and deeper market segmentation. We leverage a product-led strategy, allowing potential customers to engage with our platform through free trials and product demonstrations. A significant portion of customers subscribing without direct sales intervention.
Sales and Marketing Our go-to-market strategy continues to be driven by the strength and innovation of our platform, complemented by an expanded multi-product approach and deeper market segmentation. We leverage a product-led strategy, allowing potential customers to engage with our platform through free trials and product demonstrations. A significant portion of customers subscribe without direct sales intervention.
Together, we achieve more than we ever could alone. Our values are more than just words. They’re the foundation of our culture — the principles that guide our decisions and the behaviors that shape how we show up every day. By integrating them into our daily work, meetings, feedback, recognition, and decision-making, we keep them alive and thriving.
Together, we achieve more than we ever could alone. Our values are more than just words. They are the foundation of our culture — the principles that guide our decisions and the behaviors that shape how we show up every day. By integrating them into our daily work, meetings, feedback, recognition, and decision-making, we keep them alive and thriving.
The copyright infringement practices that we have implemented for our platform are intended to satisfy the DMCA safe harbor. Culture and Workforce At Sprout Social, we are proud to be recognized as a Built In “Best Place to Work” in 2024—a testament to the exceptional people who make up our team.
The copyright infringement practices that we have implemented for our platform are intended to satisfy the DMCA safe harbor. Culture and Workforce At Sprout Social, we are proud to be recognized as a Built In “Best Place to Work” in 2025, a testament to the exceptional people who make up our team.
As social becomes a critical channel for virtually all aspects of the customer experience, including brand awareness, influencer marketing, customer acquisition, social customer care, commerce, advocacy and reputation management, we expect that our customers will increase adoption of our platform across departments. 6 Our success and innovation are driven by an experienced leadership team and award-winning culture with a reputation for caring deeply about the success of our customers and employees.
As social becomes a critical channel for virtually all aspects of the customer experience, including brand awareness, influencer marketing, predictive media intelligence, customer acquisition, social customer care, commerce, advocacy and reputation management, we expect that our customers will increase adoption of our platform across departments. 6 Our success and innovation are driven by an experienced leadership team and award-winning culture with a reputation for caring deeply about the success of our customers and employees.
Total Rewards Sprout Social’s total rewards philosophy in 2024 was built on a foundation of fairness, competitiveness, and holistic well-being, ensuring our employees feel valued and supported at every stage of their personal and professional journeys. Our comprehensive benefits offerings reflect our commitment to enabling employees to thrive both inside and outside of work.
Total Rewards Sprout Social’s total rewards philosophy in 2025 was built on a foundation of fairness, competitiveness, and well-being, ensuring our employees feel valued and supported at every stage of their personal and professional journeys. Our comprehensive benefits offerings reflect our commitment to enabling employees to thrive both inside and outside of work.
The same report also found that 73% of consumers say they’ll buy from a competitor if a brand doesn’t respond on social media. • All aspects of business communication are shifting to social . Billions of conversations that were previously taking place via email or over the telephone are now occurring over social media.
The same report also found that 73% of consumers say they’ll buy from a competitor if a brand does not respond on social media. • All aspects of business communication are shifting to social . Billions of conversations that were previously taking place via email or over the telephone are now occurring over social media.
Users may automatically receive email alerts and other information about Sprout Social when enrolling an email address by visiting "Request Email Alerts" on the website at investors.sproutsocial.com. 25
Users may automatically receive email alerts and other information about Sprout Social when enrolling an email address by visiting "Request Email Alerts" on the website at investors.sproutsocial.com. 26
We believe social media plays a central role across several key dimensions of consumer behavior and business dynamics: • social media is a facilitator of shared human experiences; • social media is shaping our perception of the world around us; • social media is driving consumer trends and influencing purchases; • social media is shifting power to consumers; • social media is holding brands to higher standards; • social media is replacing existing communication channels; and • social media is an unprecedented source of business intelligence.
We believe social media plays a central role across several key dimensions of consumer behavior and business dynamics: • social media is a facilitator of shared human experiences; • social media is shaping our perception of the world around us; • social media is driving consumer trends and influencing purchases; • social media is shifting power to consumers; • social media is holding brands to higher standards; • social media is where news breaks first; • social media is replacing existing communication channels; and • social media is an unprecedented source of business intelligence.
With around 30,000 customers, our platform is built to scale and to deliver exceptional performance, reliability, and insights into emerging market trends. Sprout Social’s software supports businesses of all sizes, including enterprises, with 99.99% uptime. We hold ourselves to the highest standards for success with robust security and compliance measures. • Our market leadership and premium brand are excellent.
Our platform is built to scale and to deliver exceptional performance, reliability, and insights into emerging market trends. Sprout Social’s software supports businesses of all sizes, including enterprises, with 99.99% uptime. We hold ourselves to the highest standards for success with robust security and compliance measures. • Our market leadership and premium brand are excellent.
Intellectual Property We rely on a combination of patent, trade secret, copyright and trademark laws, a variety of contractual arrangements, such as license agreements, assignment agreements, confidentiality and non-disclosure agreements, and confidentiality procedures and technical measures to protect rights in our proprietary property. We have three issued U.S. patents and two U.S. patent applications pending.
Intellectual Property We rely on a combination of patent, trade secret, copyright and trademark laws, a variety of contractual arrangements, such as license agreements, assignment agreements, confidentiality and non-disclosure agreements, and confidentiality procedures and technical and technological measures to protect rights in our proprietary technology and intellectual property. We have seven issued U.S. patents and two U.S. patent applications pending.
The CSAT score is determined based on an internal survey of customers following the resolution/closure of a support case. We prioritize customer-driven innovation, using feedback from our approximately 30,000 customers to guide our product roadmap. This helps us identify the features and products most important to our customers, enabling us to deliver a platform that creates compelling, user-focused experiences.
The CSAT score is determined based on an internal survey of customers following the resolution/closure of a support case. We prioritize customer-driven innovation, using feedback from tens of thousands of customers to guide our product roadmap. This helps us identify the features and products most important to our customers, enabling us to deliver a platform that creates compelling, user-focused experiences.
In every customer interaction, we deliver exceptional value. • Put your name on it. We act with purpose, own our impact and consistently deliver exceptional results. • Change the game. We redefine what’s possible, act boldly and transform challenges into breakthroughs. • All in, All together. Collaboration, trust and inclusion power our success.
In every customer interaction, we deliver exceptional value. • Put your name on it. We act with purpose, own our impact and consistently deliver exceptional results. • Change the game. We redefine what is possible, act boldly and transform challenges into breakthroughs. 25 • All in, All together. Collaboration, trust and inclusion power our success.
We offer a robust suite of AI-powered solutions: • Publishing and Scheduling • Social Customer Care • Reporting and Analytics • Social Listening and Business Intelligence • Reputation Management • Social Commerce • Influencer Marketing • Employee Advocacy, and 10 • Automation and Workflows.
We offer a robust suite of AI-powered solutions: • Publishing and Scheduling • Social Customer Care • Reporting and Analytics • Social Listening and Business Intelligence • Reputation Management • Social Commerce • Influencer Marketing • Predictive Media Intelligence • Employee Advocacy, and • Automation and Workflows.
Customers We have a highly diverse base of approximately 30,000 current customers across SMBs, Mid-market companies, Enterprises and marketing agencies, as well as government, non-profit and educational institutions. We have been increasingly focused on the Mid-market and Enterprise segments, and we expect that our current and future growth will likely be driven by outsized contributions from Mid-market and Enterprise.
Customers We have a highly diverse base of tens of thousands of customers across SMBs, Mid-market companies, Enterprises and marketing agencies, as well as government, non-profit and educational institutions. We have been increasingly focused on the Mid-market and Enterprise segments, and we expect that our current and future growth will likely be driven by outsized contributions from Mid-market and Enterprise.
This year, we are thrilled to have been named to three Built In Best Places to Work lists for 2024: the 100 Best Large Places to Work in Chicago, the 100 Best Large Places to Work in Seattle, and the 100 Best Places to Work in Seattle.
This year, we are thrilled to have been named to three Built In Best Places to Work lists for 2025: Best Large Places to Work in Seattle, Best Places to Work in Seattle, and the Best Large Places to Work in Chicago.
Customers can quickly harness the power of AI to gain insights and manage campaigns effectively. • Our AI is human-centric . Our AI and automation doesn’t just support teams - it amplifies their strengths and supercharges their capabilities, empowering them to think outside the box when it comes to social.
Customers can quickly harness the power of AI to gain insights and manage campaigns effectively. • Our AI is human-centric . Our AI and automation does not only support teams - it amplifies their strengths and supercharges their capabilities, empowering them to think outside the box when it comes to social.
Our sales and marketing expenses were $184.1 million, $168.1 million and $123.7 million for the years ended December 31, 2024, 2023 and 2022, respectively. Customer Service Customer success is at the heart of our business, and our global support team is committed to providing exceptional service to all customers, regardless of size or segment.
Our sales and marketing expenses were $190.6 million, $184.1 million and $168.1 million for the years ended December 31, 2025, 2024 and 2023, respectively. Customer Service Customer success is at the heart of our business, and our global support team is committed to providing exceptional service to all customers, regardless of size or segment.
In 2025, we plan to enhance our go-to-market execution by prioritizing enterprise growth, multi-threaded sales motions, and targeted regional expansion. Our strategic focus includes high-value enterprise deals, verticalized go-to-market strategies, and deeper customer engagement across industries. We believe investments in influencer marketing, expanded partnerships, and international market development will further strengthen our ability to scale globally.
In 2026, we plan to enhance our go-to-market execution by prioritizing enterprise growth and multi-threaded sales motions. Our strategic focus includes high-value deals, verticalized go-to-market strategies, and deeper customer engagement across industries. We believe investments in influencer marketing, predictive analytics, expanded partnerships, and international market development will further strengthen our ability to scale globally.
We generated net losses of $62.0 million, $66.4 million and $50.2 million during the years ended December 31, 2024, 2023 and 2022, respectively. Our Industry Social media began as a way for individuals to connect and share experiences.
We generated net losses of $43.3 million, $62.0 million and $66.4 million during the years ended December 31, 2025, 2024 and 2023, respectively. Our Industry Social media began as a way for individuals to connect and share experiences.
This statute provides relief for claims of circumvention of copyright-protected technologies but includes a safe harbor that is intended to reduce the liability of online service providers for listing or linking to third-party websites or hosting content that infringes copyrights of others.
This statute provides relief for claims of copyright infringement by third parties but includes a safe harbor that is intended to reduce the liability of online service providers for listing or linking to third-party websites or hosting content that infringes copyrights of others.
Our strong culture, world-class management team, leading platform and efficient go-to market strategy have led to revenue of $405.9 million, $333.6 million and $253.8 million during the years ended December 31, 2024, 2023 and 2022, respectively, representing growth of 22% from 2023 to 2024 and representing growth of 31% from 2022 to 2023.
Our strong culture, world-class management team, leading platform and efficient go-to market strategy have led to revenue of $457.5 million, $405.9 million and $333.6 million during the years ended December 31, 2025, 2024 and 2023, respectively, representing growth of 13% from 2024 to 2025 and 22% from 2023 to 2024.
Whether we lead a team, manage a project, or shape group dynamics, we all play a key role in bringing our values to life. By actively embracing and demonstrating them, we strive to create an environment where we all thrive. • Be a joy to work with.
But values don’t mean much if they are just words. Whether we lead a team, manage a project, or shape group dynamics, we all play a key role in bringing our values to life. By actively embracing and demonstrating them, we strive to create an environment where we all thrive. • Be a joy to work with.
Data provided in our reporting suite can be delivered via API for integration with existing business intelligence tools. 14 Social Listening: power growth and set the industry standard with business intelligence at scale Social is an indispensable source of business intelligence, where billions of data points are created across social networks that contain information that can help businesses better understand their markets, their customers and their competition.
Social Listening: power growth and set the industry standard with business intelligence at scale Social is an indispensable source of business intelligence, where billions of data points are created across social networks that contain information that can help businesses better understand their markets, their customers and their competition.
As a result of our strong brand and reputation for quality and service, we generated more than 80% of our revenue from new customers in 2024 from unpaid channels. • We foster a world-class culture . Our success is possible because of our award-winning culture, which allows us to attract and retain top talent.
As a result of our strong brand and reputation for quality and service, we are able to generate a significant portion of our revenue from unpaid channels. • We foster a world-class culture . Our success is possible because of our award-winning culture, which allows us to attract and retain top talent.
We have a deep commitment to our people and our customers that compounds our competitive advantages as we continue to grow. Components of our Platform AI and automation: ignite creativity by breaking free from limits We believe AI should be our customers’ secret weapon – helping them work faster and uncover insights that let brands focus on more impactful work.
Components of our Platform AI and automation: ignite creativity by breaking free from limits We believe AI should be our customers’ secret weapon – helping them work faster and uncover insights that let brands focus on more impactful work.
To manage high volumes of customer messaging, we provide our customers with an intuitive interface to build and deploy chat experiences to help their audience get the information they need quickly and efficiently.
To manage high volumes of customer messaging, we provide our customers with an intuitive interface to build and deploy chat experiences to help their audience get the information they need quickly and efficiently. Our Growth Strategies We intend to capitalize on our large market opportunity with the following key growth strategies: • Win with Enterprise customers.
We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost-effective. We actively pursue registration of our trademarks, logos, service marks and domain names in the United States and in other key jurisdictions. We are the registered holder of a variety of domain names that include the term “Sprout Social” and similar variations.
We actively pursue registration of our trademarks, logos, service marks and domain names in the United States and in other key jurisdictions. We are the registered holder of a variety of domain names that include the term “Sprout Social” and similar variations.
In addition to our presentation-ready reports, customers can customize reports to meet their needs, and export those reports in several formats to share with peers and stakeholders across their business. • Reporting API .
In addition to our presentation-ready reports, customers can customize reports to meet their needs, and export those reports in several formats to share with peers and stakeholders across their business. • Reporting API . Data provided in our reporting suite can be delivered via API for integration with existing business intelligence tools.
This holistic approach empowers customers to not only meet, but exceed their goals and drive the business impact they need from social. Additionally, our on-demand help center supports customers in becoming self-sufficient without requiring ongoing support. As of December 31, 2024, our customer service department had 58 employees.
This holistic approach empowers customers to not only meet, but exceed their goals and drive the business impact they need from social. Additionally, our on-demand help center supports customers in becoming self-sufficient without requiring ongoing support. Customer service costs are included in Cost of revenue within the Consolidated Statements of Operations.
For example, these obligations include limiting personal data processing to only what is necessary for specified, explicit, and legitimate purposes; requiring a legal basis for personal data processing; requiring the appointment of a data protection officer in certain circumstances; increasing transparency obligations to data subjects; requiring data protection impact assessments in certain circumstances; limiting the collection and retention of personal data; increasing rights for data subjects; formalizing a heightened and codified standard of data subject consents; requiring the implementation and maintenance of technical and organizational safeguards for personal data; mandating notice of certain personal data breaches to the relevant supervisory authority(ies) and affected individuals; and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.
For example, these obligations include limiting personal data processing to only what is necessary for specified, explicit, and legitimate purposes; requiring a legal basis for personal data processing; requiring the appointment of a data protection officer in certain circumstances; increasing transparency obligations to data subjects; requiring data protection impact assessments in certain circumstances; limiting the collection and retention of personal data; increasing rights for data subjects; formalizing a heightened and codified standard of data subject consents; requiring the implementation and maintenance of technical and organizational safeguards for personal data; mandating notice of certain personal data breaches to the relevant supervisory authority(ies) and affected individuals; and mandating the appointment of representatives in the UK and/or the EU in certain circumstances. 22 See the sections titled “Risk Factors—Risks Related to the Use of Technology” and “Risk Factors—Legal and Regulatory Risks” for additional information about the laws and regulations to which we are or may become subject and about the risks to our business associated with such laws and regulations.
Currently, approximately 30,000 customers across more than 100 countries rely on our platform. The exceptional value we deliver is bolstered by our recognition as a Leader by IDC in the 2024 Marketscape for Social Marketing software for large enterprises, and our consistently high user ratings on G2. We have proven success in the SMB, Mid-market and Enterprise segments.
The exceptional value we deliver is bolstered by our recognition as a Leader by IDC in the 2024-25 Marketscape for Social Marketing software for large enterprises, and our consistently high user ratings on G2. Our platform provides a compelling offering for customers of all sizes, across the SMB, Mid-market and Enterprise customer segments.
We have an efficient, product-driven go-to-market strategy that has enabled us to scale rapidly, attracting customers from small businesses to global brands as well as marketing agencies and government, non-profit and educational institutions.
We have an efficient, product-driven go-to-market strategy that has enabled us to scale rapidly, attracting customers from small businesses to global brands as well as marketing agencies and government, non-profit and educational institutions. In 2025, the majority of our inbound trials were generated through unpaid marketing due to the strength of our brand, content marketing, and search engine optimization.
With straight-forward onboarding, powerful integrations, and ease of use, our platform is designed to scale to meet even the largest enterprise needs. Our AI-led suite of solutions helps brands maximize the value of social, connect meaningfully with their audience, and leverage insights to enhance business strategies and customer retention.
Our AI-led suite of solutions helps brands maximize the value of social, connect meaningfully with their audience, and leverage insights to enhance business strategies and customer retention.
Our customers, and those with whom they communicate using our platform, upload and store data onto our platform, generally without any restrictions imposed by us. This presents legal challenges to our business and operations, such as rights of privacy or intellectual property rights related to the content loaded onto our platform.
Our customers, and those with whom they communicate using our platform, upload and store data onto our platform, generally without any restrictions imposed by us as to the nature of such content, subject to our terms of service.
Competition There are a number of established and emerging competitors in the social media management software market. While new companies join the market frequently, barriers to entry are high, with increased consolidation in recent years.
Our research and development expenses were $101.3 million, $102.8 million and $79.6 million for the years ended December 31, 2025, 2024 and 2023, respectively. Competition There are a number of established and emerging competitors in the social media management software market. While new companies join the market frequently, barriers to entry are high, with increased consolidation in recent years.
This strong employer brand allows us to attract and retain high-quality talent and deliver a premium experience for our customers. In 2024, we were recognized as a Built In “Best Place to Work” for the sixth consecutive year. Glassdoor has recognized us as one of the “Best Places to Work” in 2017, 2018, 2020, 2021, 2022 and 2023.
This strong employer brand allows us to attract and retain high-quality talent and deliver a premium experience for our customers. In 2025, we were recognized as a Built In “Best Place to Work” for the seventh consecutive year, as well as one of “America’s Greatest Workplaces” and “Greatest Workplaces in Software and Technology” by Newsweek.
Our ability to lead in the social media management market depends on our introduction of new products and continuing to improve our current offerings. We work diligently to respond to our customers’ needs to create the best user experience possible. Our research and development team is responsible for the design, development and testing of our products.
We work diligently to respond to our customers’ needs to create the best user experience possible. Our research and development team is responsible for the design, development and testing of our products. We invest substantial resources in research and development to drive our technology innovation and bring new products to the market.
Customers can rapidly activate Sprout Social and expedite the implementation process to access analysis-ready AI. Social profiles are efficiently connected, and software integrations are configured to deliver rapid results, starting as soon as a customer’s trial, which was a key driver of new customer revenue in 2024.
Social profiles are efficiently connected, and software integrations are configured to deliver rapid results, starting as soon as a customer’s trial, which continues to be a key driver of new customer revenue.
Our hybrid work model allowed employees to choose their ideal work environment, supported by ergonomic office stipends and flexible schedules. We maintained rigorous safety protocols in our offices, equipping them with life-saving tools and ensuring secure access. Sprout Social’s mental health resources included counseling services, financial wellness tools, and backup care options, reflecting our holistic approach to employee well-being.
Health, Safety & Wellbeing The safety and well-being of our employees continued to be a top priority in 2025. Our hybrid work model allowed employees to choose their ideal work environment, supported by ergonomic office stipends, educational resources on ergonomics and flexible schedules. We maintained rigorous safety protocols in our offices, equipping them with life-saving tools and ensuring secure access.
We align our governance policies with stakeholder interests by adopting transparent practices, such as pay-for-performance disclosures and enhanced stock ownership guidelines for executive officers. Our board evaluations and risk management programs further promote accountability and efficiency at every level. Health, Safety & Wellbeing The safety and well-being of our employees continued to be a top priority in 2024.
Our Environmental, Social and Governance (ESG) committee, which includes several members of our executive team, guides our efforts intentionally and impactfully. We align our governance policies with stakeholder interests by adopting transparent practices, such as pay-for-performance disclosures and enhanced stock ownership guidelines for executive officers. Our board evaluations and risk management programs further promote accountability and efficiency at every level.
Additionally, our Employee Stock Purchase Plan (currently available in the U.S.) allows employees to share in Sprout Social’s financial success by purchasing stock at a discounted rate, reinforcing their stake in our collective growth. Our benefits offerings are designed to meet the diverse needs of our workforce, providing comprehensive healthcare, generous PTO, and retirement plans with company matching.
Additionally, our Employee Stock Purchase Plan (currently available in the U.S.) allows employees to share in Sprout Social’s financial success by purchasing stock at a discounted rate, reinforcing their stake in our collective growth. Our benefits offerings are designed to attract and retain talent while aligning with local market practices and regulatory requirements across the jurisdictions in which we operate.
We provide our customers the ability to automate alerts and categorization of messages, as well as a bot-builder technology that can automate high-volume customer conversations in private social channels.
We provide our customers the ability to automate alerts and categorization of messages, as well as a bot-builder technology that can automate high-volume customer conversations in private social channels. Predictive Intelligence: navigate the media landscape 14 In today's fast-paced digital environment, brands and publishers face tens of thousands of signals daily from breaking news to emerging trends.
Our marketing team is focused on generating awareness of our social media management platform and on inbound marketing through our industry leading blog and other social content, including our own large social media following.
Our marketing team is focused on generating awareness of our social media management platform and on inbound marketing through our industry leading blog and other social content, including 19 our own large social media following. The majority of inbound trials and demonstration requests are generated from unpaid marketing, allowing us to rapidly test, adapt and optimize our go-to-market motion.
Through our Value Awards, we celebrated employees who exemplified Sprout Social’s values. Award recipients received a $2,000 prize and a $500 charitable donation to an organization of their choice, demonstrating our commitment to community impact. Additionally, milestone anniversaries were marked with custom branded swag, fostering pride and connection among employees.
Award recipients receive a $2,000 prize and a $500 charitable donation to an organization of their choice, reinforcing our commitment to both our people and community impact. Additionally, we continue to celebrate milestone moments and anniversaries with branded swag, fostering a sense of pride and connection among our global team.
To stay ahead, brands need to take charge of their market by adopting social media management platforms that safeguard customer data across multiple social profiles and networks. Addressing these challenges with agility is critical not only for maintaining security and trust, but also for staying competitive in an increasingly fast-evolving environment. • On social media, every second matters for brands.
Addressing these challenges with agility is critical not only for maintaining security and trust, but also for staying competitive in an increasingly fast-evolving environment. • On social media, every second matters for brands. In the fast-paced world of social media, delivering a seamless customer experience requires quick, coordinated action across multiple departments.
Our global Lifestyle Spending Account empowers employees to prioritize their personal health and well-being, while new hire stipends for home office setups and ongoing Wi-Fi reimbursements enable productivity in our hybrid work environment. Beyond the essentials, Sprout Social offers a range of additional well-being benefits that underscore our holistic approach to employee care.
Our global Lifestyle Spending Account empowers employees to prioritize their personal health and well-being, while new hire stipends for home office setups and ongoing Wi-Fi reimbursements enable productivity in our hybrid work environment. As a company, in 2025, we also had nine “R&R” days in addition to holidays to help encourage employee wellbeing.
In 2024, we continued to prioritize support for growing families, offering a $5,000 family planning benefit for surrogacy and adoption, as well as a global parental leave program that provides equal time off 23 for all parents.
In 2025, we continued to prioritize support for growing families, offering a $5,000 family planning benefit for surrogacy and adoption, as well as enhancing our global parental leave programs to be better aligned with international practices and standards.
These initiatives are designed to support our workforce in achieving balance and resilience. Refreshed Values At the start of 2025, Sprout Social renewed its values to reflect our bold ambitions and commitment to achieving extraordinary things. But values don’t mean much if they’re just words.
Sprout Social’s mental health resources included counseling services, financial wellness tools, and backup care options, reflecting our holistic approach to employee well-being. These initiatives are designed to support our workforce in achieving balance and resilience. Refreshed Values At the start of 2025, Sprout Social renewed its values to reflect our bold ambitions and commitment to achieving extraordinary things.
We offer our customers a centralized, secure and powerful platform that can scale horizontally across an organization to drive maximum business value. For almost 15 years, Sprout Social has helped companies command their market on social media. Our human-centric AI and advanced analytics deliver real-time insights from more than 1 billion daily messages, driving impact quickly and boosting productivity.
We offer our customers a centralized, secure and powerful platform that can scale horizontally across an organization to drive maximum business value. For over 15 years, Sprout Social has helped companies command their market on social media. As social has evolved from a marketing channel to a critical source of enterprise intelligence, our platform has evolved with it.
In the fast-paced world of social media, delivering a seamless customer experience requires quick, coordinated action across multiple departments. A single social media message often requires input from multiple teams, and without a platform providing clear social insights and streamlining workflows, timely and effective responses are compromised.
A single social media message often requires input from multiple teams, and without a platform providing clear social insights and streamlining workflows, timely and effective responses are compromised. The right platform must deliver value quickly and enable teams to achieve fast, impactful results with minimal complexity.
Our Platform Brands can no longer afford to overlook the importance of social media, where every interaction has the potential to influence their reputation and expand their reach. Sprout Social offers an intuitive 9 platform designed to scale with organizations of all sizes and to help empower teams to secure a competitive advantage and boost their market position.
Sprout Social offers an intuitive social intelligence platform designed to scale with organizations of all sizes and to help empower teams to secure a competitive advantage and boost their market position. Customers can rapidly activate Sprout Social and expedite the implementation process to access analysis-ready AI.
This includes more scale in our customer care product, deepening our listening analytics features and support for larger scale deployments.
We intend to release more features that will allow us to continue to meet the evolving needs of the largest enterprises and drive larger ACV transactions. This includes more scale in our customer care product, deepening our listening analytics features and support for larger scale deployments.
This marks the sixth consecutive year we have received this honor, celebrating our commitment to fostering a workplace where employees feel inspired, valued, and empowered to thrive. The annual Built In awards recognize companies across all sizes and industries, including both remote-first organizations and those in major tech markets across the U.S.
This is our seventh consecutive year receiving this honor. The annual Built In awards recognize companies across all sizes and industries, including both remote-first organizations and those in major tech markets across the U.S. This recognition underscores the essence of our culture: a purposeful, collaborative, and bold team that delivers exceptional results.
Customer service costs are included in Cost of revenue within the Consolidated Statements of Operations. Research and Development We have a proven research and development team that rapidly delivers high-quality products, which has driven our customer growth.
Research and Development We have a proven research and development team that rapidly delivers high-quality products, which has driven our growth. Our ability to lead in the social media management market depends on our introduction of new products and continuing to improve our current offerings.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThis substantial level of debt could have important consequences to our business, including, but not limited to: • reducing the benefits we expect to receive from our prior and any future acquisition transactions; • making it more difficult for us to satisfy our obligations; • requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund acquisitions, capital expenditures, R&D and future business opportunities; • exposing us to the risk of increased interest rates to the extent of any future borrowings, including borrowings under our Credit Agreement, are at variable rates of interest; • increasing our vulnerability to, and reducing our flexibility to respond to, changes in our business or general adverse economic and industry conditions; • limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes and increasing the cost of any such financing; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and placing us at a competitive disadvantage as compared to our competitors, to the extent they are not as highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting; and • restricting us from pursuing certain business opportunities. 56 The Credit Agreement contains, and the terms of any future indebtedness may impose, various restrictive covenants, including, among other things, restrictions on the Company’s ability to incur liens, incur indebtedness, make or hold investments, execute certain change of control transactions, business combinations or other fundamental changes to their business, dispose of assets, make certain types of restricted payments, including dividends and other distributions to shareholders, or enter into certain related party transactions, subject to customary exceptions.
Biggest changeThis substantial level of debt could have important consequences to our business, including, but not limited to: • reducing the benefits we expect to receive from our prior and any future acquisition transactions; • making it more difficult for us to satisfy our obligations; • requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund acquisitions, capital expenditures, R&D and future business opportunities; • exposing us to the risk of increased interest rates to the extent of any future borrowings, including borrowings under our Amended Credit Agreement, are at variable rates of interest; 61 • increasing our vulnerability to, and reducing our flexibility to respond to, changes in our business or general adverse economic and industry conditions; • limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, acquisitions, and general corporate or other purposes and increasing the cost of any such financing; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and placing us at a competitive disadvantage as compared to our competitors, to the extent they are not as highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting; and • restricting us from pursuing certain business opportunities.
We may not continue to grow at similar or faster rates in the future, and our revenue growth rates may decline.
We may not continue to grow at similar or faster rates in the future, and our revenue growth rates may continue to decline.
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.
As a result of these factors, these sales opportunities may require us to devote greater resources to larger individual customers, driving up costs and time required to complete sales and diverting our resources to a smaller number of larger transactions.
For example, the EU GDPR and the equivalent law in the UK GDPR impose strict requirements for processing the personal data of individuals. Under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of annual global revenue, whichever is greater.
For example, the EU GDPR and the equivalent law in the UK impose strict requirements for processing the personal data of individuals. Under the EU GDPR, government regulators may impose temporary or definitive bans on data processing, as well as fines of up to 20 million euros or 4% of annual global revenue, whichever is greater.
In connection with such strategic transactions, we may: • issue additional equity securities that would dilute our existing stockholders; • use cash that we may need in the future to operate our business; • incur large charges or substantial liabilities; • incur indebtedness on terms unfavorable to us or that we are unable to repay; • encounter hidden liabilities, defects, bugs, vulnerabilities, or past or future data breaches within any acquired company’s code or technical environment; • encounter additional legal and compliance risk and expenses; • encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; and • become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.
In connection with such strategic transactions, we may: • issue additional equity securities that would dilute our existing stockholders; • use cash that we may need in the future to operate our business; • incur large charges or substantial liabilities; • incur indebtedness on terms unfavorable to us or that we are unable to repay; • encounter hidden liabilities, defects, bugs, vulnerabilities, or past or future data breaches within any acquired company’s code or technical environment; • encounter additional legal and compliance risk and expenses; • encounter difficulties retaining key employees of the acquired company or integrating diverse software codes or business cultures; and 59 • become subject to adverse tax consequences, substantial depreciation or deferred compensation charges.
A cybersecurity-related attack, malicious internet-based activity, online and offline fraud, and intrusion or disruption by either an internal or external source or other breach of the systems on which our platform and products operate, and on which our employees conduct business, could lead to unauthorized access to, use of, loss of or unauthorized disclosure of sensitive and confidential information, disruption of our services, and resulting regulatory enforcement actions, litigation, indemnity obligations and other possible liabilities, as well as negative publicity, which could damage our reputation, impair sales and harm our business.
A cybersecurity-related attack, malicious internet-based activity, online and offline fraud, and 38 intrusion or disruption by either an internal or external source or other breach of the systems on which our platform and products operate, and on which our employees conduct business, could lead to unauthorized access to, use of, loss of or unauthorized disclosure of sensitive and confidential information, disruption of our services, and resulting regulatory enforcement actions, litigation, indemnity obligations and other possible liabilities, as well as negative publicity, which could damage our reputation, impair sales and harm our business.
A successful assertion by one or more tax authorities requiring us to collect indirect taxes in jurisdictions in which we do not currently do so, to collect additional indirect taxes in a jurisdiction in which we currently collect such taxes, or to withhold additional employment taxes, could, among other things, result in substantial tax liabilities (including taxes on past sales, as well as penalties and interest), create 51 significant administrative burdens for us, discourage users from utilizing our products or otherwise harm our business, financial condition and results of operations.
A successful assertion by one or more tax authorities requiring us to collect indirect taxes in jurisdictions in which we do not currently do so, to collect additional indirect taxes in a jurisdiction in which we currently collect such taxes, or to withhold additional employment taxes, could, among other things, result in substantial tax liabilities (including taxes on past sales, as well as penalties and interest), create significant administrative burdens for us, discourage users from utilizing our products or otherwise harm our business, financial condition and results of operations.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: • any derivative action or proceeding brought on our behalf; • any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our current or former directors, officers, employees or our stockholders; • any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (as either may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for: • any derivative action or proceeding brought on our behalf; 54 • any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any of our current or former directors, officers, employees or our stockholders; • any action asserting a claim against us arising under the DGCL, our amended and restated certificate of incorporation, or our amended and restated bylaws (as either may be amended from time to time) or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware; and • any action asserting a claim against us that is governed by the internal-affairs doctrine.
In certain cases where our customers choose not to implement, or incorrectly implement, those features or measures, misuse our services, or otherwise experience their own vulnerabilities, policy violations, credential compromise or security incidents, even if we are not the cause of a resulting customer security issue or incident, our customer relationships reputation, and revenue in the future may be adversely impacted.
In certain cases where our customers choose not to implement, or incorrectly implement, those features or measures, misuse our services, or otherwise experience their own vulnerabilities, policy violations, credential compromise or security incidents, even if we are not the cause 39 of a resulting customer security issue or incident, our customer relationships reputation, and revenue in the future may be adversely impacted.
We also may be unable to adjust our cost structure to reflect the changes in revenue, resulting in lower margins and earnings. In addition, our subscription-based model also makes it difficult to rapidly increase our revenue 31 through additional sales in any period, as revenue from new customers generally will be recognized over the term of the applicable agreement.
We also may be unable to adjust our cost structure to reflect the changes in revenue, resulting in lower margins and earnings. In addition, our subscription-based model also makes it difficult to rapidly increase our revenue through additional sales in any period, as revenue from new customers generally will be recognized over the term of the applicable agreement.
If our security measures are compromised as a result of third-party action, employee, customer, or user error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation would be damaged, our data, information or intellectual property, or those of our customers, may be destroyed, stolen or otherwise compromised, our business may be harmed and we could incur significant liability.
If our security measures are compromised as a result of third-party action, vendor, employee, customer, or user error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation would be damaged, our data, information or intellectual property, or those of our customers, may be destroyed, stolen or otherwise compromised, our business may be harmed and we could incur significant liability.
As another example, Brazil’s General Data Protection 40 Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018) applies to our operations. The LGPD broadly regulates processing of personal data of individuals in Brazil and imposes compliance obligations and penalties comparable to those of the EU GDPR.
As another example, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018) applies to our operations. The LGPD broadly regulates processing of personal data of individuals in Brazil and imposes compliance obligations and penalties comparable to those of the EU GDPR.
The DSA aims to prevent illegal and harmful activities online and combat the spread of disinformation and sets out a framework of layered responsibilities targeted at different types of services and imposes certain additional obligations on intermediary services, including a requirement to inform consumers of any illegal products or services being offered through the relevant digital platform.
The DSA 44 aims to prevent illegal and harmful activities online and combat the spread of disinformation and sets out a framework of layered responsibilities targeted at different types of services and imposes certain additional obligations on intermediary services, including a requirement to inform consumers of any illegal products or services being offered through the relevant digital platform.
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 rate of free trials and other lead sources to paid subscriptions is impacted by a 31 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.
Social media and the software industry are each subject to rapid technological change, evolving industry standards and practices, developing 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.
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.
The replacement of any of our senior management personnel would likely involve significant time and costs, and such loss could adversely affect our revenue, business, results of operations and financial condition. 54 If we cannot attract and retain qualified personnel or maintain our culture as we grow, we may be unable to execute our business strategy.
The replacement of any of our senior management personnel would likely involve significant time and costs, and such loss could adversely affect our revenue, business, results of operations and financial condition. If we cannot attract and retain qualified personnel or maintain our culture as we grow, we may be unable to execute our business strategy.
While we have primarily transacted with customers and vendors in U.S. dollars historically, we expect to conduct some transactions with our customers that are denominated in foreign currencies in the future. Fluctuations in the value of the U.S. dollar and foreign currencies may make our subscriptions more expensive for international customers, which could harm our business.
While we have primarily transacted with customers and vendors in U.S. dollars historically, we expect to 37 conduct some transactions with customers that are denominated in foreign currencies in the future. Fluctuations in the value of the U.S. dollar and foreign currencies may make our subscriptions more expensive for international customers, which could harm our business.
Our exposure for violating these laws may increase as we continue to expand our international presence, and any failure to comply with such laws could harm our business. Risks Related to Ownership of Our Class A Common Stock 46 Our actual operating results may fluctuate from period to period and may differ significantly from any guidance provided.
Our exposure for violating these laws may increase as we continue to expand our international presence, and any failure to comply with such laws could harm our business. Risks Related to Ownership of Our Class A Common Stock Our actual operating results may fluctuate from period to period and may differ significantly from any guidance provided.
Moreover, our brand and reputation could be harmed if we were to experience significant negative publicity. We believe that maintaining, developing, and enhancing our brand is critical to achieving widespread acceptance of our platform and products, attracting new customers, retaining existing customers, persuading existing customers to adopt additional products and use-cases, and hiring and retaining our employees.
Moreover, our brand and reputation could be harmed if we were to experience significant negative publicity. 41 We believe that maintaining, developing, and enhancing our brand is critical to achieving widespread acceptance of our platform and products, attracting new customers, retaining existing customers, persuading existing customers to adopt additional products and use-cases, and hiring and retaining our employees.
We may rely upon third party service providers and technologies to operate critical business systems to process confidential and personal data in a variety of contexts, including, without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, content delivery to customers, and other functions.
We may rely upon third-party service providers and technologies to operate critical business systems to process confidential, sensitive, and personal data in a variety of contexts, including, without limitation, third-party providers of cloud-based infrastructure, encryption and authentication technology, employee email, content delivery to customers, and other functions.
There are uncertainties regarding the proper interpretation of and compliance with open source licenses, and there is a risk that such licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to use such open source software, and consequently to provide or distribute our platform and products.
There are uncertainties regarding the proper interpretation of and compliance with open source licenses, and there is a risk that such licenses could be construed in a 48 manner that imposes unanticipated conditions or restrictions on our ability to use such open source software, and consequently to provide or distribute our platform and products.
For example, these stockholders will control elections of directors, amendments of our certificate of incorporation or bylaws, increases to the number of shares available for issuance under our equity incentive plans or adoption of new equity incentive plans, and approval of any merger, sale of assets or other major corporate transaction for the foreseeable future.
For example, these stockholders will control elections of directors, amendments of our certificate of incorporation or bylaws, increases to the number of shares available for issuance under our equity incentive plans or adoption of new equity 52 incentive plans, and approval of any merger, sale of assets or other major corporate transaction for the foreseeable future.
Some of our customers have elected not to renew their agreements with us and we may not be 28 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.
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.
Regulators in the United States are increasingly scrutinizing these statements, and if these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
Regulators in the United States are increasingly scrutinizing these statements, and if these 45 policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
Furthermore, any debt agreement we may enter into may contain negative covenants that limit our ability to pay dividends. Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
Furthermore, any debt agreement we may enter into may contain negative covenants that limit our ability to pay dividends. 53 Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock.
If the debt under our Credit Agreement were to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay such debts, which would have an immediate adverse effect on our business, liquidity, and financial condition.
If the debt under our Amended Credit Agreement were to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay such debts, which would have an immediate adverse effect on our business, liquidity, and financial condition.
Many factors, including our marketing, customer acquisition and technology costs, and the pricing and marketing strategies of our competitors, can significantly affect our pricing strategies. Certain competitors offer, or may in the future offer, lower-priced products or services that compete with our platform or may bundle and offer a broader range of products and services.
Many factors, including our marketing, packaging, customer acquisition and technology costs, and the pricing and marketing strategies of our competitors, can significantly affect our pricing strategies. Certain competitors offer, or may in the future offer, lower-priced products or services that compete with our platform or may bundle and offer a broader range of products and services.
Certain data privacy and security obligations require us to implement and maintain specific security measures to protect our information technology systems, including our platform, and data. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
Certain data privacy and security obligations require us to implement and maintain specific security measures to protect our information technology systems, including our platform, 47 and data. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
A decision adverse to our interests in the Securities Actions, or in similar or related litigation, could result in the payment of substantial damages, or possibly fines, and could have a material adverse effect on our business, our stock price, cash flow, results of operations and financial condition.
A decision adverse to our interests in the Securities Actions, or in similar or related litigation, could result in the payment of 49 substantial damages, or possibly fines, and could have a material adverse effect on our business, our stock price, cash flow, results of operations and financial condition.
We could be forced to expend significant resources in the settlement 45 or defense of the Securities Actions and any potential future lawsuits, and we may not prevail in such lawsuits. Additionally, we may not be successful in having any such lawsuits dismissed or settled within the limits of our insurance coverage.
We could be forced to expend significant resources in the settlement or defense of the Securities Actions and any potential future lawsuits, and we may not prevail in such lawsuits. Additionally, we may not be successful in having any such lawsuits dismissed or settled within the limits of our insurance coverage.
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.
Our customers have no obligation to renew their subscriptions, and we cannot assure you that our customers will renew subscriptions with a similar or 29 increased subscription term or plan level or with the same or a greater number of users, social profiles or products.
In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups, and we are, or may become in the future, subject to such obligations. For 41 example, we may be subject to compliance with the Payment Card Industry Data Security Standard (“PCI DSS”).
In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups, and we are, or may become in the future, subject to such obligations. For example, we may be subject to compliance with the Payment Card Industry Data Security Standard (“PCI DSS”).
Any dispute with a customer with respect to such obligations could 44 have adverse effects on our relationship with that customer and other current and prospective customers, reduce demand for our platform or products, and harm our revenue, business and operating results.
Any dispute with a customer with respect to such obligations could have adverse effects on our relationship with that customer and other current and prospective customers, reduce demand for our platform or products, and harm our revenue, business and operating results.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and results of operations, which in turn are subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
Our ability to make scheduled payments on or to refinance our debt obligations depends on our financial condition and results of operations, which in turn are subject to prevailing economic and 60 competitive conditions and to certain financial, business and other factors beyond our control.
We may not be successful in delivering on some or all of the foregoing or doing so while maintaining competitive pricing of our platform and products, which could result in customer dissatisfaction and adversely affect our business.
We may not 42 be successful in delivering on some or all of the foregoing or doing so while maintaining competitive pricing of our platform and products, which could result in customer dissatisfaction and adversely affect our business.
Our estimates of market opportunity, forecasts of market growth and our operating metrics may prove to be inaccurate. 38 Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate.
Our estimates of market opportunity, forecasts of market growth and our operating metrics may prove to be inaccurate. Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate.
Numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
Numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and 43 affording residents with certain rights concerning their personal data.
Future business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity 43 risks and vulnerabilities, as our systems (including our platform) could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Future business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems (including our platform) could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Our ability to remain in compliance with the covenants under any future debt instruments, and to pay fees, interest and principal on our indebtedness will depend on, 57 among other things, our operating performance and market conditions.
Our ability to remain in compliance with the covenants under any future debt instruments, and to pay fees, interest and principal on our indebtedness will depend on, among other things, our operating performance and market conditions.
For example, we have been, and expect to continue being, the target of 35 unsuccessful phishing and social engineering attacks, SQL and malformed input attacks, card testing attacks, and credential stuffing attacks targeting employee and customer access.
For example, we have been, and expect to continue being, the target of unsuccessful phishing and social engineering attacks, SQL and malformed input attacks, card testing attacks, and credential stuffing attacks targeting employee and customer access.
Market and Competition Risk 26 • Our business depends on a strong brand, and if we are not able to maintain, develop, and enhance our brand, our business and operating results may be negatively impacted.
Market and Competition Risk Our business depends on a strong brand, and if we are not able to maintain, develop, and enhance our brand, our business and operating results may be negatively impacted.
For example, as described further in Note 11 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report), beginning in May 2024, securities class action litigation and related stockholder derivative lawsuits (the “Securities Actions”) were filed against us and certain of our executives alleging violations of the federal securities laws for allegedly making false and misleading statements and omissions of fact.
For example, as described further in Note 11 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report), beginning in May 2024, securities class action litigation and related stockholder derivative lawsuits (the “Securities Actions”) were filed against us and certain of our executives alleging violations of the federal securities laws for allegedly making false and misleading statements and omissions of fact.
If new technologies 30 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.
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 substantial majority of the services we use from AWS are for cloud-based server capacity, storage, and, to a lesser extent, certain other proprietary offerings. AWS enables us to order and reserve server capacity in varying amounts and sizes distributed across multiple availability zones and regions. We access AWS infrastructure through standard internet protocol, or IP, connectivity.
The majority of the services we use from AWS are for cloud-based server capacity, storage, and, to a lesser extent, certain other proprietary offerings. AWS enables us to order and reserve server 40 capacity in varying amounts and sizes distributed across multiple availability zones and regions. We access AWS infrastructure through standard internet protocol, or IP, connectivity.
General Risk Factors • Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price. • We may make acquisitions of, or invest in, other businesses or technologies, which may divert our management’s attention and result in the incurrence of indebtedness or dilution to our 27 stockholders.
General Risk Factors • Unstable market, economic and political conditions may have serious adverse consequences on our business, financial condition and share price. • We may make acquisitions of, or invest in, other businesses or technologies, which may divert our management’s attention and result in the incurrence of indebtedness or dilution to our stockholders.
However, failure to comply with changes in the law could expose Sprout to administrative, civil, or criminal liabilities, including fines, penalties, repayments, or suspension or debarment from eligibility for future U.S. government contracts. Additionally, Sprout’s effort to build an inclusive workforce in compliance with the law could lead to legal challenges.
However, failure to comply with changes in the law could expose Sprout to administrative, civil, or criminal liabilities, including fines, penalties, repayments, or suspension or debarment from eligibility for future U.S. government contracts. Additionally, Sprout Social’s effort to build an inclusive workforce in compliance with the law could lead to legal challenges.
General Risk Factors Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price.
General Risk Factors Unstable market, economic and political conditions may have serious adverse consequences on our business, financial condition and share price.
If the equity and credit markets continue to deteriorate, including as a result of global geopolitical tension or a global or domestic recession or the fear thereof, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.
If the equity and credit markets continue to deteriorate, including as a result of global geopolitical tension, political instability or a global or domestic recession or the fear thereof, it may make any necessary debt or equity financing more difficult to obtain in a timely manner or on favorable terms, more costly or more dilutive.
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, 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.
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 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.
If we are unable to maintain consistent revenue or 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.
If we are unable to maintain or increase our 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.
In the ordinary course of business, we collect and process personal data and other sensitive data, including proprietary and confidential business data, intellectual property, and other third-party data. For example, we process personal data about our customers’ consumers, content creators, and other social media users that interact with our customers’ social media pages.
In the ordinary course of business, we collect and process personal data and other sensitive data, including proprietary and confidential business data, intellectual property, and other third-party data. For example, we process personal data about our customers’ consumers, content creators, and other social media users that interact with our customers’ social media accounts.
The proliferation of new and emerging AI technologies, such as generative AI, 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 proliferation of new and emerging 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.
We have not established any reserve for any potential liability relating to the Securities Actions or any potential future lawsuits. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.
We have not established any accrual for any potential liability relating to the Securities Actions or any potential future lawsuits. It is possible that we could, in the future, incur judgments or enter into settlements of claims for monetary damages.
While we contractually prohibit our customers from using our platform to process, store, or collect sensitive information (such as personal health information or credit card information), our customers may breach these use prohibitions and cause us to inadvertently violate laws, rules, or regulations regarding the use and protection of personal data, which in turn may adversely impact our business.
While we contractually prohibit our customers from sharing directly with us or using our platform to process, store, or collect sensitive information (such as personal health information or credit card information), our customers may breach these use prohibitions and cause us to inadvertently violate laws, rules, or regulations regarding the use and protection of personal data, which in turn may adversely impact our business.
Legal and Regulatory Risks • We are subject to stringent and changing laws and obligations related to data privacy and security.
Legal and Regulatory Risks We are subject to stringent and changing obligations related to data privacy and security.
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, the price and 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.
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, our pricing 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.
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.
Further, many of our competitors may expend considerably greater 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.
Any failure of our products to operate effectively with the social media networks and other third-party platforms used most frequently by consumers or customers could reduce the demand for our products.
Any termination of our relationships with, or failure of our products to operate effectively with, the social media networks and other third-party platforms used most frequently by consumers or customers could reduce the demand for our products.
Accordingly, our cash flow may not be sufficient to allow us to pay principal and interest on future indebtedness and meet our other business obligations. 58 Item 1B. Unresolved Staff Comments None.
Accordingly, our cash flow may not be sufficient to allow us to pay principal and interest on future indebtedness and meet our other business obligations. 63 Item 1B. Unresolved Staff Comments None.
In addition to traditional computer “hackers,” malicious code (such as viruses and worms), compromised accounts with elevated privileges (phishing), credential stuffing, credential harvesting, employee misconduct or error, theft or misuse, and denial-of-service attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including advanced persistent threat intrusions) and attacks are now enhanced or facilitated by AI.
In addition to traditional computer “hackers,” malicious code (such as viruses and worms), compromised accounts with elevated privileges (phishing), compromised service accounts or API credentials or OAuth tokens, credential stuffing, credential harvesting, employee misconduct or error, theft or misuse, and denial-of-service attacks, sophisticated nation-state and nation-state supported actors now engage in attacks (including advanced persistent threat intrusions) and attacks are now enhanced or facilitated by AI.
If we cannot make the scheduled payments on our debt, we will be in default and, as a result, the lenders under our Credit Agreement could declare all outstanding principal and interest to be due and payable, the lenders under our credit facility could terminate their commitments to loan money and foreclose against the assets securing the borrowings under such credit facility, and we could be forced into bankruptcy or liquidation, which could result in an adverse impact to your investment in our company.
If we cannot make the scheduled payments on our debt, we will be in default and, as a result, the lenders under our Amended Credit Agreement could declare all outstanding principal and interest to be due and payable, terminate their commitments to loan money and foreclose against the assets securing the Facility (as defined below), and, as a result, we could be forced into bankruptcy or liquidation, which could result in an adverse impact to your investment in our company.
We cannot accurately predict the potential impact of any modification or termination of such agreements, including the impact on our access to the related APIs.
We cannot accurately predict the potential impact of any modification, non-renewal, or termination of such agreements, including the impact on our access to the related APIs.
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.
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.
Regulatory requirements, including potential bans, 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.
Regulatory 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.
Risks Related to the Use of Technology Any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business.
Risks Related to the Use of Technology Any cybersecurity-related attack, significa nt data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business.
The market price of our Class A common stock has been, and may continue to be, volatile and could be subject to wide fluctuations in light of the many risk factors listed in this section, as well as others beyond our control, including: • variations in our financial results or those of our competitors; 47 • changes in earnings estimates, recommendations or coverage of our common stock by securities analysts; • our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; • rumors, announcements or articles regarding our or our competitors’ operations, management, organization, products, acquisitions, strategic partnerships, capital commitments, financial condition or financial statements; • additions or departures of key personnel; • future sales of our common stock or other securities; • litigation or regulatory actions involving us, including Securities Actions; • general economic, industry, and market conditions; • political developments in the United States, including potential implications from the recent elections; and • other events or factors, including resulting from natural disasters, pandemics or responses to such events.
The market price of our Class A common stock has been, and may continue to be, volatile and could be subject to wide fluctuations in light of the many risk factors listed in this section, as well as others beyond our control, including: • variations in our financial results or those of our competitors; • changes in earnings estimates, recommendations or coverage of our common stock by securities analysts; • our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public; • rumors, announcements or articles regarding our or our competitors’ operations, management, organization, products, acquisitions, strategic partnerships, capital commitments, financial condition or financial statements; • additions or departures of key personnel; • future sales of our common stock or other securities; • litigation or regulatory actions involving us, including Securities Actions; • general economic, industry, and market conditions; • significant political and regulatory developments in the United States, including government budget cuts, government shut downs and tariffs ; and • other events or factors, including resulting from natural disasters, pandemics or responses to such events.
Our platform and products depend on the ability to access and integrate with third-party APIs. In particular, we have developed our platform and products to integrate with certain social media network APIs and the third-party applications of other parties. Generally, APIs and the data we receive from the APIs are written and controlled by the application provider.
In particular, we have developed our platform and products to integrate with certain social media network APIs and the third-party applications of other parties. Generally, APIs and the data we receive from the APIs are written and controlled by the application provider.
For each of the years ended December 31, 2024, 2023 and 2022, we derived 27%, 28% and 28%, respectively, of our revenue from customers located outside of the United States.
For each of the years ended December 31, 2025, 2024 and 2023, we derived 26%, 27% and 28%, respectively, of our revenue from customers located outside of the United States.
Our remote workforce poses increased risks to our information technology systems and data, as more of our employees work from home, utilizing network connections outside our premises.
Our remote workforce poses increased risks to our information technology systems and data, as more of our employees work from home, utilizing network connections and devices outside our premises, especially mobile devices.
The loss of service of senior management or other key employees could significantly delay or prevent the achievement of our development and strategic objectives. In particular, we depend to a considerable degree on the vision, skills, experience and effort of our Chief Executive Officer, Ryan Barretto, and our Co-Founder and Executive Chair, Justyn Howard.
The loss of service of senior management or other key employees could significantly delay or prevent the achievement of our development and strategic objectives. In particular, we depend to a considerable degree on the vision, skills, experience and effort of our Chief Executive Officer, Ryan Barretto.
Further, our Credit Agreement contains, and any future credit facility or other debt instrument may contain, provisions that will restrict our ability to dispose of assets and use the proceeds from any such disposition.
Further, our Amended Credit Agreement (as defined below) contains, and any future credit facility or other debt instrument may contain, provisions that will restrict our ability to dispose of assets and use the proceeds from any such disposition.
Our business, cash flows or results of operations may be harmed if any data provider: • changes, limits or discontinues our access to its APIs and data; • modifies its terms of service or other policies, including fees charged or restrictions on us or application developers; • changes or limits how customer information and other data is accessed by us or our customers; • changes or limits how we can use customer information and other data collected through the APIs; • establishes more favorable relationships with one or more of our competitors; or • experiences disruptions of its technology, services or business generally.
Our business, cash flows or results of operations may be harmed if any data provider: • changes, limits or discontinues our access to its APIs and data; • modifies its terms of service or other policies, including restrictions on us or application developers; • increases the cost associated with API access, data usage, or other pricing; • changes or limits how customer information and other data is accessed by us or our customers; • changes or limits how we can use customer information and other data collected through the APIs; • establishes more favorable relationships with one or more of our competitors; or • experiences disruptions of its technology, services or business generally.
We utilize various unpaid content marketing strategies, including webinars, blogs, thought leadership and social media engagement, as well as paid advertising, to attract visitors to our web properties, free trials and demonstrations.
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.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
For example, the California Consumer Privacy Act of 2018 (“CCPA”) as amended by the California Privacy Rights Act of 2020 (“CPRA”) applies to personal data of consumers, business representatives, and employees who are California residents and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.
Our guidance, including forward-looking statements about our business, is prepared by management and is qualified by, and subject to, a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
Our guidance and long-term operating model, including forward-looking statements about our business, is prepared by management and is qualified by, and subject to, a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, 50 economic and competitive uncertainties and contingencies.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, similar mechanisms have been challenged and invalidated in the past, and there is no assurance that we can satisfy or rely on these measures indefinitely to lawfully transfer personal data to the United States.
Any change in the number or quality of prospective customers entering free trials or requesting demonstrations 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.
Any change in the number or quality of prospective customers entering free trials or requesting demonstrations, 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.
These provisions include: • providing for a classified board of directors with staggered, three-year terms; • authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; • prohibiting cumulative voting in the election of directors; • providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors; • prohibiting stockholder action by written consent; • limiting the persons who may call special meetings of stockholders; and • requiring advance notification of stockholder nominations and proposals. 49 These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
These provisions include: • providing for a classified board of directors with staggered, three-year terms; • authorizing our board of directors to issue preferred stock with voting or other rights or preferences that could discourage a takeover attempt or delay changes in control; • prohibiting cumulative voting in the election of directors; • providing that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; • prohibiting the adoption, amendment or repeal of our amended and restated bylaws or the repeal of the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors without the required approval of at least 66.67% of the shares entitled to vote at an election of directors; • prohibiting stockholder action by written consent; • limiting the persons who may call special meetings of stockholders; and • requiring advance notification of stockholder nominations and proposals.
As of December 31, 2024, we had an accumulated deficit of $354.4 million. We have never achieved profitability on an annual or quarterly basis and we do not know if we will be able to achieve or sustain profitability.
As of December 31, 2025, we had an accumulated deficit of $397.7 million. We have never achieved profitability on an annual or quarterly basis and we do not know if we will be able to achieve or sustain profitability.
There can be no 29 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 adversely affect our results of operations.
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.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

14 edited+3 added−1 removed2 unchanged
Biggest changeRisk Factors in this Annual Report on Form 10-K, including the sections of our risk factors titled “Risks Related to the Use of Technology” and “Legal and Regulatory Risks.” Governance Our overarching security program, enterprise-wide cybersecurity strategy, risk management program, and related security policies, standards, and processes are managed by the Vice President of Information Technology, Security, and Compliance and the Chief Technology Officer.
Biggest changeManagement Responsibilities Our overarching security program, enterprise-wide cybersecurity strategy, risk management program, and related security policies, standards, and processes are managed by the Vice President of Information Technology, Security, and Compliance and the Chief Technology Officer.
Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. For example, cybersecurity risk is addressed as a component of the Company’s enterprise risk management program and identified in the Company’s risk register.
Enterprise Risk Integration Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes. For example, cybersecurity risk is addressed as a component of the Company’s enterprise risk management program and identified in the Company’s risk register.
Also, the security team works with management to help identify, discuss, and prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business.
The security team works with management to help identify, discuss, and prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business.
Sprout Social maintains an overarching security program comprising several teams including (1) Security Operations, (2) Information Technology, (3) Application Security, (4) Infrastructure Security, and (5) Governance, Risk, and Compliance.
Security Program Structure Sprout Social maintains an overarching security program comprising several teams including (1) Security Operations, (2) Information Technology, (3) Application Security, (4) Infrastructure Security, and (5) Governance, Risk, and Compliance.
Risk Management and Strategy We implement and maintain various information security processes designed to identify, assess, and manage material risks from cybersecurity threats to our critical infrastructure, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and data related to our employees and customers (“Information Systems and Data”).
We implement and maintain various information security processes designed to identify, assess, and manage material risks from cybersecurity threats to our critical infrastructure, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and data related to our employees and customers (“Information Systems and Data”).
In addition, we use third-party service providers to assist us from time to time in reviewing our policies, standards and procedures, identifying and assessing material risks from cybersecurity threats, and making recommendations to improve our security program, including, for example, professional services firms, external legal counsel, penetration testing firms, cybersecurity consultants, and cybersecurity software providers.
Third-Party Assessments and Support 64 We use third-party service providers to assist us from time to time in reviewing our policies, standards and procedures, identifying and assessing material risks from cybersecurity threats, and making recommendations to improve our security program, including, for example, professional services firms, external legal counsel, penetration testing firms, cybersecurity consultants, and cybersecurity software providers.
Depending on the environment, as part of our security program, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example, a general information security policy, incident response plan and incident response policy, data classification, protection, retention, and destruction policy, server protection and logging standards, vulnerability management program, vendor selection and security standard, business continuity and disaster recovery plan, employee onboarding, offboarding, and access escalation policy, risk management and audit policy, regular penetration testing of certain networks, maintaining industry recognized certifications, cybersecurity insurance, and dedicated cybersecurity staff.
Technical and Organizational Measures As part of our security program, we implement and maintain various technical, physical, and organizational measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to our Information Systems and Data, including, for example, a general information security policy, incident response plan and incident response policy, data classification, protection, retention, and destruction policy, server protection and logging standards, vulnerability management program, vendor selection and security standard, business continuity and disaster recovery plan, employee onboarding, offboarding, and access escalation policy, risk management and audit policy, regular penetration testing of our production networks and applications, maintaining industry recognized certifications, cybersecurity insurance, and dedicated cybersecurity staff.
Item 1C. Cybersecurity As a cloud service provider, Sprout Social believes keeping data secure is important and takes steps designed to do so.
Item 1C. Cybersecurity Risk Management and Strategy As a cloud service provider, Sprout Social believes keeping data secure is important and takes steps designed to do so.
Our security program is designed to align with the ISO 27001 (International Organization for Standardization) standard, incorporates elements from the National Institute of Standards and Technology (NIST), and is regularly reviewed and audited by independent external third-party auditors.
Our security program is designed to align with the ISO 27001:2022 (International Organization for Standardization) standard and ISO 27701:2019 (privacy extension), incorporates elements from the National Institute of Standards and Technology (NIST) Cybersecurity Framework, and is regularly reviewed and audited by independent external third-party auditors.
Senior managers work with the Company’s incident response team to help the Company mitigate and remediate certain cybersecurity incidents of which they are notified. In addition, the Company’s incident response plan includes reporting to the Board of Directors, regulators, and law enforcement for certain cybersecurity incidents.
Senior managers work with the Company’s incident response team to help the Company mitigate and remediate certain cybersecurity incidents of which they are notified. The Company's incident response plan includes reporting to the Board of Directors, regulators, and law enforcement for incidents meeting defined thresholds based on incident severity and potential impact. 65
For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part 1. Item 1A.
We require information security-related contractual provisions in our vendor agreements. For a description of the risks from cybersecurity threats that may materially affect the Company and how they may do so, see our risk factors under Part 1. Item 1A.
They also report on our risk management program, overall security posture, progress on maturing the security program, and new or emerging risks to senior management and the Board of Directors. Our Board of Directors addresses the Company’s cybersecurity risk management as part of its general oversight function.
They also report on our risk management program, overall security posture, progress on maturing the security program, and new or emerging risks to senior management and the Board of Directors.
The Board of Directors is responsible for overseeing Company’s cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats. Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to members of management based on predefined criteria, including, for example, to our Vice President of Information Technology, Security, and Compliance, General Counsel, and CTO.
Incident Response and Escalation Our cybersecurity incident response plan is designed to escalate certain cybersecurity incidents to members of management based on predefined criteria, including, for example, to our Vice President of Information Technology, Security, and Compliance, General Counsel, and Chief Technology Officer.
We use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, and other types of third-party service providers for critical business operations.
We use third-party service providers to perform a variety of functions throughout our business, such as application providers, hosting companies, and other types of third-party service providers for critical business operations. Our vendor management process includes security assessments for vendors handling sensitive data, ongoing monitoring based on risk tier, and requirements that certain vendors maintain appropriate security certifications.
Removed
Depending on the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the provider, our vendor management process 59 may involve different levels of assessment designed to help identify cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider.
Added
Risk Factors in this Annual Report on Form 10-K, including the sections of our risk factors titled “Risks Related to the Use of Technology” and “Legal and Regulatory Risks.” Governance Board Oversight Our Board of Directors is responsible for overseeing the Company's cybersecurity risk management processes, including oversight and mitigation of risks from cybersecurity threats.
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The Board receives updates on cybersecurity matters twice per year, during which management presents information regarding the Company's cybersecurity program, risk assessments, threat landscape developments, security control effectiveness, third-party assessments, and material security events or incidents.
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The Vice President of Information Technology, Security, and Compliance has over 15 years of experience leading information technology and security teams and holds a Certified Information Systems Security Professional (CISSP) certification. The Vice President of Information Technology, Security, and Compliance reports to the Chief Technology Officer.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFollowing the early termination to one floor of leased space on December 31, 2025, our office space in Chicago will reduce down to approximately 64,000 square feet. We also have office locations in Seattle, Washington; Dublin, Ireland; Santa Monica, California; and Kraków, Poland. These offices are leased, and we do not own any real property.
Biggest changeItem 2. Properties Our corporate headquarters are located in Chicago, Illinois, where we lease approximately 64,000 square feet of office space. We also have office locations in Seattle, Washington; Dublin, Ireland; and Kraków, Poland. These offices are leased, and we do not own any real property. We believe that our facilities are suitable to meet our current needs.
Removed
Item 2. Properties Our corporate headquarters are located in Chicago, Illinois, where we lease approximately 128,000 square feet of office space.
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In November 2024, the Company entered into an amendment to its Chicago office lease agreement, which will result in an early termination to one floor of the leased space effective December 31, 2025 and also extended the term for the remaining floor to December 31, 2032.
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We believe that our facilities are suitable to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings See Note 11 - “Commitments and Contingencies” of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for information regarding certain legal proceedings in which we are involved, which is incorporated by reference into this Part I, Item 3. Item 4. Mine Safety Disclosures Not applicable. 60 PART II
Biggest changeItem 3. Legal Proceedings See Note 11 - “Commitments and Contingencies” of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for information regarding certain legal proceedings in which we are involved, which is incorporated by reference into this Part I, Item 3. Item 4. Mine Safety Disclosures Not applicable. 66 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of February 14, 2025, we had 5 holders of record of our Class A common stock and 14 holders of record of our Class B common stock .
Biggest changeHolders of Record As of February 13, 2026, we had 4 holders of record of our Class A common stock and 14 holders of record of our Class B common stock .
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the S&P 500 Index and the Nasdaq Computer Index. The graph assumes an initial investment of $100 in our Class A common stock at the market close on December 31, 2019.
The graph below compares the cumulative total stockholder return on our Class A common stock with the cumulative total return on the S&P 500 Index and the Nasdaq Computer Index. The graph assumes an initial investment of $100 in our Class A common stock at the market close on December 31, 2020.
Data for the S&P 500 Index and the Nasdaq Computer Index assume reinvestment of dividends. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock. 61 62 Item 6. [Reserved]
Data for the S&P 500 Index and the Nasdaq Computer Index assume reinvestment of dividends. The comparisons in the graph below are based upon historical data and are not indicative of, nor intended to forecast, future performance of our Class A common stock. 67 68 Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYear Ended December 31, 2024 2023 2022 Reconciliation of Non-GAAP operating income (loss) ( dollars in thousands ) Loss from operations $ (60,356) $ (69,277) $ (51,676) Stock-based compensation expense 84,303 67,704 47,738 Acquisition-related expenses — 4,272 — Amortization of acquired intangible assets 4,851 2,022 — Restructuring charges 3,020 — — Gain on lease modification (1,570) — — Non-GAAP operating income (loss) $ 30,248 $ 4,721 $ (3,938) Non-GAAP Net Income (Loss) We define non-GAAP net income (loss) as GAAP net loss, excluding stock-based compensation expense, acquisition-related expenses and amortization expense associated with the acquired intangible assets from the Tagger acquisition, restructuring charges and non-cash gains from lease modifications.
Biggest changeWe 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 this non-GAAP financial measure eliminates the effect of stock-based compensation, acquisition-related expenses, amortization expense, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration, which are often unrelated to overall operating performance. 86 Year Ended December 31, 2025 2024 2023 Reconciliation of Non-GAAP operating income ( dollars in thousands ) Loss from operations $ (43,453) $ (60,356) $ (69,277) Stock-based compensation expense 78,719 84,303 67,704 Acquisition-related expenses 1,805 — 4,272 Amortization of acquired intangible assets 6,711 4,851 2,022 Restructuring charges 2,731 3,020 — Loss/(gain) on lease termination and modification 1,175 (1,570) — Accretion associated with contingent consideration 423 — — Non-GAAP operating income $ 48,111 $ 30,248 $ 4,721 Non-GAAP Net Income We define non-GAAP net income as GAAP net loss, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisition, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration.
Financing Activities Net cash used in financing activities for the year ended December 31, 2024 was $30.3 million, primarily driven by $30.0 million in repayments of the Facility and $2.3 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards, partially offset by $2.0 million of proceeds under our employee stock purchase plan.
Net cash used in financing activities for the year ended December 31, 2024 was $30.3 million, primarily driven by $30.0 million in repayments of the Facility and $2.3 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards, partially offset by $2.0 million of proceeds under our employee stock purchase plan.
Determining the period of benefit of requires judgment for which we take into consideration products sold, expected customer life, expected contract renewals, technology life cycle and other factors. The Company assesses the expected period of benefit on an annual basis and whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Determining the period of benefit requires judgment for which we take into consideration products sold, expected customer life, expected contract renewals, technology life cycle and other factors. The Company assesses the expected period of benefit on an annual basis and whenever events or changes in circumstances occur that could impact the recoverability of these assets.
Cost of Revenue and Gross Margin Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Cost of revenue Subscription $ 90,305 $ 75,076 $ 15,229 20 % Professional services and other 1,170 1,192 (22) (2) % Total cost of revenue 91,475 76,268 15,207 20 % Gross profit $ 314,433 $ 257,375 $ 57,058 22 % Gross margin Total gross margin 77 % 77 % The increase in cost of subscription revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Data provider fees $ 8,083 Personnel costs 1,780 Amortization of intangible assets 1,645 Stock-based compensation expense 712 Other 3,009 Subscription cost of revenue $ 15,229 Fees paid to our data providers increased due to higher costs of third-party data utilized in our platform.
Cost of Revenue and Gross Margin Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Cost of revenue Subscription $ 90,305 $ 75,076 $ 15,229 20 % Professional services and other 1,170 1,192 (22) (2) % Total cost of revenue 91,475 76,268 15,207 20 % Gross profit $ 314,433 $ 257,375 $ 57,058 22 % Gross margin Total gross margin 77 % 77 % The increase in cost of subscription revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Data provider fees $ 8,083 Personnel costs 1,780 Amortization of intangible assets 1,645 Stock-based compensation expense 712 Other 3,009 Subscription cost of revenue $ 15,229 82 Fees paid to our data providers increased due to higher costs of third-party data utilized in our platform.
Our future capital requirements will depend on many factors, including our subscription growth rate, subscription renewal activity, billing frequency, the impact of macroeconomic 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.
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.
Interest Income, Net Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Interest income, net $ 448 $ 4,267 $ (3,819) (90) % Percentage of total revenue — % 1 % The decrease in interest income, net was primarily driven by higher interest expense from the credit facility, partially offset by lower interest income attributable to a lower balance of marketable securities.
Interest Income, Net Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Interest income, net $ 448 $ 4,267 $ (3,819) (90) % Percentage of total revenue — % 1 % The decrease in interest income, net was primarily driven by higher interest expense from the Facility, partially offset by lower interest income attributable to a lower balance of marketable securities.
Operating across major networks, including X (formerly known as Twitter), Facebook, Instagram, TikTok, 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.
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.
For equity awards with both service and performance conditions, compensation expense is recognized on a graded vesting basis over the requisite service period once the achievement of the performance condition is considered probable. Assessing whether performance conditions are probable to be achieved and estimating the timing upon which the condition may be achieved requires judgment.
For equity awards with both service and performance conditions, compensation expense is recognized on a graded vesting basis over the requisite service period once the achievement of the 92 performance condition is considered probable. Assessing whether performance conditions are probable to be achieved and estimating the timing upon which the condition may be achieved requires judgment.
The net cash outflow from changes in operating assets and liabilities was primarily the result of a $40.5 million increase in deferred commissions due to the addition of new customers and expansion of the business, a $27.0 million 84 increase in gross accounts receivable and a $3.5 million decrease in operating lease liabilities.
The net cash outflow from changes in operating assets and liabilities was primarily the result of a $40.5 million increase in deferred commissions due to the addition of new customers and expansion of the business, a $27.0 million increase in gross accounts receivable and a $3.5 million decrease in operating lease liabilities.
Sales and Marketing Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Sales and marketing $ 184,122 $ 168,091 $ 16,031 10 % Percentage of total revenue 45 % 50 % 72 The increase in sales and marketing expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Personnel costs $ 22,219 Stock-based compensation expense 1,428 Advertising 1,074 Other 1,545 Sales commission expense (10,235) Sales and marketing $ 16,031 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.
Sales and Marketing Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Sales and marketing $ 184,122 $ 168,091 $ 16,031 10 % Percentage of total revenue 45 % 50 % 83 The increase in sales and marketing expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Personnel costs $ 22,219 Stock-based compensation expense 1,428 Advertising 1,074 Other 1,545 Sales commission expense (10,235) Sales and marketing $ 16,031 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.
We believe global demand for our 65 platform and offerings will continue to increase as awareness of our platform in international markets grows. We plan to continue adding to our local sales, customer support and customer success teams in select international markets over time.
We believe global demand for our platform and offerings will continue to increase as awareness of our platform in international markets grows. We plan to continue adding to our local sales, customer support and customer success teams in select international markets over time.
This revenue has historically represented less than 1% of our revenue and is expected to be immaterial for the foreseeable future. Our tiered subscription-based model allows our customers to choose among three 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.
This revenue has historically represented less than 1% of our revenue and is expected to be immaterial for the foreseeable future. Our tiered subscription-based model allows our customers to choose among four 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.
We view the number of customers that contribute 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.
We view the number of customers that contribute $50,000 or more 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.
On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates. The significant accounting policies used in the preparation of our audited financial statements are discussed in Note 1 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report).
On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates. The significant accounting policies used in the preparation of our audited financial statements are discussed in Note 1 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report).
Our principal uses of cash in recent periods have been to fund operations, pay for acquisitions, invest in marketable securities, pay down the Facility and invest in capital expenditures. 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.
Our principal uses of cash in recent periods have been to fund operations, pay for acquisitions, pay down our Facility and invest in capital expenditures. 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.
Our primary uses of cash from operating activities are for personnel costs across the sales and marketing and research and development departments and hosting costs. Historically, we have generated negative cash flows from operating activities. However, for the years ended December 31, 2024, 2023 and 2022, we generated positive cash flows from operations.
Our primary uses of cash from operating activities are for personnel costs across the sales and marketing and research and development departments and hosting costs. Historically, we have generated negative cash flows from operating activities. However, for the years ended December 31, 2025, 2024 and 2023, we generated positive cash flows from operations.
See Note 1 - “Nature of Operations and Summary of Significant Accounting Policies” of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for additional information on the change in accounting estimate.
See Note 1 - “Nature of Operations and Summary of Significant Accounting Policies” of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for additional information on the change in accounting estimate.
Business Combinations We account for acquisitions using the acquisition method of accounting, which requires assigning the fair value of purchase consideration to the assets acquired and liabilities assumed at the acquisition date.
Business Combinations We account for acquisitions using the acquisition method of accounting, which requires assigning the fair value of purchase consideration to the assets acquired, liabilities assumed and any contingent consideration at the acquisition date.
The increase in other was primarily driven by hosting fees. 71 Operating Expenses Research and Development Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Research and development $ 102,794 $ 79,550 $ 23,244 29 % Percentage of total revenue 25 % 24 % The increase in research and development expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Personnel costs $ 11,617 Stock-based compensation expense 7,141 Restructuring costs 2,958 Other 1,528 Research and development $ 23,244 Personnel costs and stock-based compensation expense increased primarily as a result of higher headcount within our research and development teams throughout the majority of the year.
Operating Expenses Research and Development Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Research and development $ 102,794 $ 79,550 $ 23,244 29 % Percentage of total revenue 25 % 24 % The increase in research and development expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Personnel costs $ 11,617 Stock-based compensation expense 7,141 Restructuring costs 2,958 Other 1,528 Research and development $ 23,244 Personnel costs and stock-based compensation expense increased primarily as a result of higher headcount within our research and development teams throughout the majority of the year.
General and Administrative Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) General and administrative $ 87,873 $ 79,011 $ 8,862 11 % Percentage of total revenue 22 % 24 % The increase in general and administrative expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Stock-based compensation expense $ 7,318 Personnel costs 5,204 Amortization of intangible assets 965 Other 1,217 Gain on lease modification (1,570) Acquisition-related costs (4,272) General and administrative $ 8,862 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. 73 Headcount in the general and administrative organizations throughout 2024 was on average 11% higher than 2023.
General and Administrative Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) General and administrative $ 87,873 $ 79,011 $ 8,862 11 % Percentage of total revenue 22 % 24 % The increase in general and administrative expense for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to the following: Change ( in thousands ) Stock-based compensation expense $ 7,318 Personnel costs 5,204 Amortization of intangible assets 965 Other 1,217 Gain on lease modification (1,570) Acquisition-related costs (4,272) General and administrative $ 8,862 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.
We view the number of customers that contribute 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.
We view the number of customers that contribute $30,000 or more 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.
The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. 87 When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.
The excess of the fair value of purchase consideration over the fair value of these assets acquired, liabilities assumed and any contingent consideration is recorded as goodwill. When determining the fair values of assets acquired, liabilities assumed and any contingent consideration, management makes significant estimates and assumptions, especially with respect to intangible assets and contingent consideration.
These expenses are comprised of 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.
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.
Non-GAAP Gross Profit 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 acquisition and restructuring charges.
Non-GAAP Gross Profit 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 and NewsWhip acquisitions and restructuring charges.
For this purpose, we define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period 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.
For purposes of the below metrics, we define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period, 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.
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, Item 8 of this Annual Report) for further discussion. Acquisition of Repustate, Inc.
The impact of Tagger’s financial results following the date of acquisition were not 70 significant to Sprout Social’s consolidated financial statements. Refer to Note 4 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion. Acquisition of Repustate, Inc.
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. We generated revenue of $405.9 million, $333.6 million and $253.8 million during the years ended December 31, 2024, 2023, and 2022, respectively, representing growth of 22% in 2024 and 31% in 2023.
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. We generated revenue of $457.5 million, $405.9 million and $333.6 million during the years ended December 31, 2025, 2024, and 2023, respectively, representing growth of 13% in 2025 and 22% in 2024.
We believe non-GAAP net income (loss) 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, acquisition-related expenses, amortization expense, restructuring charges and non-cash gains from lease modifications, which are often unrelated to overall operating performance.
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, acquisition-related expenses, amortization expense, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration, which are often unrelated to overall operating performance.
Refer to Note 8 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion. As of December 31, 2024, we have non-cancellable contractual obligations related primarily to operating leases and minimum guaranteed purchase commitments for data and services.
Refer to Note 4 and 14 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion. As of December 31, 2025, we have non-cancellable contractual obligations related primarily to operating leases and minimum guaranteed purchase commitments for data and services.
Currently, approximately 30,000 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.
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.
We funded the purchase consideration with a combination of cash on hand and $75 million borrowed under the Facility (defined below), which is further described in Note 8 - Revolving Line of Credit of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report).
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 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report).
In 2024, software subscriptions contributed 99% of our revenue. We generated net losses of $62.0 million, $66.4 million and $50.2 million during the years ended December 31, 2024, 2023, and 2022, respectiv ely. Our net losses include stock-based compensation expense of $84.3 million, $67.7 million and $47.7 million in the years ended December 31, 2024, 2023, and 2022, respectively.
In 2025, software subscriptions contributed 99% of our revenue. We generated net losses of $43.3 million, $62.0 million and $66.4 million during the years ended December 31, 2025, 2024, and 2023, respectiv ely. Our net losses include stock-based compensation expense of $78.7 million, $84.3 million and $67.7 million in the years ended December 31, 2025, 2024, and 2023, respectively.
We believe non-GAAP net income (loss) 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, acquisition-related expenses and amortization expense, restructuring charges and non-cash gains from 81 lease modifications, which are often unrelated to overall operating performance.
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, acquisition-related expenses, amortization expense, restructuring charges, non-cash losses or gains from lease terminations and modifications, and 87 accretion associated with contingent consideration, which are often unrelated to overall operating performance.
Investing Activities Net cash provided by investing activities for the year ended December 31, 2024 was $40.7 million, which was primarily due to $45.1 million in proceeds from the maturities of marketable securities, partially offset by $3.0 million in purchases of computer equipment and hardware and the $1.5 million payout of the Repustate acquisition purchase price holdback.
Investing Activities Net cash used in investing activities for the year ended December 31, 2025 was $52.1 million, which was primarily due to $51.8 million paid for the acquisition of NewsWhip and $4.1 million in purchases of computer equipment and hardware, partially offset by $3.8 million in proceeds from the maturities of marketable securities. 90 Net cash provided by investing activities for the year ended December 31, 2024 was $40.7 million, which was primarily due to $45.1 million in proceeds from the maturities of marketable securities, partially offset by $3.0 million in purchases of computer equipment and hardware and the $1.5 million payout of the Repustate acquisition purchase price holdback.
The net cash outflow from changes in operating assets and liabilities was primarily the result of a $30.3 million increase in deferred commissions due to the addition of new customers and expansion of the business, an $11.5 million increase in gross accounts receivable and a $2.9 million decrease in operating lease liabilities.
The net cash outflow from changes in operating assets and liabilities was primarily the result of a $36.3 million increase in deferred commissions due to the addition of new customers and expansion of the business, an $18.3 million increase in gross accounts receivable and a $3.3 million decrease in operating lease liabilities.
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 factors described above. We expect these trends to continue as we remain focused on our most sophisticated customers.
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.
As of December 31, 2024 2023 Number of customers contributing more than $50,000 in ARR 1,718 1,399 66 Components of our Results of Operations Revenue Subscription We generate revenue primarily from subscriptions to our social media management platform under a software-as-a-service model.
As of December 31, 2025 2024 Number of customers contributing $50,000 or more in ARR 2,022 1,718 Components of our Results of Operations Revenue Subscription We generate revenue primarily from subscriptions to our social media management platform under a software-as-a-service model.
We plan to increase the dollar amount of our investment in sales and marketing for the foreseeable future, primarily for increased headcount for our sales department. General and Administrative General and administrative expenses primarily consist of personnel expenses associated with our finance, legal, human resources and other administrative employees.
We plan to increase the dollar amount of our investment in sales and marketing for the foreseeable future as we continue to scale the business. General and Administrative General and administrative expenses primarily consist of personnel expenses associated with our finance, legal, human resources and other administrative employees.
Borrowings under the Facility may be designated as SOFR Loans or ABR Loans (each as defined in the Credit Agreement), subject to certain terms and conditions under the Credit Agreement, and bear interest at a rate of either (i) SOFR (subject to a 1.0% floor), plus 0.10%, plus a margin ranging from 2.75% to 3.25% based on the Company’s liquidity or (ii) ABR (subject to a 2.0% floor) plus a margin ranging from 1.75% to 2.25% based on the Company’s liquidity.
Pursuant to the Amended Credit Agreement, borrowings under the Facility may be designated as SOFR Loans or ABR Loans (each as defined in the Amended Credit Agreement), subject to certain terms and conditions under the Amended Credit Agreement, and bear interest at a rate of either (i) SOFR (subject to a 1.0% floor), plus 0.10%, plus a margin ranging from 2.25% to 2.75% based on our consolidated Senior Net Leverage Ratio or (ii) ABR (subject to a 2.0% floor) plus a margin ranging from 1.25% to 1.75% based on our Consolidated Senior Net Leverage Ratio.
For the year ended December 31, 2024, as compared to the year ended December 31, 2023, while our total number of customers decreased, our number of customers contributing over $10,000 in annualized recurring revenue (“ARR”) and $50,000 in ARR increased.
For the year ended December 31, 2025, as compared to the year ended December 31, 2024, 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.
Non-cash charges primarily consisted of $47.7 million of stock-based compensation expense, $3.9 million of depreciation and intangible asset amortization expense, $18.6 million for amortization of deferred contract acquisition costs, which were primarily commissions, $1.2 million for credit losses on accounts receivable and $1.0 million of amortization of right-of-use, or ROU, operating lease assets.
Non-cash charges primarily consisted of $78.7 million of stock-based compensation expense, $24.1 million for amortization of deferred contract acquisition costs, which were primarily commissions, $10.8 million of depreciation and intangible asset amortization expense, $3.6 million for credit losses on accounts receivable, $1.5 million of amortization of right-of-use, or ROU, operating lease assets and a $1.2 million gain on lease modification.
The following table summarizes our cash flows for the periods presented: Years Ended December 31, 2024 2023 2022 (in thousands) Net cash provided by operating activities $ 26,321 $ 6,456 $ 10,668 Net cash provided by (used in) investing activities 40,726 (86,635) (37,672) Net cash provided by (used in) financing activities (30,324) 53,957 (193) Net increase (decrease) in cash, cash equivalents and restricted cash $ 36,723 $ (26,222) $ (27,197) Operating Activities Our largest source of operating cash is cash collections from our customers for subscription services.
The following table summarizes our cash flows for the periods presented: Years Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by operating activities $ 43,427 $ 26,321 $ 6,456 Net cash (used in) provided by investing activities (52,146) 40,726 (86,635) Net cash provided by (used in) financing activities 15,504 (30,324) 53,957 Net increase (decrease) in cash, cash equivalents and restricted cash $ 6,785 $ 36,723 $ (26,222) 89 Operating Activities Our largest source of operating cash is cash collections from our customers for subscription services.
Macroeconomic Conditions 63 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, fluctuations in inflation and interest rates, ongoing overseas conflict, volatility in the capital markets and related market uncertainty.
Macroeconomic and Geopolitical Conditions 69 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 inflation, interest rates and currency exchange rates, volatility in the capital markets, tariffs and trade tensions, and related market uncertainty.
Interest Income (Expense), Net Interest income (expense), net consists primarily of interest expense related to the credit facility and is offset by interest income earned on our cash and investment balances. Other Expense, Net Other expense, net consists of foreign currency transaction gains and losses.
Interest Income (Expense), Net Interest income (expense), net consists primarily of interest expense related to the Facility and is offset by interest income earned on our cash and investment balances.
Our gross margin may fluctuate from period to period based on revenue earned, the timing and amount of investments made to expand our hosting capacity, our customer support and professional services teams and in hiring additional personnel, and the impact of acquisitions. We expect our gross profit and gross margin to increase as our business grows over time.
Gross Profit and Gross Margin Gross margin is calculated as gross profit as a percentage of total revenue. Our gross margin may fluctuate from period to period based on revenue earned, the timing and amount of investments made to expand our hosting capacity, our customer support and professional services teams and in hiring additional personnel, and the impact of acquisitions.
Year Ended December 31, 2024 2023 2022 Reconciliation of Non-GAAP gross profit ( dollars in thousands ) Gross Profit $ 314,433 $ 257,375 $ 193,970 Stock-based compensation expense 3,936 3,224 2,491 Amortization of acquired developed technology 2,820 1,175 — Restructuring charges 62 — — Non-GAAP gross profit $ 321,251 $ 261,774 $ 196,461 Non-GAAP Operating Income (Loss) We define non-GAAP operating income (loss) as GAAP loss from operations, excluding stock-based compensation expense, acquisition-related expenses and amortization expense associated with the acquired intangible assets from the Tagger acquisition, restructuring charges and non-cash gains from lease modifications.
Year Ended December 31, 2025 2024 2023 Reconciliation of Non-GAAP gross profit ( dollars in thousands ) Gross Profit $ 354,852 $ 314,433 $ 257,375 Stock-based compensation expense 2,802 3,936 3,224 Amortization of acquired developed technology 3,520 2,820 1,175 Restructuring charges 416 62 — Non-GAAP gross profit $ 361,590 $ 321,251 $ 261,774 Non-GAAP Operating Income We define non-GAAP operating income as GAAP loss from operations, excluding stock-based compensation expense, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration.
International expansion We see international expansion as a meaningful opportunity to grow our platform. Revenue generated from non-U.S. customers during the year ended December 31, 2024 was approximately 27% of our total revenue. We have teams in Ireland, Canada, the United Kingdom, Singapore, India, Australia, the Philippines and Poland to support our growth internationally.
Revenue generated from non-U.S. customers during the year ended December 31, 2025 was approximately 26% of our total revenue. We have teams in Ireland, Canada, the United Kingdom, Singapore, India, Australia, the Philippines and Poland to support our growth internationally.
Year Ended December 31, 2024 2023 2022 Reconciliation of Non-GAAP net income (loss) ( dollars in thousands ) Net loss $ (61,971) $ (66,427) $ (50,240) Stock-based compensation expense 84,303 67,704 47,738 Acquisition-related expenses — 4,272 — Amortization of acquired intangible assets 4,851 2,022 — Restructuring charges 3,020 — — Gain on lease modification (1,570) — — Non-GAAP net income (loss) $ 28,633 $ 7,571 $ (2,502) Non-GAAP Net Income (Loss) per Share We define non-GAAP net income (loss) per share as GAAP net loss per share attributable to common shareholders, basic and diluted, excluding stock-based compensation expense, acquisition-related expenses and amortization expense associated with the acquired intangible assets from the Tagger acquisition, restructuring charges and non-cash gains from lease modifications.
Year Ended December 31, 2025 2024 2023 Reconciliation of Non-GAAP net income ( dollars in thousands ) Net loss $ (43,327) $ (61,971) $ (66,427) Stock-based compensation expense 78,719 84,303 67,704 Acquisition-related expenses 1,805 — 4,272 Amortization of acquired intangible assets 6,711 4,851 2,022 Restructuring charges 2,731 3,020 — Loss/(gain) on lease termination and modification 1,175 (1,570) — Accretion associated with contingent consideration 423 — — Non-GAAP net income $ 48,237 $ 28,633 $ 7,571 Non-GAAP Net Income per Share 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, acquisition-related expenses, amortization expense associated with the acquired intangible assets from the Tagger and NewsWhip acquisitions, restructuring charges, non-cash losses or gains from lease terminations and modifications, and accretion associated with contingent consideration.
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.
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 expect this trend to continue for the foreseeable future. 68 Results of Operations The following tables set forth information comparing the components of our results of operations in dollars and as a percentage of total revenue for the periods presented.
Results of Operations The following tables set forth information comparing the components of our results of operations in dollars and as a percentage of total revenue for the periods presented.
Customers contributing over $10,000 in ARR grew 7% versus the prior year and customers contributing over $50,000 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.
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.
Customers contributing over $10,000 in ARR grew 31% versus the prior year and customers contributing over $50,000 in ARR grew 44% 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.
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.
We will 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.
We intend 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. In recent years, we have increased our focus on expanding our customers’ use of our platform over time.
Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. 88
Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations. Contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved.
Income Tax Provision The income tax provision consists of current and deferred taxes for our United States and foreign jurisdictions. We have historically reported a taxable loss in our most significant jurisdiction, the United States, and have a full valuation allowance against our deferred tax assets related to domestic operations and certain deferred tax assets related to foreign operations.
We have historically reported a taxable loss in our most significant jurisdiction, the United States, and have a full valuation allowance against our deferred tax assets related to domestic operations and certain deferred tax assets related to foreign operations. We expect this trend to continue for the foreseeable future.
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.
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 84 driven by the intangible assets recognized as part of the Tagger acquisition in August 2023.
Other Expense, Net Years Ended December 31, Change 2023 2022 Amount % ( dollars in thousands ) Other expense, net $ (768) $ (580) $ (188) 32 % Percentage of total revenue — % — % The change in other expense, net was primarily driven by foreign exchange transaction losses. 78 Income Tax (Benefit) Expense Years Ended December 31, Change 2023 2022 Amount % ( dollars in thousands ) Income tax (benefit) expense $ 649 $ 366 $ 283 77 % Percentage of total revenue — % — % The change in income tax (benefit) expense was due to higher earnings in foreign jurisdictions. 79 Non-GAAP Financial Measures In addition to our results determined in accordance with U.S. generally accepted accounting principles, or GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance.
Income Tax Expense Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Income tax expense $ 670 $ 649 $ 21 3 % Percentage of total revenue — % — % The change in income tax expense was due to higher earnings in foreign jurisdictions. 85 Non-GAAP Financial Measures In addition to our results determined in accordance with U.S. generally accepted accounting principles, or GAAP, we believe the following non-GAAP measures are useful in evaluating our operating performance.
As of December 31, 2024, $25 million remains outstanding under the Credit Agreement. Refer to Note 8 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for further discussion.
As of December 31, 2025, we had an outstanding balance of $40 million under the Amended Credit Agreement. Refer to Note 8 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.
As of December 31, 2024, the total obligation for operating leases was $22.5 million, of which $4.9 million is expected in the next twelve months. As of December 31, 2024, our purchase commitment for primarily data and services was $11.7 million, of which $7.4 million is expected in the next twelve months.
As of December 31, 2025, the total obligation for operating leases was $17.8 million, of which $3.6 million is expected in the next twelve months. As of December 31, 2025, our purchase commitment for primarily data and services was $115.7 million, of which $86.8 million is expected in the next twelve months.
Years Ended December 31, 2024 2023 2022 (in thousands) Revenue Subscription $ 402,022 $ 330,458 $ 251,213 Professional services and other 3,886 3,185 2,615 Total revenue 405,908 333,643 253,828 Cost of revenue (1) Subscription 90,305 75,076 58,767 Professional services and other 1,170 1,192 1,091 Total cost of revenue 91,475 76,268 59,858 Gross profit 314,433 257,375 193,970 Operating expenses Research and development (1) 102,794 79,550 61,436 Sales and marketing (1) 184,122 168,091 123,695 General and administrative (1) 87,873 79,011 60,515 Total operating expenses 374,789 326,652 245,646 Loss from operations (60,356) (69,277) (51,676) Interest expense (3,525) (2,754) (153) Interest income 3,973 7,021 2,535 Other expense, net (1,393) (768) (580) Loss before income taxes (61,301) (65,778) (49,874) Income tax (benefit) expense 670 649 366 Net loss $ (61,971) $ (66,427) $ (50,240) _______________ (1) Includes stock-based compensation expense as follows: Years Ended December 31, 2024 2023 2022 (in thousands) Cost of revenue $ 3,936 $ 3,224 $ 2,491 Research and development 25,619 18,478 11,280 Sales and marketing 31,544 30,116 23,066 General and administrative 23,204 15,886 10,901 Total stock-based compensation $ 84,303 $ 67,704 $ 47,738 69 Years Ended December 31, 2024 2023 2022 (as a percentage of total revenue) Revenue Subscription 99 % 99 % 99 % Professional services and other 1 % 1 % 1 % Total revenue 100 % 100 % 100 % Cost of revenue Subscription 22 % 23 % 23 % Professional services and other — % — % — % Total cost of revenue 23 % 23 % 24 % Gross profit 77 % 77 % 76 % Operating expenses Research and development 25 % 24 % 24 % Sales and marketing 45 % 50 % 49 % General and administrative 22 % 24 % 24 % Total operating expenses 92 % 98 % 97 % Loss from operations (15) % (21) % (21) % Interest expense (1) % (1) % — % Interest income 1 % 2 % 1 % Other expense, net — % — % — % Loss before income taxes (15) % (20) % (20) % Income tax (benefit) expense — % — % — % Net loss (15) % (20) % (20) % Note: Certain amounts may not sum due to rounding Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Revenue Subscription $ 402,022 $ 330,458 $ 71,564 22 % Professional services and other 3,886 3,185 701 22 % Total revenue $ 405,908 $ 333,643 $ 72,265 22 % Percentage of Total Revenue Subscription 99 % 99 % Professional services and other 1 % 1 % 70 The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers.
Years Ended December 31, 2025 2024 2023 (in thousands) Revenue Subscription $ 453,014 $ 402,022 $ 330,458 Professional services and other 4,533 3,886 3,185 Total revenue 457,547 405,908 333,643 Cost of revenue (1) Subscription 101,119 90,305 75,076 Professional services and other 1,576 1,170 1,192 Total cost of revenue 102,695 91,475 76,268 Gross profit 354,852 314,433 257,375 Operating expenses Research and development (1) 101,279 102,794 79,550 Sales and marketing (1) 190,559 184,122 168,091 General and administrative (1) 106,467 87,873 79,011 Total operating expenses 398,305 374,789 326,652 Loss from operations (43,453) (60,356) (69,277) Interest expense (2,501) (3,525) (2,754) Interest income 3,418 3,973 7,021 Other expense, net (204) (1,393) (768) Loss before income taxes (42,740) (61,301) (65,778) Income tax expense 587 670 649 Net loss $ (43,327) $ (61,971) $ (66,427) 75 _______________ (1) Includes stock-based compensation expense as follows: Years Ended December 31, 2025 2024 2023 (in thousands) Cost of revenue $ 2,802 $ 3,936 $ 3,224 Research and development 25,162 25,619 18,478 Sales and marketing 22,783 31,544 30,116 General and administrative 27,972 23,204 15,886 Total stock-based compensation $ 78,719 $ 84,303 $ 67,704 Years Ended December 31, 2025 2024 2023 (as a percentage of total revenue) Revenue Subscription 99 % 99 % 99 % Professional services and other 1 % 1 % 1 % Total revenue 100 % 100 % 100 % Cost of revenue Subscription 22 % 22 % 23 % Professional services and other — % — % — % Total cost of revenue 22 % 23 % 23 % Gross profit 78 % 77 % 77 % Operating expenses Research and development 22 % 25 % 24 % Sales and marketing 42 % 45 % 50 % General and administrative 23 % 22 % 24 % Total operating expenses 87 % 92 % 98 % Loss from operations (9) % (15) % (21) % Interest expense (1) % (1) % (1) % Interest income 1 % 1 % 2 % Other expense, net — % — % — % Loss before income taxes (9) % (15) % (20) % Income tax expense — % — % — % Net loss (9) % (15) % (20) % Note: Certain amounts may not sum due to rounding 76 Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Revenue Years Ended December 31, Change 2025 2024 Amount % ( dollars in thousands ) Revenue Subscription $ 453,014 $ 402,022 $ 50,992 13 % Professional services and other 4,533 3,886 647 17 % Total revenue $ 457,547 $ 405,908 $ 51,639 13 % Percentage of Total Revenue Subscription 99 % 99 % Professional services and other 1 % 1 % The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers.
See Note 6 and Note 11 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for more information regarding these obligations. Recent Accounting Pronouncements Refer to section titled “Recently Adopted Accounting Pronouncements” in Note 1 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report) for more information.
See Note 6 and Note 11 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for more information regarding these obligations.
Operating Expenses Research and Development Research and development expenses primarily consist of personnel costs, including salaries, benefits and allocated overhead. Research and development expenses also include depreciation 67 expense and other expenses associated with product development.
We expect our gross profit and gross margin to increase as our business grows over time. Operating Expenses Research and Development 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.
Number of customers contributing more than $10,000 in ARR We define customers contributing more than $10,000 in ARR as those on a paid subscription plan that had more than $10,000 in ARR as of a period end.
Beginning in the third quarter of 2025, the metrics below include NewsWhip customers. Number of customers contributing $30,000 or more in ARR We define customers contributing $30,000 or more in ARR as those on a paid subscription plan that had $30,000 or more in ARR as of a period end.
These outflows were partially offset by a $26.9 million increase in deferred revenue and a $7.1 million increase in accounts payable and other accrued liabilities.
These outflows were partially offset by a $22.5 million increase in deferred revenue, a $1.5 million decrease in prepaid expenses and other assets, and a $0.6 million increase in accounts payable and accrued expenses .
Credit Agreement On August 1, 2023, we entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, the banks and other financial institutions or entities party thereto as lenders and MUFG Bank, LTD. as administrative agent and collateral agent.
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. 88 Credit Agreement On August 1, 2023, we entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, the banks and other financial institutions or entities party thereto as lenders and MUFG Bank, LTD. as administrative agent and collateral agent.
Judgment is required to determine whether each product or service sold is a distinct performance obligation that should be accounted for separately. Stock-Based Compensation For equity awards with only service conditions, we recognize compensation expense based on the grant‐date fair value on a straight-line basis over the remaining requisite service period for the award.
For equity awards with only service conditions, we recognize compensation expense based on the grant‐date fair value on a straight-line basis over the remaining requisite service period for the award.
As of December 31, 2024, we were in compliance with the covenants in the Credit Agreement and expect to be in compliance with the covenants for the next 12 months. On August 1, 2023, we borrowed $75 million under the Credit Agreement in connection with the Tagger acquisition.
As of December 31, 2025, we were in compliance with such financial covenants in the Amended Credit Agreement and expect to be in compliance with such financial covenants for the next 12 months.
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.
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.
We have determined that subscriptions for our online software products are a distinct performance obligation, because the online software product is fully functional once a customer has access.
Subscription revenue is recognized ratably over the contract terms beginning on the date our product is made available to customers, which typically begins on the commencement date of each contract. We have determined that subscriptions for our online software products are a distinct performance obligation, because the online software product is fully functional once a customer has access.
These outflows were partially offset by a $41.9 million increase in deferred revenue. Net cash provided by operating activities du ring the year ended December 31, 2022 was $10.7 million, which resulted from a net loss of $50.2 million adjusted for non-cash charges of $71.9 million and net cash outflow of $11.0 million from changes in operating assets and liabilities.
Net cash provided by operating activities during the year ended December 31, 2025 was $43.4 million, which resulted from a net loss of $43.3 million adjusted for non-cash charges of $120.0 million and net cash outflow of $33.2 million from changes in operating assets and liabilities.
General and Administrative Years Ended December 31, Change 2023 2022 Amount % ( dollars in thousands ) General and administrative $ 79,011 $ 60,515 $ 18,496 31 % Percentage of total revenue 24 % 24 % 77 The increase in general and administrative expense for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to the following: Change ( in thousands ) Personnel costs $ 5,194 Stock-based compensation expense 4,985 Acquisition-related costs 4,272 Amortization of intangible assets 1,327 Credit losses on accounts receivable 1,219 Accounting fees 771 Other 728 General and administrative $ 18,496 Personnel costs and stock-based compensation expense increased primarily as a result of an 18% increase in headcount as we continue to invest in our finance, legal and other administrative functions to support the company’s growth.
General and Administrative Years Ended December 31, Change 2025 2024 Amount % ( dollars in thousands ) General and administrative $ 106,467 $ 87,873 $ 18,594 21 % Percentage of total revenue 23 % 22 % 79 The increase in general and administrative expense for the year ended December 31, 2025 compared to the year ended December 31, 2024 was primarily due to the following: Change ( in thousands ) Personnel costs $ 6,529 Stock-based compensation expense 4,768 Bad debt expense 1,849 Acquisition-related costs 1,805 Accounting fees 446 Accretion expense 423 Other 2,774 General and administrative $ 18,594 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.
We have a history of attracting new customers and we have recently increased our focus on expanding their use of our platform over time. We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, because we believe this metric reflects our ability to retain and expand subscription revenue generated from our existing customers.
We use dollar-based net retention rate to evaluate the long-term value of our customer relationships, because we believe this metric reflects our ability to retain and expand subscription revenue 71 generated from our existing customers. Our dollar-based net retention rate for the years ended December 31, 2025 and 2024 was 100% and 104%, respectively.
The impact of Repustate’s financial results following the date of acquisition were not significant to Sprout Social’s consolidated financial statements.
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 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report) for further discussion.
Net cash used in financing activities for the year ended December 31, 2022 was $0.2 million, primarily driven by $1.9 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards, offset by $1.7 million of proceeds under our employee stock purchase plan. 85 Contractual Obligations As of December 31, 2024, we have $25 million outstanding under the Credit Agreement, which matures on August 1, 2028.
Financing Activities Net cash provided by financing activities for the year ended December 31, 2025 was $15.5 million, primarily driven by $32.0 million in borrowings under the Facility and $1.3 million of proceeds under our employee stock purchase plan, partially offset by $17.0 million in repayments of the Facility, $0.5 million in issuance costs related to the Amended Credit Agreement and $0.3 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards.
We believe macroeconomic uncertainty could persist, and as a result, we expect that some or all of these negative trends may emerge or recur during future quarters. Acquisition of Tagger Media, Inc. 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 believe macroeconomic uncertainty could persist, and as a result, we expect that some or all of these negative trends may emerge or recur during future quarters. Acquisition of NewsWhip Group Holdings Limited On July 30, 2025, we completed the acquisition of all of the outstanding voting shares of NewsWhip Group Holdings Limited (“NewsWhip”).
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 revenue to decrease as a percentage of our revenue over time.
Overhead associated with facilities and information technology is allocated to cost of revenue and operating expenses based on headcount.
Income Tax Expense Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Income tax expense $ 670 $ 649 $ 21 3 % Percentage of total revenue — % — % The change in income tax expense was due to higher earnings in foreign jurisdictions. 74 Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenue Years Ended December 31, Change 2023 2022 Amount % ( dollars in thousands ) Revenue Subscription $ 330,458 $ 251,213 $ 79,245 32 % Professional services and other 3,185 2,615 570 22 % Total revenue $ 333,643 $ 253,828 $ 79,815 31 % Percentage of Total Revenue Subscription 99 % 99 % Professional services and other 1 % 1 % The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers.
Other Expense, Net Years Ended December 31, Change 2025 2024 Amount % ( dollars in thousands ) Other expense, net $ (204) $ (1,393) $ 1,189 (85) % Percentage of total revenue — % — % The change in other expense, net was primarily driven by lower foreign exchange transaction losses. 80 Income Tax Expense Years Ended December 31, Change 2025 2024 Amount % ( dollars in thousands ) Income tax expense $ 587 $ 670 $ (83) (12) % Percentage of total revenue — % — % The change in income tax expense was due to the release of certain foreign valuation allowance reserves, partly offset by increased taxes due to higher earnings in foreign jurisdictions. 81 Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue Years Ended December 31, Change 2024 2023 Amount % ( dollars in thousands ) Revenue Subscription $ 402,022 $ 330,458 $ 71,564 22 % Professional services and other 3,886 3,185 701 22 % Total revenue $ 405,908 $ 333,643 $ 72,265 22 % Percentage of Total Revenue Subscription 99 % 99 % Professional services and other 1 % 1 % The increase in subscription revenue was primarily driven by increased revenue from our highest tier customers.
Professional Services and Other Cost of professional services primarily consists of expenses related to our professional services organization and are comprised of personnel costs, including salaries, benefits, bonuses and allocated overhead. Gross Profit and Gross Margin Gross margin is calculated as gross profit as a percentage of total revenue.
Although we expect our cost of revenue to increase in absolute dollars as our business and revenue grows, we expect it to decrease as a percentage of our revenue over time. 73 Professional Services and Other Cost of professional services primarily consists of expenses related to our professional services organization and comprise personnel costs, including salaries, benefits, bonuses and allocated overhead.
Year Ended December 31, 2024 2023 2022 Reconciliation of Non-GAAP net income (loss) per share Net loss per share attributable to common shareholders, basic and diluted $ (1.09) $ (1.19) $ (0.92) Stock-based compensation expense per share 1.48 1.22 0.87 Acquisition-related expenses — 0.08 — Amortization of acquired intangible assets 0.09 0.03 — Restructuring charges 0.05 — — Gain on lease modification (0.03) — — Non-GAAP net income (loss) per share $ 0.50 $ 0.14 $ (0.05) Non-GAAP Free Cash Flow Non-GAAP free cash flow is a non-GAAP financial measure that we define as net cash used in operating activities less expenditures for property and equipment, acquisition-related costs, interest and payments related to restructuring charges.
Year Ended December 31, 2025 2024 2023 Reconciliation of Non-GAAP net income per share Net loss per share attributable to common shareholders, basic and diluted $ (0.74) $ (1.09) $ (1.19) Stock-based compensation expense per share 1.34 1.48 1.22 Acquisition-related expenses 0.03 — 0.08 Amortization of acquired intangible assets 0.11 0.09 0.03 Restructuring charges 0.05 0.05 — Loss/(gain) on lease termination and modification 0.02 (0.03) — Accretion associated with contingent consideration 0.01 — — Non-GAAP net income per share $ 0.82 $ 0.50 $ 0.14 Liquidity and Capital Resources As of December 31, 2025, our principal sources of liquidity were cash and cash equivalents of $95.3 million and net accounts receivable of $101.0 million.
As of December 31, 2024, the borrowings under the Facility were designated as SOFR Loans. The Facility also includes a quarterly commitment fee on the unused portion of the Facility of 0.30% or 0.35% based on the Company’s liquidity. The Credit Agreement includes customary conditions to credit extensions, affirmative and negative covenants, and customary events of default.
For the twelve months ended December 31, 2025, the borrowings under the Facility were designated as SOFR Loans. The Facility also includes a quarterly commitment fee on the unused portion of the Facility of 0.30% or 0.35% based on our Consolidated Senior Net Leverage Ratio.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures of Market Risk Interest Rate Risk We had cash and cash equivalents totaling $86.4 million as of December 31, 2024, the majority of which was invested in money market accounts and money market funds. We also had marketable securities of $3.7 million which were invested in investment-grade corporate bonds.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures of Market Risk Interest Rate Risk We had cash and cash equivalents totaling $95.3 million as of December 31, 2025, the majority of which was invested in money market accounts and money market funds. In recent periods, we have also had marketable securities, which were invested in investment-grade corporate bonds.
The revolving line of credit bears interest at a rate of either (i) SOFR (subject to a 1.0% floor), plus 0.10%, plus a margin ranging from 2.75% to 3.25% based on the Company’s liquidity or (ii) ABR (subject to a 2.0% floor) plus a margin ranging from 1.75% to 2.25% based on the Company’s liquidity.
The revolving line of credit bears interest at a rate of either (i) SOFR (subject to a 1.0% floor), plus 0.10%, plus a margin ranging from 2.25% to 2.75% based on the Company’s liquidity or (ii) ABR (subject to a 2.0% floor) plus a margin ranging from 1.25% to 1.75% based on the Company’s liquidity.
We have not engaged in the hedging of foreign currency transactions to date. However, as our international operations expand, our foreign currency exchange risk may increase. If our foreign currency exchange risk increases in the future, we may evaluate the costs and benefits of initiating a foreign currency hedge program in connection with non-U.S. dollar denominated transactions. 89
We have not engaged in the hedging of foreign currency transactions to date. However, as our international operations expand, our foreign currency exchange risk may increase. If our foreign currency exchange risk increases in the future, we may evaluate the costs and benefits of initiating a foreign currency hedge program in connection with non-U.S. dollar denominated transactions. 94
Refer to Note 8 of the Notes to the Financial Statements (Part I, Item 8 of this Annual Report). We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
Refer to Note 8 of the Notes to the Financial Statements (Part II, Item 8 of this Annual Report). We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
Decreases in the relative value of the U.S. dollar to the Canadian dollar may negatively affect revenue and other operating results as expressed in U.S. dollars. We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to the Canadian dollar would have a material effect on operating results.
Decreases in the relative value of the U.S. dollar to these foreign currencies may negatively affect revenue and other operating results as expressed in U.S. dollars. We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar to the applicable foreign currencies would have a material effect on operating results.
However, we have some foreign currency risk related to a small amount of sales denominated in Canadian dollars. Sales denominated in Canadian dollars reflect the prevailing U.S. dollar exchange rate on the date of invoice for such sales.
However, we have some foreign currency risk related to a small amount of sales denominated in Canadian dollars, Euros and British pounds. Sales denominated in foreign currencies reflect the prevailing U.S. dollar exchange rate on the date of invoice for such sales.
We do not enter into investments for trading or speculative purposes. As of December 31, 2024, we had $25 million in secured indebtedness outstanding under the Credit Agreement.
We do not enter into investments for trading or speculative purposes. As of December 31, 2025, we had $40 million in secured indebtedness outstanding under the Amended Credit Agreement.

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