Shares in Sprout Social, the US-based social media management platform, jumped more than 18% in after-hours trading on Monday after the company released quarterly results that beat market expectations. The firm reported revenue of $134.5 million for the three months to June 30, a 22% increase compared with the same period last year, driven by a surge in enterprise contract signings.
Chief executive Justyn Howard said the company had benefited from “increased demand for integrated social media tools” as brands look to navigate a fragmented digital landscape. The firm also lifted its full-year revenue forecast to between $545 million and $550 million, up from a previous range of $530 million to $535 million, citing strong retention rates and upsells.
Investors were also encouraged by the launch of Sprout Social’s new AI-driven analytics suite, which uses machine learning to predict audience behaviour and optimise posting schedules. Analysts at Wedbush Securities described the move as “a clear differentiator in a competitive market”, noting that the feature could help the company win larger, long-term contracts.
For UK investors with exposure to US tech stocks through funds or pension portfolios, the rally underscores the continued appetite for software-as-a-service (SaaS) companies that can demonstrate both growth and profitability. The broader Nasdaq 100 index rose 0.3% on Monday, with Sprout Social’s gains outpacing the tech-heavy benchmark.
However, some analysts caution that the stock’s valuation remains stretched, trading at around 40 times forward earnings. “The growth story is compelling, but investors should be aware that any miss on future guidance could trigger a sharp correction,” said a note from RBC Capital Markets. The company is scheduled to report its third-quarter results in late October.