Sprout Social (SPT) Q2 Earnings Report Preview: What To Look For

Social media management software company Sprout (NASDAQ:SPT) will be announcing earnings results tomorrow after the bell. Here's what investors should know.

Sprout Social met analysts' revenue expectations last quarter, reporting revenues of $96.78 million, up 28.7% year on year. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a miss of analysts' billings estimates. It added 134 enterprise customers paying more than $10,000 annually to reach a total of 8,823.

Is Sprout Social a buy or sell going into earnings? Read our full analysis here, it's free.

This quarter, analysts are expecting Sprout Social's revenue to grow 24.4% year on year to $98.69 million, slowing from the 29.1% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.08 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Sprout Social has missed Wall Street's revenue estimates twice over the last two years.

Looking at Sprout Social's peers in the sales and marketing software segment, some have already reported their Q2 results, giving us a hint as to what we can expect. VeriSign delivered year-on-year revenue growth of 4.1%, meeting analysts' expectations, and Freshworks reported revenues up 20%, topping estimates by 3%. VeriSign traded up 4.3% following the results.

Read our full analysis of VeriSign's results here and Freshworks's results here.

There has been positive sentiment among investors in the sales and marketing software segment, with share prices up 2.2% on average over the last month. Sprout Social is up 8.1% during the same time and is heading into earnings with an average analyst price target of $44.7 (compared to the current share price of $39.3).

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