Sprout Social: Sell as 15.1% Equity Compensation Wipes Out 10.5% Free Cash Flow at 2.19x DCF
Enterprise >$50k ARR expansion and Tagger influencer workflows lift TTM revenue 24.9% to $481.8M, yet -4.7% SBC-burdened owner cash burn and SMB seat attrition leave shares overvalued at $53.02.
Score Locked · Full AccessResearchPublished Nov 9, 2026 · Data as of Jun 30, 2026· 2 min read · 2 exhibits
Software Quality Ratings & Archive: New research stays open free for 7 days; Full Access unlocks SPT and all 130 software quality ratings plus the permanent research archive.
Sprout Social (`SPT`) embodies the classic mid-cap SaaS upmarket-transition trap: strong top-line product expansion paired with chronic GAAP operating losses and equity compensation that transfers more than all operating cash generation from public shareholders to insiders and employees.
Our primary-filing decomposition exposes the gap between adjusted non-GAAP narratives and audited GAAP per-share reality. Across every single fiscal year from FY2021 through Q2 2026, Sprout Social has posted negative GAAP operating income (cumulating -$252.85M in GAAP EBIT losses from FY2021 to FY2025, plus -$28.45M over the trailing twelve months) and deeply negative SBC-burdened Owner FCF (-$22.41M TTM, or -4.65% of revenue).
[1] While trailing revenue re-accelerated 24.93% year over year following FY2025's 12.72% growth trough, customer acquisition and retention costs have risen structurally as Sprout abandoned self-serve SMB inbound velocity to contest six-figure enterprise RFPs against Sprinklr, Salesforce Service Cloud, and Adobe GenStudio. [2]
More importantly, our valuation work is deliberately generous to the upmarket bull thesis and still arrives at a decisive Sell. Rather than penalizing `SPT` with its negative trailing Owner FCF (which produces $0.00 per share in an unadjusted trailing Owner FCF DCF), our calibrated 3-statement model normalizes Sprout Social to a 14.0% steady-state Owner FCF margin as SBC steps down from 15.10% of revenue.
Even under that constructive margin bridge, fair value is $24.20 per share (-54.4% downside from $53.02), and even our $37.24 Bull Case sits 29.8% below spot. [1]
Exhibit 1Financial Schedule
Sprout Social scaled revenue to $481.8M, yet SBC exceeded GAAP FCF in every filed period
Filed annual and trailing twelve-month GAAP income statement and SBC-burdened owner cash burn.
Line
FY2022
FY2023
FY2024
FY2025
TTM Q2 26
Growth & Gross Profit
RevenueFiled GAAP subscription revenue across publishing, listening, care, and Tagger influencer suites
$253.83M
$333.64M
$405.91M
$457.55M
$481.82M
Gross profit
$193.97M
$257.38M
$314.43M
$354.85M
$373.15M
Gross marginIncludes AWS hosting and third-party social network firehose API licensing costs
76.4%
77.1%
77.5%
77.6%
77.5%
Operating Profit & Owner Cash
Operating income (EBIT)
-$51.68M
-$69.28M
-$60.36M
-$43.45M
-$28.45M
Free cash flowGAAP operating cash flow ($53.92M TTM) less capital expenditures ($3.56M TTM)
Source: Sprout Social, Inc. SEC Form 10-K and Q2 2026 Form 10-Q filings.
Exhibit 2Data Exhibit
Revenue approached $482M as GAAP FCF margin reached 10.5%, still trailing 15.1% SBC
Filed annual and TTM GAAP revenue (primary bars) and GAAP free cash flow margin (secondary line).
Revenue
FCF margin
Source: Sprout Social, Inc. SEC Form 10-K and Form 10-Q filings.
Full Access
Duolingo: Buy as 42.6% Growth and Max Tier Pricing Drive a +31-Point GAAP Margin Swing
Duolingo scaled TTM revenue 42.6% to $1.18B while swinging GAAP operating margin from -17.6% in FY2022 to +13.7% TTM ($407.0M GAAP FCF), leaving shares at $185.15 at a 64.9% discount to our $528.01 base DCF.
Duolingo, Inc.Nov 8, 2026 · Data as of Sep 30, 2026
