Q2 2025 Sprout Social Inc Earnings Call
Thank you for standing by. My name is Rebecca and I will be your conference operator. Today at this time I would like to welcome everyone to the Sprout social second quarter 2025 earnings call all lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again, thank you. I would now like to turn the call over to Alex Kurtz. Vice president of investor relations corporate development. Please go ahead.
Thank you, operator, and welcome to sprout. Social second quarter, 2025 earnings call. We'll be discussing the results announced in our press release issued after the market closed today and have also released an updated investor presentation, which can be found on our website.
With me or Sprout socials. CEO. Ryan breto and CFO Joe delpo.
Today's call will contain forward-looking statements which are made pursuant to the safe harbor, provisions of the private Securities. Litigation Reform, Act of 1995.
all statements other than statements of historical, facts are forward-looking
These include among others statements concerning our expected future financial performance.
Including our Q3 and 2025 outlook and business plans and objectives. This can be identified by words such as expect, anticipate, intend, plan, believe, seek opportunity, or will.
These statements, reflect our views, as of today. Only and should not be relied upon as representing our views at any subsequent date.
And we do not undertake any duty to update these statements.
Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially.
For discussion of these risks and other important factors that could affect our actual results, please refer to our annual report on Form 10-K for the year ended December 31, 2024, as well as our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2025, to be filed with the SEC.
During the call, we will discuss non-gaap Financial measures which are not prepared in accordance with generally accepted accounting principles.
Definitions of these non-gaap Financial measures along with the reconciliations to the most directly comparable. Gaap, Financial measures are included in our second quarter earnings release which has been furnished to the SEC and is available on our website at investors. Sprouts social.com
With that, let me turn the call over to Ryan Ryan.
Thank you, Alex, and welcome to our second quarter earnings call for fiscal 2025.
we reported second quarter results with revenue of 111.8 million representing year-over-year, growth of 12% and non-gaap operating margin expansion of almost 400 basis points,
our current remaining performance obligations, which reached 251.6 million, represented 18% year-over-year growth
Our go-to-market delivered another solid quarter with 18% growth in the $50,000 and above customer cohort. We landed strategic wins with global brands like Honda, Sigma, Kimberly-Clark, Authentic Brands Group, Lockroy, Smokers, the U.S. Department of Transportation, and Texas Tech.
These customers, demonstrate our continued execution, and strategic fit with the most socially, sophisticated Enterprise customers.
During the quarter Sprout, continued to earn industry recognition.
We secured 164 liter Badges and g2's latest reports with top rankings in Enterprise social media, Suites analytics and customer service across North America, Amiya and APAC.
radius 2025 top rated Awards and 8 categories, including social media marketing, audience intelligence and online reputation management, reinforcing the meaningful business outcomes, our customers achieve with sprout,
Additionally, we received silver for best influencer marketing platform, at the Global influencer Marketing Awards, and a silver shorty award in the micro influencer strategy category for our own Innovative influencer strategy. That turns Sprouts listening data into thought leadership and helped shape industry conversations.
Today, I'm excited to begin by discussing our recent acquisition of Newsweek, a leader in AI, powered predictive media intelligence.
Headquartered in Dublin, Ireland, Newsweek was a privately held company with approximately 70 employees and we couldn't be more excited to welcome the team to sprout.
Newsweek has become a mission critical tool for some of the largest global Brands media companies and agencies for crisis management. Real-time media monitoring research and strategy
Strategic customers such as Nissan, the Associated Press, Fortune 50 Media Company, 2 Fortune 50 technology companies, and a Fortune 100 consumer beverage company all rely on Newsweek for real-time monitoring of news articles, social posts, and other media related to their brand products and their competitors.
I want to outline our strategic rationale for acquiring news Whip. And why we see this as a pivotal Milestone that combined with our existing product roadmap will drive unique crisis management, Trend detection and AI offerings from spread over the next several years.
First news whips, AI power predictive media, intelligence can help identify which stories and narratives are about to go viral.
This is become Mission critical for Brands as new stories can quickly escalate across various social media platforms.
Newsweek provides 3 core values, real-time alerts and predictive analysis. Key insights into an emerging Trends in conversations and sophisticated AI, alerting capabilities that are leveraged by crisis management teams and the Sea Suite.
Over time we expect to enable early crisis detection, from Newsweek to seamlessly flow to customer care. Teams working in the Sprout platform, creating a truly differentiated end-to-end experience which transforms insights into action.
We also believe integrating music's capabilities with Sprouts listing products and its extensive social. Interaction data will create a comprehensive 360 degree view of Social and immediate ecosystems.
Together, we will combine predictive media intelligence with agile, social action to drive impactful earned owned and paid media strategies.
This integrated approach will enable real-time trend detection, targeted engagement, and clear ROI reporting, delivering measurable outcomes for businesses.
During the second quarter Newsweek launched, its AI agents, which have garnered strong interest among newsweek's, larger customers with over 70% of brand, customers leveraging them in just over a month.
Newsweek's, AI agents, proactively scan, Global News and social data, identifying stories and themes gaining momentum before they Peak and giving Brands the Strategic Edge to own the narrative.
With the massive volumes. These brands have to manage these agents are designed to separate the signal from the noise and to drive clear efficiency for practitioners while also ensuring, they never miss a critical moment.
Newsup will enable Sprout to enter in the mission critical PR and crisis, monitoring space with a new offering.
These are potentially new buyers for Sprout. Both new logos to Sprout, as well as growth opportunities within our existing customers. And in both cases, these are often groups with long-standing dedicated budgets.
We're incredibly excited to discuss news whips capabilities with them in the coming weeks and months.
While there is some minimal customer overlap, We Believe spreads full go to market distribution. Will accelerate these opportunities
We also believe that news whip can further, strengthen our gross retention goals among larger Enterprise customers given its stickiness with crisis management teams.
Newsworthiness of top tier customers over the last 10 years with contract sizes often at the higher end of sprouts customer TV range.
Finally, we are thrilled about the future impact. We expect the news whip team members will have at sprout.
agile team is built on a must-have tool for some of the biggest brands and we've been really impressed with the news whip engineering Talent, shaking the future of AI, driven Real Time medium monitoring
I'm also pleased to share that NewsWhip's co-founder and CEO, Paul Quigley, will step into the role of General Manager for our listening business, overseeing both NewsWhip and Sprout's listening products.
Moving forward.
Before handing the call to Joe, let me briefly take you through some customer wins and our four key growth drivers that include.
winning the Enterprise driving. Customer health and adoption expanding our partnership and ecosystem and driving improved account penetration.
To win the enterprise. We intend to expand the pipeline closed. More 50k plus deals and accelerate adoption with a product roadmap built for Enterprise needs.
Let's start with the key product releases in the quarter.
For influencer marketing, we reimagined our influencer marketing platform Now, featuring a refreshed design and advanced AI driven capabilities.
As social media becomes Central to Brand Discovery influencer marketing is an increasingly important strategy to drive Roi
Key updates include AI, powered natural language. Discovery for search driving more authentic and impactful activations, a customizable brand safety solution to align creators with brand values and a new Creator. Vetting feature that drastically reduces time. Spent in Discovery to Brands can refocus on their more strategic creative tasks.
In care, we introduce Innovations for a proactive customer engagement through enhanced efficiency and smarter workflows.
with the introduction of Q's care, teams can easily, organize High volumes of inbound customer interactions by urgency topic or customer segments, significantly reducing response times and ensuring critical conversations, receive immediate attention
Additionally, new bot Integrations, and AI enhancements automate routine, interactions, proactively resolve customer issues, and free up care, agents to focus, on higher value tasks.
These Innovations mean faster resolution times with increase agent productivity and more tailored and effective support for customers, ultimately cultivating, greater customer satisfaction and loyalty.
Social media has become Central to product Discovery and purchasing which means Brands must deliver. Fast personalized social care across platforms or risk losing vital customer trust in business. In fact, 73% of consumers, say they will buy from a competitor if a brand doesn't reply to them on social.
While reactive support is expected. The new Innovations and Care by Sprouts, empowers Brands to deliver proactive care. Turning positive interactions into business assets that build loyalty, and attract new customers.
For governments, we enhanced brand safety and customer data. Handling with the launch of our new product, Guardian by Sprout. Social
Guardians supercharges, Social customer care and social media management with Innovative AI driven tools, that reduce brand risk, helping our customers, securely and confidently, handled our customer data.
Guardian is a huge asset for security conscious and highly regulated Industries. Providing features like blocked words data, masking and secure forms.
We're also pleased to share several strategic Enterprise wins this quarter.
The first win was a seven figure new business deal with a global brand management company consolidating their marketing care and customer experience under one tech stack with.
With Premier success listening and premium analytics that can unify social strategy across 50, plus brands, ensuring consistent governance and workflows that can also boost efficiency with powerful and intuitive reporting tools, while reducing costs and complexity by consolidating the social management publishing and analytics into a single platform.
The next story, we want to highlight is in almost 900 K expansion deal with a global health technology company that switched from a competitor due to its overly complex workflows.
They were seeking a seamless care agent workflow with our service cloud integration.
Sprout. This company can amplify its brand messaging with over 60 publishers and 15000 advocates expanding reach and boosting brand awareness.
<unk> also enables real time insights for deep customer behavioral analysis, our service cloud integration allows them to manage 90000 customer support request per month to increase customer satisfaction.
It can also safely host data in EU in a compliant manner, which is critical in a highly regulated industry.
This final customer story is the 360 K expansion when highlighting the growth opportunities that exist within our customer base.
This fortune 500, global healthcare company already a seven figure <unk> customer for marketing care and customer experience expanded to include listening premium analytics, influencer marketing and employee advocacy.
They are now able to unify social efforts globally for consistent brand messaging worldwide and to elevate brand reputation by tracking sentiment and covering key drivers of perception and benchmarking against competitors in real time.
Our second growth driver is a sharper focus on customer health onboarding and adoption to maximize long term value.
This quarter, we introduced two new support offerings accelerated support an accelerated support plus while also enhancing our existing premier success light offering.
Features include two hour response times and access to a dedicated customer experience specialists. Since launch. These offerings have gained strong traction driving new deals and significant interest across our premier support suite.
Our third driver is our continued investment in our partnerships with strong global partners that brings sprout into strategic accounts and expand our reach into some of the largest digital marketing budgets.
We continue to ramp our partnership activities through the first half of 2025, as we mentioned last quarter, our social network technical integrations and go to market partnerships provide what we believe is a lasting competitive advantage in the market.
As we move into the second half of the year, we will be expanding our partnerships and capabilities across key networks, including publishing reporting and listening capabilities with blue Sky engagement in our reporting with Reddit listening with Tic Toc and building out personal profile reporting with Linkedin.
Our fourth growth driver focus is on deepening customer engagement through use case expansion and premium modules with our sales team seeking to drive greater value across both new and existing customers.
Expanding our trust and compliance offerings that spread has been a key priority as I mentioned earlier this past quarter, we launched guardian solution, enabling our customers to securely manage their data, while still personalizing interactions and enhancing brand safety, we've seen strong interest across highly regulated industries, especially health care and financial services.
Closing our first deal within just a couple of weeks of launch we're even seeing demand from less regulated industries as organizations increasingly recognize the inherent value of having these capabilities readily available.
The acquisition of news, which will significantly enhance our AI listening and care capabilities, enabling us to expand use cases and elevate our premium module offerings. We're excited to share more in Q3, as we begin introducing news to our customers.
In closing I'd like to revisit our discussion last quarter of social search and the undeniable long term trends, we see playing out and how the news with acquisition ties into this theme.
As traditional search continues to trend towards zero click with AI current content strategy has faced headwinds with traffic changing in real time.
We know nearly half of Gen Z starts price discovery on platforms like Tictoc in Instagram and over 80% of consumers say social is that a top channel for product discovery organic.
Organic website traffic is declining while paid search costs are rising.
<unk> has become the new front door for discovery, but most brands are optimizing for it or they're not getting their first or.
Our ability to drive discovery on social platforms is critical and translates into AI search where platforms like red it increasingly contribute to source content and in traditional search where wealth Reddit and Instagram index on the first page of Google search results.
Social media is authenticity immediacy and community driven nature filled the gap as search behavior shift offering businesses stronger ROI outcomes.
Sprout helps brands went into new era of discovery, our publishing tools are designed to optimize every posts for maximum visibility using keyword rich titles platform specific formatting and built in guidance for hashtags, all texts and timing to help ensure nothing gets missed in social search and brands can reclaim lost organic.
Traffic and now Newsweek and our view is the perfect condition to this strategy as spreads will enable global brands with a greater ability to recognize real time and predicted trends powered by AI agents. These innovations will help marketers know exactly what content they should be creating to benefit from social search momentum as well as spot issues before they arrive.
<unk> with differentiated solutions for crisis management.
We believe the future of this category will be defined by real time data and intelligence.
Sensible platforms and trusted AI. That's the foundation, we're building at sprint and were excited about where it's taking us and with that I'll turn it over to Joe to run through the financials Joe.
Thanks Ryan.
I'll now run through our financial results and guidance.
Our second quarter results were highlighted by a quarterly non-GAAP operating margin of nine 2%.
A 400 basis points from the year ago period.
We generated $5 2 million.
non-GAAP free cash flow during the quarter up $2 7 million from our non-GAAP free cash flow and <unk> 24, an increase of 110% on a year on year basis.
On a trailing 12 month basis non-GAAP free cash flow is up Forex.
We remain committed to growing operating leverage on a fiscal year basis.
On to a summary of the quarter.
Total revenue for the second quarter was $111 8 million, representing 12% year over year growth.
Subscription revenue was $111 1 million up 13% year over year.
The number of customers contributing more than $10000 and error grew 6% from a year ago.
The number of customers contributing more than $50000 and IRR grew 18% from a year ago.
Q2, ACB was 15321 up 14% year over year.
As Brian discussed earlier, our strategy to drive ACB growth remains focused on shifting to higher enterprise mix.
Illustrating premium module attach rates, such as Influencer marketing and customer care.
<unk> totaled 347.0 million down from $362 million exiting Q1.
18% year over year.
We expect to recognize 72% or $251 6 million of total <unk> revenue over the next 12 months.
<unk> RPM growth rate of 80% year over year.
non-GAAP operating income totaled $10 3 million, which was ahead of the high end of our outlook.
This was up from $5 3 million a year ago equates to a non-GAAP operating margin of nine 2%.
We're pleased with our progress here demonstrates our focus on continued growth and our margin profile.
Before moving onto guidance few quick comments about our acquisition of news with.
We acquired news for a cash consideration of $55 million with an additional $10 million in potential cash earn outs that are structured over the next two years.
We financed the acquisition with our credit revolver and cash and believe this was an efficient use of capital as our products address the needs of our customers and we believe the combined solution is highly differentiated offering.
Looking ahead, we are increasing our full year revenue guidance, primarily reflecting the early contribution from Newsweek.
We've seen strong early interest from new and existing enterprise customers.
Leading new conversations with globally recognized brands underscore the strategic value of this acquisition.
We believe this early traction is a strong signal to the opportunity had and reinforces the differentiation. We believe sprout is building.
That said, we're early in the integration.
One of the core business continues to perform in line with the expectations. We set at the start of the year.
We expect some near term pressure on rep productivity as we train teams aligned our go to market motion.
For our customers through a more expansive conversation around listening and Newsweek.
The only five months of revenue contribution remaining this year.
So we are just starting to operate the <unk> business given the closing last week, we've taken a measured approach to modeling the impact.
Lastly.
The acquisition Nuzzo was expected to be an approximately breakeven business in the back half of the year on a standalone basis.
We're pleased that we were still able to raise our non-GAAP operating income outlook by absorbing the associated cost.
Now onto guidance.
The third quarter of fiscal 2025, we expect revenue in the range of $114 4 million to $115 2 million.
We expect non-GAAP operating income in the range of $9 3 million to $10 3 million.
We expect a non-GAAP net income per share of between 15 and 16.
This assumes approximately 59.0 million weighted average basic shares of common stock outstanding.
For the full year 2025, we are raising our guidance for the prior quarter and now expect revenue in the range of $452 9 million to $455 9 million.
We are also raising our non-GAAP operating income guidance is expected to be in the range of $43 1 million to $45 1 billion.
We expect non-GAAP net income per share between <unk> 71, and 75, assuming approximately $58 7 million weighted average basic shares of common stock outstanding.
We look forward to continuing to innovate and create more opportunities for our customers to grow with US. We appreciate your interest in sprouts, social with that Ryan Alex and I are happy to take any of your questions operator.
At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
And your first question comes from the line of Arjun Bhatia with William Blair. Your line is open.
Yes perfect.
Thank you so much I appreciate you guys, taking the question here.
Maybe just start out with just if you can.
Zoom out and just take a step back for a second.
I'm very curious to hear just how you would.
Characterize the core business.
As it stands today.
And then I have a follow up after that.
Hey, it's Ron I will start thanks for the question.
Yes, just in terms of the business, we've been really pleased with the progress that we've been seeing and incredibly proud of the effort from the team.
Business been performing really well and tracking to the plan that we laid out to all of you at the beginning of the year, we've had some great wins this quarter.
Brands Honda Smokers Department of transportation.
We had shared in the prepared remarks, and we grew both the 10-K K customer.
Counts quarter over quarter on top of that or 50, K trailing 12 month revenue cohort is growing greater than 30%, which just shows the enterprise execution.
On the retention.
The oil side. The performance has been really strong and we've seen steady improvement in gross revenue retention year over year, and we're seeing continued momentum with our teams and closing more annual and multiyear deals, which will contribute to retention and certainly gives us better visibility of the business.
Finally from a non-GAAP operating margin were up nearly 400 basis points, which I think really speaks to the execution and the operating discipline that we have in the business. So everything considered we're feeling really good about where the businesses as we head into the back half.
Alright, perfect very helpful. And then just as a follow up as I'm looking at the guidance can.
Can you just give us a sense of what.
The impact of newsletters, and what you incorporated into the guidance here.
Yes. Thanks Carter this is Joe I'll jump in on this one and thanks for the question maybe let me walk you through how we approached the guidance in total and I think that'll be most helpful to address.
Question, you are asking I think first.
This came in slightly ahead in Q2 and continues to track to plan, we laid out at the start of the year, we haven't assumed a change in the broader demand environment and we flowed through a modest portion.
But the Q2 beat into our updated full year guide to reflect that.
For the newswire business, we are projecting that to contribute approximately $2 5 million over the final five months of the year.
And then you got to remember with any small tuck in acquisition. We wanted to take a prudent approach looking ahead, we just closed the acquisition last week.
Natural unknowns around renewal rate pipeline conversion and other business fundamentals, we need to consider.
As a result, we are taking a very measured approach with our guidance.
And then we're still early but we believe this really sets us up to lead in that area, that's becoming increasingly important to our customers into the market and we're really excited about this acquisition.
Thanks next question. Please thank you.
Your next question comes from the line of Scott Berg with Meat Ham Your line is open.
Yes, Hi, Rob Roley office Calpers. Thanks for taking the question just to a couple of hundred unusual acquisition can you just touch on the timeline for integration of the teams and products and you noted some positive momentum with enterprise conversations so far any other feedback from customers regarding that.
The acquisition of the capability of being able to sweep thanks.
Yes, Thanks, Rob I appreciate it.
We're digging in as Jeff said, we're about a week and.
The teams are chugging, along already we've been working on a bunch of our hands with the teams and actually just an all hands with <unk> yesterday and the company all hands last week.
We've been CRM, together and aligning everything and working really closely on the go to market strategies.
<unk> also seen a number of conversations already in the first week, so lots of progress being made on the integration.
As a product integration piece is those will develop over the next.
A few quarters or so but the teams are working in the background, obviously as we mentioned on the call Paul.
Now the GM of our existing business will be really working closely with the rest of the team there and then from a customer perspective.
Wanted to just say the teams are internally are incredibly excited about the opportunity to share the value of the needs with product to our customers. We've seen this as a mission critical solution for PR and communications professionals and the ability to take insights from news with and have them drive actions and the spread platforms really.
Really exciting so initial feedback and again.
<unk> has been strong and encourage all of you to take a look at the news with website and go to the customer stories, you get a great sense for the quality of the customers there and the types of problems that they're solving.
Got it that's helpful. Thank you and then last quarter. There was reference to the launch of our multi product campaign I understand it might still be early days, but have you seen any benefit from suffer resulting in expansion sort of existing customers are larger lands with Neil and you sort of jump in new customer <unk>.
Yes, thanks, Rob.
We'll say it.
It's a focus for our team across the <unk>.
Product organization and go to market.
We've seen healthy pipeline being created there clearly newsworthy as being a big contributor to that you will be as we go forward I mentioned Guardian on the Colo as well another Great example.
Product that we launched in the quarter.
The progress happening right now, but nothing else to add has certainly come back and share the progress along the way. Thanks for the question.
Thanks, Rob next question please.
Your next question comes from the line of Adam Hotchkiss with Goldman Sachs. Your line is open.
Great. Thanks, so much for taking the questions I guess, yes, I think we've heard from some of your peers and I think you had mentioned it.
Growing cost of advertising, particularly.
If you're a smaller business and.
I'd be curious if that is resonating with your customers. When you talk to them about the value of social as a channel and if youre seeing any mix shift in the way that brands are thinking about their advertising strategies. It really feels like that that's really ticked up in the last couple of quarters I'm. Just curious if that's impacted you in your deals at all.
Yes, I appreciate the question Adam.
Hi.
<unk>.
The final piece of my prepared remarks, as I got into the Ibs social search we're certainly seeing.
Customers talking a lot about the fact that they've seen pretty significant disruption to the things that the counted on in the past specifically around search engine optimization and search engine marketing and certainly we are in this world right now where.
For quite some a lot of these things has increased significantly and people are clicking last so customers are definitely looking for more help in how do they show up in the right places where discovery is happening and we're seeing more and more of that happening on social so a lot of the conversations we're having with customers is how do you reclaiming some of this lost traffic can perform.
<unk> in places like social and so if you think about what our platform does it really helps customers figure out the right type of content to produce the right time to their audience, giving analytics on both your you are paid and organic so that you can really double down on the things that are working and clearly in this environment.
And Thats something Thats really really critical so I would say that it's been.
The real part of the conversations that we're having with customers and I'd say most of our customers are having that conversation right now with the disruption in the market.
Okay. That's really helpful. Thanks, Brian and then just on the <unk> dynamic I noticed that step down sequentially. I think you mentioned that in <unk> I think was even below Q4 levels is that just.
Churn at the low end of the market or anything else to call out there seasonality would be helpful. Thank you.
Yes, Adam I think really what it's attributed to the last thing you said, there was which is the seasonality part of the business. So as we move more up market over the last couple of years a lot of our bigger renewals in the larger deals were signed in Q3 and Q4 and so what Youll see is on the back half of this year Youll see that those dollars start to tick up.
In the next couple of quarters, we feel pretty good about how exit the year.
In 2025 as it relates to those metrics. So we feel good about the momentum there.
Seasonality that you call.
Okay. Thanks, so much Joe.
Thanks, Thanks, Adam next question please.
Your next question comes from the line of Parker Lane with Stifle. Your line is now open.
Yeah, Hey, guys. This is Jack Mcshane on Parker. Thanks second question. So I wanted to touch on the macro obviously theres been a lot of geopolitical headlines this quarter. So I'd be curious this year, how both the pipeline was impacted by the noisy macro and how renewal conversations have been impacted as well. Thanks.
Thanks, Jack I appreciate the question I'll start off.
On the pipeline side of it yes.
Clearly, we're still in the same demand environment I wouldn't call out anything that materially changed for us this quarter from.
Previous quarters.
For us it's definitely leaning into the value prop is similar to that.
Feedback from the last question and add a lot of our customers right. Now is this is this is an important part of the work that youre doing whether its discovery and making sure that they're getting their customers in the front door or thinking about how they respond to their customers from a care perspective.
We're certainly leaning in more.
I've shared in previous quarters on just the customer value and the ROI story.
You're really thinking about what I've seen from the teams and the type of rigor that Mike and the team has created around pipe creation and pipe acceleration so nothing to call out that's different from previous quarters. There on the renewal side, we feel really good about that we've seen a lot of progress year on year in terms of our retention and renewal.
Rates.
This also speaks to the value of.
Our product for our customers.
Fact that theyre spending hours, a day and our products and this is how they execute on their social strategy, but we've seen that as a strength for us.
Got it and as a follow up on <unk>.
Be curious to touch on the customer care use case and more specifically how sales forces emphasis on agent force has impacted the demand in this segment.
Yes, no I appreciate it.
<unk> continues to be a really important use case for our customers. We shared a few stories today, just highlighting with really large customers how they're leveraging care. One specifically was an example of a customer that new dose over to as a global health Tech company.
That moved over to use the service cloud integration customer literally managing 90000 customer support request every single month and they are able to execute on that with that speed and customer satisfaction because of the integration that we've done.
Built with Salesforce so.
It's continued to be a really important part of the strategy clearly our customers are doing it directly in our product where do they get the benefit of leveraging integrations like the service.
More and more we're seeing customers showing up on social as a place that they want to be served and their expectations when they show up on social or higher than any other channel.
So the way that our platform set up to support customers matter significantly yes.
Agent Force side of things, we're excited about the work that we're doing they're coming off of connections and getting geared up for Dream Force.
Yes.
And believe this will continue to be kind of the next chapter and the value that we're adding to the customers that are in our joint scrapped and service Salesforce customers.
Thanks, Chuck next question please.
Your next question comes from the line of surrender side with Jefferies. Your line is open.
Thank you.
Maybe talk a little bit about.
Just kind of.
Sales of some of the premium modules in the attach rates that you.
You referenced as part of this strategy does environment like this.
A little bit more difficult.
It feels like things haven't really changed a lot in the last few quarters, but.
There just seems to be a lot of noise out there and we're hearing different things from different channels.
Yes, I appreciate the question.
Yes.
Alluded to it a little bit before about what I'm seeing from the team in terms of creating this multi product pipeline.
But the product teams have been working hard in the background here, we've talked through a few of the use cases that we have we've added guard again, our testing compliance.
This past quarter, obviously Neusoft is another addition, there.
This is just really important for us because what it means is.
Our sales team to show up to customers with a variety of different product problems that we can solve for our customer base.
Yes, clearly the demand environment Hasnt changed over the last number of quarters, but that's why it's even more important for us to be able to really serve customers depending on where they are so we've got customers coming in where they got high volumes happening on social from a care perspective, which we can support you got other customers who are seeing significant.
Disruption at the top of funnel from a marketing perspective, and social ends up being a really important thing for them.
So these are some of the examples but I think the velocity that leave you with is that from an attach rate perspective, we continue to see a lot of headroom and opportunity for us to sell our products.
Both from a new business perspective to land bigger as well as from a current customer perspective to be able to attach more products to our current base of almost 30000 customers.
Yes.
Got it and then.
And I think obviously the international business international clients, a little bit smaller part of the business but.
Any color on the trends there.
Been lagging the U S for a little bit and I didn't see the Q out yet so just any color that you can provide there on some of those numbers and trends.
I appreciate it.
Youre right International.
It's a smaller part of our business, but we feel really strongly about that market opportunity there and the teams that we have on the ground. Our distribution teams. They are still relatively small compared to the U S.
We're seeing good progress in terms of the pipeline and the opportunities. We're also with a lot of that multi product that we're bringing to bear and the types of companies. We're selling to we're getting more of these mobile type opportunities where the footprint in the U S will open up opportunities for our teams in EMEA and APAC.
Main takeaway is that we are.
Still early on that journey, but there's quite a bit of room, there and over time, we'll be continuing to invest in our distribution and trying to adjust.
Answer the last part of your question as far as the mix of our international Q1 to Q2, it hasnt changed materially. So when you see the queue come out the ratio of international revenue versus the rest of it's pretty consistent so no major shifts there.
Thank you Alright, alright. Thank you next question please.
Your next question comes from the line of Matt then village with Cantor. Your line is open.
Hey, good afternoon, thanks for taking the question.
I guess when you look at where the news with technology fits in in the current product platform is.
Curious if this is sort of a discovered either GAAP or just greater extension of the listening platform, where youre getting into situations, where people are trying to push listening into other use cases.
You just needed more functionality curious I guess, if you could elaborate a little more on where it overlaps or complements the listening platform.
Yes, I appreciate the question that it is an excellent complement for us.
One of the things that we really appreciated about the news with team is what they do is really really tied to a lot of our future product roadmap and maybe maybe the best way to think about this as we see it as really strengthening our overall approach to the market and really differentiating us against our closest competitors.
<unk>.
If you think about this Brent listening spread listening is really deeper analysis and longer term understanding of social conversations and share of voice and brand sentiment.
Ideal for brands when they are trying to understand the why behind historical trends and insights news with the command center for real time, ACH, it's built for speed and high Stakes helping.
Figure out this massive fragmented media landscape.
Giving them these proactive alerts to breaking stories with real time monitoring and predictive analytics to allow them to know exactly where the trends are and so it becomes this essential tool for crisis communications and any team that really needed to get ahead of the narrative.
<unk> also just as a side note I've mentioned it a little bit in my prepared remarks that March some agents to their customers, which is being adopted really really quickly here and it's really helping customers cut through the from the signal to noise. So I think the main thing to highlight here is it fits really well complements our overall strategy.
Unit passports our roadmap.
Okay very helpful and then Joe you mentioned.
Newsgroup was on pace to be breakeven for the second half is that still incorporated in the guidance or is there. Some additional expenses related to integration to be speeding up anything they had in the works I guess, what's the second half impact over the next five months impact of <unk> on the operating.
Income guidance.
Yes, I know the guys a quick question, Matt the guidance contemplated that they would be breakeven for the rest of the year. So there shouldn't be any incremental expense or any other expenses that we're incurring that's kind of an all in when it comes to guidance and then I think over the longer term, we definitely believe there's a lot of leverage it can come out of that business, we think about putting that product and our sales team and the.
We can get.
Over the more fixed costs that they have right now I think we feel good about the ability to drive more leverage proud overall coming out of town.
Alright, great. Thank you.
Thanks, Matt next question please.
Your next question comes from the line of Jackson Ader with Keybanc capital markets. Your line is open.
Great. Good evening guys. Thanks for taking our questions.
The first one is in the core business, Ryan you've mentioned a bunch of times about.
Trying to capitalize on that.
The struggles of organic and paid search and switching things over to.
So social so I'm just curious you guys.
Especially with new sales leadership are you running any particular sales plays or.
Special incentives or something to really kind of capitalize on the.
At the beginning of this possible mega shifts thanks.
Yes, thanks for the question.
The biggest thing to highlight is we've definitely been enabling the team on the value props behind the things that we can do to help customers and social search, but also AI search and traditional search and so.
A lot of this is just being wrapped in there.
<unk> and then obviously customer communications.
Think about it and I mentioned some of this in the prepared remarks.
Seeing more and more especially gen Z consumers showing up in social searching in places like tick Tock and Youtube managed before theyre going to traditional search and so you showing up in the right place matters, a ton, which our customers need to deal. We also know that performing really well on social ties into how can.
Content is green presented an AI search so the better you do in social means that you will perform better and AI search and then finally, we're seeing more and more.
These relationships happening between social and traditional search for things like read it and Instagram indexing on the first page. So again, if you're performing really well and social you will have a byproduct downstream impact of performing better on traditional search as well so for US all of these things are things that we're enabling the team on.
To be able to have those conversations with customers.
Okay, Alright got it and then quick follow up I think.
Bill I think it was you mentioned in your prepared remarks that with any acquisition. There is always like the potential for some disruption as you.
Training and kind of add things to the plate of the salespeople.
To an outsider, though I hear news with capabilities and I think pretty similar to what the salespeople were already pitching right as far as like a value proposition. So I'm. Just curious is there something specific that you'll be adding to people's plates or is this just.
No.
The business of acquisition, then things get a little noisy when youre integrating thanks. Thanks.
Yes.
Well first I'll say, we're one weekend I think the biggest thing that I'd highlight is it's actually tied up in your question there.
It's enablement on making sure that we can perfectly articulate what I shared earlier question here around the debt differences between listening our core listing product and useful and how they fit together, thus far our internal teams and then certainly for customers. So theres enablement theres things that come with any integration here.
After the races on that we had an all hands call last Friday.
<unk> kicked off on Monday.
So we're deep in that already and I think to your point. These things are still closing so complementary and we also in many of our customer accounts, we have folks from the PR and media.
Teams, who are in our core platform. So these are also people that we in many cases should now inside the organization and have an opportunity to now go and share more about this new solution that we have.
Perfectly.
Okay that makes sense. Thank you.
Thank you. Thanks Jackson next question please.
Your next question comes from the line of Rob Oliver with Bard. Your line is open.
Great. Thanks, guys. Good afternoon, I had two Ryan first for you I just wanted to ask about the Influencer marketing portion of the business.
Seems like.
Still a lot of interest in the market around it but a buzz around the potential impact.
But just take AI or AI there.
You guys, obviously made pretty strong tuck in acquisition, a couple of years ago, and maybe not breaking that out anymore, but just wanted to get a sense for how thats doing and how when you come in for those renewals for perhaps customers that don't have it how those negotiations are going and then I had a quick follow up for Joe.
Yes, thanks, Rob appreciate it.
We feel really good about the opportunity for Influencer marketing the artist formerly known as Tanger.
The themes I shared a little bit on the prepared remarks, there, but the product teams have just been cranking in terms of some of the advancements that we've done there there's been some really nice AI enhancements in the way of FTE thinking about creator discovery for our customers.
We've been doing a lot actually.
Safety perspective, as you might imagine as these large brands, who are leaning in and trying to figure out the right treaters they need to make sure that these creators perfectly fit their brand and that Theres no risk and so that's something that we've also just really built into the platform that it has added a ton of value and then just create are netting to make it much easier for our customers to figure out.
How to build their strategy and how to add the right creators.
So a lot of automation workflow and tools built into all of that it continues to be a really nice launch for us to go into accounts that might be blended through social media management, but this is a great way to land with a differentiated product and then leverage that to go back and be able to sell more of that customer later on so continued progress there and feeling.
Good about the opportunity in front of US last thing I'll say is this.
Some of the earlier questions around if youre, having disruption with traditional SPM or SCL in PE, we've seen that Influencer marketing is returning a five to six acts on the dollars and so this has been a really great opportunity for our customers to get good return on AD spend and in <unk>.
They probably aren't investing today.
Got it really helpful. Thanks, I appreciate that and then Joe just one for you.
A lot of questions, obviously on news with but I guess more broadly speaking you guys are doing some product investments I know you've been working on the go to market on the enterprise and sales side piece of innovation, just not asking you guys. The next year or anything but just wanted to think about how you're thinking about balancing.
All of those and the potential for more tuck in acquisitions onto your platform with.
Potential continued margin expansion. Thanks.
Yes, Matt. Thanks for the question I think consistent with what we've shown over the last couple of years and what we've kind of got it to this year, which is you can expect a couple of hundred basis points of margin improvement year over year, and I don't see that changing in the near term.
And that's regardless of what our growth rate is and what we're doing I think we've got this commitment that hey, we believe that we can manage this business as a very responsible manner and any type of condition and we want to make sure we're continuing to drive that margin.
We're not moving off of that commitment to drive margin on a year over year.
Okay helpful to hear thank you guys very much.
Alright, Thanks, Rob next question please.
Your next question comes from the line of Raimo Lynch Chow with Barclays. Your line is open.
Thanks for squeezing me in.
Ryan one for you'd like with all the changes in the industry, where people customers have to think about search you have to think about.
So Sean do you have to.
Think about like what do we do through <unk>.
How does the pipeline conversation changed for you as you engage with customers in terms of like number of conversations, but also like a size of potential deals.
Thanks, very much I appreciate it yes, there's certainly a lot that our customers have to be thinking about I mean, I think the biggest thing here.
This just goes back to making sure that we are perfectly tuned into the biggest problems for these customers and that is so dependent obviously on the key stakeholders, we're getting in front of US. If you have in front of a marketing audience. They are absolutely thinking about.
AI is impacting search how.
<unk> may not be working as well how their website traffic may not be working as well and so we're thinking a lot about social is the front door and trying to figure out how can we help them show up in the right places drive awareness and a return on that spend other.
Other customers might be seeing just a significant amount of demand changing channels from their call Center web site into social from a care perspective, and they've got to figure out how to manage that demand like that example, the 90000.
Mrs Network that we're managing and so a lot of it just comes down to making sure that our teams are really doing a lot of discovery to understand where is the biggest problem sets are and that we're leaning into those solutions and then and then tying that with real return on investment.
Feedback on the places in which we think that we can help our customers. So.
There's a lot in there for our teams in terms of just.
Investing in the right places and understanding the right problems.
Feel like we'd be making a lot of progress there and really proud of how the team is showing up in front of customers.
Perfect and then one follow up for Joe, but if you think new Smith with kind of more usage et cetera is there any like.
And you talked about breakeven.
Already but is there anything we should be aware of in terms of gross margin implications from.
I assume that use gpus et cetera.
We need to consider thank you.
No right now we feel pretty good about we did a lot of work during diligence on the tech side to understand the scalability of our platform and that was one of the real positives and one of the one of the big check the boxes for our CTO is that the way they build the backend infrastructure and how this is scaling with the AI considered and so we feel pretty good right now that there is nothing major.
The change in the cost structure of that business as well.
Okay perfect. Thank you.
Hey, Raimo next question please.
Your final question comes from the line of David Hynes with Canaccord Genuity. Your line is open.
Hey, guys Ryan two questions on newswire.
Get your positioning is kind of command center for real time action that makes a lot of sense.
I didn't hear you say, there's news with give you access to media sources that previously weren't being captured by the listening offering.
Yes, Jay it does it does.
Can you elaborate like what are those.
Yes.
Think about it.
Pretty much any of the media sources out there that we would be consuming in looking at all of the articles that the value prop there.
Our platform it takes a little bit of a different angle then we've taken on our listing right listening is warranty brand sentiment our customers use it from a research perspective, they are going back and looking at trends news Whitsel angle is consuming all of the news and media publications out there identifying.
Articles that are being created and figuring out where theres gravity around those articles and what's trending and this matters a lot for our customers because these articles Ken as we've seen news breaking many different places over the last few weeks and months and years. These things can turn into real viral moments that are either good or bad on the good side. It could end up creating a lot of <unk>.
And if you are a product company on the Dod side. It can create a lot of crisis management and so theyre looking at those media articles and figuring out where there's rapid year round them in places like social to allow those PR comms teams to figure out where they should be leaning in.
Yes, Okay got it and then the second follow up to that like what's the pipeline for news.
I know, it's an enterprise product, but like how much are people spending on it.
Yes, yes it is.
In enterprise product.
Multiples bigger than our average deal size.
If you go to the.
Their customer case studies Youll see a lot of the large enterprises that are that are working with them fits really nicely into our enterprise segment.
That we'll see some opportunities there certainly with agencies in mid market as well.
Yes, perfect. Okay. Thank you.
Thank you.
I will now turn the call back over to Ryan <unk> for closing remarks.
Great. Thank you very much operator, and thanks for joining us Tonight and for the thoughtful questions I want to end by thanking our team for their continued dedication and effort really grateful for all you do for our customers and for our business.
Look forward to spending more time with the rest of the queue later over the next quarter and we will talk to you soon have a great night.
Ladies and gentlemen that concludes today's call. Thank you all for joining you may now disconnect.
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