Sprout Social (SPT) FY2025 10-K Risk Factors: 9 New, 9 Dropped

What the changes say

Sprout Social highlighted expanded debt obligations tied to its NewsWhip acquisition and heightened regulatory scrutiny regarding data privacy and cybersecurity.

What changed since the prior 10-K

New

NewRisks Related to the Use of Technology
of a resulting customer security issue or incident, our customer relationships reputation, and revenue in the future may be adversely impacted
Cybersecurity incidents or customer data breaches could lead to large claims exceeding our liability insurance coverage limits.
NewMarket and Competition Risk
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
Competitors with greater name recognition, larger budgets, and bundled products could undercut our pricing and make it harder to acquire customers.
NewLegal and Regulatory Risks
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
Stricter and rapidly changing data privacy regulations across jurisdictions create uncertainty, increasing our compliance costs and sales cycle times.
NewLegal and Regulatory Risks
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
Security incidents or perceived breaches could result in costly stakeholder notifications, government enforcement actions, and reputational harm.
NewLegal and Regulatory Risks
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
Ordinary course litigation involving labor, employment, and commercial disputes could increase as our business grows.
NewRisks Related to Ownership of Our Class A Common Stock
We cannot predict the effect our dual class structure may have on the market of our Class A common stock
Our dual class share structure could lead to exclusion from certain stock indices and negative commentary from stockholder advisory firms.
NewRisks Related to Tax and Accounting Matters
Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operations
New or modified tax laws, including the Tax Cuts and Jobs Act and the Inflation Reduction Act, could negatively impact our deferred tax assets.
NewRisks Related to Intellectual Property Matters
competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness
Insufficient cash flows could leave us unable to service our indebtedness, forcing us to seek costly refinancing or sell assets.
NewRisks Related to Intellectual Property Matters
We have incurred a substantial amount of debt, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness, and prevent us from meeting our debt obligations
We borrowed $40 million under our credit facility as of December 31, 2025, including $32 million to fund the acquisition of NewsWhip.

Dropped

DroppedRisks Related to our Business Model and Other Operations Risks
We have a number of federal government customers that may be impacted by any budget cuts implemented by the incoming administration. We cannot predict the impact any budget cuts will have on our existing or prospective customers and how that may impact their spending with us
DroppedRisks Related to our Business Model and Other Operations Risks
If we are unable to attract potential customers through unpaid channels, convert this traffic to free trials and other leads or convert free trials and other leads to paid subscriptions, our business and results of operations may be adversely affected
Risks from federal government customer budget cuts under the incoming administration.
DroppedRisks Related to our Business Model and Other Operations Risks
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
DroppedRisks Related to our Business Model and Other Operations Risks
As more of our sales efforts target larger enterprise customers, our sales cycle has and may continue to become longer and more expensive and we may encounter increased pricing pressure and compliance challenges
DroppedRisks Related to our Business Model and Other Operations Risks
If we do not adequately fund our research and development efforts, or use research and development teams effectively, we may not be able to compete effectively, and our business and operating results may be harmed
Inability to attract potential customers through unpaid inbound marketing channels and free trials.
DroppedRisks Related to our Business Model and Other Operations Risks
business to run more efficiently than Sprout Social, placing us at a competitive disadvantage, and they may better incorporate AI into their product offerings, negatively impacting demand for our products
DroppedRisks Related to Intellectual Property Matters
Our recent growth and any future growth in headcount may be difficult to manage effectively
Emergence of new social media networks requiring rapid platform integrations.
DroppedRisks Related to Intellectual Property Matters
We may not be able to generate sufficient cash to service our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
Longer and more expensive sales cycles when targeting larger enterprise customers.
DroppedRisks Related to Intellectual Property Matters
We entered into the Credit Agreement with the lenders named therein and MUFG Bank, LTD. as administrative agent and collateral agent, in August 2023, which provides for a $100 million senior secured credit facility

Reworded

95% rewrittenRisks Related to our Business Model and Other Operations Risks
Technological advances in AI may in the future disrupt the social media industry, which could significantly reduce the demand for our services or otherwise adversely impact our business or reputation if we are unable to successfully keep pace and navigate this evolving environment
Expanded to explicitly warn that AI advances could enable customers to bypass our services or reduce the number of seats they use.
86% rewrittenRisks Related to our Business Model and Other Operations Risks
Our international sales, operations and global workforce subject us to additional risks and costs, including operational, legal, regulatory, market and foreign currency exchange rate risks, that can adversely affect our business, operating results and financial condition
Updated international revenue figures from 2024 to 2025 and added specific office locations in Dublin and Kraków plus distributed global teams.
Was: Our international sales and operations subject us to additional risks and costs, including exposure to foreign currency exchange rate fluctuations, that can adversely affect our business, operating results and financial condition
85% rewrittenRisks Related to our Business Model and Other Operations Risks
If we fail to adapt and respond effectively to rapidly changing technology, new social media platforms, evolving industry standards or changing customer needs, requirements, tastes or preferences, our products may become less competitive
Added specific mention that AI advancements present security risks, data privacy considerations, and evolving customer expectations.
78% rewrittenRisks Related to our Business Model and Other Operations Risks
If we fail to attract new customers and retain and increase the spending of existing customers, our revenue, business, results of operations, financial condition and growth prospects would be harmed
Added a factor regarding our ability to successfully execute on new product innovation and enhancements.
66% rewrittenMarket and Competition Risk
The market in which we operate is competitive, and if we do not compete effectively, our operating results could be harmed
Maintained substantially the same core text regarding competition in the social media management market.
59% rewrittenRisks Related to our Business Model and Other Operations Risks
We recognize subscription revenue ratably over the term of our customer contracts. Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern
Maintained the same risk regarding ratable subscription revenue recognition and deferred revenue impacts.
52% rewrittenRisks Related to our Business Model and Other Operations Risks
Our platform and products are dependent on APIs built and owned by third parties, including social media networks, and if we cannot renew on commercially reasonable terms or we lose access to data provided by such APIs for any reason, our business could suffer
Retained the risk regarding our operational dependence on third-party APIs built and owned by social media networks.
Was: Our platform and products are dependent on APIs built and owned by third parties, including social media networks, and if we lose access to data provided by such APIs or the terms and conditions on which we obtain such access become less favorable, our business could suffer
51% rewrittenRisks Related to Ownership of Our Class A Common Stock
The dual class structure of our common stock and the existing ownership of capital stock by our Co-Founders have the effect of concentrating voting control with our Co-Founders for the foreseeable future, which limits the ability of our other investors to influence corporate matters
Changed voting power percentage of Class B stock from 55.8% to 52.6% and updated controlling terms to reference the Sunset Trigger Date.
44% rewrittenRisks Related to our Business Model and Other Operations Risks
Our historical revenue growth rates may not be indicative of our future growth
43% rewrittenRisks Related to our Business Model and Other Operations Risks
We have a history of losses and may not achieve profitability in the future
41% rewrittenRisks Related to our Business Model and Other Operations Risks
If we fail to offer high-quality customer support, or if the cost of such support is not consistent with corresponding levels of revenue, our business and reputation may be harmed
41% rewrittenLegal and Regulatory Risks
We are currently subject to, and may become in the future, subject to litigation, disputes or regulatory inquiries for a variety of claims, which could adversely affect our results of operations, harm our reputation or otherwise negatively affect our business
36% rewrittenRisks 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
32% rewrittenRisks Related to Intellectual Property Matters
Inability or failure to protect our intellectual property rights could impair our business
24% rewrittenRisks Related to Intellectual Property Matters
Third party intellectual property infringement claims could impair our business
24% rewrittenRisks Related to Intellectual Property Matters
We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs
24% rewrittenRisks Related to Ownership of Our Class A Common Stock
Future sales of our common stock in the public market could cause our share price to fall
22% rewrittenRisks Related to Intellectual Property Matters
Unstable market, economic and political conditions may have serious adverse consequences on our business, financial condition and share price
Was: Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and share price

All 47 risk factors

Headings as the filing states them, in filing order.

Risks Related to our Business Model and Other Operations Risks

01If we fail to attract new customers and retain and increase the spending of existing customers, our revenue, business, results of operations, financial condition and growth prospects would be harmed78% rewritten
02Our historical revenue growth rates may not be indicative of our future growth44% rewritten
03Our platform and products are dependent on APIs built and owned by third parties, including social media networks, and if we cannot renew on commercially reasonable terms or we lose access to data provided by such APIs for any reason, our business could suffer52% rewritten
04If we fail to adapt and respond effectively to rapidly changing technology, new social media platforms, evolving industry standards or changing customer needs, requirements, tastes or preferences, our products may become less competitive85% rewritten
05We recognize subscription revenue ratably over the term of our customer contracts. Consequently, downturns or upturns in new sales may not be immediately reflected in our operating results and may be difficult to discern59% rewritten
06If we fail to offer high-quality customer support, or if the cost of such support is not consistent with corresponding levels of revenue, our business and reputation may be harmed41% rewritten
07Technological advances in AI may in the future disrupt the social media industry, which could significantly reduce the demand for our services or otherwise adversely impact our business or reputation if we are unable to successfully keep pace and navigate this evolving environment95% rewritten
08Our international sales, operations and global workforce subject us to additional risks and costs, including operational, legal, regulatory, market and foreign currency exchange rate risks, that can adversely affect our business, operating results and financial condition86% rewritten
09We have a history of losses and may not achieve profitability in the future43% rewritten
10If we are unable to develop and maintain successful relationships with channel partners, our business, results of operations and financial condition could be harmed

Risks Related to the Use of Technology

11Any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business36% rewritten
12of a resulting customer security issue or incident, our customer relationships reputation, and revenue in the future may be adversely impactedNew
13We rely upon third parties to operate our platform and any disruption of or interference with our use of such third party providers would adversely affect our business, results of operations and financial condition
14Real or perceived errors, failures or bugs in our platform or products could materially and adversely affect our operating results and growth prospects
15We are subject to subscription and payment processing risk from our third-party vendors and any disruption to such processing systems could adversely affect our business and results of operations

Market and Competition Risk

16Our 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. Moreover, our brand and reputation could be harmed if we were to experience significant negative publicity
17Our estimates of market opportunity, forecasts of market growth and our operating metrics may prove to be inaccurate
18The market in which we operate is competitive, and if we do not compete effectively, our operating results could be harmed66% rewritten
19be 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 businessNew

Legal and Regulatory Risks

20policies, 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 consequencesNew
21and data. While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effectiveNew
22Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses
23Our use of “open source” software could negatively affect our ability to offer and sell access to our platform and products and subject us to possible litigation
24We are currently subject to, and may become in the future, subject to litigation, disputes or regulatory inquiries for a variety of claims, which could adversely affect our results of operations, harm our reputation or otherwise negatively affect our business41% rewritten
25substantial damages, or possibly fines, and could have a material adverse effect on our business, our stock price, cash flow, results of operations and financial conditionNew
26We are subject to U.S. economic sanctions and export control and anti-corruption laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations

Risks Related to Ownership of Our Class A Common Stock

27Our actual operating results may fluctuate from period to period and may differ significantly from any guidance provided
28Our share price has been and may continue to be volatile, and you could lose all or part of your investment
29The dual class structure of our common stock and the existing ownership of capital stock by our Co-Founders have the effect of concentrating voting control with our Co-Founders for the foreseeable future, which limits the ability of our other investors to influence corporate matters51% rewritten
30We cannot predict the effect our dual class structure may have on the market of our Class A common stockNew
31Future sales of our common stock in the public market could cause our share price to fall24% rewritten
32We have never paid dividends on our capital stock and we do not intend to pay dividends for the foreseeable future
33Our charter documents and Delaware law could prevent a takeover that stockholders consider favorable and could also reduce the market price of our stock
34These 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
35If securities or industry analysts do not continue to publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline

Risks Related to Tax and Accounting Matters

36Failure to maintain effective internal control over financial reporting could result in our failure to accurately or timely report our financial condition or results of operations, which could have a material adverse effect on our business and stock price
37Our ability to utilize our net operating loss carryforwards may be limited
38Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse effect on our business, cash flow, financial condition, or results of operationsNew

Risks Related to Intellectual Property Matters

39Inability or failure to protect our intellectual property rights could impair our business32% rewritten
40Third party intellectual property infringement claims could impair our business24% rewritten
41Unstable market, economic and political conditions may have serious adverse consequences on our business, financial condition and share price22% rewritten
42We depend largely on the continued service of our senior management and other key employees, the loss of any of whom could adversely affect our business, results of operations and financial condition
43If we cannot attract and retain qualified personnel or maintain our culture as we grow, we may be unable to execute our business strategy
44competitive conditions and to certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtednessNew
45We have incurred a substantial amount of debt, which could adversely affect our business, including by restricting our ability to engage in additional transactions or incur additional indebtedness, and prevent us from meeting our debt obligationsNew
46We may not be able to secure additional financing on favorable terms, or at all, to meet our future capital needs24% rewritten
47There are risks associated with potential future indebtedness that may adversely affect our financial condition and future financing agreements may contain restrictive operating and financial covenants that could limit our operating flexibility

Other Sprout Social 10-Ks

FY2024 10-K risk factors
47 risks
Sprout Social faces heavy risks from reliance on third-party social media APIs, cloud infrastructure, and inbound customer acquisition. The company struggles with ongoing net losses, reporting an accumulated deficit of $354.4 million as of December 31, 2024. Expanding into enterprise sales brings longer cycles and compliance challenges while AI disruption poses competitive threats.
Filed Feb 26, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.