Sprout Social, Inc.SPT

Sprout Social, Inc. Fair Value Disclosure

10-KFiled Feb 27, 20263 min read
The Company measures certain financial assets and liabilities at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:
•Level 1: Quoted prices in active markets for identical assets or liabilities.
•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3: Unobservable inputs that are supported by little or no market activity.
The following tables present information about the Company’s financial assets and liabilities that are measured at fair value and indicate the fair value hierarchy of the valuation inputs used (in thousands):
December 31, 2025
Level 1Level 2Level 3Total
Liabilities:
  Contingent consideration— — 8,873 8,873 
Total liabilities$— $— $8,873 $8,873 
December 31, 2024
Level 1Level 2Level 3Total
Assets:
Marketable Securities:
  Corporate bonds— 3,745 — 3,745 
Total assets$— $3,745 $— $3,745 
There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.
The contingent consideration as presented in the fair value table above relates to the NewsWhip acquisition, and represents the future potential earnout payments based on the achievement of specified financial performance metrics through June 30, 2027. Refer to Note 4 for further discussion of the acquisition.
The fair value of the contingent consideration was determined using a scenario-based approach. The model includes significant unobservable inputs including the discount rate and projected revenues
over the earn-out period. The contingent consideration was classified as Level 3 within the fair value hierarchy.
The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Changes in the fair value of contingent consideration, other than measurement period adjustments, are recorded within General and administrative expenses within the consolidated statements of operations. The current and non-current portions of contingent consideration are recorded to Accrued expenses and other and Other noncurrent liabilities, respectively, within the consolidated balance sheets.
The change in fair value of the contingent consideration (a Level 3 input) was as follows (in thousands):
Contingent consideration liability as of NewsWhip acquisition date$8,450 
Change due to accretion423 
Contingent consideration liability as of December 31, 2025
$8,873 
Marketable securities are classified within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market. The Company’s marketable securities, which were accounted for as available-for-sale securities, matured as of June 30, 2025. There was not a significant difference between the amortized cost and fair value of these securities in the periods presented, and the gross unrealized gains and losses associated with these securities were immaterial. There were no available-for-sale securities as of December 31, 2025.
The carrying amounts of certain financial instruments, including cash held in banks, cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to their short-term maturities and are excluded from the fair value tables above.
Free Sentinel

Want the next Sprout Social, Inc. fair value disclosure the moment it drops?

Set a Sentinel and we'll alert you the moment Sprout Social, Inc.'s next filing hits EDGAR. No credit card, your email never gets sold.

Track for free

Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 26, 2025
2023Feb 23, 2024
2022Feb 22, 2023
2021Feb 23, 2022
2020Feb 24, 2021

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

Income TaxesRevenueEarnings Per SharePP&EGoodwill & IntangiblesLeasesSegmentsDebtCommitmentsStock CompensationNew Standards