Sprout Social, Inc. (“Sprout Social”, the “Company”) (Nasdaq: SPT),
an industry-leading provider of cloud-based social media management
software, today announced financial results for its third quarter
ended September 30, 2024.
“The Sprout team delivered a solid third quarter,
driving 20% revenue growth and 31% growth in cRPO as we executed
our strategy across key company metrics. Sprout continues to focus
on product leadership and expanding our competitive position within
the Enterprise segment as these customers leverage the power of
Social to drive their digital strategies,” said Ryan Barretto,
CEO.
Third Quarter 2024 Financial
Highlights
Revenue
- Revenue was $102.6 million, up 20% compared to the third
quarter of 2023.
- Total remaining performance obligations (RPO) of $311.5 million
as of September 30, 2024, up 36% year-over-year.
- Current remaining performance obligations (cRPO) of $220.7
million as of September 30, 2024, up 31% year-over-year.
Operating Income (Loss)
- GAAP operating loss was ($16.9) million, compared to ($24.2)
million in the third quarter of 2023.
- Non-GAAP operating income (loss) was $7.5 million, compared to
($0.6) million in the third quarter of 2023.
Net Loss
- GAAP net loss was ($17.1) million, compared to ($23.0) million
in the third quarter of 2023.
- Non-GAAP net income (loss) was $7.3 million, compared to ($0.6)
million in the third quarter of 2023.
- GAAP net loss per share was ($0.30) based on 57.2 million
weighted-average shares of common stock outstanding, compared to
($0.41) based on 55.8 million weighted-average shares of common
stock outstanding in the third quarter of 2023.
- Non-GAAP net income (loss) per share was $0.13 based on 57.2
million weighted-average shares of common stock outstanding,
compared to ($0.01) based on 55.8 million weighted-average shares
of common stock outstanding in the third quarter of 2023.
Cash
- Cash and equivalents and marketable securities totaled $91.5
million as of September 30, 2024, compared to $93.2 million as of
June 30, 2024.
- Net cash generated by (used in) operating activities was $9.0
million, compared to ($5.5) million in the third quarter of
2023.
- Non-GAAP free cash flow was $9.3 million, compared to ($3.4)
million in the third quarter of 2023.
See “Use of Non-GAAP Financial Measures” below for
definitions of Non-GAAP operating income (loss), Non-GAAP net
income (loss), Non-GAAP net income (loss) per share, non-GAAP free
cash flow, dollar-based net retention rate and dollar-based net
retention rate excluding small-and-medium-sized business customers
and the financial tables that accompany this release for
reconciliations of our non-GAAP measures to their closest
comparable GAAP measures. See “Customer Metrics” below for how
Sprout Social defines the number of customers contributing over
$10,000 in ARR and the number of customers contributing over
$50,000 in ARR.
Customer Metrics
- Grew number of customers contributing over $10,000 in ARR to
9,119 customers as of September 30, 2024, up 12% compared to
September 30, 2023.
- Grew number of customers contributing over $50,000 in ARR to
1,610 customers as of September 30, 2024, up 29% compared to
September 30, 2023.
Recent Customer Highlights
- During the third quarter, we had the opportunity to grow with
new and existing customers like: Zoom, Honda, Campbell’s, Church
and Dwight, AGI, Valvoline Global, Valvoline Instant Oil Change,
the United States Coast Guard, Mattress Firm, Constellation Energy
Corp, Banco de Oro, and Scrub Daddy.
Recent Business Highlights
Sprout Social recently:
- Named Mike Wolff as Chief Revenue Officer to oversee Sprout’s
global Sales, Success and Partnerships organization. He will focus
on the continued global growth and expansion of Sprout’s innovative
offerings. (link)
- Named #1 in 94 Reports in G2’s 2024 Fall Reports, expanding its
leadership across global markets and business segments (link)
- Launched new Salesforce integration using Agentforce to assist
service reps (link)
- Unveiled latest product innovations to streamline marketers’
work, accelerate business insights with AI, and simplify social
customer service (link)
- Joined the AWS Marketplace to help customers simplify the
procurement process, streamline billing, and gain faster time to
value (link)
Fourth Quarter and 2024 Financial
Outlook
For the fourth quarter of 2024, the Company
currently expects:
- Total revenue between $106.3 million and $107.1 million.
- Non-GAAP operating income to be between $8.7 million and $9.5
million.
- Non-GAAP net income per share of between $0.15 and $0.16 based
on approximately 57.6 million weighted-average shares of common
stock outstanding.
For the full year 2024, the Company currently
expects:
- Total revenue to be between $405.1 million and $405.9
million.
- Non-GAAP operating income between $27.5 million and $28.3
million, including an estimated benefit from the deferred
commission accounting change, which will affect all future
periods.
- Non-GAAP net income per share between $0.46 and $0.47 based on
approximately 57.0 million weighted-average shares of common stock
outstanding.
The Company’s fourth quarter and 2024 financial
outlook is based on a number of assumptions that are subject to
change and many of which are outside the Company’s control. If
actual results vary from these assumptions, the Company’s
expectations may change. There can be no assurance that the Company
will achieve these results.
The Company does not provide guidance for
operating loss, the most directly comparable GAAP measure to
non-GAAP operating income, net loss per share, the most directly
comparable GAAP measure to non-GAAP net income per share, or
operating margin, the most directly comparable GAAP measure to
Non-GAAP operating margin, and similarly cannot provide a
reconciliation between its forecasted non-GAAP operating income,
non-GAAP net income per share and non-GAAP operating margin and
these comparable GAAP measures without unreasonable effort due to
the unavailability of reliable estimates for certain items. These
items are not within the Company’s control and may vary greatly
between periods and could significantly impact future financial
results.
Conference Call Information
The financial results and business highlights will
be discussed on a conference call and webcast scheduled at 4:00
p.m. Central Time (5:00 p.m. Eastern Time) today, November 7, 2024.
Online registration for this event conference call can be found at
https://registrations.events/direct/Q4I1913184. The live webcast of
the conference call can be accessed from Sprout Social’s investor
relations website at http://investors.sproutsocial.com.
Following completion of the events, a webcast
replay will also be available at
http://investors.sproutsocial.com for 12 months.
About Sprout Social
Sprout Social is a global leader in social media
management and analytics software. Sprout’s unified platform puts
powerful social data into the hands of approximately 30,000 brands
so they can make strategic decisions that drive business growth and
innovation. With a full suite of social media management solutions,
Sprout offers comprehensive publishing and engagement
functionality, customer care, connected workflows and AI-powered
business intelligence. Sprout’s award-winning software operates
across all major social media networks and digital platforms. For
more information about Sprout Social (NASDAQ: SPT), visit
sproutsocial.com.
Forward-Looking Statements
This press release contains “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. In some cases, you can identify
forward-looking statements by terms such as “anticipate,”
“believe,” “can,” “continue,” “could,” “estimate,” “expect,”
“explore,” “intend,” “long-term model,” “may,” “medium to longer
term goals,” “might” “outlook,” “plan,” “potential,” “predict,”
“project,” “should,” “strategy,” “target,” “will,” “would,” or the
negative of these terms, and similar expressions intended to
identify forward-looking statements. However, not all
forward-looking statements contain these identifying words. These
statements may relate to our market size and growth strategy, our
estimated and projected costs, margins, revenue, expenditures and
customer and financial growth rates, our Q4 2024 and full year 2024
financial outlook, our plans and objectives for future operations,
growth, initiatives or strategies. By their nature, these
statements are subject to numerous uncertainties and risks,
including factors beyond our control, that could cause actual
results, performance or achievement to differ materially and
adversely from those anticipated or implied in the forward-looking
statements. These assumptions, uncertainties and risks include
that, among others: we may not be able to sustain our revenue and
customer growth rate in the future; price increases have and may
continue to negatively impact demand for our products, customer
acquisition and retention and reduce the total number of customers
or customer additions; our business would be harmed by any
significant interruptions, delays or outages in services from our
platform, our API providers, or certain social media platforms; if
we are unable to attract potential customers through unpaid
channels, convert this traffic to free trials or convert free
trials to paid subscriptions, our business and results of
operations may be adversely affected; we may be unable to
successfully enter new markets, manage our international expansion
and comply with any applicable international laws and regulations;
we may be unable to integrate acquired businesses or technologies
successfully or achieve the expected benefits of such acquisitions
and investments; unstable market and economic conditions, such as
recession risks, effects of inflation, labor shortages, supply
chain issues, high interest rates, and the impacts of current and
potential future bank failures and impacts of ongoing overseas
conflicts, have and could continue to adversely impact our business
and that of our existing and prospective customers, which may
result in reduced demand for our products; we may not be able to
generate sufficient cash to service our indebtedness; covenants in
our credit agreement may restrict our operations, and if we do not
effectively manage our business to comply with these covenants, our
financial condition could be adversely impacted; 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; changing regulations relating
to privacy, information security and data protection could increase
our costs, affect or limit how we collect and use personal
information and harm our brand; and risks related to ongoing legal
proceedings. Additional risks and uncertainties that could cause
actual outcomes and results to differ materially from those
contemplated by the forward-looking statements are included under
the caption “Risk Factors” and elsewhere in our filings with the
Securities and Exchange Commission (the “SEC”), including our
Annual Report on Form 10-K for the year ended December 31, 2023
filed with the SEC on February 23, 2024, as well as any future
reports that we file with the SEC. Moreover, you should interpret
many of the risks identified in those reports as being heightened
as a result of the current instability in market and economic
conditions. Forward-looking statements speak only as of the date
the statements are made and are based on information available to
Sprout Social at the time those statements are made and/or
management's good faith belief as of that time with respect to
future events. Sprout Social assumes no obligation to update
forward-looking statements to reflect events or circumstances after
the date they were made, except as required by law.
Use of Non-GAAP Financial
Measures
We have provided in this press release certain
financial information that has not been prepared in accordance with
generally accepted accounting principles in the United States
(“GAAP”). Our management uses these non-GAAP financial measures
internally in analyzing our financial results and believes that use
of these non-GAAP financial measures is useful to investors as an
additional tool to evaluate ongoing operating results and trends
and in comparing our financial results with other companies in our
industry, many of which present similar non-GAAP financial
measures. Non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable financial
measures prepared in accordance with GAAP and should be read only
in conjunction with our consolidated financial statements prepared
in accordance with GAAP. A reconciliation of our historical
non-GAAP financial measures to the most directly comparable GAAP
measures has been provided in the financial statement tables
included in this press release, and investors are encouraged to
review these reconciliations.
Non-GAAP gross profit. We define
non-GAAP gross profit as GAAP gross profit, excluding stock-based
compensation expense and amortization expense associated with the
acquired developed technology from our acquisition of Tagger Media,
Inc. (the “Tagger acquisition”). We believe non-GAAP gross profit
provides our management and investors consistency and comparability
with our past financial performance and facilitates
period-to-period comparisons of operations, as it eliminates the
effect of stock-based compensation and amortization expense, which
are often unrelated to overall operating performance. In 2023, we
revised our definition of non-GAAP gross profit to exclude
amortization expense associated with the acquired developed
technology from the Tagger acquisition.
Non-GAAP gross margin. We define
non-GAAP gross margin as non-GAAP gross profit as a percentage of
revenue.
Non-GAAP operating income (loss).
We define non-GAAP operating income (loss) as GAAP loss from
operations, excluding stock-based compensation expense,
acquisition-related expenses and amortization expense associated
with the acquired intangible assets from the Tagger acquisition. We
believe non-GAAP operating income (loss) provides our management
and investors consistency and comparability with our past financial
performance and facilitates period-to-period comparisons of
operations, as it eliminates the effect of stock-based
compensation, acquisition-related expenses and amortization
expense, which are often unrelated to overall operating
performance. In 2023, we revised our definition of non-GAAP
operating income (loss) to exclude acquisition-related expenses in
connection with the Tagger acquisition and amortization expense
associated with the acquired intangible assets from the Tagger
acquisition.
Non-GAAP operating margin. We
define non-GAAP operating margin as non-GAAP operating income
(loss) as a percentage of revenue.
Non-GAAP net income (loss). We
define non-GAAP net income (loss) as GAAP net loss, excluding
stock-based compensation expense, acquisition-related expenses,
amortization expense associated with the acquired intangible assets
from the Tagger acquisition and tax benefits due to changes in
valuation allowances from business acquisitions. We believe
non-GAAP net income (loss) provides our management and investors
consistency and comparability with our past financial performance
and facilitates period-to-period comparisons of operations, as this
non-GAAP financial measure eliminates the effect of stock-based
compensation, acquisition-related expenses, amortization expense
and tax benefits due to changes in valuation allowances from
business acquisitions, which are often unrelated to overall
operating performance. In 2023, we revised our definition of
non-GAAP net income (loss) to exclude acquisition-related expenses
in connection with the Tagger acquisition, amortization expense
associated with the acquired intangible assets from the Tagger
acquisition and tax benefits recognized from changes in the
valuation allowance associated with our acquisition of Tagger.
Non-GAAP net income (loss) per
share. We define non-GAAP net income (loss) per share as
GAAP net loss per share attributable to common shareholders, basic
and diluted, excluding stock-based compensation expense,
acquisition-related expenses, amortization expense associated with
the acquired intangible assets from the Tagger acquisition and tax
benefits due to changes in valuation allowances from business
acquisitions. We believe non-GAAP net income (loss) per share
provides our management and investors consistency and comparability
with our past financial performance and facilitates
period-to-period comparisons of operations, as this non-GAAP
financial measure eliminates the effect of stock-based
compensation, acquisition-related expenses, amortization expense
and tax benefits due to changes in valuation allowances from
business acquisitions, which are often unrelated to overall
operating performance. In 2023, we revised our definition of
non-GAAP net income (loss) per share to exclude acquisition-related
expenses in connection with the Tagger acquisition, amortization
expense associated with the acquired intangible assets from the
Tagger acquisition and tax benefits recognized from changes in the
valuation allowance associated with our acquisition of Tagger.
Non-GAAP free cash flow. We
define non-GAAP free cash flow as net cash provided by (used in)
operating activities less expenditures for property and equipment,
acquisition-related costs and interest. Non-GAAP free cash flow
does not reflect our future contractual obligations or represent
the total increase or decrease in our cash balance for a given
period. We believe non-GAAP free cash flow is a useful indicator of
liquidity that provides information to management and investors
about the amount of cash used in our core operations that, after
expenditures for property and equipment, acquisition-related costs
and interest, is not available for strategic initiatives. In 2023,
we revised our definition of non-GAAP free cash flow to exclude
payments related to acquisition-related costs associated with the
Tagger acquisition (which are not applicable for the periods
presented) and cash paid for interest on our revolving line of
credit.
Non-GAAP free cash flow margin.
We define non-GAAP free cash flow margin as non-GAAP free cash flow
as a percentage of revenue.
Non-GAAP sales and marketing expenses,
non-GAAP research and development expenses and non-GAAP general and
administrative expenses. Non-GAAP sales and marketing
expenses, non-GAAP research and development expenses and non-GAAP
general and administrative expenses are defined as sales and
marketing expenses, research and development expenses and general
and administrative expenses, respectively, less stock-based
compensation expense and acquisition-related expenses. We believe
these non-GAAP measures provide our management and investors with
insight into day-to-day operating expenses given that these
measures eliminate the effect of stock-based compensation and
acquisition-related expenses. In 2023, we revised our definition of
non-GAAP general and administrative expenses to exclude
acquisition-related expenses in connection with the Tagger
acquisition and amortization expense associated with the acquired
intangible assets from the Tagger acquisition.
Key Business Metrics
Annual recurring revenue (“ARR”).
We define ARR as the annualized revenue run-rate of subscription
agreements from all customers as of the last date of the specified
period. We believe ARR is an indicator of the scale of our entire
platform while mitigating fluctuations due to seasonality and
contract term.
Remaining performance obligations
(“RPO”). RPO, or remaining performance obligations,
represents contracted revenue that has not yet been recognized, and
includes deferred revenue and amounts that will be invoiced and
recognized in future periods.
Current remaining performance obligations
(“cRPO”). cRPO, or current RPO, represents contracted
revenue that has not yet been recognized, and includes deferred
revenue and amounts that will be invoiced and recognized in the
next 12 months.
Number of customers. We define a
customer as a unique account, multiple accounts containing a common
non-personal email domain, or multiple accounts governed by a
single agreement or entity. We believe that the number of customers
using our platform is an indicator of our market penetration.
Number of customers contributing more than
$10,000 in ARR. We define number of customers contributing
more than $10,000 in ARR as those on a paid subscription plan that
had more than $10,000 in ARR as of a period end. We view the number
of customers that contribute more than $10,000 in ARR as a measure
of our ability to scale with our customers and attract larger
organizations. We define a customer as a unique account, multiple
accounts containing a common non-personal email domain, or multiple
accounts governed by a single agreement or entity. We believe this
represents potential for future growth, including expanding within
our current customer base.
Number of customers contributing more than
$50,000 in ARR. We define number of customers contributing
more than $50,000 in ARR as those on a paid subscription plan that
had more than $50,000 in ARR as of a period end. We view the number
of customers that contribute more than $50,000 in ARR as a measure
of our ability to scale with large customers and attract
sophisticated organizations. We define a customer as a unique
account, multiple accounts containing a common non-personal email
domain, or multiple accounts governed by a single agreement or
entity. We believe this represents potential for future growth,
including expanding within our current customer base.
Dollar-based net retention rate.
We calculate dollar-based net retention rate by dividing the ARR
from our customers as of December 31st in the reported year by the
ARR from those same customers as of December 31st in the previous
year. This calculation is net of upsells, contraction, cancellation
or expansion during the period but excludes ARR from new customers.
We use dollar-based net retention to evaluate the long-term value
of our customer relationships, because we believe this metric
reflects our ability to retain and expand subscription revenue
generated from our existing customers.
Dollar-based net retention rate excluding
SMB customers. We calculate dollar-based net retention
rate excluding SMB customers by dividing the ARR from all customers
excluding ARR from customers that we have identified or that
self-identified as having less than 50 employees as of December
31st in the reported year by the ARR from those same customers as
of December 31st of the previous year. This calculation is net of
upsells, contraction, cancellation or expansion during the period
but excludes ARR from new customers. We used dollar-based net
retention excluding SMB customers to evaluate the long-term value
of our larger customer relationships, because we believe this
metric reflects our ability to retain and expand subscription
revenue generated from our existing customers.
While we no longer believe that ARR and number of
customers are key performance indicators of Sprout Social’s
business, these metrics are necessary for an understanding of how
we define number of customers contributing over $10,000 in ARR and
number of customers contributing over $50,000 in ARR. For this
purpose, we define ARR as the annualized revenue run-rate of
subscription agreements from all customers as of the last date of
the specified period and we define a customer as a unique account,
multiple accounts containing a common non-personal email domain, or
multiple accounts governed by a single agreement or entity.
Availability of Information on Sprout
Social’s Website and Social Media Profiles
Investors and others should note that Sprout
Social routinely announces material information to investors and
the marketplace using SEC filings, press releases, public
conference calls, webcasts and the Sprout Social Investors website.
We also intend to use the social media profiles listed below as a
means of disclosing information about us to our customers,
investors and the public. While not all of the information that the
Company posts to the Sprout Social Investors website or to social
media profiles is of a material nature, some information could be
deemed to be material. Accordingly, the Company encourages
investors, the media, and others interested in Sprout Social to
review the information that it shares at the Investors link located
at the bottom of the page on www.sproutsocial.com and to regularly
follow our social media profiles. Users may automatically receive
email alerts and other information about Sprout Social when
enrolling an email address by visiting “Email Alerts” in the
“Shareholder Services” section of Sprout Social's Investor website
at https://investors.sproutsocial.com/.
Social Media Profiles:
www.twitter.com/SproutSocialwww.twitter.com/SproutSocialIRwww.facebook.com/SproutSocialIncwww.linkedin.com/company/sprout-social-inc-/www.instagram.com/sproutsocial
Contact
Media: Layla Revis Email:
pr@sproutsocial.com Phone: (866) 878-3231
Investors: Alex Kurtz Twitter:
@SproutSocialIR Email: investors@sproutsocial.comPhone: (312)
528-9166
|
|
|
Sprout Social, Inc. |
|
Consolidated Statements of Operations
(Unaudited) |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
2024 |
|
2023 |
|
Revenue |
|
|
|
|
Subscription |
$ 101,813 |
|
$ 84,802 |
|
Professional services and other |
825 |
|
730 |
|
Total revenue |
102,638 |
|
85,532 |
|
Cost of revenue(1) |
|
|
|
|
Subscription |
22,928 |
|
19,874 |
|
Professional services and other |
304 |
|
324 |
|
Total cost of revenue |
23,232 |
|
20,198 |
|
Gross profit |
79,406 |
|
65,334 |
|
Operating expenses |
|
|
|
|
Research and development(1) |
26,272 |
|
20,057 |
|
Sales and marketing(1) |
47,499 |
|
44,499 |
|
General and administrative(1) |
22,514 |
|
24,982 |
|
Total operating expenses |
96,285 |
|
89,538 |
|
Loss from operations |
(16,879) |
|
(24,204) |
|
Interest expense |
(851) |
|
(1,147) |
|
Interest income |
1,007 |
|
1,651 |
|
Other expense, net |
(110) |
|
(293) |
|
Loss before income taxes |
(16,833) |
|
(23,993) |
|
Income tax expense (benefit) |
254 |
|
(980) |
|
Net loss |
$ (17,087) |
|
$ (23,013) |
|
Net loss per share attributable to common shareholders, basic and
diluted |
$ (0.30) |
|
$ (0.41) |
|
Weighted-average shares outstanding used to compute net loss per
share, basic and diluted |
57,179,710 |
|
55,831,230 |
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows: |
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
2024 |
|
2023 |
|
Cost of revenue |
$ 1,059 |
|
$ 971 |
|
Research and development |
7,493 |
|
5,020 |
|
Sales and marketing |
8,962 |
|
8,570 |
|
General and administrative |
5,672 |
|
4,452 |
|
Total stock-based compensation expense |
$ 23,186 |
|
$ 19,013 |
|
Sprout Social, Inc. |
|
Consolidated Statements of Operations
(Unaudited) |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
|
Revenue |
|
|
|
|
Subscription |
$ 296,100 |
|
$ 238,234 |
|
Professional services and other |
2,718 |
|
1,825 |
|
Total revenue |
298,818 |
|
240,059 |
|
Cost of revenue(1) |
|
|
|
|
Subscription |
67,211 |
|
54,479 |
|
Professional services and other |
851 |
|
828 |
|
Total cost of revenue |
68,062 |
|
55,307 |
|
Gross profit |
230,756 |
|
184,752 |
|
Operating expenses |
|
|
|
|
Research and development(1) |
75,167 |
|
56,889 |
|
Sales and marketing(1) |
138,233 |
|
120,711 |
|
General and administrative(1) |
64,035 |
|
58,206 |
|
Total operating expenses |
277,435 |
|
235,806 |
|
Loss from operations |
(46,679) |
|
(51,054) |
|
Interest expense |
(2,869) |
|
(1,210) |
|
Interest income |
3,095 |
|
5,811 |
|
Other expense, net |
(773) |
|
(650) |
|
Loss before income taxes |
(47,226) |
|
(47,103) |
|
Income tax expense (benefit) |
328 |
|
(753) |
|
Net loss |
$ (47,554) |
|
$ (46,350) |
|
Net loss per share attributable to common shareholders, basic and
diluted |
$ (0.84) |
|
$ (0.83) |
|
Weighted-average shares outstanding used to compute net loss per
share, basic and diluted |
56,742,498 |
|
55,508,195 |
|
|
|
|
|
|
(1) Includes stock-based compensation expense as follows: |
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
|
Cost of revenue |
$ 2,890 |
|
$ 2,329 |
|
Research and development |
18,979 |
|
12,949 |
|
Sales and marketing |
24,527 |
|
22,346 |
|
General and administrative |
15,454 |
|
11,421 |
|
Total stock-based compensation expense |
$ 61,850 |
|
$ 49,045 |
|
Sprout Social, Inc. |
|
Consolidated Balance Sheets (Unaudited) |
|
(in thousands, except share and per share
data) |
|
|
|
|
|
September 30, 2024 |
|
December 31, 2023 |
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
$ 82,886 |
|
$ 49,760 |
|
Marketable securities |
8,625 |
|
44,645 |
|
Accounts receivable, net of allowances of $2,220 and $2,177 at
September 30, 2024 and December 31, 2023, respectively |
54,361 |
|
63,489 |
|
Deferred Commissions |
17,662 |
|
27,725 |
|
Prepaid expenses and other assets |
14,984 |
|
10,324 |
|
Total current assets |
178,518 |
|
195,943 |
|
Marketable securities, noncurrent |
- |
|
3,699 |
|
Property and equipment, net |
10,773 |
|
11,407 |
|
Deferred commissions, net of current portion |
45,772 |
|
26,240 |
|
Operating lease, right-of-use asset |
8,003 |
|
8,729 |
|
Goodwill |
121,315 |
|
121,404 |
|
Intangible assets, net |
23,388 |
|
28,065 |
|
Other assets, net |
1,060 |
|
1,098 |
|
Total assets |
$ 388,829 |
|
$ 396,585 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
$ 7,536 |
|
$ 6,933 |
|
Deferred revenue |
149,172 |
|
140,536 |
|
Operating lease liability |
3,913 |
|
3,948 |
|
Accrued wages and payroll related benefits |
15,669 |
|
18,362 |
|
Accrued expenses and other |
10,227 |
|
11,260 |
|
Total current liabilities |
186,517 |
|
181,039 |
|
Revolving credit facility |
30,000 |
|
55,000 |
|
Deferred revenue, net of current portion |
1,040 |
|
920 |
|
Operating lease liability, net of current portion |
12,835 |
|
15,083 |
|
Other non-current liabilities |
351 |
|
351 |
|
Total liabilities |
230,743 |
|
252,393 |
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
|
|
Class A common stock, par value $0.0001 per share; 1,000,000,000
shares authorized; 53,810,286 and 50,878,170 shares issued and
outstanding, respectively, at September 30, 2024; 52,133,594 and
49,241,563 shares issued and outstanding, respectively, at December
31, 2023 |
4 |
|
4 |
|
Class B common stock, par value $0.0001 per share; 25,000,000
shares authorized; 6,727,582 and 6,520,638 shares issued and
outstanding, respectively, at September 30, 2024; 7,201,140 and
6,994,196 shares issued and outstanding, respectively, at December
31, 2023 |
1 |
|
1 |
|
Additional paid-in capital |
535,154 |
|
471,789 |
|
Treasury stock, at cost |
(37,113) |
|
(35,113) |
|
Accumulated other comprehensive loss |
6 |
|
(77) |
|
Accumulated deficit |
(339,966) |
|
(292,412) |
|
Total stockholders’ equity |
158,086 |
|
144,192 |
|
Total liabilities and stockholders’ equity |
$ 388,829 |
|
$ 396,585 |
|
Sprout Social, Inc. |
|
Consolidated Statements of Cash Flows
(Unaudited) |
|
(in thousands) |
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
2024 |
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
Net loss |
$ (17,087) |
|
$ (23,013) |
|
Adjustments to reconcile net loss to net cash provided by operating
activities |
|
|
|
|
Depreciation and amortization of property, equipment and
software |
960 |
|
790 |
|
Amortization of line of credit issuance costs |
52 |
|
34 |
|
Amortization of premium (accretion of discount) on marketable
securities |
(58) |
|
(844) |
|
Amortization of acquired intangible assets |
1,553 |
|
1,199 |
|
Amortization of deferred commissions |
4,238 |
|
6,893 |
|
Amortization of right-of-use operating lease asset |
475 |
|
405 |
|
Stock-based compensation expense |
23,186 |
|
19,013 |
|
Provision for accounts receivable allowances |
732 |
|
723 |
|
Tax benefit related to release of valuation allowance |
- |
|
(1,134) |
|
Changes in operating assets and liabilities, excluding impact from
business acquisition |
|
|
|
|
Accounts receivable |
3,521 |
|
(551) |
|
Prepaid expenses and other current assets |
(10) |
|
598 |
|
Deferred commissions |
(7,286) |
|
(9,458) |
|
Accounts payable and accrued expenses |
(1,313) |
|
(2,756) |
|
Deferred revenue |
949 |
|
3,503 |
|
Lease liabilities |
(960) |
|
(920) |
|
Net cash provided by (used in) operating activities |
8,952 |
|
(5,518) |
|
Cash flows from investing activities |
|
|
|
|
Expenditures for property and equipment |
(477) |
|
(800) |
|
Payments for business acquisition, net of cash acquired |
- |
|
(139,347) |
|
Proceeds from maturity of marketable securities |
3,800 |
|
38,712 |
|
Net cash provided by (used in) investing activities |
3,323 |
|
(101,435) |
|
Cash flows from financing activities |
|
|
|
|
Borrowings from line of credit |
- |
|
75,000 |
|
Repayments of line of credit |
(10,000) |
|
- |
|
Payments for line of credit issuance costs |
- |
|
(823) |
|
Proceeds from exercise of stock options |
2 |
|
- |
|
Employee taxes paid related to the net share settlement of
stock-based awards |
(252) |
|
(474) |
|
Net cash (used in) provided by financing activities |
(10,250) |
|
73,703 |
|
Net increase (decrease) in cash, cash equivalents, and restricted
cash |
2,025 |
|
(33,250) |
|
Cash, cash equivalents, and restricted cash |
|
|
|
|
Beginning of period |
84,830 |
|
77,211 |
|
End of period |
$ 86,855 |
|
$ 43,961 |
|
Sprout Social, Inc. |
|
Consolidated Statements of Cash Flows
(Unaudited) |
|
(in thousands) |
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
|
Cash flows from operating activities |
|
|
|
|
Net loss |
$ (47,554) |
|
$ (46,350) |
|
Adjustments to reconcile net loss to net cash provided by operating
activities |
|
|
|
|
Depreciation and amortization of property, equipment and
software |
2,826 |
|
2,302 |
|
Amortization of line of credit issuance costs |
155 |
|
34 |
|
Amortization of premium (accretion of discount) on marketable
securities |
(383) |
|
(2,733) |
|
Amortization of acquired intangible assets |
4,677 |
|
1,937 |
|
Amortization of deferred commissions |
11,649 |
|
19,064 |
|
Amortization of right-of-use operating lease asset |
1,360 |
|
1,128 |
|
Stock-based compensation expense |
61,850 |
|
49,045 |
|
Provision for accounts receivable allowances |
1,473 |
|
1,583 |
|
Tax benefit related to release of valuation allowance |
- |
|
(1,134) |
|
Changes in operating assets and liabilities, excluding impact from
business acquisition |
|
|
|
|
Accounts receivable |
7,655 |
|
(7,747) |
|
Prepaid expenses and other current assets |
(4,723) |
|
(3,535) |
|
Deferred commissions |
(21,118) |
|
(26,018) |
|
Accounts payable and accrued expenses |
(1,526) |
|
247 |
|
Deferred revenue |
8,755 |
|
23,867 |
|
Lease liabilities |
(2,917) |
|
(2,630) |
|
Net cash provided by operating activities |
22,179 |
|
9,060 |
|
Cash flows from investing activities |
|
|
|
|
Expenditures for property and equipment |
(2,062) |
|
(1,444) |
|
Payments for business acquisition, net of cash acquired |
(1,409) |
|
(145,779) |
|
Purchases of marketable securities |
- |
|
(63,085) |
|
Proceeds from maturity of marketable securities |
40,185 |
|
85,964 |
|
Proceeds from sale of marketable securities |
- |
|
5,538 |
|
Net cash provided by (used in) investing activities |
36,714 |
|
(118,806) |
|
Cash flows from financing activities |
|
|
|
|
Borrowings from line of credit |
- |
|
75,000 |
|
Repayments of line of credit |
(25,000) |
|
- |
|
Payments for line of credit issuance costs |
- |
|
(823) |
|
Proceeds from exercise of stock options |
29 |
|
29 |
|
Proceeds from employee stock purchase plan |
1,238 |
|
1,427 |
|
Employee taxes paid related to the net share settlement of
stock-based awards |
(2,000) |
|
(1,843) |
|
Net cash (used in) provided by financing activities |
(25,733) |
|
73,790 |
|
Net increase (decrease) in cash, cash equivalents, and restricted
cash |
33,160 |
|
(35,956) |
|
Cash, cash equivalents, and restricted cash |
|
|
|
|
Beginning of period |
53,695 |
|
79,917 |
|
End of period |
$ 86,855 |
|
$ 43,961 |
The following schedule reflects our non-GAAP
financial measures and reconciles our non-GAAP financial measures
to the related GAAP financial measures (in thousands, except per
share data):
|
Reconciliation of Non-GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
Reconciliation of Non-GAAP gross profit |
|
|
|
|
|
|
|
|
Gross profit |
$ 79,406 |
|
$ 65,334 |
|
$ 230,756 |
|
$ 184,752 |
|
Stock-based compensation expense |
1,059 |
|
971 |
|
2,890 |
|
2,329 |
|
Amortization of acquired developed technology |
705 |
|
470 |
|
2,115 |
|
470 |
|
Non-GAAP gross profit |
$ 81,170 |
|
$ 66,775 |
|
$ 235,761 |
|
$ 187,551 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP operating income
(loss) |
|
|
|
|
|
|
|
Loss from operations |
$ (16,879) |
|
$ (24,204) |
|
$ (46,679) |
|
$ (51,054) |
|
Stock-based compensation expense |
23,186 |
|
19,013 |
|
61,850 |
|
49,045 |
|
Acquisition-related expenses |
- |
|
3,755 |
|
- |
|
4,221 |
|
Amortization of acquired intangible assets |
1,213 |
|
809 |
|
3,639 |
|
809 |
|
Non-GAAP operating income (loss) |
$ 7,520 |
|
$ (627) |
|
$ 18,810 |
|
$ 3,021 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP net income (loss) |
|
|
|
|
|
|
|
|
Net loss |
$ (17,087) |
|
$ (23,013) |
|
$ (47,554) |
|
$ (46,350) |
|
Stock-based compensation expense |
23,186 |
|
19,013 |
|
61,850 |
|
49,045 |
|
Acquisition-related expenses |
- |
|
3,755 |
|
- |
|
4,221 |
|
Amortization of acquired intangible assets |
1,213 |
|
809 |
|
3,639 |
|
809 |
|
Tax benefit due to change in valuation allowance from business
acquisition |
- |
|
(1,134) |
|
- |
|
(1,134) |
|
Non-GAAP net income (loss) |
$ 7,312 |
|
$ (570) |
|
$ 17,935 |
|
$ 6,591 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP net income (loss) per
share |
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and
diluted |
$ (0.30) |
|
$ (0.41) |
|
$ (0.84) |
|
$ (0.83) |
|
Stock-based compensation expense |
0.41 |
|
0.34 |
|
1.10 |
|
0.88 |
|
Acquisition-related expenses |
- |
|
0.07 |
|
- |
|
0.08 |
|
Amortization of acquired intangible assets |
0.02 |
|
0.01 |
|
0.06 |
|
0.01 |
|
Tax benefit due to change in valuation allowance from business
acquisition |
- |
|
(0.02) |
|
- |
|
(0.02) |
|
Non-GAAP net income (loss) per share |
$0.13 |
|
$(0.01) |
|
$ 0.32 |
|
$ 0.12 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP free cash flow |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ 8,952 |
|
$ (5,518) |
|
$ 22,179 |
|
$ 9,060 |
|
Expenditures for property and equipment |
(477) |
|
(800) |
|
(2,062) |
|
(1,444) |
|
Acquisition-related costs |
- |
|
2,906 |
|
- |
|
2,906 |
|
Interest paid on credit facility |
836 |
|
- |
|
3,014 |
|
- |
|
Non-GAAP free cash flow |
$ 9,311 |
|
$ (3,412) |
|
$ 23,131 |
|
$ 10,522 |
Sprout Social (NASDAQ:SPT)
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