SPT - Earnings call transcript Q1 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to Sprout Social’s First Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode and please be advised that this call is being recorded. After the speakers’ prepared remarks, there will be a question-and-answer session. [Operator Instructions] And now I’d like to turn the call over to Mr. Jason Rechel, Vice President of Investor Relations and Corporate Development. ahead. go Please

Jason Rechel

also the Welcome are call. operator. our CEO, harbor website. Social’s quarter Barretto. on and first release which investor Thank be can contain will Today’s be to Social’s CFO, discussing earnings found have today Securities made closed We’ll after to in an Del the XXXX updated safe Justyn issued Private which presentation, the you, our market Sprout pursuant released results press me of Act With Sprout Preto; Reform Joe provisions call forward-looking Howard; are of and Ryan Litigation statements, President, XXXX. announced

identified multiyear concerning future and size framework, our as update statements today our only, for among statements. performance strategies, XXXX. our any plans condition, be will. our financial and opportunity, at of Forward-looking And quarter future for guidance and our or business the our trends, XXXX financial initiatives as the financial believe, not second business others, date, operations, intend, of financial upon and any do as views and undertake relied These we statements words subsequent our or expect, by growth can should to expected full seek statements plan, views market anticipate, and include, objectives against and and reflect year be duty representing such not these performance

risks could and address that actual to statements to are uncertainties subject differ Forward-looking matters that results cause materially.

Form the year SEC. risks the XXXX, as the refer any our could our Securities XX, well please affect Exchange we with discussion for filed quarterly to of current that fiscal Commission, the on report file and actual and For reports other and future December with factors that important a as ended annual results, XX-K

our comparable we’ll to accepted financial investors.sproutsocial.com. GAAP financial with call, measures directly call of to release, not that, at with the website discuss let measures SEC which are our along to over reconciliations in available principles. which me are accounting the and been measures, non-GAAP earnings press has non-GAAP With generally prepared included most the financial Definitions in furnished on During accordance Justyn. these the is turn

Justyn?

Justyn Howard

you good to is XXXX and a is afternoon, great and Jason, us. transformative our everyone. to shaping be Thank you, company. for start joining Thank off year for a up

Our teams level. continue high execute to a at

partnerships is unlocking customers map road leadership. towards to of ways potential industry path guidance our ongoing in the we Ryan product a our on and appreciate we full We Our new today realize support for over you are front new social and opportunity the Since highlights accelerating before our massive planning with of call recently I’m as us. capitalize Joe. and to leave this spoke February, turning in few to your

growth of year-over-year than again Rule the benchmark. We’re revenue with hitting deliver XX% pleased XX again greater to efficiency

Our importance and management, social continues our driven be platform. disruptive, strategy, our media opportunity to of go-to-market differentiation of fundamentally by the the efficient mission-critical

was quarter strong. this execution Our

ARR, of believe $XX,XXX is Our momentum plan have a to the the system to up customers this record execution and up a cohort strategic our more than to performance our faster our number social in commitments pull come. been ARR, XXX highlights. industry free XX% elevate us contributing we the feel and of impact in are to our is had our product quarters because partnership customers increasingly opportunity we’re returns than customer continue validation in similar our have as believe customer a we action. year-over-year, already this pace $XX,XXX to market, intelligence away the This be growing nearly pipeline, and at contribute. of of execution at upside cohort than making flow and XX% The magnitude Sprout, we number $XX,XXX underscores in in and of incrementally in and encouraging customers, partnerships particularly business are to the opportunity growing at QX from $XX,XXX our in We and With investments. momentum scale. our acceleration accelerate contributing more an year-over-year inflection go-to-market strategy this customers able is allowing cash We leadership opportunity the deliver ACV on the capital-efficient to that further further to

an the raise geopolitical puts and both While business today, we the year. of expectations category. prudent margin fortunate in ambitious fundamental an position that our Sprout outlined in define map acknowledging remain to road to plan our face growth for Last underlying the world we external positions many our R&D that we factors quarter, for us aggressive and product strength a XXXX with believe

map it’s Our we approach and our our maximize revenue with and to customer an our value our our map partnership company deliver road deliver today road was March for technology, will in long-term leadership are to to expect and announced never customers has to we exciting. of It innovation validation we our But more our The Salesforce incredible the also potential. that represents believe technology multiyear market customers a opportunity. position building been success.

their and execute strategic our ways commerce, to strategy. are Our customers in foundational reporting investments publishing platform social social messaging, the

for our and customer listening, has new social social us in announcements we’re on you Our our our this expect been advocacy. and expand from leadership, greater, been has track product QX momentum and analytics to partner in advancements further year Building also road significant never should map care prioritized, in on footprint.

opportunities messaging and listening, existing partners. commerce, new both and integrations elegant in with working and with to are partners We on multiple new have deeper go powerful,

product The are depth customer partner here moats each an and and unique and this to key made possible social have area. as not our and integrations true strengthening both are the unified without the well product around grow. from commitment has We find as But our Our fully platform, this road in breadth work advantages. aligns Sprout of competitive opportunity a our category significant the and we our teams. scale, competitive media work of incredible that and and map platform management compounding and our to network combination we believe overall

working the ambitious a the growth development positions to recently actively more excited Sprout growth to our including redefine to of achieve our of us we expect We’re lead the and been workplace come. strategy. thoughtful to talent to people, intentional help shift that our an generation, disciplines Through inclusive across that midst our and commitment and remain goals many about years with never over the our way our leadership largest work. culture onboarded team, career make us I’ve we we’ve and will destination

the getting of just over create our warmed still in value beyond. that, excited and XXXX We’re to we’re I’ll Ryan. up, turn for With stakeholders to call all and

Ryan Barretto

I up to agree. is transformative Justyn. XXXX be year a company. Thanks, for shaping our

opportunities Our delivering growth. product road accelerating map new for and is both

is momentum. building international Our expansion

a direction. this hiring have at shifting company I’ve Our opportunity, into higher and a shifted with about excited stemming as upside and pace is market our gear, mid-market partner time our more never has on announcements. our quickly the converging our are that of efforts pipeline the in our right been we from enterprise across

year as to we capitalize from a category-defining emerge and expect company. to We this aspire

funnel with sales Our got a setting marketing our growth, fast of top for up start to strong team success. team off

I’ve this XX-plus social one partners. way, We manager. the I foundation to years co-selling and as other Sprout and engaging. looking found I a Sprout marketing created launched practitioners media problem this community and a owner, our buyers, If alike seen new notions with better thousands people encounter continue co-marketing account-based most We the freelancers [indiscernible], to our which target have quarter, can’t Community I relationships social and the from ideas already its my has and and of on things solutions Salesforce Agency of community the the the answers practices. all find most Sprout priceless can for over building customers kind customers crowdsource world. in I and We and that of always that never with know establishes Social first sophisticated for agencies the it to share described is build for, I’m Community reach best

increasingly Sprout answer there with resource further into find for In to complexity community customer and problems and for our the our market innovative solve The an dynamic and is a social there professionals, consolidate try addition opportunity enormous customers. media creates an strategic driving Because are management social is team emergence a an social enormous evolving new of rapidly, to at use well. software opportunity cases, urgency and to also Manager of listening cases for automation always other as HashiCorp, expanded or platforms and which insights use media. set brands media media Public well. lot wanted multi-cloud in customer to We software. case Sprout a topics the added partner monitor, a like we’ve happening been Social, broader of talking with across company social expand value Martin PR industry and helps at understand listening covered we is the Birdman, and Relations leader teams conversations platform usage about the HashiCorp our on use company, social a said infrastructure realized it of Sprout. a to and our new We across

this team use As quarter, step become permissioning step really L.L.Bean win. our to The to workflow are collaboration, equipped put has of thesis Social best and are capabilities believe ease and these a A Sprout to, the help new work. of sport software Martin elegance we teams customer two. alluded this one, we’re and

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with natively powering improve to to had customer the largest has speed and comms, to investments the customers listening, in work holistic financial and success been becoming PLAD, better social and monitoring all platform in and making analytics social This profiles, quarter, manually to strategy. product incorporate which are with head PLAD increase we teams. with was to the PLAD program, their social partner Sprout all a fintech. cumbersome we’re on chose names support a technology meet managing engagement needs designed social with customers. provide opportunity business their marketing into these their The and and for also

going combination Storage, with teams performance. differentiated Department Alto ServiceMaster, greater need more enterprise our new expanding platform by and included deeper, even look and and with we sizable And well value continue customers is even accelerated And we’re Salesforce offering Watson while shared brands you on at want stack Space brands a quarter, the of few a both module see The of we’re Salesforce partnership This sales quarter? tech typically the functionality. SMB, mid-market is growth Salesforce more our Bikes, to use business Sprout put and rates its of expansion quarter, cloud Trek slower and entire in edition reinforces and that value that a and of General are customers. seasonally the deliver IBM of fact ensure Denver, integration immense value means attach delivering teams this are Health, clear and us. Networks, Hospitality, the that social to growth list combined U.S. than with together outstanding to the ACV this partnership now executed agency deliver this exciting of workflows Palo you as steady Cruise working It’s industry-leading Our counts, XXK we enterprise become can enabling customer premium when seat Salesforce upmarket increasing enhanced cloud a evidenced of and our Pure and to Extra opportunity customer Storage, the cohort. LLC our service subsidiary our closely front what all Labor, Danaher, longtime to rising Radisson in of Sprout drumbeat notable rate that cases, Motors, with grew and the

and a getting XXXX strong only start we’re as off unfolds. to We’re stronger

market Our dynamic is growing. and quickly

roadmap customers product unlock tremendous Our to potential. positions

scale. we be Our our team position momentum partnership future to we our will continues to up success. believe as level at every additive And

place through right place year in class grow foundation the with opportunity. Joe? on financials. journey the team, run build our With customer. I be for And it to world world your in we Sprout to over to building huge class and career a will believe defining place a product, to a the the to We’re and and to be that, the a market turn right is Joe capitalize a

Joe Del Preto

through for and year before delivered in the first quarter on Thanks, than with results the XXXX. growth quarter ARR greater up quarter efficiency Ryan. guidance year-over-year. XX% detail million our second XX Rule exiting of you revenue million, hitting for the again to moving XX% I’ll XX% walk $XX.X now year-over-year year-over-year QX was We representing benchmark. first was full growth. Revenue $XXX.X

retention as We’re pleased to new healthy business, and see strong activity. as very well expansion

that We’re consecutive of rate stack particularly fifth quarter. ARR two-year for the growth pleased accelerated the

We year-over-year. expect growth up net this expectations. as scale, QX the will of to durability our XX% underscoring at continue new XX,XXX in customers grow faster customers quarter we multi-year X,XXX finish We with trend added the

customer As not on always, we remained our the new focused cohorts, of revenue additions. net yield volume from high-quality

on in our with increase partner XXXX, optimizing net quarterly more revenue for point $XX,XXX our expect will going factors now count a in X,XXX a ACV ACV note year have want additions the basis from demand in up a of We continue currently a share announcements. of unless that non-GAAP significance year-over-year our inbound future. of XX% faster ago. in us the emphasize expense. also XXK the growth to and we XXXX, income exclude The customer growth. made foreseeable discussing to healthy of remainder QX year than ARR cohort opportunity. number statement, customers ACV to plan Our Justyn growth contributing our XXX, XXK delivered we all stated that rapid many deliver than the ARR up The sustain to customer medium-term operating pipeline of strengthen continued durable yield recent similar $XX,XXX I for In the from more contribute we our is a did a in results on XX% stock-based than please allow has otherwise references complement compensation of customers. that expenses, cohort from enterprise to customers the Underscoring customer volume XX% an future to the number built while ago.

scale further in up or XX% on before XX call. with Now or of the sales of our and our just hire both mid-market million revenue development hiring throughout enterprise a on expansion to issued to for revenue, we gross our marketing expenses margin representing reconciled were margin expenses XX% marketing down points of fortunate and This In teams emphasis was side. and made from into SEO year XX% highest were international Sales a Research a gross press year investments pace compared in aggressive an were sales is QX, In ago. growth ago. we the have marketing and $XX.X million gross quarter. results from QX XX.X% year XX% as accelerate We that ago, million across of meaningful content, team, $XX.X customer up margin our GAAP in release this and to profit our gross basis QX was of $XX.X earnings years, onboarding. and five XX.X%. we is for

XX% year differentiate the expenses position or for and market software absolute R&D. market as substantially believe largest as category QX quarter, in we leadership a million Sprout again the from headcount trajectory investment $XX.X our ago. ever of expense incremental of will ourselves down were XX% company. revenue, this administrative this General of a Our continue in We our extend and dollar further finding grew

operating is with negative basis G&A was a in operating revenue. percentage negative expenses an loss operating margin. million spending more of improvement XXX of ago. as for increase enter margin decrease our environment, QX a X.X% expect normalized $X.X X.X% points but This year compared as to We or XXXX, a we to a Non-GAAP

million efficiency of outstanding are $X.XX We a been our as and average we Non-GAAP per a ago. million and of loss $X.X for we for QX with due million pleased to exceeded on net share, share per loss net common stock scale, $X.XX of revenue outperformance. based weighted year loss net improving expectations XX.X shares $X.X to was

and flow Turning we QX cash end after the to even securities QX. was seasonally million at the million a strong statement. with end increase revenue and the a sequential strong sequential at the increase million quarter delivered from $XX.X XXXX. cash, equivalents balance sheet $XXX.X of cash Deferred record QX marketable in of had the the We $XXX.X

our each by a we QX As our of in seasonal do watermark QX high know last quarter, expected think we watermark that low over enterprise our business becoming time the more as is of each changes, year. all mix

QX RPO in XX% Looking both unbilled up up million remaining year-over-year. and million, our from approximately billed XXX.X performance and as XXXX or our obligations, contracts, XXX.X was

or We QX X% Operating margin was year million ago. positive as expect ago. revenue flow the XX% XX.X million cash $X.X positive total free flow XX% to X% with free over Free margin RPO was next cash flow approximately months. here $X.X a $X.X XX a million year-over-year flow compared million cash an year of positive recognize to cash in up or

I operating guidance, plan anticipate hiring, of do we cash and formal Based QX into to our the represent and flow. and low get year. tighten clarify the this quarterly profitability free annual want that on operating timing watermark timing of as to cadence Before for we margins, corporate the the expenses will profitability expense

efficiency or in second is the increase formal the margin revenue indicated progressing of our $XX.X to we $XX.X million guidance, goals, prior for growth XXXX, of million we’re Shifting that range fiscal of in in As XXXX ahead our pleased quarter the annual XX%. to rate plan. of expect

$X.X operating to range million. anticipated X.X%. represents of margin an the of in loss operating expect $X.X We This non-GAAP million negative

basic $X.XX, outstanding. assuming approximately approximately of net We expect a weighted share XX.X average stock non-GAAP common per shares loss million

$XXX range an now and expected in XX% prior goals. total rate growth revenue expect tracking of the of to against million. XX% our XX%, to overall $XXX our growth million full This the reported from up XXXX, of For expected rate we fiscal medium-term well

operating in margin points of basis we to $X.X a million. This up up basis basis non-GAAP of prior a annual non-GAAP XXX implies expansion points XXXX, XX roughly points. expect loss points XX from now basis range expansion operating For GE margin range million XXX to $X.X to a

revenue growth pleased even company. we the efficiency across investments improved as forecast growth to make faster We’re with

your common our We summary, stock robust make and rising category, by on share per to average social, cash and market $X.XX between is strength previously to XX our Ryan our we demand the our believe go-to-market, placing $X.XX strengths in leadership our are customers up expect the and inbound These is financial shares net emphasis, flow optionality, balance that, and happy pipeline investments unlike a weighted and future non-GAAP performance billion $XXX assuming In With approximately million outstanding. highlights any free ahead. strategic of opportunity loss experienced. Sprout of market basic we sheet in us to technology with questions. forge us empower Operator? define anything take are which positions Justyn, QX

Operator

We’ll Raimo you. this Instructions] at first go to [Operator Lenschow Thank Barclays. afternoon

Raimo Lenschow

questions. me. Hey, there? we quarter, a up and one. that with Question came two is is that of odd is what a Can you. that of market question on of the kind you quick it updates would – that’s with that please is and talked seems that kind have is last in about announcing that announcement Salesforce what you. vendor Thank partnership opportunity more one. that like lot the how large a to be It’s to or entailed the terms together you One on of me any success congrats the that Two from something because in speak out stood kind space that

Ryan Barretto

Ryan Hey here. Raimo. Thanks It’s for question.

and had work On and the We’ve also them Sprout’s they’ve with integration the the to been the base, them partnership – progressed of a Salesforce, they realized standpoint. CRM we Salesforce years lot taken leveraging started as market’s just platform. great longstanding just going their their to and think are for I from best customers with think about a it customers note seeing as a just years, think and I solutions. time, in doing part first worked their social that we’ve strategy the Sprout and with an customer marketplace over And of that for their a of breed resource as investments as relates forward

together is this something we’re that don’t And the customers. tremendous market, so these to see in you typically adding value but

add existed that stack work and Slack Cloud of even And and with reinforcing Cloud, in to to of they’re value value CRM we customers And doing just see the the the deeper social. additional we’ve top on integrations that today and go partnership early these those into so announced had March. opportunities to Sales in Salesforce the we more Service integrations

teams, well much that quarter, really has the today our over. time as and in not some happening with co-selling the in but seen with customers customers of across from feedback terms that So progress that’s the great both as transitioned have of great interactions those interacted our and teams

us. feeling So more front and lot customer to partnership continue but see we in quarters, a good perspective, us follow think future there, of large the about a in opportunity I growth. of from pretty to From that

off XXk number, think being a I hopefully, XX% just rate. at for growth the they the growth everybody is page the jumped

mid-market and consuming a are see enterprise for our products they’re that We of space. and great a continue seeing We fit number to value. in just customers that tremendous

in I getting speed ROI or of differentiation that for a that real the the in to the the as pay the speed into tremendous they think And away. go-to-market contract us value way with to right our implementation, finding we’re has well product before they’re been sign they’re strategy money. them getting any terms

sophisticated more Justyn differentiation we’ll So up in, to And that happening roadmap, increase there. build remarks, as continue the some continued on coming to of just continue in and mentioned going the we’re to things our execution market. prepared the innovation our

Raimo Lenschow

sense. Makes Congratulations. Perfect. Okay.

Ryan Barretto

you. Thank

Operator

Elizabeth We go Morgan to at Stanley. now you. Porter Thank next

Elizabeth Porter

the I you demand of broader appreciate cycles incremental suggests just in quarter have full thanks the by congrats quarter. on, you’re any color good just wanted upside and sales momentum, in funnel top geo. Hi, changes year demand but the or trends The engagement is seeing so any on to touch the much in in on environment. what Thanks.

Ryan Barretto

Yes, question. notion I us, lot business we’re that the with data us that It’s I just great and been been notion. now outbound for that’s appreciate complimented running our the hallmarks of consistent the healthy. one of pretty inbound business tell We’ve the of think been with is. to and where And of a consistency seen have funnel we has top really our

We be and of running campaigns and continue to against a focused strategies efforts mid-market our ABM outbound lot and enterprise space.

I what think within for for interacting that they this companies down to to compelling the mission in for they’re And that customers. we just go for with. own comes strategies also critical that to arena. to social us the know with be work need something is Sprout way them, platform they is just participate And market has their is this and proven them the that

and we’re So lot lot seeing the else and and we progress and environment, own of but a certainly headlines like are of what’s success consistency happening a into into macro in in business QX going QX. everybody seeing the reading our coming

Elizabeth Porter

uncertainty much to update I hoping get environment that customer. tools look on That’s drive listening great. Thanks. as And just the premium curious rates. a if just and to more pulse customers just to that And more attach a that follow-up, the then an does get specifically, was module on like for macro

Justyn Howard

drivers focus, et maybe strategic And having there platforms the visibility some within things, business or then greater value it’s in think their ends that first. that to as another a on definitely is the across being question. of businesses of can whatever shifting own And kind whether progress this through decisions, that the that. becomes compelling folks of greater Yes, half macro visibility touch that the being able these aspect better it landscape, efforts up making right. just really can is efficiency social jump conditions or lever be advertising having Joe refocusing business, across of various across might the I’ll pull, where drive I cetera, of Justyn. the on second

as may think I is where So opportunistic not moment. avenues there investment successful here the that some be happening, at other

mentioned, organizations their tailwind efforts important So then part more across just let’s hitting board. just But level social. lean strategic into there’s a social more an is as a the further of where and of maturity Ryan such of

So we the booming, to to we’re right? scenario, of see there for kind customers uncertainty, When social’s it’s when are And place place kind that there’s mix to and be of of a in things environment. be. all the weather social’s either

Joe Del Preto

the can Then we Elizabeth, in number momentum continue What we disclose as attach to on relates so mid we’re I rates. is range Yes. and it in on to QX, don’t area kind to quarter-over-quarter that And actual saw this quarter. they high you the attach solid tell in rates each rise a of teens basis.

Elizabeth Porter

Great. much. Thank you so

Operator

Thank you. Needham. We go next now to Scott Berg at

John Godin

Great. Thank you. This questions. is my John Godin on for taking Scott Berg. Appreciate

history deal as with their a around space, considering Salesforce and well your and your the which been has the managing when at Plaid, as partnership of previously. high kind just level First natively commentary

Just and realization, you of guys kind the broader point requirements seeing really are in maybe a strategy. wondering of managing nature social if inflection complex the

think addition think you other relative use functionality your you. competitors on placing the really time do ease that quick space. you value guys’ customers more to some of in addition in in are to In of of – this the value Thank

Ryan Barretto

appreciate I the Yes, question.

do a in really Plaid number have the businesses are is amount to that at sophisticated be in some things, allow thinking we I of to we forward on really the get could example, seeing Plaid when board, organization the to the solution data going when organization able way entire example, this amazing and previously, doing we’ve still back. this was great it adopted on early the more that what the more them look needs manner, we’re but in like pretty a in that social terms think a of a be mentioned to we a think and tip more space, social things. this strategy more So their Sprout. of in they couple efficient and and their I spear realizing across And the a with company doing great and to that that are invest that a needing about collaborate one, think solution

see the our which developed fantastic product business, matters are use, investment of really ties quite where ease strategy. we the terms this top elegance of so within really And And your second time to is brands sophistication of of still value, question, their lot. often a great this organizations days in on in part to earlier

the you we We want the every when work we so you that you. perfectly in get to product, the for say, into going want sure walk And to making into we keyboard. trial, hands and is your on account this want

a You customer there, as is value, turn And start processes you really to and away the in implement right it trial. live. of on from start go then some your easy to to business the you see

from that they’ve And product before the so XX% over of still comes our in purchased. today actually revenue customers have been

I in those very think here the are both differentiated. market So of us really just important for things and

Justyn Howard

that into we number learning of when involved And behalf plays approach time in use organization, organization value because terms about of have the I’ll experience departments how rapid made with involved, of we logical use. an that expanding rapidly that number and day are the this who successful that pockets to the right? of the participating be the that organization, people the is from think we’ve ultimately on cases is ease ease on and in strategy to time of that behind huge around across right It’s those point people keyboard successful that emphasis the we and the the of how quickly those that the people add had be of value to number are all we’ve to across running Because you and social we’ve critical and platform curve, we’ve taken need put the both to second large that really the build, up and advantages, scenarios, to of user one. have got use

advantage So point. think I there to that powerful a your that’s

John Godin

kind strategy. data your seeing of you you. could Awesome. into you a overall more tighter on the strategy, I Thank briefly, guess, but engagement and broader curious more dig any Data And really it back. touched integration, with if how you then little seeing second, you of are broader you’re evolved, bit just customers

Justyn Howard

et as and that getting involved of lean into two Yes. that cetera, probably is I across present are a And where the time the degree of as years areas strategic and inside our degree organization. in powering look more the think a along the at conversations at that definitely a would I the broader ago are in coming organization. picture care least through further more of decisions the are and develop – Social it those some journey get was types is how listening, don’t opening social today, operationalizing visibility tighter or doors can and integrations more the those some cases that’s the to as we say for now, the additional mature things intelligence all of with a that about definitely the that driving within we customers are we’re use organizations of can to of into set of organization adoption powering customers? we a starting into How a those – for to

So, it social that. about in is and we’re taking it, hitting a more their starting it, role what to and of advantage holistically and point to really are think data about stack, and thinking relates more organizations now where social as

Ryan Barretto

add the also not just specific would they’re I integration, to to specific quickly data strategy. but on

customers that more data the asked customer to executive being We’re solution, sales from are from by live surface more and team hearing the more team success that their now and directly folks this more and and insights. our and our practitioners, team in

but the Sometimes, data exists a has a the are today, social the time. more within own and strategy. definitely basis executives that really and their over to looking on point they more understand data leveraging quarterly continued themes, trends, inform another to basis, that weekly it’s critical as or as sentiment That the they’re increase

John Godin

Thanks helpful. Very everyone.

Operator

Parker Stifel. Thank at you. We go next Lane now to

Parker Lane

to wanted $XX,XXX back circle quarter Yes, the customer cohort. question. for on there. ARR strong hi. Very Thanks I the taking

as But the second it like few the fourth the think of Or expect trend continue? this Should be ARR terms watermark. high to last years data is was customers that actually you’ve seen we you. concerned? seasonality about I have. of best to in think those Thank years, cohort that something in that far What’s and looking the year? way highest recent had the as looks that quarter at aware we’ve we that the is $XX,XXX there we should

Ryan Barretto

Yes. I bit, bit and – did remarks. kind mean Justyn I think prepared I think of little this a covered in little a the Joe

just continue with seasonality the see that to has into of organizations business pushed seeing, into quarter. our we’ll the those enterprise, we’re buying mid-market of to as shift size and fourth continued more the I as deals well think cycles increasingly As

the for the really about, results a seen, to with strong excited us. the obviously, $XX,XXX, is going year rate XX% We’re we’ve that into QX growth start a

We sounds a you for that of those year business lot growing expect the faster at fascinating of customers. growth and consistent they’re is $XX,XXX $XX,XXX scale. exciting the points And a our at to with actually that through have look one if $XX,XXX the today, the similar data than

that lot opportunity of us in we that that will but at some be continue the think size do bigger through closing customers a to headroom and see have volume the of year, terms in are We’ll I So and increase scale. there. consistency QX of a for

Parker Lane

any in that And management right. overrepresented it’s the media others? there again, than message in more terms cohort and may That’s is you’d Sprout of there be say the to of today, receptive industry

Ryan Barretto

business that verticals industries advantages market end to of all just our see addressable customers and distinct the of it and in we the from speaks total area. is this One that up

we fall ed. or into are government, organizations there, retail things might but we imagine, And see tech, more to might certainly, see you BXC higher be see going so that in we as

there’s entire within So, enterprise is any say another I just wouldn’t opportunity future area, our company. the that that team that which this of for sees concentration mid-market and

Parker Lane

feedback. the you. Thank Appreciate

Operator

next Rob Oliver you. go Baird. Thank now at to We

Rob Oliver

questions. Good afternoon two Thanks. guys. I Great. have

start. Twitter. strong with very Justyn, traditionally relationship have to had Twitter a pausing. now, and Obviously, turnover in there right one guys is you play for advertisers you There’s just about chatter

share but So expect? and to there I had terms direct extent obviously, Ryan. then take on might your in what’s we’d quick hear impact tell to can happening your follow-up And of for too we a to what you just for love that the early business,

Justyn Howard

Yes, sure.

many, built had So yes, long-standing it’s over go-to-market the the been and many and relationships product and have years relationships engineering, interesting, the across and we’ve leadership parts of organization.

have last busy them. couple been a weeks the little of So for

that point, read leadership around been agree what figure the right, and a Twitter still that. see headlines think things past that love the that if better your exciting some what a and of our I is we the really be my had, this people the need to by closes. they’re the going And the think we’re to of I that But be of something them, that such they’ve out what priorities lot I go-forward large, Twitter that going point. powerful, we’ve changes the are and And once powerful with deal over of a I think, years fascinating part be and want to going but of are people platform, mission. what validation the anticipating And those span to, the by at baked broadly, many empowered changes society any the – we’re to many, to think et the just with work, is I potentially – is there’s that’s and there’s think plan that to seen that more think continue doing And from on to take. plan some understand relationship. that I better want that directions and are folks questions, just openness Twitter for positive initial health into some in But not going users, I things of cetera. important perspective, going just organization. what are to most is the are

Rob Oliver

Got it.

a Ryan, had I Thanks lot. then, And helpful. for you. That’s one Okay.

win guys called quarter traditionally, guys you think success – had and time me, on a for budget use cases out different from You that the But PR the this some that been talking side. about [ph] there. been has the you’ve I struck And HashiCorp have marketing. was different

go to that perhaps Is for about of are perhaps some there? guys of assess some love another after the maybe Thank what’s monitoring that using they’re tools legacy able win. pool And to so out as we’d PR of just hear to of dollars that you. start guys the you representative

Ryan Barretto

Thanks, within Rob. winning we’ve this been area. Yes, Yes. business mean, I

just was and more what on just happening think more, happening I seeing in directly we’re a traditionally PR, of social. lot

need. that a I address customers amount things there’s so could what product think And today good of happening those in our

better the the in about we listening of understand of just we’re a building as I that lot audience. have as think well today some components to your functionality

organizations, lot puts continue to in the PR specifically it us think I those a today, world. help of great And customers. spot we to a really within have

continued at getting where excited our grow continue map. So, that about. it’s I we’re grow that product as footprint just to use road have think we But to as those within and we’ll our to opportunity one cases an that there’s has our look to an area. expand of certainly opportunity evolve I’d it time our market that chance a over

Rob Oliver

Appreciated guys. Thanks again. Great.

Operator

Genuity. Hynes We DJ at to you. now Thank Canaccord next go

DJ Hynes

guys, here. questions. Thanks quarter Hey my nice taking for

the ask that characterize of through opportunity opportunity what wanted seeing you what on model. Salesforce might maybe coming just the how about in Just partnership. average to your there, to channels? partnership build contribute I you’re trying think the the of typically see back to So, direct But based would terms they you help to versus how in size

Ryan Barretto

Yes.

the So of I business today most of and is business seen, have mid-market the think we that most enterprise.

today the fastest fits That’s part capacity, our And nicely our biggest the so go-to-market our business already of executing. and into it we’re growing. really strategy, where

as given our the in teams, that enablement that’s with But early happening teams as It’s align Salesforce’s far. we’re product going in still and So realm. of seeing it’s that’s really things marketing continuing us Salesforce pretty for to March, well of so terms the to cloud happen some was sunset within the and happening over the co-selling positive the been announcement that time. is

front as it. about opportunities like So, we get ideally our these We some excited these see them and with mid-market really of well. deals upside looking enterprise in in

DJ Hynes

Yes.

invoicing comments as sense. the you maybe your that’s picked just seasonality, annual, have? to last quarterly, it up right? about how billings, obviously more me perfect over I see traction you Okay. Can mix in ask then, I And and on of the or makes that enterprise? you monthly want Perfect. two changed year And Joe, the remind

Joe Del Preto

Yes, for sure.

So and then We pretty if quarterly, invoicing but XX% some, much very rest do right is the around now, annual XX%, little, a lot. it’s monthly. not

mid-market earlier, so to the strongest continues right annual right? And move in DJ. And that’s of QX. as are say now, mix Ryan that more kind what mentioned can been enterprise And have is to the the I – deals,

We’re QX. going see you’re is, little think that of in billings what to increased see bit more I to seasonality you’re more a going so seeing and

You really that QX. strong the outcome of just was that free saw in cash flow

just consistent going I about be not and that’s think we’ve that obviously, deals so it’s bit, bounce before, something something a year-over-year. little the because expect mix. And it’s you this type between not And around a but that to want annual, to move quarters, can – talked similar of the mix going more to it’s we to going to be given trend

DJ Hynes

Yes, of course.

you Thank guys. Okay.

Operator

at go Turits Thank to KeyBanc. you. now next Michael We

Michael Turits

to and the financials one seasonality. question, and macro guys, Hey back then

about macro, to SMB. potential any able not segments or discern market more SMB versus I worry the are impact versus on your you enterprise? when mid on potentially back different mean, difference So, between changed might

Justyn Howard

This Yes. Justyn. is

behavior. So point in this just in the at answer no discernible difference of terms is

some more in example, XXXX I SMB. distinct in were for dealing of the we were think, things the that with

that today very performing It seeing likely the impacted. the to not We’re effect of be stands first parts that and would well. those market reason are SMB

the up just We’re of seeing pipeline. in not it the data show

Michael Turits

And then same question. Joe,

been a ARR, less seasonality, in than new DJs, ARR, relative seeing. in high was on which As you’ve growth little the I ARR to sequential XXs, think but strong but

well? that is seasonality So matter as a of

Joe Del Preto

at right. Michael, over couple the the it of last, exactly perspective, is that’s typically seen I years. QX look we’ve this, think an from ARR if quarter you Yes, smallest

probably to think I be the have throughout QX the as of we going so probably And to net high watermark watermark, the year. you’re and then a more QX continue be the from standpoint, low build ARR see

increased our guidance you this guidance, we as our So as expected, annual we more can was by tell beat. our by

was in were what line right we this expecting. with So

So quarter. we good feel pretty the about

Michael Turits

Great. Thanks, Joe. it. Got

Operator

Arjun to now next go William at Blair. Bhatia We you. Thank

Arjun Bhatia

maybe go the flows. I you. back deal Thank Perfect. to to large want

at think beyond, I ARR and you considering any was you especially are it’s buyer change in QX. deals XX,XXX impressive, in cycles, the noticing just get sales into as But $XX,XXX or very these deals, profile the are it in customers more all? more investing you your go-to-market you’re curious as when in up impact investing the Sprout. direct market, motion does view motion go-to-market and And much I’m partnership then how salesforce

Ryan Barretto

help in Thanks, One, it’s see the improve for would the say Digital us. in experience Arjun. first. nicely going to generate XXK those cases, the and have opportunity getting business? a conversations it’s I in common what’s Chief I It’s XXK organization in here somebody of all the functionality really for we’re to CMOs seeing larger would and CDOs, features the that but going getting that or reduce Certainly, or customer more just for VP of in gravity us terms the most, in. It’s great Officers the that the is platform How Ryan. practitioner And materialized conversations. accounts. the the into out just of impact more what’s I’ll going that So solutions. or or if think there’s just you’re great costs? changed Sprout, about jump the and opportunities maybe going things we’re audiences in be level. on the executive dynamics wider outside Yes, that’s a this growth deeper a It’s been us. care – data at about an level to of to behind around them, level they they’re It’s the see from like in conversations maybe want but that some the we’re and

and more more more multi-threaded getting which organization, stakeholders use and users. across that We’re the departments are more cases means involved, there’s

the And and of a a then these Sprout and of really one as piece together that’s organization perspective So certainly a an platform. the salesforce partnership, Sprout going validation for into trend and about partnership mean, is think as any us. I selling great just been I if nice accounts from

been that’s tremendous So for us.

selling deals. We on are direct still those

done, we’re good of really capacity I’m plan about and folks that if as But feeling and the right have. manage always And our we to we we’re really right we feel And team we generate can the able our good where we see the have we we’ll across really make investments we’ve opportunity good spots. hiring bigger the feel doing to So, be even about going those more returns, opportunity. that and that our our capacity to now in amount partnership the teams. think

Arjun Bhatia

very helpful. actually, well. partnership And to wanted I as ask That’s the Perfect. strategy about

it’s additional it’s to with I partnerships. resellers are whether a couple or agencies out whether the or super called partnerships integrations front, just curious those we you’re the priorities technology or that And prepared get in remarks think to I’m intentions if for times partnership your of go-to-market where better prioritizing a invest sense are? on partnerships, talking care, product about maybe you partnership trying where further is e-commerce in it customer of

Ryan Barretto

Yes.

integrations perspective But terms partnership motion particularly The organization, look from that As across technology and and within relationships and with just what add imagine, And pockets with partners, the of of progress to need some opportunities it. alongside where footprint all and that the be about comes integrations. ton a customers the others. we and around the for we you together. what and just of Ryan’s The and organizations those is those and us our of can in customers partnerships really investment the go-to-market call networks organization the we’re where which salesforce network new trying a some emphasis to around to answer increasing themselves then our revenue the are be like, like building value can technology and things above. is, thinking

three motion. So constant we’ve of those strategies in got all

Arjun Bhatia

guys. the Very start and helpful year of Perfect. good congrats on a

Ryan Barretto

Thank you.

Operator

you. Thank

will We next at go VanVliet now BTIG. to Matt

Matt VanVliet

a two maybe ask little or guys. and part Yes. landing the into relatively XXK the shares XXK Thanks customers, these and total And around or even these question. some on go to cases? ultimate to some some opportunity afternoon, a the in that’s and still opportunities, the we of differentiation should take market willing like small about at When think you compared are little what the of now. wallet you question just the of platform? ready XXK looking bigger Wanted as point sort XXK of customers, Good for to or what taking look more between Or is? XXK

Ryan Barretto

early question. stage for and in that like tell Yes, mean, opportunity. Thanks to of number users. any big of Matt. going through. where a those the Hey, terms the to totally you certainly I It’s I the XXK, would us closing pretty segments just generally difference, we’re in feel XXK a we be customers XXK XXK between both customer like for and The rare feel sold close the of it’s they’re is

in the marketing And in size marketing that we’re just an might entire might care have marketing penetrated of departments? the the may the in in of So even like consuming XXK be And the sits XXK and at past that same organization. in. organization we’ve got department of analytics. some in just department, be about some talked XXK behind And the with a just on those come our be we from going across listening an it we’ve and XXK, perspective portion product a might a good over not it’s marketing or huge just it of where how just the it the be or thing one department just deal oftentimes might are that organization. today the opportunity organizations depending a the deeper add-on be And

biggest So of tend to top of grow about us think for the being those premium we terms in able opportunity. point the And terms the the as accounts. then be in on users icing leverage to the add-ons

the But our feel landing the say us the would gravity So potential account, winning trial last call, we’re we’re organization something certainly as was a we a significantly around when a like seeing and tremendous level, amount And across got for lot our great am seeing that we’ve rate, in began And we is and the to I call. we’ve a departments of two-period that social, this on at that even million bit example headline first really shared it executive headroom. on dollar of I the accounts base landing different with and still talked right little today. takeaway just more or up pretty about those many small over in of growing. then main

Justyn Howard

maybe think, is one bigger years underline for enterprise step within was just mid-market used people two organization Yes. specifically and the things starting than that It piece of it of the involves even just quickly ago, social we’ve bringing project. And broader investment just years to. organization it a that, maturity first an into is more ago, scale, that I to is and seen the five social of the than a

came similar be Ryan’s starting or at upside so at that are customers might And probably But the of that than the signal upside. investment XXK to funnel And that at into were is account just more a stage typically, point, tons better penetrated. customers the idea rather larger those the $XX,XXX. journey landing less a that, as of their us, for of our actually

Matt VanVliet

and Shopify And in commerce. to terms helpful. are sort of out update or of some usage with love they’re All of just of would early to here? the Where long at some right. tail are time of for the I I going on customers? How there’s I social get only product so need partnerships the kind tech any that building Facebook and adopter call, but Very initial know much

Justyn Howard

Yes.

But of is customers shape got the that partners and the going look that’s way sets is We’ve of we’re built running out seen what think to networks, it couple like, the are more quarters a on traction a the kind are – going and different the with to the networks working commerce we’re customers, the investments journey, I spoke So our hard and last is and future to today. the it of shape long integrations front different fantastic of with up. that to consistent about capabilities in how like than be, we’ve to is with of going space still commerce social We’ve the going be we gladly strategy one us, nuance going be. social and feeling team opportunities – capabilities. that’s out what ultimate what still the

partners, the trenches with state of with the happy we’re like the learning with our customers. They’re the great finding we’re learning with in we’ve our kind there. feels seen in things So we now uptake and success that really have

along a have more further date, today’s get we releases color may about, to start. and some talk product there, As great for but there’s we’re to we more off

Matt VanVliet

Thank Great. you. right. All

Justyn Howard

Okay.

Operator

Thank Fitzgerald. We’ll next you. go Brett at Knoblauch to now Cantor

Brett Knoblauch

question. taking the for Thanks team. Hi,

competitive dynamic. from Just the maybe landscape one

what’s favor at guys? changing all As kind upmarket to you’re to towards Is speed the any enterprise, main are and moving what’s driving the pricing? mid you. dynamics And Thank competitive of or of you difference or looking kind between it you about the decisions? can talk in decisions value? it Is functionality,

Ryan Barretto

Yes, in for thanks a investment I the and to Brett. Hey, ability value. say sure, that it’s the organizations, the for driver and speed question. large One, to return things. the would get enterprise the the couple biggest on of

involved so a we’re sport. it bit team and before. prepared There’s today more And ever again, highlighted as it little Justyn and you social and seeing people time this a time a lot organizations now heard just are And than remarks,

the real have care do social need analytics. might to customer in to with we’re They products time customers for again big they perspective, the time work. needs needs user be intuitive, It’s because so need you powerful. to It just be listening. be that a elegant. to the might this be things in that platform, want from time customers a use And hearing the the customers the the that more that, engaging driver reports product. to in empowered and and need business running in if is for to people be And to certainly they’re that And platforms do be today, need to way they it as

has for that differentiator been us. huge So a

lot, You a product, a and they the the is hear people us. this me hands on for on keyboards say will the buy getting differentiator before massive

and thousands a we’ve success really customer got just to that customer continuing a We bit matters of community, other. are customers resources, there. customer customer fact talked community. little our within engaging in getting about in from space. providing that support. the that They’re the feedback We’re And additional community get but excited a They introduced They’re getting today. I’m access moderation today lot about about. We’ve best team new this to practices to each our

not it We’re in been still industry where so this in practitioners in are it the for that have that even long. early

see And role that be and and our best they doing. things education for could we so practices great being the all awareness driving

And success, the a to be has So point innovation that then you. been community, would innovation. third I that that Speed huge differentiator. give customer

We organically code the all from they’re on to individual this be They these And on Care Instagram a they example functionality to Sprout Cells. into Cells engage our new for log I to counting as log that don’t Care customers. because move quickly think to base. customers, have our their a us We quarter. Instagram able with matters with good introduced one do maybe new work. their Sprout into about And lot platforms, We incredibly customers. functionality built introduce Social when we

put out still in competitors Many We’re it. X have don’t the it market. of first to companies of our the

but important – a relying customers example, because one just our for very on that’s so it’s And they’re a do tactical work. to their us

Brett Knoblauch

much. time. XXXX Is adding so just Perfect. TikTok? Any support Thanks maybe have one for if catalyst? Maybe a update on you follow-up that

Justyn Howard

Stay No proper update today. tuned.

Brett Knoblauch

you. Thank

Operator

afternoon And from Jefferies Clarke we’ll our Piper at take question last this Sandler.

Clarke Jefferies

it the linearity. on taking seasonality thank call, – on Are wanted couple but question. think of and Joe, the might later revenue to due we’ve loaded times linearity QX historically? a these quarter, to deals volume more back-end the be deals, than higher of get closed was in I you a you for just briefly on even touched where kind of Hello I in larger situations seeing touch

Joe Del Preto

it’s think think more year point, towards end of fair we Clarke, a Yes. to that’s If revenue definitely going be gave, guidance think the the I assumption. your that the like I back I to of

Clarke Jefferies

question a a shifting All And right. Ryan, mentioned Perfect. of, into follow-up then you gear. hiring higher

Just generally, R&D find Do or regions hiring played at? any plan out whether difficulty the yourself hiring that in you’re year-to-date? looking how is you in the having sales

Ryan Barretto

And a market. from our and sales very if the we I’m the to I’ll talk perspective R&D. then hiring you to, Clarke, start. want about a good really perspective, approach Justyn, about started feeling Yes, to

later, in things Dublin really Chicago of that we the and talent. past hybrid I now we’re located only pulling the think and from workforce and we’ve years hybrid all Seattle a that just the got then And today our folks world. the it over Chicago, one in in were was ago, few approach, running are

so talent quickly. over last And access us getting we’ve way plus people that’s in talent ramped to and bigger the good and got this and them giving pools, greater and couple onboarding of really up really years running

over coming to top them That’s mission to is drives before end that in focused it So point feeling of here is Justyn be we Sprout the employer about us. of there people good hand the really on on. culture an are being have continues what last that a and why very I for to that. And up and differentiator something just huge choice we

differentiator us been And tailwind. so that’s nice a for and a nice

Justyn Howard

mattered Yes, organization, have across add, I’ll point, just mentioned the Ryan, the lot. a

historically have the great positive an there’s platform, to And not – the hiring just And sidelines. the cohorts just maybe many industry, to point, that, a sitting the hybrid grid a terms commitments reputation, just in to cetera, something it’s around opportunity They I places there’s our over got and do decided to on are we’re Ryan’s and attracting us only We because they’re work clear talent, weren’t really a like, in great that’s is think labor people what past we getting we’ve just half of start bigger. and our that dialogue – that’s lot ago, bringing and anymore. benefits. The so phenomenal organization, new culture, who that’s I of et we with great And our it’s in that year bigger plan funnel, into and really in challenging been fit might the phenomenal exciting. made I think months. so as of work. with we’re it like think been just market going puts we’ve head pool current been people. the more a I XX the onboarding got that is committed we the – on look made, customer opportunity, that people, and go-forward work don’t our a Zoom The

Clarke Jefferies

you much. Thank very

Operator

back the turn Howard I’d to at closing you. call Thank over for Mr. any like this comments. time, And to

Justyn Howard

quarter. Thank I And just so look Thanks we’ve forward team the you. proud of our doing this thanks as keep Thanks really the quick. and we’re for the Thanks maybe Thanks, always quarter. I’ll everyone. with you. all a this job Thank the questions. results know over throughout We those Yes. time, time. delivered to for the of you for on having a more your to knockout conversations little for support.

Operator

great Thank gentlemen, Sprout of Earnings joining us and will conclude to much Conference like you, a Mr. day. Call. Social’s all for you First your all you so remainder Howard. thank Quarter We’d wish Ladies and that XXXX

Sprout Social (SPT) 4 May 222022 Q1 Earnings call transcript