SPT - Earnings call transcript Q2 2022

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Operator

Hello, and thank you for standing by. My name's JoAnne and I will be your conference operator today. At this time, I would like to welcome everyone to the Sprout Social Second Quarter 2022 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session. you. Thank instructions] [Operator of and Head go Development, ahead. Investor Rechel, Corporate Relation please Jason

Jason Rechel

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

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

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

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

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

Justyn? This ARR good be during fortunate year-over-year you to annual am of billion across strong growth the and position I Jason, Thank strong again goals surpassed surpassed at we execution Thank Justyn a of afternoon, us. growth joining to of in raise a output against for coming today pleased $X.XX margin faster Howard world quarter. backdrop teams, and when out our of you, a around We our ARR. us. rate the a is QX $XXX dynamic million than the of particularly everyone.

and our culture perfectly customers aligned a changing business are Our navigate world. to model help

new picture, social than flow for customer of drivers I'm year-over-year, year-over-year and grew team short are grew to and customer leveling We in accelerate cash for and consecutive our now ACVs ARR of we every proud outsize customers world-class the many customers number contributing of The performance and quarter of years XX% contributions strengthening growth growth quarter. more our than quarter also for ever we've of lands stop believe and business of to business the social up new XX% the delivered and execution driven as in our ARR stacked during growth sixth sixth rate the of and and see than number fundamental continue our use the more deliver ARR numbers those care. more $XX,XXX The this was grew enterprise durability XX% even of by positive Our consistency to consecutive I'm criticality pleased for largest this QX. contributing in future. our full two-year the our Sprout increase land of cases segments. free quarter. positioned year-over-year is from mid-market thrive into $XX,XXX to

from which than partnership, strong new the expect year. We more second XX delivered we logos be has half our momentum begun also of will a Salesforce into to what build

level I months business want throughout markets. Net uncertainty ARR growth. with what to view our more and the exiting the relatively our and we're of for linearity trajectory, retention a Given April May in and the of now consistent QX healthy the heightened balance across new expecting financial the quarter of granular give was new into the year. of

record including in May the of a month and ever. June, large strongest enterprise. was expansion we business April however, Retention line of and strong, one month, incredibly Our with our and trend new delivered consistent momentum stayed deal

we As currently retention workflow. customer remain ahead, mission-critical customer's and steady we we as expansion our to within see look trends

that and put the kind customer Shifting to entering in engagement we new capacity, we publishing both well our market. new and marketing investment, commitments, competitors perform a customers has enterprise healthy define distance of efficiency investments begin moderation integration features believe given went from ourselves integration, to strong impacts plans our also its also we their in Sprout. enhanced reels scope outlined have from paddle partner and of TikTok well we into went workflow believe we Instagram demand, go our relative fortune our this live; of R&D summer. announced our and on to deliberate support and investment requested that our second recently two this many live Today, In late ARR to business in product pace about lead near-term support of highly The gear, to build growth sales we to hiring we given of strong our those and month, the continue customer the believe position customers. and LinkedIn and XXXX. momentum plan pipeline, plan to leadership. category profile close not subtle for entire the partner keeping our thoughtful further lean and program across base on May, across live, on joined went expansion conditions also this for half into As in hiring our always first social currently with intelligence we to ARR, that to we're of market listening deliver TikTok consistently Sprout value growth to quickly mid-market and introduced positions analytics a investments. with an eye cloud our into ability live and a the TikTok and cloud later initiatives Salesforce margin impact Salesforce while our are will the the Last ambitious we high us been proposition. further integration position back We priorities; our service marketing and expect Because our comment positioned on

Our commerce, social been prioritized. investments and care social roadmap strategic has customer messaging, in publishing our reporting platform great and are further in making progress

further on deeper and We have new to opportunities are working with go messaging and multiple integrations partners listening. in commerce

advantages well integrations management our both and social aligns modes as here now. competitive fully around product and our the our partner the are that customer Sprout of believe depth strengthening work media of to unified roadmap competitive breadth platform especially and we our and scale, are to and the We compounding Our significant network combination grow.

Ryan This customers comment we and hear is isn't greater direction. in you'll partners. discuss our detail, market limited increasingly believe in to the As shifting

and the am workplaces work us ongoing demand fortunate grateful as I'll confidence Chicago great XXXX places trend great steady of With company were one and the we and incredibly QX continue to to I be execution Ryan. recognized we with that, we to as best our in leaders. a by value our over of consecutive of our place people to turn to are call excited for thoughtfully the consistency deliver The collectively were During to fourth to people certified all gives work and to and to stakeholders in beyond. build our year. amazing

Ryan Barretto

us provides teams from big execute for proud opportunity to as a I'm from more competitors and even and and our ahead moment roadmap This create a distance Justyn. from our I'm and incredibly we our ourselves momentum what's go-to-market being to more us our expected performance by Sprout position we Thanks, us, business ahead delivering partnerships externalities to a peers. joy excited of more focused We move value the do When in this business with. strategy. of to around our category-defining company. on is as than with believe aren't and a distracted we're customers

leadership, to witness incredible QX market the new the plan can brands, will community, their best great our greater our our even actively customers in our are to of which customer later practitioners, this highlighted has which top which of teams, work last of and at and validation during not, the impactful to more The periods thousands clear marketing Justyn this practitioners of in refine year network to and to the work excited We launched sprout ideas role. which has teams level that reach be dynamic our sharing engaged speed been community Sprout and those the our Sprout skills for to up of TikTok practices. product with reception launched marketing partnership expand was looking generate even the pipeline product deliver. quarter now all teams ahead. The funnel team

their jobs in in LinkedIn ROI being they with demand most more we budgets within and American a our is to role and is In has ad it meet sport. a frequently This with design this advertising Said of increasingly cases social direct CAMBA, more which mission social highlights are Speaking the quarter. about than of a customers, occupation is before. expanding the fact ever where social world mission CAMBA, and how of community marketing you reality power a become specialist to social the of important our the is and for where talk use critical scrutinized, the rising the the North anywhere, marketing single are. heart growth do. practitioners, as to the increasingly everything brands we this team to that on organic impactful of organic and world result category, complexity is teams. According to media of Sprout the they marketing report, of at is speaks empower publish and anything everyone expanded XXXX

brand love. to with social them to was scale most engaging quarterly what and to them proactively fostering out us Given the Shifting build than community, to me platform been feedback collect greater new able of engagement key and XX% and our Sprout's has been growth engage We've conversations lands. performance, strong and use lasting all-in-one our connections. authentic to strengthen business rapidly channels. helped social valuable stood across community our the listening global with growing has ACV

investments have enterprise. targeting in the marketing personas buyers and been Our more sophisticated

it our larger focused has social the of grow and and mid-market and they customers hiring use the how sophisticated but the expansion climate, the users enterprise faster sales larger initial land grow cases. larger as critical us, to Sprout Our explosive increasingly of right? deal is they perfectly global Our and with to our on especially know social current fundamentally sizes, We and the against suited brands the big get backdrop seed become into that is for product platform. to customers speak of small motion with mission

from referenced came Salesforce quarter Justyn than more As earlier, partnership. XX logos, this new our

go As customers, Salesforce, learned several studio deeper key we with we've things. social

are these customer. our customers considerably average larger First, than

customers create and media reinforce momentum on this I'm and third, service at quarter we our the year our the very pipeline cloud further XXXX management. second a the Dreamforce value of of Salesforce even for for sprout where incredibly investments very with is Second will and later partnership deeper and integration stack. technical strong social unlock half Salesforce their to articulate clearly build opportunity our strong building value excited our believe more as together present we vision for existing in will and tech

leading Hertz, can It Pay, Red, our managed change ahead. it speaks Porter the the as half owned Block, of Decker's we campaign Virginia magnitude segments grew After of One Heinz, the to team the Johnson, America. initiatives I'm and the was J. Service. quarter across quarter do customers North is right to is choose and hope food to heart; can through food platform in migrate across delivered Douglas elevate but partnership this in what technology digital Salesforce the the I by what our this to with from of Service, sustainability use world. University Food Virgin important I'm teams Duolingo, made execute all teams economy. social over social and privately The the other management inspired organic family Elliman, a that HP, Gordon from to good, foster usability importance but at food finds BT studio that Sprout easy incredibly service too. of group opportunity H. largest to by we our for of section us of first And supervisor is taste close Baird. that to and Food close more Sprout's Gordon distributor help not Footwear, quarters program, strong Kristen brands Sunoco, have even we listening. only have good first migrated we that and organization. to to our of created team meaningful Sprout strategy confidence and of partner behind dashboards, easy accomplish Airlines, different both Health, that franchises the publishing lead media have We Group, Athena this good social will across that our group's Spread's and find the Gordon our social analytics centralized for includes with solutions proud XXXX, we broader the This know us Robert of

Our partnerships building are momentum.

upleveling growth million rate We a surpassed and $X.XX enhancements billion product when we at $XXX are our faster value incremental teams during ARR than to are QX surpassed new a customers. delivering of a of ARR. Our

powerful platform, growth to will scale confidence I'll to and with Joe? over model inbound and run it to be financials, world-class disruptive next turn Joe teams Our our continue milestones, above the And trial faster. through even that, can unified

Joe Del Preto

the that moving now the social six growth. before guidance the mission to raise $XXX.X to million for quarter our quarter was was media management. consecutive I'll underscores two-year ARR year of positive our for growth, year-over-year in quarter, and ARR deliver Ryan. XXXX. again, second detail year-over-year. to you through we flow, which criticality representing rate XX% in pleased third Revenue We're pleased quarter of stack very QX organic on Thanks, of the year, durability We're cash up for for full strong growth the XX% results walk the now free momentum. $XX.X million our believe underscoring and second very growth accelerated expectations

pipeline remained to us our accelerated strong, XX,XXX strong XXX XX% the finish our new new medium expectation to volume quarter and during customers to enterprise Our term and We deliver continue business this QX consistently the customers positions to inbound contributing ARR and deliver believe further durable goals. of growth. growth year-over-year. We added in and efficient have to net quarter with our

were than business, new previously required about we Our because size net experienced additions below trend ACV, primarily deal year fewer recent our new managing we ACV to and normal this more logos while growth business case to the larger enterprise new we've business in year growth which that in business outsize goals trends during XX% ARR over mid-market QX, meant resulted that than been the continue. achieve talked could this than

new customer momentum visibility believe and healthy we additions business foreseeable future. into strong for also new have We the

unless contribute the capacity discussing than based ARR larger statement. As up customers up growth growth that ARR there stated exclude to a ago. reached medium ago, our number to deal year XX% XX% share from sustained otherwise compensation non-GAAP in are increase the note operating factors believe and are customers by Please $XX,XXX of expense. several of from references remainder will in reach to $XX,XXX than contribute primarily more term income in the basis current sales initial expenses, driven ACB continues QX We the year XX% stock results sizes. all of that of was more a to number year a over XXX year contribute ACB X,XXX our

financial well gross a gross model years, in issued was gap year gross pressure total our margin just earnings our up XX.X% into before highest call that represented the sales ago, and was profit that this to release XXX This in master and is million ago. basis $XX.X and or compared as development expenses points XX% QX million to in ago. demand scale reconcile again or is quarter to the sales signal year XX% a meaningful we investments margin throughout from XX% from XX.X%. mid-market million hire We're QX research of five revenue of were results make a $XX.X a capacity year see $XX.X up a we enterprise in margin to Now gross fortunate marketing current QX for expenses of continue were of revenue and for up XX%

this absolute substantially in go headcount Our quarter. expenses. Again,

G&A for and million transforming general a as up XX% ago, basis, revenue for but to in decrease software of the continue we X.X investments, one $XX.X QX we on slightly and $X.X year loss of expenses market of for believe a operating sprout spending XXXX, from was defining non positioning a continue in XX% to we to as our expenses normalized as expect administrative company trajectory a category we margin. As percent negative 'XX increase of a R&D more leadership environment, process or our revenue extending were million annual enter operating an

marketer with per the the cents year flow cash for a QX share saw securities end cash turn sequential strong $XXX.X QX from of at to the in We X the $XXX.X increase. quarter million balance are efficiency and at weighted outstanding we of for $X.X and common our average compared non-GAAP per was million loss expectations this scale, QX XX.X We share, of based to to due shares ongoing with revenue on stock, net loss quarter X net improvements million, with cents and end of the we net million million $XX.X $X.X for as income statement. pleased million and a ago, sheet of exceeded equivalent outperformance, revenue

approximately million QX to from near obligations remaining our $XXX.X watermark total, We $XXX.X million contracts, both in as in or performance and and build year. unbuild continue our QX, to XX% high over year progress have anticipated RPO our nicely

expectations RPO cash This was the cash guidance greater based in for or cash And we XXXX, rate XX $X.X in quarter operating $X.X million loss for of was XX% positive XX.X an of expect shifting revenue recognize X.X%. non-GAA to flow operating to ahead XX.X million management of anticipated the QX revenue We flow the or X.X to million free XX% approximately flow. X.X fiscal million of $XXX.X million. negative X% positive compared a the formal next as growth the like of year third than range of months positive pre ago, a $X.X over million margin million represents expect of range the to operating our

loss We as make $X.XX basis well of and expansion investments X.X share loss between efficiency, growth expect expect XXX.X margin overall This future, points basic gap revenue expansion expected a goals than forecast net $X.XX; XX We rate between and points. loss with for We shares This XX%, million. fiscal assuming growth with to a to of of in expect pleased roughly of for share million $X.XX. against a faster to tracking to we more non-gap the operating and from from operating non even XX.X a implies outstanding now to annual revenue a our growth expected $X.XX points basis range points of total margin now XXX for common million we weighted reported net non-GAAP continue prior million. million in non-GAAP our basis to XXX the of X.X our stock rate range XXX We basis of is points range approved full medium year hundred approximately prior roughly average $XXX.X expect basis for XXXX. term growth XXXX.

shares two, stock weighted of Assuming our and highlights summary, emphasis. average performance the of consistency strategic in two million rising our financial execution approximately common $XX.X basic the outstanding

efficient strength us are and or to the balance and sprout flow opportunity believe with Upmarket in on customers backdrop provide market of forge Our positions a even that. hundred this. billion around our poise pull social, free sheet future ahead. growth, optionality against which robust deliver the world leadership We our dynamic away and consistent pipeline. placing and With cash is

take any and Justyn, I of Operator? are to questions. happy your Ryan

Operator

line, your open. line Your is Michael of instructions] first KeyBanc. Sir, with on [Operator Turits question the comes

Michael Turits

Hey be Maybe I guys, my could not fundamental paid been if would results on there has but, congrats environment. I does question Salesforce just more I and side. the guess those How we've know digital weakness, holding but -- more more fundamental add social new maybe a a which management, there XX tough on say one give speaking trend you're marketing ads, numbers say would it why media maybe that on you from do broadly. better to in seen some previously? the and little that us logos just, in, think could in demand, But and in you you bit if what just [ph], good talk about, I including up seem in Greg then then

Justyn Howard

sure. then you I'll jump in. the start question. the for Yeah, half can Ryan question, of with first Thank that

from market, in through In the management to terms I of of part it's of think we happening functions, I pretty and down how in spend, but of that how the to participate remained it media comes resilient separate the in there, largely it dynamic has think, around flows paid we've fact don't right. before, social the terms and isolation shared got bit things a we've so that advertising as the marketing space

you've customer and one presales, direct the hand postsales around evangelism just budget, side usually very their the And customer On customers. and on have support on commentary the that it. and relationships it's the or brands customers. support other, team Whether between the general simple specific between forth you back organic of a if purpose got advertising side, very brand with or is and

think built was of we with It is and I important And and I which this consistent. form remain as other It's our focus side to so is any where important. to going going it, customers that largely remain think as what is so. around communication company is increasingly of

that against some organizations productive the may side. on much On of the flip advertising where are the side hedge very there anything be side think of a social I is that, less organic

few might cultivating to times little a channels to earning organic more results. extent see generally positive the are to that So different that always that's be returns handful and last that of very with available is be we've where the going them and community channel at challenging years, over brands those one a that

to we've So we play on be our be in two of part social expect the are continues but reasons. side stage through just at etcetera. I marketing, that not that that workflows in for parts importance. customer and of we're sales those are advertising primarily those specific very focused I for I clearly And across really that social to where see And customers to something reasons, becoming service that now growing is for continues organization. Not of that think the think to support, we'll continue strong, the the

Ryan Barretto

customers, point paid or running. are jump one the efficient. and Michael, and spend customers the help They be spend from provide, scrutinizing be type feedback, into get our especially marketing of agreed that hearing environment that they're areas know, for real running with just social the on on on in of everything smarter time and analytics might very to some Their the that I'll their tie one from where, in data perspective more then we're we campaigns this And, Salesforce just a of them I'll they're that piece are more shared, other there. campaigns more expensive you, last they Justin you

in of do to is coming points customers. these those the identifying sprout our are again, with for one it. right to being and solve needs those us, model that up inbound ends customers for that they're the solution value looking that, So And

market the of perspective us. to So think front the I seeing are all resilience really the our Salesforce excited in be about a why those continue within reasons from opportunity we're

We logos are just deals. with, those getting started, trends you in with the seen can that see still as closed we've we've

far one, team interaction getting and great many into of participation the and from intros these customers. we are So Salesforce

top that, mentioned average K are these customers customers then of had bucket. of that sprout. for exciting XX is They're lot they before, the and studio And larger parts of which we that our wishlist size. XX lots They're has in than been on social falling the seeing there are weren't in that K As deal our a lot they're of product a their seeing on of innovation. really in features,

if examples last think our even before quarter, about we've in so didn't of have just that things like now. within and and happened they great innovation wouldn't platform what TikTok that I And delivered have the Reels, have

to a can of about do relationship and these we see opportunity So that we're lot developing. the, there are excited the

Operator

Barclays. Your from comes question open. next line your Raimo of the Lenschow line with is Sir,

Unidentified Analyst

Hey, any for seen have evolved high a the in more Frank prior at be for Thanks taking Maybe this my resiliency and question. How how better is [ph]. you suited since level. has the potential the downturn? recessions of to product suite business

Justyn Howard

mode how and I This think the that history incredible have organization is horizontal regardless a necessary that their of They're the is in challenging within what times. previous the Justyn. I'll the question and, that need itself years the, product's maybe mission If resounding objective Current, role brands it in of and in thoughts. And fared some that's at on one an for that take of included utility the sure through. and not we've during product of and making going critical terms correctly, last we couple anyone and the, platform given the else think customers that well. are resiliency heard very both our communication the our stage. the I team for the around business that is of serving very thrown answer one growing a just of seen can to because think indirectly are job function. I, place. an an offering lot that anything a is us all really does we are of set solutions specific about environment is because very as across there navigated primarily a discrete in I across I fundamental therefore well-rounded company have this And add organization really our a we've that tying certainly at

kind when the example, COVID really pass world. took tough first when, throughout its when For of

customers that we to the One are were pretty steady shift primary sales as the forward other able things way where more investing a struggling on growing as In business, communities. state their some the of more focused their that that and were to much connected efforts are was scenarios engaging ways least functions businesses developing We're see etcetera. social or starting at care, different the activities they're their such customers. of only to otherwise into stay saw things in that audience social, little businesses their and with larger the more new with using of in with looking

And think because really been providing the value ton very of business and fundamental for just has customers remains at that a are a social business through high this it's rain list of our something set shine something things is needs of so or I that that certainly haves must for channels, point. this on important we're very

curve for that to those in we is saw us we we but through in throwing not positioned QX very what year of so And a just continue at we're of to add fared different really very well done our conditions balls customers and value expect a environments. handful ton well that as this

Ryan Barretto

the we the product types in support. add and has that has, that product a seen that too. types really such the we've any one way of of point, the during of because we also have the can the and been diversity verticals point being architected that difficult ensure we've specific of use cases segments got concentration of industries just Maybe across Part is utility to that remit wide important is and don't times, and companies

Operator

Elizabeth the with Porter line Morgan comes Your Stanley. next of from question

Your line open. is

Elizabeth Porter

Great. quarter. is platform benefit Sprout to on congrats Thank hear A a we much fast the this implementation so about time the and and ROI. you strong just relatively strong

So just particular, this on in at customers willingness the to to spend, context it environment more spend. as longer the benefit, cycles we're curious comments it if that's potentially just more coming a potentially up you. scrutiny Thank and new the of in that overall more, thinking hearing over just the and move point, how about a sprout are in that's scrutiny conversations about given deal on on,

Justyn Howard

on the a us. Yeah, continue a of actually And they Thanks, it evaluate for get they commercial before to and buy ever nice customer. keyboard. XX% a really the way our any terms you be press today, to be actually modern business to to trial the revenue sign on hands actually the before to sign, for your product over we proven Elizabeth. first, know, touches become Again, our contract strength product is

to ensure and the conversations want for sprout And solution's to to customers you so we're you what We platform. that we with get for can having the for mitigate that want is our need, into work going risk you. us, actually the

analytics listening, the the need, can be works and and you or for or, parts is your publishing one, the case you benefit do it that prove prove whether customers of that it us, fit. You or engaging use sophisticated start that or with to that

You get technology. chance a to the experience

value you prop huge it of trial. which incredible that team, during us, chance You interact But part a also get for with the for that implementation us. is do also means a our to

Again, huge consistent consistent stayed what trial the have. for stayed conversations the And that. seen. is through conversations from part we we've cycle, we're the then XX of lead times days that And days because that, of sales again, a trial having, historically our so they've pretty for around that have a XX pretty

it see strength we a that we, huge we're leading a, So into. as

Ryan Barretto

side budgets looking on on time is that's for typically that's detrimental, challenging disruption this company a make isn't business something introducing I'll has in managing our for customer the they're or list the is been pretty to they're you Yeah. areas channel, know, that One start pretty brand other meaning more how looked a the that's at to get time. for thing social for the a effectively reality on invested to conversations this scrutiny this if get to just lights into point one start out on cuts and the the, social facing the is particularly turning communities some non-negotiable to or when of isn't question that close on

critical think And and that given price block. this, where the, coming that from the exceptions the, down I are that organization well within serve chopping the platform to be the budget so, organizations. the from we're, to we're that going the the I, points I, there function we are of the we the nature to we're certainly on things selling list we're of but pretty come and within the

Elizabeth Porter

follow then just up, a customer the ads. as on And Great. I to wanted touch

the So we're that thousand seeing strength a we're, time really about seven in large clearly from the a customer fell first But total customer cohort. in perspective, the below net new quarters. ads for

segment, trying just versus, call to in large smaller trends those with from macro anything respect first, sensitivity. segment, just the to know, any of sense there the the you customer some SMB get just was So more to customers Thanks. demand that given if out softness

Justyn Howard

Yeah.

that people And we're become on only the top of in the year, that base, of mentioned, the the in highest the with gotten, you really mid-market more kind shift of new and enterprise the the investment our enterprise. some as the in the opportunities also you're lower ones focused XXK started see we're shift targeting mid-market we've seeing customer funnel swapping XXK where of seeing the volume momentum end the emphasis some to in market seeing and really you're of the of that not the we're lands. which and in But mix middle the have last continuing and So some priorities deals. the that bigger the out

the revenue we to logos and focus. think that continue about our the do yield so, of primary from quality think idea the is ads opportunities we'll edges the our And the, reinforce that the, points our mid-market the net price in when the by I parts in investments. the some the areas toward in focusing lowest we're we're there of change enterprise, at of lowest market some the definitely nature that the composition that intentional at of seeing

some one we're on going Some output feeling happening of the the now quality good world the continue focus the nonetheless, a of result to in of healthy us about that right that. shift of things we're that to perhaps and but And really a for of that revenue.

Operator

William the Bhatia question comes next Arjun from line Your with Blair. of

Your is open. line

Arjun Bhatia

with front, and coming composition. you're the values. much your Thanks the It in I that obviously the start much are strength how for is growth customer Are expand guys. strong want continue questions seeing from, those curious coming across taking lands growth just I'm, of expansion those currently I'm from new at new maybe to is these that switching the net larger pretty new particularly customer customers And seems the customers how customers the, both to on maybe front, to that coming competitors? Or are then existing sprout. from relation with are largely in they customers? opportunity? Greenfield landing the where that a still that off versus

Ryan Barretto

over is by This Yeah. us. business perspective, for Ryan. a growth Arjun. a healthy pretty weighted continued. and It's have trends those it's Thanks new balance still From expansion,

in really up You but we lands. see can XX%, it feel business, the new good about numbers ACV those

bit, coming see enterprise we're customer to You then it outside we've the it of but where And it's new large from can bit XX-K an had, and a a today. business really the, down a also terms more has that the expansion grow been, of a perspective on in expansion continued they're perspective continuing side mix. from strong side of from enterprise from a been the but it's XX-K and standpoint, And growth in path. than business new mid-market that has

know, we're enterprises, strategy within might invested how might very this Even have you'll social it's in had market many a large organization. across using that you'd today. come early up or they They a this we we you but native small not we've said investment management. and before, the So, tools, siloed not really have somewhere, but be across that media that still organizations believe surprised be it's in

balance uncover really and some sprout. as now and as with healthy big of So a, they in where displacing competitors, it's, well able to they being invest the weren't a chance of it's get a investing going need been a to pretty

Arjun Bhatia

obviously Got then over seems can, I power, of several the capabilities how and, more, one I'm, if quarters and curious that viewing platform. it. the the adding I'm That's to like very and, helpful. next pricing know, over just years, it And you're next you terms lever you're in

on price is is integrations consider and your and something a lever You're as, as with, there that's develops? available you product requirements adding that enterprise that platform would

Justyn Howard

Yeah.

start with I'll So one. that

is, where course chunk today, certainly, of the landing that in on I think couple is funnel certainly there customer time. that answer of good we're the product of through it level We're at giving power things today. I pricing that And entry time. platform is of on of focused increased a think platform the us the is point. the that there The for enhancements, some focused the years sizes, we're doubling has there steadily that. least and additional the stuttering of networks the historically of your our example, where most cases a yes, top deal you've for over base lot seen to value for think where to I we're customers like from over is, over increased a And

ideas be to us opportune pricing probably side. know, specifically occurred developing super you testing I to we're And six around last constantly so time to the not I quarters disruptive the be the iterating that. most will think say that have on

of as ton growth, from a made ACB have obviously improvements seen think on to more there's the you've the some that that We We meat bone changes term. made and point there. long

a to to platform steadily ticking And expect is deliver your fair that what But channel. this I getting more brands always be the Sprout continues grow and for up. to like our we than Now think expecting value over and we're in a to time spend for getting point, investments platform value are back.

to going continually be to we're responsible iterate So that. and

Operator

with BTIG. comes of VanVliet from question Matt the line Your next

Your open. line is

Matt VanVliet

and actually for are, the the the to are or Thanks know, you you're the deeper just and dig in being larger. attach modules of Yeah. for best size a seats similar There of on more the are reasons Good still and, from maybe actually you, are a sizes of just bigger Ryan more is relative landing wanted customer driving maybe or of afternoon or overall little to listening from trends the guys. lands seeing question. you larger of size analytics the you those new larger earlier but kind taking Maybe deal number rates. for with significantly the that ACV getting footprint Thanks. for on organization, or

Justyn Howard

Yeah. Thanks Matt.

call or more core the organizations of in terms enterprise the of I'd our the, majority rule from products. getting an more definitely the of core the, revenue it still it's So, coming XX XX of front in

the, So but think problems the from add-ons about of but licenses. solve a the the, the in for core and they share the opportunity, users the lot users add-ons obviously ACB value, also of revenues line add the customers, coming terms versus that of both

capacity we to investing on sure take in to customers. We've and that customers great We've than well. ensure funnel from in the in we're have this And We've space. enterprise care front been we're a more make them that those and top to within deals been ever the we've perspective past. supporting investing been them attract and end a of sales to more of mid-market prospects the lot investing team been doing back so in we're, of those

opportunity of a it's seat perspective, front know, just you user are a in some of those license you're customers, So deals, in even organizations seeing certainly front departments. from have as these really getting departments marketing perspective, those massive in customer more of or more bigger And of we deals. care

the more of to add-on a seeing still the of we're So of lot grow, and it well. landing opportunity opportunity. large that, obviously we're products even headroom, most driving that tends accounts be divisions what's a today, the as users, be to that lot And in departments,

Matt VanVliet

or at the Right. sort today to reels of understanding are platforms, monetize Great analytics they drive and how Obviously actual finding strong? more pull in those looking And those, you be can how there's tons your an or platforms you but to side of them can understand even then traffic are process Instagram to, from to from on there. users sort TikTok the response they product, product or there sense the those is reception helping of education announced use business there? and of customers

Justyn Howard

reception different tends been great it it's that say I the question. I, is so a fantastic. of This Justin. little to more a bit That's that first, has think be Yeah. I'll

needed become been as things You technology know, the else. that our have networks in there's, to These these these are our them things that customers customers are to above available hands are excited their they our get available we're customers. and have very two make and them. excited have the what products very for all for themselves asking has to the do of done Obviously to

within a side. for requires the being evolution example consumer brands answer just sets type a to TikTok the as short the I'll of an of the different being question and reels know prepared format. much It is to it together nuanced I different skills engaging put other media your right? and It's part if them. education different think behaviors on of some, videos, it. of little network, similar So to better more and to utilize is I network it's there's call habits some don't

the interest is awareness that think I there. So and

TikTok the, generally, with, on is, haven't And is with experience doing network I think obviously of angles the and we consumer really juggernaut lot a new and that has cool then incredibly have seen a really I here. think going doing and a job brands we've still go that but come a they're bit to are along doing ready media up things cool well be a that readiness curve, new is little and, plenty as types bang the who to behind the are other of with seen that who before.

excited see customers as this about those up this massive thing matters it, content as to of thousands I time networks we maturity say along. video, form certainly about the those to are some the of on. Yeah, Again, tick there, and continue think some other brands for relatively our that the that Justin's are think other types, other goes doing a and when is active engaged time continue, further of and super that's that there's adoption. of still early media are them. is And hundreds short point, about win that a the ton, interesting I but in early just we're we'll are when this

see building community and help developing to huge opportunity and touch leveraging more even on spending happening can that, on drive skillset come customer just the participate leverage perspective, in getting with how perspective best those been value the from topics those within I and this see a For adopting spread it board to practices from has our And that can that And of see on platform. communities internally, education a of awareness ensure like C these they a conversations that to as tools, are still you the haven't then to internally, success a that team about content these. time a lot lot we learning they're the they this are how it. from can

can add I the current way. opportunity more a along there's for we So the of and lot think then value customers that

Operator

comes of Your with line Parker the next Stifel. question Lane from

Your open. line is

Parker Lane

taking during end any for that the channel see agencies provide signs what of you some those in weakness sprout Thanks quarter. their more users? first Curious for during the questions. that of context is saw inside on they the could you the the performance if the with agency to quarter leveraging Are of of health of channel are starting par some

Justyn Howard

Parker. Thanks Yeah.

I So it in little us, more business the challenging. would QX say was agency for bit a

side. the that on out the, mostly Specifically that portion new work it of that, I'd that SMB and call business those within

still new help great services to not has agency agency are growth those segment. best a versus with that them we've And on teams Despite build are in, the, organizations. now clients on we're imagine, the perspective focused we're from seeing evangelists but there business, filled might practices build and you within win business. been one existing to supporting for the As perspective those, our a seen very those from and a right clients. us within them people We've segment only created software for business. customers trying expanding spread supports to at that execution their retaining That this

the for we future. about, a versa in So in some us you confident new for say a feel business side, their organizations on really and being vice being point the business know, headwinds I'd those but we, and great support this time

Parker Lane

on relative it. there next today, us during you expiration of our contract social those, know, partnership, days, studio give I versus to to you XXX we quarter. XX what share customers of Salesforce regardless sprout to and XX be the Can that coming at customer the think the then saying, a Got the those alluded our you of looking would of need this contracts wins are whose And when sense functionality to Understood. expires.

Justyn Howard

upcoming that in, they getting Yeah. we're Directionally, the that those team Salesforce have team back were needing customers they accounts I'd or the referrals say figure team. out make where a it's that they majority Salesforce renewals the the intros more, with Salesforce to what's partnered the next. sales market decision, into And to channel from calls with either of these were were

were building. I to launch quarter. something what for with we're renewal over tremendous to think And cloud had into was little up be catalyst next new because to a tend years we're and those prospect we'll and we're we're couple they to are a going doing decision. customers get integration bit of the that a integrated service that are with a that there lot So upcoming about make this to as those working this that then the we're on that social that building, we later that Dreamforce talk ones We, from is come really renewals a lot excited continue value to accounts they studio here. more partner on Salesforce about And deeply

Operator

Sandler. of question Jefferies the next from Your comes Clarke line Piper with

open. line Your is

Clarke Jefferies

some the the migration the social of of process? that customers Did thank scope were from of for in, in innovation. change part taking migration customers migration question, organization Oh their benefit the fundamental as these you that media any these Ryan, of management you mentioned seeing

Ryan Barretto

There's expanded been been certainly there's of have some scope that the -- the utilization.

customers. was marketing use you'll mostly functionality were started features in yet with care some the for marketing marketing. sprout of and the social on for was were their the and of that might and that quickly that and, vice was wishlist Salesforce was at we the they're the a there some So idea comment around in in exist were customers. versa, was quite case wish studio mostly My see lot we've we would doing a And and directed social conversations roadmap coming a won on we've studio or having using or that that most won didn't where driver care have initial when fit them, and that have been

critical if that There's DMS Instagram as practitioners Reel's listening, which the obviously for re-released a think might counting every are Reddit day, that but we is of before. like things didn't like So, you counting we about that, on these functionality example. they pretty are, year, last the another solutions, imagine, TikTok, have on bunch sprout

So of driver. opportunity yeah, for that of bit little the on more a a in been case of big didn't use has us. existed conversation, that there certainly part these sprout features expansion, exist But their a lot and

Justyn Howard

on in we're first like will additional We like place. additional of I to I short we're look something changes algorithm get talking networks changes anecdotally get solution folks and form solution opportunities short the we, at kind can of specifically content. focused let's resolved. I of difference just organic most of to in seems a different place the let's processes partnership in video, to of But that change and, now by the table, order of for may that up follow the the get some things around the running. and social versus and Helpful is to spinning be that the around conversations departments users video. that. for think about stage wheels business we've between brought what forms the see term their those the to excited proactive ask presence and but think They're and I that prioritization talked of know, them the prioritize this and content and things the Yeah. that that sales add in and, we're of the we've that the, the wanted bringing lot on, and you as early is up it relatively in And then call in let,

for that any at those additive form sprout cetera. of these large engaging and, algorithm distinct the networks time seen of So in and generally change makes measuring behavior sprout? content, just haven't that been you speaking, maybe flow or are video sort your spending products we short prioritizing our are generally has of that social value changes a it customers that their seen continuity through publishing all et Yeah, doing the that of in around to disruptive listening, that to customers analytics, so the changes our, have things

there the that the, very the, does And were those but videos. recent much consumer right? feed, to difference, look at a the the So, the And if short distinct change for experience. where short form, example, you is were prioritized, form prioritizing changes Facebook they

in I the a but that least may some back at bit, quite press what be think changing seen changed has from back we've degree. or to

an opt versus in also in is term we're that think be. seeing engagement the networks their I So own to and experience most that But patterns short of their normal what as the, of would algorithms. the out prioritizing the, shifting are end algorithm there's what suggested opportunity user video or the

don't it I disruptive know really it, is. So how

think two, our But end spirit customer, few out. it'll to things how question more I think take quarters I of changing a the for that figure for our the and it's things

Ryan Barretto

back you Justyn? Are

Justyn Howard

I'm I back. dropped.

So years, of the value one changes to what they're customers doing a of behavior, brands are hasn't of and our flowed terms my and seen answer like networks it. over to in maybe the to cetera. But, lot the platform, the et changes of didn't these but was doing. and to down really listening what it We've algorithm the

the that that plans tackle something internal emphasis together ways But there that on in the probably I increasing getting help to be them. video them Appreciate in think form again, short tools out available we platform is we that's our it to them they through able the it. past. haven't and with to through make

the much hopefully hopefully Sorry, but hit know key I I, you. answer I don't points for how cut out, of that

Operator

of next Hynes DJ Genuity. question with comes from the Your line Canaccord

is line Your open.

Ryan Barretto

your for we'll can one for if just second And right, keep I'll work to more. one All it mic see Justin,

DJ Hynes

kind win Ryan, to you the quarter. be the like, on a you're that record you just of you on, seeing curious, are mentioned roadmap are social care maybe from care. hearing the talk reinforces I'm prioritization and, market the social you in about what segue What customers? making and in that's on good there, touched

Justyn Howard

Yeah, sure.

et and of we're cetera. the So, I think care. in particularly one wins higher typically mid-market I, case that that use the the, large, sizes, of a we're around seeing opportunities the those around mean the, seeing that that the, the the is opportunities high signals just are that land obvious number Typically oriented seeing I the side we're on most enterprise deal users the

a those things. certainly supports that's pulling prioritizing why we're and So function

and operational how answer management, The way right? like the operationalized typical a maturity it lot to thinking you've other got I like respond more handoffs really I a routing within in being we're of about between community that hybrid things just and there. looks you've long service, customer SLAs, channels like to social things and like care just things and successful that. thing agents think more questions was time, more So for got complex It's where our think approaches going kind to through organizations they're community of a is of this

opportunity there's for ton And there. just a us of so

that I in also seen as demonstrated we've of phenomenal job it's roadmap think that roadmap customers really of this the things there. that. there. part for of help That's on do we and of that There's fascinating we're ton ton with success today think do is, to our care to they really a particularly talking the with we advance us and that potential a a I exciting where can them support the their some largest front. a Yeah, social further just But as from would is has like

DJ Hynes

makes Congrats results on guys. That the sense.

Operator

from line comes question Michael of next Your the Needham. with Rackers

open. is line Your

Scott Berg

There estimates cautious some seeing. maybe to color the your they, Scott just actually a what in sorry. be more I'd Thank more more the macro Berg you're hear don't maybe of maybe historically. wanted guess I than the clarity all what That'd guidance everyone. a great. Hey, from And terms back you've are really in half in know, little in there. back It's to gain are seen just half, questions I guidance bit regards in to of the regards, little you. here. the love the assumptions

Justyn Howard

we raise than think, felt what ability in out beat. I macro good our, our more our of in Scott, the, the pretty environment Yes, by guidance this come to core, we

feel we we're, to a we, We guidance. the And business. like give as hitting. way the way pretty we're we it there's, a so we that level like a in high A you that confidence in know, responsible of give momentum there's lot in have and of

some perspective, think of And that year. execute guidance from pretty out from positioned have we given plan to back we the standpoint has known so the feel there. a in into I risk of that our the well half And up that and everything taken unknown the we're of kind we've that consideration on risks

of for the so I into back think half our guidance year. And we've factored all that the

Operator

line Your - of Brett Fitzgerald. Cantor next the from Knoblauch comes question

line is Your open.

Brett Knoblauch

Hi guys. Thanks for taking my question.

of for social the investing and that's you're and, two kind find you seeing in you're growth e-com of large with there being first of through what terms further commerce what doing Just on me drive that growth? macro. Can to weaker how and as

Justyn Howard

Yeah.

in things early really of hear that surprising to arc that multi-year side be So, commerce building customers. that to us. There investment building. our our of for built very that fundamental lot things we've things. want a social We're is with, discussed things cool around that be interesting of we it's we're it we've actually in a some we're increasing has this the a to may as of of before, the for are lot lot do And commerce that a

look we is to be that over going social the playing. term out commerce long As role,

a overreact that without the projections be that's get happening able We've early performance it our that we're in of to sure right cover from commerce they're air to broadly got volatility, making. And quarter. the or been this the around part some to to material speaking we're with to fortunate quarter maybe anything so make we having time we're of while online hasn't this

super to roadmap So team hasn't think I it we're and are our investment that changed. continuing Because we're effort quarter still ramping of, roadmap or putting but forward. there. on to Nothing fundamental a regardless is of that anything push of in big else, part we more long got disproportionate going And that long, that up we've regardless is CU there, any and industry to there some a be time a of companies and, to get COVID this focused see the that quarter for the are lag the performance may right. it opportunity

super about. we're area still it's So excited an

Brett Knoblauch

heard then EMEA being you. of couple environment, cycles, and maybe those maybe just helpful. deal particularly XX% the any I also companies is Have know And lengthening you That's we've about, know a demand EMEA talk maybe from your weak. on impact I Thank seen of maybe so Perfect. business? far XX%, your business.

Justyn Howard

touches Brad. reasons, product the they're go buy, revenue they're XX% No, plus investing the our cycle of starting implementation sales of in the distinct a for got to model through. they're a they inbound because there, again, Thanks product, resources trial us model, coming the we've advantage perspective, Yeah. that to and from because they're just before and

from than felt that you're perspective, had it EMEA then what before. So hasn't And right. we've a than, different

among that just the well, quarter. that In them of had really the this the growth business, we for value terms of the, teams was performed the highest

we're there's So opportunity feeling really we also upside like that there, lot and still early but we're market. within of still strong, the a feel

have areas two been for not concerns performance. those So on us based

Operator

Yes, question question. Factset. we one take Masago comes with can from more And the Jim [ph]

open. Your line is

the are time. at to turn There further withdrew no question. would think I like his I now over the to questions call this back he presenters.

Justyn Howard

you. All we're I'm the here but Thank get much. and the up catching the let over days, Thank over here right. I'll Thank always or everyone us We'll out next so if forward couple time out we'll great sure support. look today. not quickly. you as you for to Thanks Yeah. with not, you and questions. quarter weeks, for get

Operator

This concludes call. today's conference

You may now disconnect.

Sprout Social (SPT) 3 Aug 222022 Q2 Earnings call transcript