Sprout Social, Inc. (“Sprout Social”, the “Company”) (Nasdaq: SPT),
an industry-leading provider of cloud-based social media management
software, today announced financial results for its third quarter
ended September 30, 2023.
“We’re pleased to share incredibly strong third quarter
results,” said Justyn Howard, Sprout Social’s CEO and co-founder.
“We're building an enduring software company centered on amazing
products, amazing people and overdelivering for our customers every
day. Our fantastic business results and outlook reflect strong
execution against these goals.”
Third Quarter 2023 Financial Highlights
Revenue
- Revenue was $85.5 million, up 31% compared to the third quarter
of 2022.
- ARR was $359.5 million, up 33% compared to the third quarter of
2022.
- Total remaining performance obligations (RPO) of $228.7M, up
67% year-over-year.
Operating Loss
- GAAP operating loss was ($24.2) million, compared to ($14.4)
million in the third quarter of 2022.
- Non-GAAP operating loss was ($0.6) million, compared to a
Non-GAAP operating loss of ($1.4) million in the third quarter of
2022.
Net Loss
- GAAP net loss was ($23.0) million, compared to ($13.9) million
in the third quarter of 2022.
- Non-GAAP net loss was ($0.6) million, compared to a Non-GAAP
net loss of ($1.0) million in the third quarter of 2022.
- GAAP net loss per share was ($0.41) based on 55.8 million
weighted-average shares of common stock outstanding, compared to
($0.25) based on 54.7 million weighted-average shares of common
stock outstanding in the third quarter of 2022.
- Non-GAAP net loss per share was ($0.01) based on 55.8 million
weighted-average shares of common stock outstanding, compared to
($0.02) based on 54.7 million weighted-average shares of common
stock outstanding in the third quarter of 2022.
Cash
- Cash and equivalents and marketable securities totaled $121.4
million as of September 30, 2023, compared to $192.4 million as of
June 30, 2023.
- Net cash (used in) provided by operating activities was ($5.5)
million, compared to $1.0 million in the third quarter of
2022.
- Free cash flow was ($3.4) million, compared to $0.5 million in
the third quarter of 2022.
See “Customer Metrics” and “Use of Non-GAAP Financial Measures”
below for how Sprout Social defines total number of customers,
number of customers contributing over $10,000 in ARR, number of
customers contributing over $50,000 in ARR, ARR, Non-GAAP operating
income (loss), Non-GAAP net income (loss), Non-GAAP net income
(loss) per share, free cash flow and the financial tables that
accompany this release for reconciliations of these measures to
their closest comparable GAAP measures.
Customer Metrics
- Grew number of customers contributing over $10,000 in ARR to
8,111 customers as of September 30, 2023, up 33% compared to
September 30, 2022.
- Grew number of customers contributing over $50,000 in ARR to
1,252 customers as of September 30, 2023, up 49% compared to
September 30, 2022.
- Total number of customers as of September 30, 2023 was 32,383,
down 5% compared to September 30, 2022.
Recent Customer Highlights
- During the third quarter, we had the opportunity to grow with
great new & existing customers like American Honda Motor
Company, Harman International, Camping World, Hormel Foods,
Danaher, Activision Blizzard, Welch Foods, NYU Langone Health
System, Belden and Mercadolibre.
Recent Business Highlights
Sprout Social recently:
- Published its 2023 Environmental, Social and Governance (ESG)
Impact Report (here).
- Named to the 2023 Fortune Best Workplaces in Technology™ List
(here).
- Recognized by G2’s 2023 Fall Reports as a leader across 138
categories including Social Customer Service, Social Media
Analytics and Best Results for Enterprise Customers (here).
- Released the 2023 Sprout Social Index, Edition XIX:
Breakthrough that uncovered the growing and integral role of social
media in the customer journey and how brands are evolving to meet
increased expectations (here).
- Published a case study outlining how Salesforce saved 12,000
hours in its first year using Sprout Social (here).
Fourth Quarter and 2023 Financial Outlook
For the fourth quarter of 2023, the Company currently
expects:
- Total revenue to be between $90.5 million and $90.6
million.
- Non-GAAP operating income to be between $0.6 million and $0.7
million.
- Non-GAAP net income per share of between $0.00 and $0.01 based
on approximately 56.6 million weighted-average shares of common
stock outstanding.
“Our focused investments are delivering strong returns,” said
Joe Del Preto, CFO. “Our current performance and leading indicators
performed well during Q3 led by the rapidly changing mix of our
business and further acceleration in our enterprise segment. Tagger
overperformed our expectations right out of the gate.”
For the full year 2023, the Company currently expects:
- Total revenue to be between $330.6 million and $330.7 million.
Services revenue will be lower than 2022 levels.
- The implied ARR growth rate exiting 2023 to be approximately
30%, higher than our prior view of 28-29%. This continues to assume
that non-core, low end ARR declines to zero exiting the year.
- Non-GAAP operating income between $3.6 million and $3.7
million.
- This implies year-over-year Non-GAAP operating margin
improvement of roughly 270bps, compared with our prior range of
roughly 200bps year-over-year.
- Non-GAAP net income per share between $0.12 and $0.13 based on
approximately 55.9 million weighted-average shares of common stock
outstanding.
The Company’s fourth quarter and 2023 financial outlook is based
on a number of assumptions that are subject to change and many of
which are outside the Company’s control. If actual results vary
from these assumptions, the Company’s expectations may change.
There can be no assurance that the Company will achieve these
results.
The Company does not provide guidance for operating loss, the
most directly comparable GAAP measure to non-GAAP operating income,
net loss per share, the most directly comparable GAAP measure to
non-GAAP net income per share, or operating margin, the most
directly comparable GAAP measure to Non-GAAP operating margin, and
similarly cannot provide a reconciliation between its forecasted
non-GAAP operating income, non-GAAP net income per share and
non-GAAP operating margin and these comparable GAAP measures
without unreasonable effort due to the unavailability of reliable
estimates for certain items. These items are not within the
Company’s control and may vary greatly between periods and could
significantly impact future financial results.
Conference Call Information
The financial results and business highlights will be discussed
on a conference call and webcast scheduled at 4:00 p.m. Central
Time (5:00 p.m. Eastern Time) today, November 2, 2023. Online
registration for this event conference call can be found at
https://conferencingportals.com/event/KXqdWaBd. The live webcast of
the conference call can be accessed from Sprout Social’s investor
relations website at http://investors.sproutsocial.com.
Following completion of the events, a webcast replay will also
be available at http://investors.sproutsocial.com for 12
months.
About Sprout SocialSprout Social is a global
leader in social media management and analytics software. Sprout’s
unified platform puts powerful social data into the hands of more
than 30,000 brands so they can make strategic decisions that drive
business growth and innovation. With a full suite of social media
management solutions, Sprout offers comprehensive publishing and
engagement functionality, customer care, connected workflows and
AI-powered business intelligence. Sprout’s award-winning software
operates across all major social media networks and digital
platforms. For more information about Sprout Social (NASDAQ: SPT),
visit sproutsocial.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. In some cases, you can identify forward-looking statements
by terms such as “anticipate,” “believe,” “can,” “continue,”
“could,” “estimate,” “expect,” “explore,” “intend,” “long-term
model,” “may,” “might” “outlook,” “plan,” “potential,” “predict,”
“project,” “should,” “strategy,” “target,” “will,” “would,” or the
negative of these terms, and similar expressions intended to
identify forward-looking statements. However, not all
forward-looking statements contain these identifying words. These
statements may relate to our market size and growth strategy, our
estimated and projected costs, margins, revenue, expenditures and
customer and financial growth rates, our Q4 and 2023 financial
outlook, our plans and objectives for future operations, growth,
initiatives or strategies. By their nature, these statements are
subject to numerous uncertainties and risks, including factors
beyond our control, that could cause actual results, performance or
achievement to differ materially and adversely from those
anticipated or implied in the forward-looking statements. These
assumptions, uncertainties and risks include that, among others: we
may not be able to sustain our revenue and customer growth rate in
the future; price increases have and may continue to negatively
impact demand for our products, customer acquisition and retention
and reduce the total number of customers or customer additions; our
business would be harmed by any significant interruptions, delays
or outages in services from our platform, our API providers, or
certain social media platforms; if we are unable to attract
potential customers through unpaid channels, convert this traffic
to free trials or convert free trials to paid subscriptions, our
business and results of operations may be adversely affected; we
may be unable to integrate acquired businesses or technologies
successfully or achieve the expected benefits of such acquisitions
and investments; unstable market and economic conditions, such as
recession risks, effects of inflation, labor shortages, supply
chain issues, higher interest rates, the impacts of current and
potential future bank failures and geopolitical impacts of overseas
conflict, could adversely impact our business and that of our
existing and prospective customers, which may result in reduced
demand for our products; we may not be able to generate sufficient
cash to service our indebtedness; covenants in our credit agreement
may restrict our operations, and if we do not effectively manage
our business to comply with these covenants, our financial
condition could be adversely impacted; any cybersecurity-related
attack, significant data breach or disruption of the information
technology systems or networks on which we rely could negatively
affect our business; and changing regulations relating to privacy,
information security and data protection could increase our costs,
affect or limit how we collect and use personal information and
harm our brand. Additional risks and uncertainties that could cause
actual outcomes and results to differ materially from those
contemplated by the forward-looking statements are included under
the caption “Risk Factors” and elsewhere in our filings with the
Securities and Exchange Commission (the “SEC”), including our
Annual Report on Form 10-K for the year ended December 31, 2022
filed with the SEC on February 22, 2023, as supplemented by our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2023
filed with the SEC on August 4, 2023, and our Quarterly Report on
Form 10-Q for the quarter ended September 30, 2023 to be filed with
the SEC as well as any future reports that we file with the SEC.
Moreover, you should interpret many of the risks identified in
those reports as being heightened as a result of the current
instability in market and economic conditions. Forward-looking
statements speak only as of the date the statements are made and
are based on information available to Sprout Social at the time
those statements are made and/or management's good faith belief as
of that time with respect to future events. Sprout Social assumes
no obligation to update forward-looking statements to reflect
events or circumstances after the date they were made, except as
required by law.
Use of Non-GAAP Financial Measures
We have provided in this press release certain financial
information that has not been prepared in accordance with generally
accepted accounting principles in the United States (“GAAP”). Our
management uses these non-GAAP financial measures internally in
analyzing our financial results and believes that use of these
non-GAAP financial measures is useful to investors as an additional
tool to evaluate ongoing operating results and trends and in
comparing our financial results with other companies in our
industry, many of which present similar non-GAAP financial
measures. Non-GAAP financial measures are not meant to be
considered in isolation or as a substitute for comparable financial
measures prepared in accordance with GAAP and should be read only
in conjunction with our consolidated financial statements prepared
in accordance with GAAP. A reconciliation of our historical
non-GAAP financial measures to the most directly comparable GAAP
measures has been provided in the financial statement tables
included in this press release, and investors are encouraged to
review these reconciliations.
Non-GAAP gross profit. We define non-GAAP gross
profit as GAAP gross profit, excluding stock-based compensation
expense and amortization expense associated with the acquired
developed technology from the Tagger acquisition. We believe
non-GAAP gross profit provides our management and investors
consistency and comparability with our past financial performance
and facilitates period-to-period comparisons of operations, as it
eliminates the effect of stock-based compensation and amortization
expense, which are often unrelated to overall operating
performance. During the third quarter of 2023, we revised our
definition of non-GAAP gross profit to exclude amortization expense
associated with the acquired developed technology from the Tagger
acquisition.
Non-GAAP gross margin. We define non-GAAP gross
margin as non-GAAP gross profit as a percentage of revenue.
Non-GAAP operating income (loss). We define
non-GAAP operating income (loss) as GAAP loss from operations,
excluding stock-based compensation expense, acquisition-related
costs and amortization expense associated with the acquired
intangible assets from the Tagger acquisition. We believe non-GAAP
operating income (loss) provides our management and investors
consistency and comparability with our past financial performance
and facilitates period-to-period comparisons of operations, as it
eliminates the effect of stock-based compensation,
acquisition-related expenses and amortization expense, which are
often unrelated to overall operating performance. During the second
quarter of 2023, we revised our definition of non-GAAP operating
income (loss) to exclude acquisition-related expenses in connection
with our acquisition of Tagger, Inc. During the third quarter, we
revised our definition of non-GAAP operating income (loss) to
exclude amortization expense associated with the acquired
intangible assets from the Tagger acquisition.
Non-GAAP operating margin. We defined non-GAAP
operating margin as non-GAAP operating income (loss) as a
percentage of revenue.
Non-GAAP net income (loss). We define non-GAAP
net income (loss) as GAAP net loss, excluding stock-based
compensation expense, acquisition-related expenses, amortization
expense associated with the acquired intangible assets from the
Tagger acquisition and tax benefits due to changes in valuation
allowances from business acquisitions. We believe non-GAAP net
income (loss) provides our management and investors consistency and
comparability with our past financial performance and facilitates
period-to-period comparisons of operations, as this non-GAAP
financial measure eliminates the effect of stock-based
compensation, acquisition-related expenses, amortization expense
and tax benefits due to changes in valuation allowances from
business acquisitions, which are often unrelated to overall
operating performance. During the second quarter of 2023, we
revised our definition of non-GAAP net income (loss) to exclude
acquisition-related expenses in connection with our acquisition of
Tagger, Inc. During the third quarter of 2023, we revised our
definition of non-GAAP net income (loss) to exclude amortization
expense associated with the acquired intangible assets from the
Tagger acquisition and tax benefits recognized from changes in the
valuation allowance associated with our acquisition of Tagger.
Non-GAAP net income (loss) per share. We define
non-GAAP net income (loss) per share as GAAP net loss per share
attributable to common shareholders, basic and diluted, excluding
stock-based compensation expense, acquisition-related expenses,
amortization expense associated with the acquired intangible assets
from the Tagger acquisition and tax benefits due to changes in
valuation allowances from business acquisitions. We believe
non-GAAP net income (loss) per share provides our management and
investors consistency and comparability with our past financial
performance and facilitates period-to-period comparisons of
operations, as this non-GAAP financial measure eliminates the
effect of stock-based compensation, acquisition-related expenses,
amortization expense and tax benefits due to changes in valuation
allowances from business acquisitions, which are often unrelated to
overall operating performance. During the second quarter of 2023,
we revised our definition of non-GAAP net income (loss) per share
to exclude acquisition-related expenses in connection with our
acquisition of Tagger, Inc. During the third quarter of 2023, we
revised our definition of non-GAAP net income (loss) per share to
exclude amortization expense associated with the acquired
intangible assets from the Tagger acquisition and tax benefits
recognized from changes in the valuation allowance associated with
our acquisition of Tagger.
Free cash flow. We define free cash flow as net
cash provided by (used in) operating activities less expenditures
for property and equipment and acquisition-related costs. Free cash
flow does not reflect our future contractual obligations or
represent the total increase or decrease in our cash balance for a
given period. We believe free cash flow is a useful indicator of
liquidity that provides information to management and investors
about the amount of cash used in our core operations that, after
expenditures for property and equipment, is not available for
strategic initiatives.
Free cash flow margin. We define free cash flow
margin as free cash flow as a percentage of revenue.
Non-GAAP sales and marketing expenses, non-GAAP research
and development expenses and non-GAAP general and administrative
expenses. Non-GAAP sales and marketing expenses, non-GAAP
research and development expenses and non-GAAP general and
administrative expenses are defined as sales and marketing
expenses, research and development expenses and general and
administrative expenses, respectively, less stock-based
compensation expense and acquisition-related expenses. We believe
these non-GAAP measures provide our management and investors with
insight into day-to-day operating expenses given that these
measures eliminate the effect of stock-based compensation and
acquisition-related expenses. During the second quarter of 2023, we
revised our definition of non-GAAP general and administrative
expenses to exclude acquisition-related expenses in connection with
our acquisition of Tagger, Inc.
Customer Metrics
Annual recurring revenue (“ARR”). We define ARR
as the annualized revenue run-rate of subscription agreements from
all customers as of the last date of the specified period. We
believe ARR is an indicator of the scale of our entire platform
while mitigating fluctuations due to seasonality and contract
term.
Number of customers. We define a customer as a
unique account, multiple accounts containing a common non-personal
email domain, or multiple accounts governed by a single agreement
or entity. We believe that the number of customers using our
platform is an indicator of our market penetration.
Number of customers contributing more than $10,000 in
ARR. We define number of customers contributing more than
$10,000 in ARR as those on a paid subscription plan that had more
than $10,000 in ARR as of a period end. We view the number of
customers that contribute more than $10,000 in ARR as a measure of
our ability to scale with our customers and attract larger
organizations. We believe this represents potential for future
growth, including expanding within our current customer base.
Number of customers contributing more than $50,000 in
ARR. We define number of customers contributing more than
$50,000 in ARR as those on a paid subscription plan that had more
than $50,000 in ARR as of a period end. We view the number of
customers that contribute more than $50,000 in ARR as a measure of
our ability to scale with large customers and attract sophisticated
organizations. We believe this represents potential for future
growth, including expanding within our current customer base.
Availability of Information on Sprout Social’s Website
and Social Media Profiles
Investors and others should note that Sprout Social routinely
announces material information to investors and the marketplace
using SEC filings, press releases, public conference calls,
webcasts and the Sprout Social Investors website. We also intend to
use the social media profiles listed below as a means of disclosing
information about us to our customers, investors and the public.
While not all of the information that the Company posts to the
Sprout Social Investors website or to social media profiles is of a
material nature, some information could be deemed to be material.
Accordingly, the Company encourages investors, the media, and
others interested in Sprout Social to review the information that
it shares at the Investors link located at the bottom of the page
on www.sproutsocial.com and to regularly follow our social media
profiles. Users may automatically receive email alerts and other
information about Sprout Social when enrolling an email address by
visiting "Email Alerts" in the "Shareholder Services" section of
Sprout Social's Investor website at
https://investors.sproutsocial.com/.
Social Media Profiles:
www.twitter.com/SproutSocialwww.twitter.com/SproutSocialIRwww.facebook.com/SproutSocialIncwww.linkedin.com/company/sprout-social-inc-/www.instagram.com/sproutsocial
Contact
Media:Kaitlyn GronekEmail:
pr@sproutsocial.comPhone: (773) 904-9674
Investors:Jason RechelTwitter:
@SproutSocialIREmail: jason.rechel@sproutsocial.com Phone: (312)
528-9166
Sprout Social, Inc. |
Consolidated Statements of Operations
(Unaudited) |
(in thousands, except share and per share
data) |
|
|
|
|
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
Subscription |
$ |
84,802 |
|
|
$ |
64,536 |
|
Professional services and
other |
|
730 |
|
|
|
771 |
|
Total revenue |
|
85,532 |
|
|
|
65,307 |
|
Cost of
revenue(1) |
|
|
|
Subscription |
|
19,874 |
|
|
|
15,008 |
|
Professional services and
other |
|
324 |
|
|
|
304 |
|
Total cost of revenue |
|
20,198 |
|
|
|
15,312 |
|
Gross profit |
|
65,334 |
|
|
|
49,995 |
|
Operating
expenses |
|
|
|
Research and
development(1) |
|
20,057 |
|
|
|
16,278 |
|
Sales and marketing(1) |
|
44,499 |
|
|
|
32,411 |
|
General and
administrative(1) |
|
24,982 |
|
|
|
15,691 |
|
Total operating expenses |
|
89,538 |
|
|
|
64,380 |
|
Loss from operations |
|
(24,204 |
) |
|
|
(14,385 |
) |
Interest expense |
|
(1,147 |
) |
|
|
(29 |
) |
Interest income |
|
1,651 |
|
|
|
728 |
|
Other expense, net |
|
(293 |
) |
|
|
(160 |
) |
Loss before income taxes |
|
(23,993 |
) |
|
|
(13,846 |
) |
Income tax (benefit)
expense |
|
(980 |
) |
|
|
87 |
|
Net loss |
$ |
(23,013 |
) |
|
$ |
(13,933 |
) |
Net loss per share
attributable to common shareholders, basic and diluted |
$ |
(0.41 |
) |
|
$ |
(0.25 |
) |
Weighted-average shares
outstanding used to compute net loss per share, basic and
diluted |
|
55,831,230 |
|
|
|
54,716,770 |
|
|
|
|
|
(1) Includes stock-based
compensation expense as follows: |
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Cost of revenue |
$ |
971 |
|
|
$ |
674 |
|
Research and development |
|
5,020 |
|
|
|
3,122 |
|
Sales and marketing |
|
8,570 |
|
|
|
6,164 |
|
General and
administrative |
|
4,452 |
|
|
|
3,014 |
|
Total stock-based compensation
expense |
$ |
19,013 |
|
|
$ |
12,974 |
|
Sprout Social, Inc. |
Consolidated Statements of Operations
(Unaudited) |
(in thousands, except share and per share
data) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
|
|
Subscription |
$ |
238,234 |
|
|
$ |
182,048 |
|
Professional services and
other |
|
1,825 |
|
|
|
2,120 |
|
Total revenue |
|
240,059 |
|
|
|
184,168 |
|
Cost of
revenue(1) |
|
|
|
Subscription |
|
54,479 |
|
|
|
43,641 |
|
Professional services and
other |
|
828 |
|
|
|
802 |
|
Total cost of revenue |
|
55,307 |
|
|
|
44,443 |
|
Gross profit |
|
184,752 |
|
|
|
139,725 |
|
Operating
expenses |
|
|
|
Research and
development(1) |
|
56,889 |
|
|
|
44,717 |
|
Sales and marketing(1) |
|
120,711 |
|
|
|
88,373 |
|
General and
administrative(1) |
|
58,206 |
|
|
|
45,162 |
|
Total operating expenses |
|
235,806 |
|
|
|
178,252 |
|
Loss from operations |
|
(51,054 |
) |
|
|
(38,527 |
) |
Interest expense |
|
(1,210 |
) |
|
|
(128 |
) |
Interest income |
|
5,811 |
|
|
|
1,172 |
|
Other expense, net |
|
(650 |
) |
|
|
(558 |
) |
Loss before income taxes |
|
(47,103 |
) |
|
|
(38,041 |
) |
Income tax (benefit)
expense |
|
(753 |
) |
|
|
257 |
|
Net loss |
$ |
(46,350 |
) |
|
$ |
(38,298 |
) |
Net loss per share
attributable to common shareholders, basic and diluted |
$ |
(0.83 |
) |
|
$ |
(0.70 |
) |
Weighted-average shares
outstanding used to compute net loss per share, basic and
diluted |
|
55,508,195 |
|
|
|
54,450,003 |
|
|
|
|
|
(1) Includes stock-based
compensation expense as follows: |
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Cost of revenue |
$ |
2,329 |
|
|
$ |
1,888 |
|
Research and development |
|
12,949 |
|
|
|
7,907 |
|
Sales and marketing |
|
22,346 |
|
|
|
16,341 |
|
General and
administrative |
|
11,421 |
|
|
|
7,894 |
|
Total stock-based compensation
expense |
$ |
49,045 |
|
|
$ |
34,030 |
|
Sprout Social, Inc. |
Consolidated Balance Sheets (Unaudited) |
(in thousands, except share and per share
data) |
|
|
|
|
|
|
|
September 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
41,103 |
|
|
$ |
79,917 |
|
Marketable securities |
|
71,927 |
|
|
|
92,929 |
|
Accounts receivable, net of
allowances of $1,616 and $1,789 atSeptember 30, 2023 and December
31, 2022, respectively |
|
45,090 |
|
|
|
35,833 |
|
Deferred Commissions |
|
24,726 |
|
|
|
20,369 |
|
Prepaid expenses and other
assets |
|
13,388 |
|
|
|
6,418 |
|
Total current assets |
|
196,234 |
|
|
|
235,466 |
|
Marketable securities,
noncurrent |
|
8,393 |
|
|
|
12,995 |
|
Property and equipment,
net |
|
11,402 |
|
|
|
11,949 |
|
Deferred commissions, net of
current portion |
|
22,235 |
|
|
|
19,638 |
|
Operating lease, right-of-use
asset |
|
8,589 |
|
|
|
9,503 |
|
Goodwill |
|
122,680 |
|
|
|
2,299 |
|
Intangible assets, net |
|
29,669 |
|
|
|
2,006 |
|
Other assets, net |
|
1,111 |
|
|
|
64 |
|
Total assets |
$ |
400,313 |
|
|
$ |
293,920 |
|
Liabilities and
Stockholders' Equity |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
11,562 |
|
|
$ |
4,988 |
|
Deferred revenue |
|
122,489 |
|
|
|
95,740 |
|
Operating lease liability |
|
3,728 |
|
|
|
3,499 |
|
Accrued wages and payroll
related benefits |
|
14,981 |
|
|
|
14,257 |
|
Accrued expenses and
other |
|
10,557 |
|
|
|
14,322 |
|
Total current liabilities |
|
163,317 |
|
|
|
132,806 |
|
Revolving credit facility |
|
75,000 |
|
|
|
- |
|
Deferred revenue, net of
current portion |
|
917 |
|
|
|
490 |
|
Operating lease liability, net
of current portion |
|
15,658 |
|
|
|
18,287 |
|
Other non-current
liabilities |
|
477 |
|
|
|
- |
|
Total liabilities |
|
255,369 |
|
|
|
151,583 |
|
|
|
|
|
Stockholders' equity |
|
|
|
|
|
|
|
Class A common stock, par
value $0.0001 per share; 1,000,000,000 shares authorized;
51,645,606 and 48,762,556 shares issued and outstanding,
respectively, at September 30, 2023; 50,413,415 and 47,562,911
shares issued and outstanding, respectively, at December 31,
2022 |
|
4 |
|
|
|
4 |
|
Class B common stock, par
value $0.0001 per share; 25,000,000 shares authorized; 7,424,526
and 7,217,582 shares issued and outstanding, respectively, at
September 30, 2023; 7,667,376 and 7,460,432 shares issued and
outstanding, respectively, at December 31, 2022 |
|
1 |
|
|
|
1 |
|
Additional paid-in
capital |
|
452,139 |
|
|
|
401,419 |
|
Treasury stock, at cost |
|
(34,576 |
) |
|
|
(32,733 |
) |
Accumulated other
comprehensive loss |
|
(289 |
) |
|
|
(369 |
) |
Accumulated deficit |
|
(272,335 |
) |
|
|
(225,985 |
) |
Total stockholders’
equity |
|
144,944 |
|
|
|
142,337 |
|
Total liabilities and
stockholders’ equity |
$ |
400,313 |
|
|
$ |
293,920 |
|
Sprout Social, Inc. |
Consolidated Statements of Cash Flows
(Unaudited) |
(in thousands) |
|
|
|
|
|
Three Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities |
|
|
|
Net loss |
$ |
(23,013 |
) |
|
$ |
(13,933 |
) |
Adjustments to reconcile net
loss to net cash provided by operating activities |
|
|
|
Depreciation and amortization
of property, equipment and software |
|
790 |
|
|
|
728 |
|
Amortization of premium
(accretion of discount) on marketable securities |
|
(844 |
) |
|
|
(163 |
) |
Amortization of acquired
intangible assets |
|
1,199 |
|
|
|
261 |
|
Amortization of deferred
commissions |
|
6,893 |
|
|
|
4,843 |
|
Amortization of right-of-use
operating lease asset |
|
405 |
|
|
|
328 |
|
Amortization of line of credit
issuance costs |
|
34 |
|
|
|
- |
|
Stock-based compensation
expense |
|
19,013 |
|
|
|
12,974 |
|
Provision for accounts
receivable allowances |
|
723 |
|
|
|
(61 |
) |
Tax benefit related to release
of valuation allowance |
|
(1,134 |
) |
|
|
- |
|
Changes in operating assets
and liabilities, excluding impact from business acquisition |
|
|
|
Accounts receivable |
|
(551 |
) |
|
|
(1,803 |
) |
Prepaid expenses and other
current assets |
|
598 |
|
|
|
67 |
|
Deferred commissions |
|
(9,458 |
) |
|
|
(6,747 |
) |
Accounts payable and accrued
expenses |
|
(2,756 |
) |
|
|
680 |
|
Deferred revenue |
|
3,503 |
|
|
|
4,804 |
|
Lease liabilities |
|
(920 |
) |
|
|
(931 |
) |
Net cash (used in) provided by
operating activities |
|
(5,518 |
) |
|
|
1,047 |
|
Cash flows from
investing activities |
|
|
|
Expenditures for property and
equipment |
|
(800 |
) |
|
|
(514 |
) |
Payments for business
acquisition, net of cash acquired |
|
(139,347 |
) |
|
|
- |
|
Purchases of marketable
securities |
|
- |
|
|
|
(28,910 |
) |
Proceeds from maturity of
marketable securities |
|
38,712 |
|
|
|
55,300 |
|
Net cash (used in) provided by
investing activities |
|
(101,435 |
) |
|
|
25,876 |
|
Cash flows from
financing activities |
|
|
|
Borrowings from line of
credit |
|
75,000 |
|
|
|
- |
|
Payments for line of credit
issuance costs |
|
(823 |
) |
|
|
- |
|
Employee taxes paid related to
the net share settlement of stock-based awards |
|
(474 |
) |
|
|
(343 |
) |
Net cash provided by (used in)
financing activities |
|
73,703 |
|
|
|
(343 |
) |
Net decrease in cash, cash
equivalents, and restricted cash |
|
(33,250 |
) |
|
|
26,580 |
|
Cash, cash
equivalents, and restricted cash |
|
|
|
Beginning of period |
|
77,211 |
|
|
|
68,561 |
|
End of period |
$ |
43,961 |
|
|
$ |
95,141 |
|
Sprout Social, Inc. |
Consolidated Statements of Cash Flows
(Unaudited) |
(in thousands) |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
Cash flows from
operating activities |
|
|
|
Net loss |
$ |
(46,350 |
) |
|
$ |
(38,298 |
) |
Adjustments to reconcile net
loss to net cash provided by operating activities |
|
|
|
Depreciation and amortization
of property, equipment and software |
|
2,302 |
|
|
|
2,127 |
|
Amortization of line of credit
issuance costs |
|
34 |
|
|
|
30 |
|
Amortization of premium
(accretion of discount) on marketable securities |
|
(2,733 |
) |
|
|
(20 |
) |
Amortization of acquired
intangible assets |
|
1,937 |
|
|
|
782 |
|
Amortization of deferred
commissions |
|
19,064 |
|
|
|
13,310 |
|
Amortization of right-of-use
operating lease asset |
|
1,128 |
|
|
|
696 |
|
Stock-based compensation
expense |
|
49,045 |
|
|
|
34,030 |
|
Provision for accounts
receivable allowances |
|
1,583 |
|
|
|
562 |
|
Tax benefit related to release
of valuation allowance |
|
(1,134 |
) |
|
|
- |
|
Changes in operating assets
and liabilities, excluding impact from business acquisition |
|
|
|
Accounts receivable |
|
(7,747 |
) |
|
|
(1,807 |
) |
Prepaid expenses and other
current assets |
|
(3,535 |
) |
|
|
(2,208 |
) |
Deferred commissions |
|
(26,018 |
) |
|
|
(19,738 |
) |
Accounts payable and accrued
expenses |
|
247 |
|
|
|
4,808 |
|
Deferred revenue |
|
23,867 |
|
|
|
15,693 |
|
Lease liabilities |
|
(2,630 |
) |
|
|
(2,251 |
) |
Net cash provided by operating
activities |
|
9,060 |
|
|
|
7,716 |
|
Cash flows from
investing activities |
|
|
|
Expenditures for property and
equipment |
|
(1,444 |
) |
|
|
(1,427 |
) |
Payments for business
acquisition, net of cash acquired |
|
(145,779 |
) |
|
|
- |
|
Purchases of marketable
securities |
|
(63,085 |
) |
|
|
(135,742 |
) |
Proceeds from maturity of
marketable securities |
|
85,964 |
|
|
|
118,370 |
|
Proceeds from sale of
marketable securities |
|
5,538 |
|
|
|
- |
|
Net cash used in investing
activities |
|
(118,806 |
) |
|
|
(18,799 |
) |
Cash flows from
financing activities |
|
|
|
Borrowings from line of
credit |
|
75,000 |
|
|
|
- |
|
Payments for line of credit
issuance costs |
|
(823 |
) |
|
|
(23 |
) |
Proceeds from exercise of
stock options |
|
29 |
|
|
|
14 |
|
Proceeds from employee stock
purchase plan |
|
1,427 |
|
|
|
675 |
|
Employee taxes paid related to
the net share settlement of stock-based awards |
|
(1,843 |
) |
|
|
(1,556 |
) |
Net cash provided by (used in)
financing activities |
|
73,790 |
|
|
|
(890 |
) |
Net decrease in cash, cash
equivalents and restricted cash |
|
(35,956 |
) |
|
|
(11,973 |
) |
Cash, cash
equivalents, and restricted cash |
|
|
|
Beginning of period |
|
79,917 |
|
|
|
107,114 |
|
End of period |
$ |
43,961 |
|
|
$ |
95,141 |
|
|
The following schedule reflects our non-GAAP financial measures
and reconciles our non-GAAP financial measures to the related GAAP
financial measures (in thousands, except per share data):
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Financial Measures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of
Non-GAAP gross profit |
|
|
|
|
|
|
|
Gross profit |
$ |
65,334 |
|
|
$ |
49,995 |
|
|
$ |
184,752 |
|
|
$ |
139,725 |
|
Stock-based compensation
expense |
|
971 |
|
|
|
674 |
|
|
|
2,329 |
|
|
|
1,888 |
|
Amortization of acquired
developed technology |
|
470 |
|
|
|
- |
|
|
|
470 |
|
|
|
- |
|
Non-GAAP gross
profit |
$ |
66,775 |
|
|
$ |
50,669 |
|
|
$ |
187,551 |
|
|
$ |
141,613 |
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP operating
income (loss) |
|
|
|
|
|
|
|
Loss from operations |
$ |
(24,204 |
) |
|
$ |
(14,385 |
) |
|
$ |
(51,054 |
) |
|
$ |
(38,527 |
) |
Stock-based compensation
expense |
|
19,013 |
|
|
|
12,974 |
|
|
|
49,045 |
|
|
|
34,030 |
|
Acquisition-related
expenses |
|
3,755 |
|
|
|
- |
|
|
|
4,221 |
|
|
|
- |
|
Amortization of acquired
intangible assets |
|
809 |
|
|
|
- |
|
|
|
809 |
|
|
|
- |
|
Non-GAAP operating
income (loss) |
$ |
(627 |
) |
|
$ |
(1,411 |
) |
|
$ |
3,021 |
|
|
$ |
(4,497 |
) |
Reconciliation of
Non-GAAP net income (loss) |
|
|
|
|
|
|
|
Net loss |
$ |
(23,013 |
) |
|
$ |
(13,933 |
) |
|
$ |
(46,350 |
) |
|
$ |
(38,298 |
) |
Stock-based compensation
expense |
|
19,013 |
|
|
|
12,974 |
|
|
|
49,045 |
|
|
|
34,030 |
|
Acquisition-related
expenses |
|
3,755 |
|
|
|
- |
|
|
|
4,221 |
|
|
|
- |
|
Amortization of acquired
intangible assets |
|
809 |
|
|
|
- |
|
|
|
809 |
|
|
|
- |
|
Tax benefit due to change in
valuation allowance from business acquisition |
|
(1,134 |
) |
|
|
- |
|
|
|
(1,134 |
) |
|
|
- |
|
Non-GAAP net income
(loss) |
$ |
(570 |
) |
|
$ |
(959 |
) |
|
$ |
6,591 |
|
|
$ |
(4,268 |
) |
Reconciliation of
Non-GAAP net income (loss) per share |
|
|
|
|
|
|
|
Net loss per share attributable to common shareholders, basic and
diluted |
$ |
(0.41 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.83 |
) |
|
$ |
(0.70 |
) |
Stock-based compensation
expense |
|
0.34 |
|
|
|
0.23 |
|
|
|
0.88 |
|
|
|
0.62 |
|
Acquisition-related
expenses |
|
0.07 |
|
|
|
- |
|
|
|
0.08 |
|
|
|
- |
|
Amortization of acquired
intangible assets |
|
0.01 |
|
|
|
- |
|
|
|
0.01 |
|
|
|
- |
|
Tax benefit due to change in
valuation allowance from business acquisition |
|
(0.02 |
) |
|
|
- |
|
|
|
(0.02 |
) |
|
|
- |
|
Non-GAAP net income
(loss) per share |
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
$ |
0.12 |
|
|
$ |
(0.08 |
) |
Reconciliation of free
cash flow |
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
(5,518 |
) |
|
$ |
1,047 |
|
|
$ |
9,060 |
|
|
$ |
7,716 |
|
Expenditures for property and
equipment |
|
(800 |
) |
|
|
(514 |
) |
|
|
(1,444 |
) |
|
|
(1,427 |
) |
Acquisition-related costs |
|
2,906 |
|
|
|
- |
|
|
|
2,906 |
|
|
|
- |
|
Free cash
flow |
$ |
(3,412 |
) |
|
$ |
533 |
|
|
$ |
10,522 |
|
|
$ |
6,289 |
|
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