On August 1, 2024, Sprout Social Inc (SPT, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Sprout Social Inc, a leading provider of cloud-based social media management software, reported financial results that surpassed revenue expectations but showed an increased GAAP net loss.
Company Overview
Sprout Social Inc develops cloud software that integrates social messaging, data, and workflows into a unified system of record, intelligence, and action. The company primarily generates revenue from software subscriptions.
Q2 2024 Financial Highlights
Sprout Social Inc reported revenue of $99.4 million for Q2 2024, a 25% increase compared to the same period in 2023, surpassing the analyst estimate of $98.68 million. However, the company reported a GAAP net loss of $16.9 million, or $0.30 per share, compared to a net loss of $13.1 million, or $0.24 per share, in Q2 2023.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Revenue | $99.4 million | $79.3 million |
| GAAP Net Loss | ($16.9) million | ($13.1) million |
| Non-GAAP Net Income | $4.9 million | $3.8 million |
| Cash and Equivalents | $93.2 million | $95.2 million |
Performance Analysis
Sprout Social Inc's revenue growth is a positive indicator of the company's expanding market presence and customer base. The number of customers contributing over $10,000 in annual recurring revenue (ARR) grew by 21% year-over-year to 8,966, while those contributing over $50,000 in ARR increased by 38% to 1,545.
Despite the revenue growth, the company faced challenges with increased operating expenses, leading to a higher GAAP net loss. GAAP operating loss for Q2 2024 was $16.5 million, compared to $14.9 million in Q2 2023. Non-GAAP operating income, however, improved to $5.3 million from $1.9 million in the same period last year.
Cash Flow and Balance Sheet
Sprout Social Inc reported cash and equivalents and marketable securities totaling $93.2 million as of June 30, 2024, slightly down from $95.2 million as of March 31, 2024. Net cash generated by operating activities was $2.1 million, compared to $6.3 million in Q2 2023. Non-GAAP free cash flow was $2.5 million, down from $6.0 million in the same period last year.
Commentary and Outlook
“We’re pleased to share that we’re tracking ahead of the plan outlined last quarter,” said Ryan Barretto, President and incoming CEO. “Through the dedication and hard work of our teams and strong customer success, we further extended our product leadership, continued to improve our competitive position, and generated record pipeline. We’re building momentum for a stronger second half of the year.”
For Q3 2024, Sprout Social Inc expects total revenue between $101.9 million and $102.1 million, with non-GAAP net income per share between $0.12 and $0.13. For the full year 2024, the company anticipates total revenue between $405.0 million and $406.0 million, aligning closely with the annual estimate of $405.53 million.
Sprout Social Inc's performance in Q2 2024 highlights its ability to grow revenue and expand its customer base, despite facing increased operating losses. The company's focus on product leadership and customer success positions it well for future growth in the competitive software industry.
Explore the complete 8-K earnings release (here) from Sprout Social Inc for further details.
