Sprout Social(US:SPT)2024-05-03 20:06PART I - FINANCIAL INFORMATION Financial Statements Unaudited Q1 2024 financial statements: revenue $96,784 thousand, net loss $13,575 thousand, balance sheet, and cash flow Condensed Consolidated Statements of Operations (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Total Revenue | $96,784 | $75,212 | | Gross Profit | $74,356 | $58,337 | | Loss from Operations | $(13,287) | $(11,933) | | Net Loss | $(13,575) | $(10,252) | | Net Loss per Share | $(0.24) | $(0.19) | Condensed Consolidated Balance Sheets (As of March 31, 2024) | Metric | March 31, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $69,162 | $49,760 | | Total Current Assets | $177,747 | $195,943 | | Total Assets | $389,940 | $396,585 | | Total Current Liabilities | $182,407 | $181,039 | | Total Liabilities | $242,590 | $252,393 | | Total Stockholders' Equity | $147,350 | $144,192 | Condensed Consolidated Statements of Cash Flows (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,164 | $8,284 | | Net cash provided by (used in) investing activities | $20,054 | $(8,691) | | Net cash used in financing activities | $(11,476) | $(1,099) | Notes to Condensed Consolidated Financial Statements - The company changed its accounting estimate for the amortization period of deferred sales commissions from three years to five years, effective January 1, 2024. This change reduced sales and marketing expenses by $4,400 thousand in Q1 202435 - As of March 31, 2024, the company had an outstanding balance of $45,000 thousand under its $100,000 thousand senior secured revolving credit facility, which matures in August 2028. The interest rate in effect was approximately 8.2%4648 - Revenue from customers outside of the United States accounted for approximately 27% of total revenue for the three months ended March 31, 2024, consistent with the prior year period58 - The acquisition of Tagger Media, Inc. in August 2023 for $144,000 thousand was funded by cash on hand and $75,000 thousand from the revolving credit facility. The purchase price allocation remains preliminary, primarily concerning income taxes697072 Management's Discussion and Analysis of Financial Condition and Results of Operations Q1 2024 financial performance: 29% revenue growth to $96,784 thousand, customer expansion, cost drivers, and non-GAAP reconciliations Revenue Performance (Q1 2024 vs Q1 2023) | Revenue Type | Q1 2024 (in thousands) | Q1 2023 (in thousands) | Growth % | | :--- | :--- | :--- | :--- | | Subscription | $95,789 | $74,742 | 28% | | Professional services and other | $995 | $470 | 112% | | Total Revenue | $96,784 | $75,212 | 29% | High-Value Customer Growth (as of March 31) | Customer Segment | 2024 | 2023 | Growth | | :--- | :--- | :--- | :--- | | Customers with > $10,000 in ARR | 8,823 | 7,107 | 24% | | Customers with > $50,000 in ARR | 1,449 | 1,008 | 44% | - The increase in cost of revenue was primarily driven by a $2,900 thousand increase in data provider fees and a $700 thousand increase in amortization of intangible assets from the Tagger acquisition130 - Operating expenses increased across the board due to higher personnel costs from headcount growth: R&D headcount grew 19%, Sales & Marketing 23%, and General & Administrative 21%131132134 Non-GAAP Financial Measures Reconciliation (Q1 2024) | Metric | GAAP (in thousands) | Non-GAAP (in thousands) | | :--- | :--- | :--- | | Gross Profit | $74,356 | $75,986 | | Loss from Operations | $(13,287) | $5,992 (Income) | | Net Loss | $(13,575) | $5,704 (Income) | | Net Cash from Operating Activities | $11,164 | $11,332 (Free Cash Flow) | Quantitative and Qualitative Disclosures About Market Risk Primary market risks: interest rate from cash, securities, $45,000 thousand variable-rate debt; foreign currency risk is minimal - The company is exposed to interest rate risk through its cash and marketable securities, as well as its $45,000 thousand outstanding balance on the variable-rate revolving credit facility175176 - Foreign currency exchange risk is not significant because both U.S. and international sales are predominantly denominated in U.S. dollars. A 10% change in the USD/CAD exchange rate would not have a material effect178 Controls and Procedures Disclosure controls and procedures deemed effective by management as of March 31, 2024; no material internal control changes - Management, including the CEO and CFO, concluded that as of March 31, 2024, the company's disclosure controls and procedures are effective181 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to affect, internal controls182 PART II - OTHER INFORMATION Legal Proceedings The company is not currently a party to any material pending legal proceedings - As of the reporting date, the company is not involved in any material pending legal proceedings185 Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred during the reporting period - None186 Other Information No Rule 10b5-1 trading arrangements by directors/officers in Q1 2024; officers used non-Rule 10b5-1 sell-to-cover for tax obligations - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading arrangements during the quarter ended March 31, 2024187 - Company officers have entered into "sell-to-cover" arrangements, which are non-Rule 10b5-1 plans, to automatically sell shares to cover tax withholding obligations upon the vesting of restricted stock units188 Exhibits Index of exhibits filed with Form 10-Q, including CEO and CFO certifications and other corporate documents - The report includes an index of all exhibits filed, such as the CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and financial data formatted in Inline XBRL190191