Summary
Sprout Social reported second quarter revenue of $99.4 million, up 25% compared to the second quarter of 2023. Total revenue for the six months ended June 30, 2024 was $196.2 million, up 27%. That top line growth did not carry down to the bottom line. GAAP operating loss was ($16.5) million, compared to ($14.9) million in the second quarter of 2023, and GAAP net loss was ($16.9) million, compared to ($13.1) million. GAAP net loss per share was ($0.30), compared to ($0.24). The company remains unprofitable on a GAAP basis. Non-GAAP operating income was $5.3 million, compared to $1.9 million, and non-GAAP net income was $4.9 million, compared to $3.8 million. Non-GAAP net income per share was $0.09, compared to $0.07.
Backlog and customer metrics point to steady demand from larger accounts. Total remaining performance obligations were $295.1 million as of June 30, 2024, up 43% year-over-year. Deferred revenue, the current portion, was $148.32 million, up 28%. Customers contributing more than $10,000 in ARR grew 21% to 8,966, while customers contributing more than $50,000 in ARR grew 38% to 1,545. More than 30,000 customers across more than 100 countries use the platform. Management no longer discloses total customer count, and the MD&A notes that the price increase announced in November 2022 lifted average revenue per customer even as the total number of customers decreased.
Cash generation weakened in the quarter. Operating cash flow was $2.06 million, down from $6.29 million in the prior-year quarter. Operating cash flow for the six months ended June 30, 2024 was $13.23 million, down from $14.58 million. Capital expenditures were $0.49 million for the quarter, up from $0.26 million. Non-GAAP free cash flow was $2.5 million, compared to $6.0 million. Cash and cash equivalents and marketable securities totaled $93.2 million as of June 30, 2024, compared to $95.2 million as of March 31, 2024. The company carried $40 million outstanding under its revolving credit facility as of June 30, 2024.
For the third quarter of 2024, the company expects total revenue growth of greater than 19%. It guides to non-GAAP operating income of $6.5 million to $7.5 million and non-GAAP net income per share of $0.12 to $0.13, based on approximately 57.1 million weighted-average shares. The full year 2024 outlook assumes 20% organic Sprout revenue growth and accelerated Tagger subscription revenue growth. Full year non-GAAP operating income is guided to $28.0 million to $29.0 million, including an estimated benefit from a deferred commission accounting change. Excluding that change, the range falls to $15.0 million to $16.0 million. Full year non-GAAP net income per share is guided to $0.45 to $0.46 on the same share count. The company does not provide GAAP guidance for operating loss or net loss per share because it cannot reconcile those measures without unreasonable effort.
Management described the software buying environment as relatively subdued. The MD&A points to high inflation, high interest rates, ongoing overseas conflict, and capital market volatility. Those conditions have produced more measured buying behavior and longer average sales cycles, which have slowed revenue growth relative to historical levels, and the company says similar trends could recur. Pricing pressure and the expense drag from the Tagger acquisition, bought in August 2023 for $144 million, and the Repustate acquisition, bought in January 2023 for $8.3 million, remain part of the cost structure. Research and development headcount rose 18%, sales and marketing headcount rose 20%, and general and administrative headcount rose 14%. The credit facility carries covenants, including minimum liquidity of $30 million and recurring revenue growth of at least 115% of the prior-year period.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $99.4M | $96.8M | +2.7% | $79.3M | +25.3% |
| Gross profit | $77.0M | $74.4M | +3.5% | $61.1M | +26.1% |
| Gross margin | 77.5% | 76.8% | +0.6 pp | 77.0% | +0.4 pp |
| Research & development | $25.1M | $23.8M | +5.7% | $19.0M | +32.5% |
| Sales & marketing | $46.2M | $44.5M | +3.7% | $39.3M | +17.5% |
| General & administrative | $22.2M | $19.3M | +14.8% | $17.7M | +25.1% |
| Total operating expenses | $93.5M | $87.6M | +6.7% | $76.0M | +23.0% |
| Operating income (loss) | -$16.5M | -$13.3M | -24.3% | -$14.9M | -10.7% |
| Operating margin | -16.6% | -13.7% | -2.9 pp | -18.8% | +2.2 pp |
| Net income (loss) | -$16.9M | -$13.6M | -24.4% | -$13.1M | -29.1% |
| Net margin | -17.0% | -14.0% | -3.0 pp | -16.5% | -0.5 pp |
| Diluted EPS | -$0.30 | -$0.24 | -$0.06 | -$0.24 | -$0.06 |
Risks
Macroeconomic pressures such as high inflation, high interest rates, and overseas conflict have contributed to more measured buying behavior and lengthening average sales cycles for certain customers and sales, which management says contributed to a slowdown in revenue growth versus historical levels and may recur in future quarters.
Net loss widened to $16.9 million in FY2024 Q2 from $13.1 million in FY2023 Q2, and operating loss widened to $16.5 million from $14.9 million, with stock-based compensation expense of $20.6 million in FY2024 Q2 and management expecting net losses for the foreseeable future.
As of June 30, 2024, $40 million remained outstanding under the credit facility, which requires minimum liquidity and minimum recurring revenue growth of at least 115% of prior-year same-period recurring revenue; higher interest expense from the facility and lower interest income reduced net interest income 96% in FY2024 Q2 to $81 thousand from $2.1 million.
The total number of customers decreased over the six months ended June 30, 2024, while customers contributing over $10,000 in ARR grew 21% and over $50,000 in ARR grew 38%, increasing reliance on the largest customers; the company also stopped publicly disclosing ARR and total customer count.
The Tagger acquisition closed August 2, 2023 for $144 million and was funded partly with $75 million borrowed under the credit facility; purchase accounting was finalized in FY2024 Q2, and amortization of acquired intangibles is increasing costs, so failure to realize expected benefits could pressure results.
SaaS KPIs
All quarters →Total Customers
Non-GAAP Operating Income
Total remaining performance obligations (RPO)
Current remaining performance obligations (cRPO)
Non-GAAP free cash flow
Customers contributing over $10,000 in ARR
Customers contributing over $50,000 in ARR
Summary, forecast, risks and KPIs are extracted from Sprout Social, Inc.'s SEC filings for Q2 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.