Summary
Sprout Social closed the third quarter of fiscal 2021 with revenue of $49.1 million, up 45.8% from the prior-year quarter. Gross profit rose 47.6% to $36.7 million, and gross margin reached 74.9%, up 0.9 percentage points from the prior-year quarter. The GAAP operating loss was $6.8 million, and the loss narrowed compared with the prior-year quarter. GAAP net loss was $7.0 million, essentially flat with the prior-year quarter, and diluted GAAP net loss per share was -$0.13. Year-to-date revenue was $134.6 million, up 40.8%, and the year-to-date GAAP net loss was $18.8 million, a narrower loss than in the prior-year period. Operating margin for the quarter was -13.9%, an improvement of 6.6 percentage points from the prior-year quarter.
The customer base reached 30,705 as of September 30, 2021, up 20% from a year earlier. Customers contributing more than $10,000 in ARR totaled 4,380, up 57%, while those contributing more than $50,000 in ARR reached 478, up 98%. ARR was $204.6 million, up 44% compared with the third quarter of 2020. Management tied the quarter's momentum to large-customer cohorts and said the company saw very strong ACV growth. New customers included Tesco PLC, TrueCar, Northland Properties and InstantBrands. Growth deals were executed with Atlassian, Blue Cross Blue Shield of Michigan, BARK and LHC Group. Sprout Social also published its 2021 Diversity, Equity and Inclusion Report and launched an ESG website.
Non-GAAP operating loss was $1.6 million, compared with a non-GAAP operating loss of $4.4 million in the prior-year quarter. Non-GAAP net loss was $1.8 million, compared with $4.4 million. Non-GAAP net loss per share was negative $0.03, compared with negative $0.09. Free cash flow was $4.2 million, compared with negative $4.0 million in the prior-year quarter. GAAP operating cash flow was $4.4 million in the quarter, and purchases of property and equipment were $0.2 million. Deferred revenue was $55.9 million, up 50.0% from the prior-year quarter. Remaining performance obligations were $87.2 million, up 61.8%. On a year-to-date basis, GAAP operating cash flow was $12.3 million, and capital expenditures were $0.7 million.
For the fourth quarter of 2021, Sprout Social guided to overall revenue growth of 37%. It guided non-GAAP operating loss between $4.0 million and $3.5 million, and non-GAAP net loss per share between $0.07 and $0.06 based on approximately 54.1 million weighted-average shares. For the full year 2021, the company guided to overall revenue growth of 40%. Full-year non-GAAP operating loss is expected between $7.8 million and $7.3 million. Full-year non-GAAP net loss per share is expected between $0.15 and $0.14 based on approximately 53.8 million weighted-average shares. The company does not provide guidance for GAAP operating loss or GAAP net loss per share because it cannot reconcile those measures without unreasonable effort.
The outlook depends on assumptions that could change, including the ongoing COVID-19 pandemic. Sprout Social warned that the pandemic could affect customer marketing or social media budgets, sales cycles, employees and customers' ability to pay for existing subscriptions. The company also cited risks tied to competitive markets, its ability to sustain revenue growth, privacy and data protection regulations, cybersecurity attacks or data breaches, platform service interruptions and changes at social media platforms. It plans to keep investing in growth and expects net losses for the foreseeable future. The company had positive operating cash flow in the quarter and year to date, but it continues to carry an accumulated deficit and may need additional equity or debt financing if operations require more cash.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $49.1M | $44.7M | +9.9% | $33.7M | +45.8% |
| Gross profit | $36.7M | $33.5M | +9.6% | $24.9M | +47.6% |
| Gross margin | 74.8% | 75.0% | -0.2 pp | 73.9% | +0.9 pp |
| Research & development | $10.6M | $9.0M | +17.1% | $7.7M | +37.2% |
| Sales & marketing | $21.4M | $19.8M | +7.9% | $14.8M | +44.7% |
| General & administrative | $11.6M | $10.0M | +16.4% | $9.3M | +24.6% |
| Total operating expenses | $43.6M | $38.8M | +12.2% | $31.8M | +37.0% |
| Operating income (loss) | -$6.8M | -$5.3M | -28.7% | -$6.9M | +1.2% |
| Operating margin | -13.9% | -11.9% | -2.0 pp | -20.6% | +6.6 pp |
| Net income (loss) | -$7.0M | -$5.4M | -28.5% | -$7.0M | +0.1% |
| Net margin | -14.2% | -12.2% | -2.1 pp | -20.8% | +6.5 pp |
Risks
MD&A states the duration and spread of the COVID-19 pandemic, governmental responses and any re-emergence could impact customers' marketing or social media budgets or ability to pay for existing subscriptions, particularly in the industries most impacted by COVID-19. The extent of the impact on financial condition or results of operations remains uncertain.
The company expects to continue investing in growth and to incur operating losses and net losses for the foreseeable future. Net loss was flat versus prior year in FY2021 Q3 at -$6.99M and the FY2021 year-to-date net loss of -$18.80M narrowed versus the prior-year period, but MD&A notes losses could be greater than anticipated if the pandemic persists for a prolonged period.
Stock-based compensation expense rose sharply, to $5.2M in FY2021 Q3 from $2.6M in the prior-year quarter, and to $14.6M for the FY2021 year to date from $8.6M a year earlier, driven by increased headcount and an award granted to the President on promotion. This non-cash expense pressures GAAP results and creates dilution.
Revenue from non-U.S. customers was approximately 28% of total revenue during the nine months ended September 30, 2021, with local teams in Ireland, Canada, the United Kingdom, Singapore, India, Australia and the Philippines. MD&A flags plans to continue adding international sales and support headcount, exposing results to foreign exchange and overseas operating conditions.
Data provider fees, the largest driver of subscription cost of revenue, rose $2.5M in FY2021 Q3 versus the prior-year quarter and $6.9M for the FY2021 year to date, tied to revenue growth. Total operating expenses grew 37% year over year in the quarter and headcount increased across R&D (+20%), sales and marketing (+16%) and G&A (+26%).
A prior-year reserve for potential COVID-19 impact on customers' ability to pay led credit losses on accounts receivable to decrease by $0.5M in FY2021 Q3 and by $1.7M for the FY2021 year to date; MD&A attributes the decline to improved collections in 2021, indicating collection risk remains sensitive to customer health.
The SVB Credit Facility matures on January 31, 2022 and carries financial covenants such as minimum adjusted EBITDA and minimum liquidity when a Streamline Period is not in effect. As of September 30, 2021 no principal was outstanding and the company was in compliance, but renewal or replacement is not assured.
SaaS KPIs
All quarters →Total Customers
ARR
Free cash flow
Non-GAAP operating loss
Summary, forecast, risks and KPIs are extracted from Sprout Social, Inc.'s SEC filings for Q3 FY2021 (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.