Summary
Sprout Social closed fiscal 2022 with record net new ARR and fourth-quarter revenue of $69.66 million, up 30.8% from the prior-year quarter. Full-year revenue was $253.83 million, up 35.1%. Gross profit rose to $54.24 million in the quarter, up 35.7%, and to $193.97 million for the full year, up 37.5%. Gross margin expanded to 77.9% in the quarter from 75.0%, and full-year gross margin was 76.4%. Profitability moved the other way. GAAP operating loss widened to $13.15 million in the quarter from $9.72 million a year earlier, and the full-year operating loss widened to $51.68 million from $28.09 million. GAAP net loss widened to $11.94 million in the quarter from $9.90 million, and to $50.24 million for the full year from $28.70 million. Full-year diluted net loss per share widened to $0.92 from $0.53. Operating margin was -18.9% in the quarter and -20.4% for the full year.
Non-GAAP results tell a different story. Fourth-quarter non-GAAP operating income was $0.6 million, compared with a non-GAAP operating loss of $2.6 million in the prior-year quarter. Non-GAAP net income was $1.8 million, compared with a non-GAAP net loss of $2.7 million, and non-GAAP net income per share was $0.03, compared with a non-GAAP net loss per share of $0.05. For the full year, non-GAAP operating loss was $3.9 million against $6.4 million in fiscal 2021, and non-GAAP net loss per share was $0.05 against $0.13. Cash generation was positive but uneven. Operating cash flow was $2.95 million in the quarter, up from $2.48 million, while full-year operating cash flow was $10.67 million, down from $14.82 million. Free cash flow, a separate measure, was $2.6 million in the quarter compared with $2.2 million, and $8.8 million for the full year compared with $13.9 million. Capital expenditures were $0.40 million in the quarter, up 50.4%, and $1.82 million for the full year, up 97.0%. Current deferred revenue was $95.74 million, up 38.3% from the prior-year quarter.
Operating metrics show demand holding up, especially among larger accounts. Annual recurring revenue was $296.6 million at December 31, 2022, up 32% from the end of 2021. Total customers grew 8% to 34,390. Customers contributing more than $10,000 in ARR rose 35% to 6,652, and those contributing more than $50,000 in ARR rose 59% to 972. Dollar-based net retention was 109% in 2022, compared with 112% in 2021. Management pointed to record net new ARR and said enterprise new business and expansion led the quarter. Partnership demand ran materially stronger than expected. Sprout Social offered free implementation and onboarding to the 175 Social Studio customers that moved to its platform during the quarter, and management tied a $0.8 million to $1.2 million impact on services revenue to that decision. The company also acquired Repustate and launched a Tableau integration.
Guidance points to continued growth and a swing to non-GAAP profitability. For the first quarter of 2023, the company expects year-over-year growth of 31%. First-quarter non-GAAP operating loss is guided to between $(0.7) million and $(0.5) million, and non-GAAP net loss per share is expected at $(0.01) on approximately 55.4 million weighted-average shares. For the full year 2023, growth is guided at 31% year-over-year. Management expects total 2023 ARR growth to exceed total reported revenue growth by at least 200 basis points. Full-year non-GAAP operating income is guided to between $1.6 million and $2.0 million, which implies at least 210 basis points of year-over-year non-GAAP operating margin improvement. Full-year non-GAAP net income per share is guided to between $0.03 and $0.04 on approximately 56.0 million weighted-average shares. Services revenue is expected to be lower than the first quarter of 2022 and lower than 2022 levels.
The risk list is familiar and material. Macroeconomic conditions, including inflation, higher interest rates, recession risk, the Russia-Ukraine war and COVID-19, could weigh on customers and prospects, and the company said it is already seeing slower expansion by existing customers in some cases. Price increases may hurt demand, customer acquisition and retention. Interruptions, delays or outages from its platform, API providers or social media platforms could harm the business, as could cybersecurity attacks or data breaches and changing privacy rules. The company does not give GAAP guidance for operating loss, net loss per share or operating margin because it cannot reconcile those measures without unreasonable effort.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $69.7M | $65.3M | +6.7% | $53.3M | +30.8% |
| Gross profit | $54.2M | $50.0M | +8.5% | $40.0M | +35.7% |
| Gross margin | 77.9% | 76.5% | +1.3 pp | 75.0% | +2.8 pp |
| Research & development | $16.7M | $16.3M | +2.7% | $12.2M | +36.8% |
| Sales & marketing | $35.3M | $32.4M | +9.0% | $24.8M | +42.3% |
| General & administrative | $15.4M | $15.7M | -2.2% | $12.7M | +21.3% |
| Total operating expenses | $67.4M | $64.4M | +4.7% | $49.7M | +35.6% |
| Operating income (loss) | -$13.1M | -$14.4M | +8.6% | -$9.7M | -35.3% |
| Operating margin | -18.9% | -22.0% | +3.2 pp | -18.3% | -0.6 pp |
| Net income (loss) | -$11.9M | -$13.9M | +14.3% | -$9.9M | -20.6% |
| Net margin | -17.1% | -21.3% | +4.2 pp | -18.6% | +1.4 pp |
| Diluted EPS | -$0.22 | -$0.25 | +$0.03 | — | — |
| Customers | 34,000 | — | — | 31,000 | +9.7% |
| Net retention rate | 112.0% | — | — | 110.0% | +2.0 pp |
Risks
The platform depends on social media network APIs, and most are governed by standard developer terms that providers can change unilaterally. Sprout specifically notes it is a member of the Twitter Official Partner Program (TOPP) with no assurance Twitter will maintain it, and any change to the program or membership terms could hurt results.
Worsening macroeconomic conditions (rising inflation and interest rates, capital market volatility, Russia-Ukraine war) are causing slower expansion by existing customers, and MD&A states the company is observing such slower expansion in some cases, with the long-term impact uncertain.
Dollar-based net retention rate fell to 108% for the year ended December 31, 2022 from 112% for the year ended December 31, 2021 (and to 115% from 118% excluding SMB customers), reflecting contraction in existing customer spending that pushes toward lower future growth.
A price increase was announced in November 2022, and the filing warns it may reduce demonstrations, free-trial sign-ups and conversions, potentially decreasing total customers and net new customer adds, and softening demand or souring sentiment could harm the brand.
Losses are widening: net loss was $50.2M for FY2022 versus $28.7M for FY2021 (loss widened 75.0%), operating loss widened 84.0% to $51.7M, and accumulated deficit stood at $226.0M as of December 31, 2022, with net losses expected to continue.
Revenue growth decelerated to 35% in FY2022 from 41% in FY2021, and the filing cautions that growth rates may decline further due to reduced demand, competition or macroeconomic factors such as the Russia-Ukraine war and rising inflation and interest rates.
Stock-based compensation expense rose to $47.7M in FY2022 from $21.7M in FY2021, and the company notes intense competition for software developers, product managers and sales personnel, with dependence on key executives including CEO Justyn Howard, President Ryan Barretto and CTO Aaron Rankin.
The vast majority of cloud infrastructure is outsourced to a single provider (Amazon Web Services), and the filing cites limited ability to conduct security audits, weak indemnification terms, and an untested disaster recovery program, so an outage or termination could interrupt service and delay product delivery.
Expanding data privacy and security obligations (CCPA, CPRA effective January 1, 2023, EU/UK GDPR, Brazil LGPD, China PIPL) with penalties of up to 20 million euros or 4% of annual global revenue under GDPR could raise compliance costs and lengthen sales cycles as customers complete more rigorous privacy assessments.
SaaS KPIs
All quarters →Total Customers
ARR
Free cash flow
Non-GAAP Operating Margin
Summary, forecast, risks and KPIs are extracted from Sprout Social, Inc.'s SEC filings for Q4 FY2022 (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.