Stock Story -
Social media management software company Sprout (NASDAQ:SPT) missed analysts' expectations in Q1 CY2024, with revenue up 28.7% year on year to $96.78 million. Next quarter's revenue guidance of $98.55 million also underwhelmed, coming in 2.9% below analysts' estimates. It made a non-GAAP profit of $0.10 per share, improving from its profit of $0.06 per share in the same quarter last year.
Is now the time to buy Sprout Social? Find out by reading the original article on StockStory, it's free.
Sprout Social (NASDAQ:SPT) Q1 CY2024 Highlights:
- Revenue: $96.78 million vs analyst estimates of $97.32 million (small miss)
- EPS (non-GAAP): $0.10 vs analyst estimates of $0.01 ($0.09 beat)
- Revenue Guidance for Q2 CY2024 is $98.55 million at the midpoint, below analyst estimates of $101.5 million
- The company dropped its revenue guidance for the full year from $425.4 million to $405.5 million at the midpoint, a 4.7% decrease
- Gross Margin (GAAP): 76.8%, in line with the same quarter last year
- Free Cash Flow of $11.33 million is up from -$3.23 million in the previous quarter
- Market Capitalization: $2.82 billion
Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ:SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook (NASDAQ:META), Instagram, Youtube and LinkedIn.
Marketing SoftwareWhether or not companies market their products through social media, all businesses need to meet customers where they are; and increasingly, that is social media. As more and more people use a greater number of social media platforms, social media management software become more valuable to their customers.
Sales GrowthAs you can see below, Sprout Social's revenue growth has been very strong over the last three years, growing from $40.82 million in Q1 2021 to $96.78 million this quarter.
Even though Sprout Social fell short of analysts' revenue estimates, its quarterly revenue still grew a very solid 28.7% year on year. However, its growth did slow down compared to last quarter as the company's revenue increased by just $3.2 million in Q1 compared to $8.05 million in Q4 CY2023. While we'd like to see revenue increase by a greater amount each quarter, a one-off fluctuation is usually not concerning.
Next quarter's guidance suggests that Sprout Social is expecting revenue to grow 24.3% year on year to $98.55 million, slowing down from the 29.1% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 27.2% over the next 12 months before the earnings results announcement.
Large Customers Growth This quarter, Sprout Social reported 8,823 enterprise customers paying more than $10,000 annually, an increase of 134 from the previous quarter. That's a bit fewer contract wins than last quarter and quite a bit below what we've typically observed over the past four quarters, suggesting that its sales momentum with large customers is slowing.
Key Takeaways from Sprout Social's Q1 Results We struggled to find many strong positives in these results. Its full-year revenue guidance was below expectations and it announced a CEO succession plan. Overall, this was a bad quarter for Sprout Social. The company is down 24.7% on the results and currently trades at $36.25 per share.