Sprout Social (SPT) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $99.4 million, up 25% year-over-year, with strong customer growth, record pipeline, and expanding enterprise momentum.

• Non-GAAP operating income was $5.3 million (5.3% margin), and non-GAAP net income was $4.9 million ($0.09 per share), both up from Q2 2023.

• Customer base expanded, with 8,966 customers contributing over $10K ARR (+21% YoY) and 1,545 over $50K ARR (+38% YoY); high-value customers drove growth.

• Tagger, the influencer marketing module, remains the fastest-growing product, driving cross-sell opportunities and premium module attach rates; Tagger and Repustate acquisitions expanded capabilities.

• Leadership transition announced, with the CEO moving to Executive Chair and the President set to become CEO; new Chief Product Officer appointed to drive innovation.

Financial highlights

• Q2 revenue was $99.4 million (+25% YoY); subscription revenue was $98.5 million (+25% YoY), and services revenue was $0.9 million (+44% YoY).

• Non-GAAP gross profit was $78.6 million (79.1% margin), up from $61.1 million (77%) YoY; GAAP gross profit was $77.0 million (77% margin).

• Non-GAAP net income for Q2 2024 was $4.9 million ($0.09 per share), up from $3.8 million ($0.07 per share) in Q2 2023.

• Cash, cash equivalents, and marketable securities totaled $93.2 million at quarter-end; $40 million outstanding on the credit facility.

• Non-GAAP free cash flow was $2.5 million in Q2 2024, down from $6.0 million YoY; net cash from operations was $2.1 million.

Outlook and guidance

• Q3 2024 revenue expected between $101.9 million and $102.1 million (>19% growth); non-GAAP operating income of $6.5–$7.5 million; non-GAAP EPS of $0.12–$0.13.

• Full-year 2024 revenue guidance maintained at $405.0–$406.0 million, with over 20% organic growth and accelerated Tagger growth.

• Full-year non-GAAP operating income expected at $28–$29 million (including deferred commission accounting benefit); non-GAAP EPS of $0.45–$0.46.

• Targeting >$1B in revenue, >80% non-GAAP gross margin, and >20% non-GAAP operating margin by 2028.

• Management anticipates continued investment in R&D, sales, and marketing, with ongoing net losses expected.