Sprout Social (SPT) Q3 2024 earnings summary

Executive summary

• Achieved $102.6 million in Q3 2024 revenue, up 20% year-over-year, surpassing $100 million for the first time, with 99% from subscriptions and a gross profit margin of 77%.

• Customer base expanded to ~30,000 across 100+ countries, with 9,119 customers >$10K ARR (up 12%) and 1,610 >$50K ARR (up 29%).

• Growth driven by strong enterprise pipeline, improved gross retention, and favorable competitive win rates, with focus on product innovation and strategic partnerships.

• Introduced new executive leaders and appointed Mike Wolff as Chief Revenue Officer to drive global sales and partnerships.

• Named #1 in 94 G2 Fall 2024 Reports and recognized as #1 Best Software Product by G2 in 2024.

Financial highlights

• Q3 2024 revenue: $102.6M (+20% YoY); subscription revenue: $101.8M (+20% YoY); services revenue: $0.8M (+13% YoY).

• Gross profit for Q3 2024 was $79.4M (77% margin); non-GAAP gross margin improved to 79%.

• Non-GAAP operating income: $7.5M (7.3% margin), up from -$0.6M YoY; GAAP net loss: $17.1M, improved from $23.0M YoY.

• Non-GAAP net income for Q3 2024 was $7.3M ($0.13 per share), compared to a non-GAAP net loss of $0.6M in Q3 2023.

• Free cash flow for Q3 2024 was $9.3M, with $23.1M YTD; cash and equivalents were $91.5M at quarter end.

Outlook and guidance

• Q4 2024 revenue expected: $106.3M–$107.1M; non-GAAP operating income: $8.7M–$9.5M.

• Q4 non-GAAP net income per share: $0.15–$0.16 (57.6M shares); full-year: $0.46–$0.47 (57.0M shares).

• FY2024 revenue expected: $405.1M–$405.9M; non-GAAP operating income: $27.5M–$28.3M.

• Medium to longer-term goals include >$1B revenue, >80% non-GAAP gross margin, >20% non-GAAP operating margin, and 20–22% non-GAAP FCF margin; 2028 timeframe removed due to market uncertainty.

• Management expects to continue investing in growth, anticipating net losses for the foreseeable future.