Sprout Social (SPT) 21 Feb 232022 Q4 Earnings call transcript

Good day and welcome to the Sprout Social Fourth Quarter 2022 Financial Results Call. Today's call is being recorded. [Operator Instructions] Thank you.

And now I'd like to turn the conference over to Jason Rechel, Vice President of Investor Relations and Corporate Development. Please go ahead.

operator. you, Thank Social's Sprout XXXX Call. Earnings Welcome Fourth to Quarter be announced press and release We'll which also be after our results the can presentation, investor today discussing issued website. in market an updated on found our released have closed Social's With CFO, Joe Ryan Justyn Del me CEO, Howard; and Preto; are President, Sprout Barretto.

of forward-looking Litigation Securities Reform of XXXX. contain statements, pursuant will Private are call made the the to Today's which safe harbor provisions Act

XXXX financial trends, among our include, financial statements and our products, as against will. guidance initiatives, quarter and plan, expected performance others, first business, opportunity, anticipate, and market future or strategies, our identified framework, customer statements Forward-looking year plans, intend, or expected business our future XXXX investments, objectives by concerning our words performance and can for financial operations, condition, expect, believe, financial be such the and and our seek of and multiyear from growth, full pricing results the size

our any today at any as reflect statements. views and do we These of date, to our not undertake update not only, be upon these representing subsequent statements views duty relied as should

results Forward-looking and uncertainties actual to statements subject materially. to risks differ matters cause could address that that are

Exchange affect results, XXXX, to and be risks important the For of as SEC. year XX, file reports with December Form fiscal as Commission a and that ended well and report discussion current the XX-K filed please our on the factors our that annual other future to could we actual refer for Securities quarterly the with

the measures, are in to of along to comparable share. has and financial accounting our and non-GAAP website the earnings in discuss principles. GAAP reconciliations measures, is non-GAAP measures, non-GAAP investors.sproutsocial.com. operating income directly accordance at accepted income, been generally not on our press included furnished profitability which SEC earnings available we'll are to financial prepared During call, per non-GAAP refer with these the In Definitions particular, references to release, most net with financial which non-GAAP

Justyn. let that, With to over call me turn the

Justyn?

Jason, incredibly you everyone. a team you, with proud for quarter, be good we'll afternoon, sharing joining and that you, I'm We had Thank and results always, today. as Thank of our remarkably the for strong fourth us.

environment, and delivered acceleration across a record net in new Despite business. ARR Sprout challenging an QX our

gain us continue Social towards continues our guide position category, a your profitable to in journey. believe to our define execution appreciate accelerating XXXX. we growth on ARR and a this criticality, building strong puts and today We're business we we as in that will support durable favorable

with believe of net are a business, and notable shape today in our on including in social, the our ARR. changes. take momentum very our in leadership further clear strong begin definition new partnership investment enterprise, We of execution breakout our I'll trends prioritization beginning several pricing a fantastic customer in multiyear to

expanding us in XX% $XX,XXX paying in rapidly more or delivered ARR. sizes, paying or more and $XX,XXX customers us With deal customers ARR growth in we XX% year-over-year year-over-year in growth

of ACV the delivered benefits rate record profit. alongside acceleration and growth, our of in early strength pricing business in operating changes new Exceptional a meaningful non-GAAP enterprise quarterly our the

retention, better-than-expected this under plans, data to and accelerating profitable planning quality top-of-funnel with Taken we ARR and and our are new year. pricing deliver conversion growth

customers. enterprise, that We fast-moving the of in and relevant role today. thesis highly customer business become from epicenter the to was service entire Our is way the to it strongly never saw we with engage, believe horizontal, original social on social's critical relationship, that more and the disruptive and beginning has brands been than retain to going social transformation attract, the

problem vision a at base of the easy future empower code maintained others to elegant our the stubborn social, customer adoption success. became committed at not UI, that We were And careful the core chase could expense of debt. innovation and we single to an or We distracted. while deliver speed coupled revenue technical solve, focus were to on a with

Now success. Across sales, on and business teams, customer social HR, support, it operations, day meet is the Sprout their out marketing, preferred business product critical has and for for intelligence and care, consumers, communication to day customers channel and rely succeed. in objectives become

were Our be commitment being to place place recently important. been culture Places named a Glassdoor's XXXX be people connected. to fourth believe Best and customer year. great to never work Work our has are that a consecutive for to We to great more and deeply also a We list the honored

commitment in people ongoing to our Our investments and methodical values objectives destination our grow of while and building have to aggressively career our culture, people thrive. our and pursue and pace to for deliberate hiring, a us allowed

of is market Sprout people of on We in our see environment. positioned strength to ability afforded team and any prepared continue product, away our pull opportunity us the us have believe the combination and now The for today have our the our in investment thesis the in innovation we uniquely XXXX. and breakout to

aligned we're strategies year, we productive we winning the to and already product, pricing, full Entering parts and believe platform. our are positioned our best of within value most are provide the our go-to-market outsized customers to our customer to market where

than more analytics business quarter, than more our total, QX, analytics our prior products. new the customers than more saw strategy, new ARR in quarter in In existing adding the than across analytics strong XX% any is premium we Another we net and added prior reinforcement any prior this changes XX% nearly momentum strength of expansion and quarter. new premium any and our pricing upmarket saw purchasing premium our than customers X.Xx More of success quarter.

social analytics doubled XX% ARR module our roughly grew year-over-year. listening year-over-year, and greater premium Total than

end execution high series of the ever. of the sophisticated enterprise validate than the resonating combined pricing changes, of enterprise. another was The high new QX wins at that of the strong platform, a our usability business in against is end our the highlight with Beyond leadership our to more market emerging functionality, serve at powerful

employee Repustate recent across learning multiple We're our also accelerate will bring map allow acquisition of care, value publishing, mix. and platform to from and multiple extend in deliver to Repustate the customers, AI paths technology we ML this the engagement. we'll next messaging to listening product us and of new customer AI our our monetization investments over social social believe We to months. this unlock very meaningful machine excited our and and road to will and XX dimensions XX strengthen into our

execute category the XXXX winner. focus [indiscernible] to advantages continue on our our and are going pricing continue to map, Our compelling upmarket evolution priorities to our to execute and to continue momentum competitive We're road product and clear. for clear make Sprout on

organization to the the most the hire productive balance continue and we're invest with time. across to business, growth in of parts first for we strong profitability our As excited

be to a we're and unique to fortunate the come. on We to realize path in from position strength, are we potential of the years our operating believe full

more With over I'll success the of the that, quarter, Ryan. on for to and turn the call

in Thanks, who and to Justyn. our for our continue execute. I'm teams more customers grateful our who platform see to for value continue

demand The organizational is clearly undergoing software, change. as planning, growth of through us industry has of XXXX. thoughtful positioned ARR the technology And durability to accelerate our with the our Justyn combined for highlighted, nature

from will to business challenges, months all with This X begun distracted and map competitors spent our and customer product road and to has migrations support. They're the Sprout pulling investments, impact in see spans that migration Sprout segments confidence structural a competitors and have the point inflection we've and away Our the is continue category-defining back to platform. market building company. an which on last struggling reinforces

GX's Annual recognized year. was by this the Best Sprout Earlier month, consecutive seventh Award for Software

enterprise and Companies across We category software media the XX Global are only top product social software a featured software mid-market in X in categories, and social Software recognized management enterprise. the is media the We're including for and Best management enterprise. right SMB, only software top

and employees winning are proud the our As XXXX and building career company well rally is at this like advanced so it's to most our It's that customers. opportunity. our I'm Sprout. choose join we aligned people through recently and kickoff, pricing I told around increased executed focus changes where our a in their build we've Work around on time. team lens this why implemented are that

teams our to in is excitement first. execution being with led quickly, urgency alongside customer move our customers the putting empathy to The and work Idea from an

canceled than into canceled of canceled in XXX rolling than dollar-based the value shifted $XXX. customers the that X-month low initial cancellation. logo customers share December Across more the from average as smallest feedback pricing base, smallest uplift our to more month prior ACV field entire was And average the to the customers materially higher as the of customer offset rate net $X,XXX. that went during of XXX in retention compared as ACV average of the want effect changes December the XXX I had had an average. roughly our We The rolling December. X-month

feedback to upgrade to even add customer their as ARR customers a opportunity performance have use their increases These encouraging. reprioritize modules resulted an more trends within social. add investment plan, was have they users premium Anecdotal or in far so in Many better-than-expected begun as pricing base.

lowest customers December average will ACV more to our half trailing new In business added And we customer XXx new customers. more to ARR. and ACV average, logos ACV, new as the of the X-month business the XX,XXX Our our average compared than lands begin ACV cohort, month Xx paying added during total business cancel. the with averaged X% than than our smallest monthly December number of XXX in the less XXX of largest our more but

landing we our maintaining long at And the paying a The within of than logos. Overall, our ACV will new doubled compound board, more sweet value. business are NDR we're of growth time. business we're accelerating era tremendous higher creating delivers tier the benefits the where far of year-over-year. very our quality today for lowest that monetization market fewer with spot across the platform market now believe our We're customers

Dreamforce Salesforce. attributable larger with will great our with Also social QX, work XXX-degree the their never Sprout, enterprise. data, We the integration introduced in doing has of the A more differentiated integration Tableau important. particularly in with integration announced that of now, Some our of to live service we're including highly strengthen logos empower the at our during and view customers customer with we QX. went to cloud this are September, the in customer view been

to logos XXX report pipeline. proud XXX total we Dreamforce Last logos. quarter, out to our that XXXX added than the talked bringing QX, new our I momentum from partnership more record about during of coming I'm and

integrations continue products into marketing strong to to and out-of-the-box our continue differentiated expect we XXXX. to build well together to accelerate with playbook, very our closer a relationship we As and bring and sales

we capacity sales matches ensuring our have ago. demand. And we're larger we that To did on XX days than this point, currently pipeline a focused

Six organizations The the Flags moving Shoppe, direction. of Fitness, Allen market The Synopsys, Louisiana QX market is and Kentucky, Sotheby’s, customers broader The larger Sprout notable are group of Insurance, Visteon, State like they Vitamin indicative with Foods, Orangetheory Booz Entertainment, that Standard grew theme University. up that Square, University is skews selecting are upgrading, of that in Hormel Holdings of Carrier, includes University brands Hamilton, which Michigan, and The the we believe our that fact is from we

Now look Sprout," electronic with listening quarter to Lopes, forward Synopsys. capabilities. design strategy, further excited reporting and Social having XXXX this of our publishing, story "We're our firm, our component it and comes up-level is of at we a Head said Synopsys. from key It Michael to Media social program

Visteon Global strategy up-level Brand said of We're social by Sprout, Corp. with excited working at Director our Remis Lori and Communications to [ph],

platform have acquisition the usability new of analytics across extend listening tools than brand need improving building and a our as enable to we includes advancing on Visteon's from for We we mobility. centered awareness more social digital footprint vision gives talent XX,XXX The that global the of future publishing, single and brand broader equity us our employees. social

uncertain the I'm time, potential. delivering path to full our on of the way unlock proud an through nowhere we're and

Our strong partnerships have momentum.

changes pricing are market. resonating Our within the

to New And delivering product value stronger. positioning competitive customers. are been our tremendous enhancements our never has

continue we category-defining most enterprise We're and the successful the of scale focused ahead company. for sales talent, we're We're recruiting our on hiring and market. to work tiers excited a as amazing

to financials. the through And over with turn to that, Joe run I'll it Joe?

and now full quarter. Thanks, growth in into positive net results I'll Ryan. pleased consecutive overall you XXXX. eighth guidance new cash for through free detail flow before first We're quarter and to our the for deliver walk ARR, quarter year fourth moving the record

outperform to goals XXXX non-GAAP in medium-term expect profitability. with and deliver growth accelerating We our financial

million, plan. $XX.X up was growth. Revenue for year-over-year XX% million, fourth revenue the and Subscription quarter $XX.X representing year-over-year ahead nicely of XX% was our

a Studio plan. onboarding XXX However, services million customers $X.X to during Social resulted shortfall inflection offer we in revenue in demand all QX. experienced This our materially relative partnership in and pre-implementation million to greater-than-expected and for $X.X

$XXX.X possibility to our forward services continue We've to QX. was expect moving ARR strong exceptionally and up this was XXXX than as XX% will levels revenue methodology playbook. the business forecast new Enterprise in in million, be lower adjusted that QX year-over-year.

We record at and agency in as set the while a net went changes accelerated pricing into new each month enterprise and effect. ARR mid-market, of SMB December

We had deal materially size. of contributing XX,XXX reached line XX% net XX,XXX $XX,XXX reached Quarterly up new with contributing finish points prior our ago. number year price up net rapidly even than year high a from a XXX, The were $XX,XXX higher customers customers to in XX% customers, XX,XXX ARR customers from with ARR XXX the adds and and watermark, quarterly QX The total up at in more expanding X,XXX, customer more year-over-year. with number quarter in in X% than of ago.

of business momentum representing XX.X% profit enterprise was of margin driven the gross year contribution a a ACV to basis Non-GAAP points year-over-year up of non-GAAP pricing to QX began initial This compared changes. new a growth is ago. by gross XXX $XX.X non-GAAP margin and from XX% accelerate gross million, XX.X%.

business We low typically benefit into a model from favorably services contribution quarter. scale continue to this our and

were Non-GAAP for and $XX.X year a or sales from QX marketing XX% of ago. XX% revenue, up expenses million

throughout enterprise in and continue and particularly make We to meaningful growth in well roles. are investments quarter the our customer hire fortunate to future,

R&D administrative million a investments down research ago. of the $XX.X to million QX for future platform. and continued down $XX.X ago. general transportive our development for Non-GAAP year QX were from expenses XX% support were make expenses Non-GAAP XX% XX% of XX% to or of a We've and evolution revenue, revenue, year or from

G&A expect We as deliver of a percent moving leverage consistent revenue forward. to

Non-GAAP than operating operating a $X.X more million income margin, improvement non-GAAP positive of basis or X.X% points year-over-year. for QX XXX was

as scale, are prioritize as with even investments pleased We improvements efficiency the we growth in we business. ongoing the

was a non-GAAP income per year a weighted loss for million QX stock Non-GAAP share million on ago. $X.X share $X.X and net per or a common to net million $X.XX of XX.X shares income based compared of $X.XX average net outstanding of

cash $XXX.X Turning cash, flow. with the $XXX.X million to sheet in balance equivalents QX We from QX. marketable at cash ended the end million and and of securities

Deferred revenue quarter of $XX.X at was end million. the the

sequential approximately up QX, in remaining $XXX.X up performance at obligations, contracts, RPO, Looking million increase unbilled both from and our XX% or billed $XXX.X and our million, as totaled year-over-year. a record

approximately recognize We XX% million expect over $XXX XX total months. RPO's revenue of next or to the

captured but of I do want contracts to during call out a typical rules, sheet. year-end $XX billings million growth invoicing pattern. the were [indiscernible] both Approximately QX. between XX% normalized $XX estimate revenue QX RPO QX not and customer January. but customer million an our be balance XX% to our and to this accounting invoiced not until deferred signed in We was on over rate

positive million compared Operating to year $X.X or was flow million of $X.X positive flow a flow positive margin ahead was QX our $X.X cash free Free X.X% expectations. ago. a cash in million cash

margin. was free free X.X% For $X.X cash or year flow million the XXXX, full cash

In addition cash annual ongoing as a to and efficiency, contracts continues have our positive strong shift impact to grow. we to multiyear free flow on the

In XXXX, dollar-based from was rate in our retention XXX%, XXXX. XXX% net overall down

primarily our Our retention compared expansion dollar-based on XXX% net amongst XXX% in in value expansion customers. excluding net customers, activity, segments lowest rate, SMB Lower agency with and weighed in was XXXX. SMB activity XXXX our

towards north by mid-market improve alignment put net enterprise, most tangible However, and XXXX. path we a on our and dollar-based customers quickly the believe changing of mix our sophisticated around XXX% strategic Sprout retention changes pricing to

in growth expect of $XX.X rate $XX.X million the first quarter Shifting XX%. fiscal million of range a the XXXX, formal to or we revenue to of guidance; for

We revenue year-over-year. to decline expect services

operating to an of X.X%. We the loss in expect non-GAAP negative $X.X $X.X of non-GAAP million. million This represents margin range anticipated operating

roughly non-GAAP expect We weighted of of $X.XX, XX.X a net million stock share common loss shares average assuming basic outstanding. per

$XXX $XXX overall million. For range we of million XXXX, of expected reported expect to XX%. growth full the year total the revenue in rate This is fiscal

revenue expect XXXX than will be services We levels. lower

reported accelerate ARR our ARR full faster XXX from that of implying changes reported and growing full at revenue XXXX in ARR For and a faster We least XXXX, basis least enterprise XX%. revenue, growth than from year-over-year fiscal year our expect contribution growth year the points at to believe we total pricing grow grow mix than tailwinds and mid-market will to our segments, due outside partnerships. of

We do guide ARR unique. XXXX intend to each while not year will be

benefit model the year, the ARR partial installed and providing XXXX over Our and a XXXX. to changes base financial our both benefit revenue layer of will to into in pricing XXXX course

$X.X non-GAAP income to of For million XXXX, operating in the million. expect range $X.X we

to margin our points improve on expect full margin operating of year non-GAAP of the first implies profitable for non-GAAP non-GAAP deliver to annual of to This and points pleased the improvement non-GAAP expansion operating basis. basis for We're profitability growth basis durable, XXX XXX rate time. a

We and expect weighted of shares average XX.X $X.XX common between outstanding. basic share non-GAAP net income approximately $X.XX, million stock per assuming

customer expand pricing on new of pricing regarding business Both changes. month changes. communicated first and making pricing the existing were November, comments December of I'll month early effective in the changes Ryan's Finally,

QX saw partial such, early As a and contribution.

XXX In their and us. we to subscriptions the been most began base, understanding feedback logos customers month innovation has normal of value with was the Low deliver higher have installed both delivered our receptive, than that in return customers since enhanced overall by the we approximately December.

ACVs to are weighted and logos of logos XXX the was churn However, average small low-value these X,XXX.

average $XX,XXX compared the an average new largest XXX of month of business in of of ACV $XXX an small ACV the As logos ACV the canceled December XXX that December. shared, with for had the logos Ryan of month

We compared increase. price than us premium rolling absorbing modules means expand as the many December in a customers average. seats expand pure a prior as or We incremental rather saw to with fewer-than-normal to customer saw adopt upgrade six-month

attach In of by QX, increased fact, basis the from purchased over points prior the quarters. X roughly XXX module having a the rate sequentially double premium customers cadence

record. a prior ACVs year-over-year new December set total monthly in line, our set retention than record. net new December, on expectation. Gross with consistent lower a basis. December monthly business dollar trend than business and doubled a logos ARR were And more

trends each these expect continue. We to

In meaningful volume is expect The a we of higher modestly NDR. higher to that prior and to cash lower and be and stickier expect ACVs, ARR volume value to will compared a flow add customers. the low-value a to very turn tailwind XXXX of customers period, trade-up growth,

business than prior be growth We to our levels. to our will growth materially ACV total, below QX rate. and likely exit be In XXXX but continue further trend higher expect accelerate ACV will customer from more meaningfully in new lines, historical

proud our very which from software. our of underscores model of we're teams, the and conclusion, In our value resiliency of execution the business

a Social has to or competitive $XXX we're and emerge in important never category-defining unique as been believe away customers, valuable pull our from company and we more in position our a more to billion market. a set

with that as to Now we expect deliver to continue profitability we growth scale.

questions. and With to are of that, Justyn, Ryan take Operator? your I happy any

question [Operator take Lenschow first Raimo from Barclays. our We'll Instructions] with

may. if ones, quick Two I

about you the how played evolving? First that to the where see like that out Can pointed little for Synopsys, kind market. seems you in a Social in of more Square the kind have of bit that's I imagined never you cohort, it Sprout kind are up of historically customer historically on kind kind seems all, of higher and because pipeline wins the higher like you end the of in would that it group of talk activity

at should both And pieces -- little a about about also NRR think look there we the moving ticked total, higher. but we bit that then the as Can consider talk that down number? like, kind Like one for of you that Joe. are slightly for,

it customer of us on in Ryan. more off with, become something And lot around thus has the is is the This to that first this a and Raimo. I'll pronounced for the start we've just enterprise. large continues huge quarter. -- every and far, this a been Thanks, wins I question opportunity think seen success

tailwinds really us that a There's for few are here. things

shared differentiated I before customers. think us we built success also from It's things the is those the historical but that intuitive, I that it's one one think of just product. has the way this really we incredibly been incredibly And has sophisticated. enterprise

important XXX accounts, accessing marketing XX usability that from be in product. shared the sales we've that populations amazing quarters, that entire work. these large And organization. in across wins And Fortune typically they Fortune And some care have and can group. some That and and have that of been are incredibly in across and previous the users becomes

You customers built that that, social top and one incredible and They that They products these listening same and buy want, with vendors. that suite our these and to all the of place. are they don't analytics want and want in the products them it advocacy, are platform. across our want layer UX. on they And getting we've and love from same multi in one it they it UI

with code And has base so that here single organic that build we that have differentiated us. really

with well piece these process job I'll done they're when adoption. these customers also going they through evaluation against getting them really awareness get final care win highlight and out user that implemented of taking sure great is well and quickly enterprise, that amazing opportunities, the The teams making that as pipeline great we as accounts, an executing building the have these that both and in our just but driving

XX% things And year-over-year. think the we're really it to to continuing are growth stands when So enterprise. wins, the contributing success which those are really you all that now see the out at at look to start XX,XXX I in

and the then, throughout about pressure low-end SMB takes, low we was And the on the side. Raimo, we end on before. year puts the then Where on and this front, MDR talked agency saw SMB,

up in well expect the think XX we we think SMB is move the our the do these the you factors in we on numbers enterprise, where shifting, the gave to number And mid-market about is above we because that X agency. ex through XXXX. upside actually, If if look dollar business retention the at about that net in enterprise, mid-market

of talked overall with we XXX% landing, early we're also enterprise to in especially seeing, the indications about higher mid-market, like by with expect, that we're what the XXXX, changes quality. get new And up just the pricing and then logos to we they're

overall we totally change. the the couple -- the is is quality believe, And customer so it over going of of to base, next years

gives as we it so a lot us move And forward. confidence of

We'll Blair. take our William question next from Bhatia with Arjun

maybe quarter. Justyn, -- to customers increasingly the mentioned it's in December, what just customers differences new are helpful. I with you any on seen start that the noticing in like there departments that terms want less enterprise Are think, than prioritizing of are But be more the you in, it Maybe scope historically? particular particularly the numbers. I Congrats color seeing seems involved, of you're their involved Sprout that through deployment? would are or cases And on come coming with net you've some that your social. use

Ryan. start It's I'll there. Thanks,

part social. critical we come they're of we're really today have parcel into seeing I is that their and customers realize this and in Those motion the which a tend enterprise. that in, mid-market think to it's strategy. part prioritizing sophisticated of They all customers, certainly of focused skew that the business

contributing in business And social a make beyond decisions. the growth it to They like really, that it and into it see want to to exist see customer revenue data things care. leverage They capture customer the from service, really they sales marketing perspective.

it's we're usually those So the when specifics multiple I customers with think what seeing today, across departments. of about

which they decisions, they social they insights perhaps compete. consume customer data that want to can in outside about with even that marketing So making want to which them data, think from certainly could help contribute care. to to department they're of But grabbing markets into, introduce trying or need evolve go they how how the to products which and that, to

products. so in And itself also seeing manifest this multiple we're

and the are across like marketing listening core things in in those but also our So customer cases care, then and bigger. lands for They're coming adding use they're social analytics.

team demands. getting population. that to want social of users we're the important They're to data. nature across access because place technology these all given horizontal I equal and with they their one it's larger in deeper a more see And Again, sophisticated really think the generally, has So the solutions

of bit, their got zooming who this Arjun, One We've varying a just rise Justyn. sophistication. I'll front out time. different is organizations of customers right? think add what there seeing end is in thing a got social terms that stages is in the a amount their just We've curve, investing maturity we're for investment, in been of have I at are the

social. maturity And their was

seeing more funnel more and demands. within more that They're that cases just the into in looking the with proven maturity sophisticated their we're to has climbed They've climbs. so for companies years come last social use And continuously organizations. operationalize as several ways year-over-year

in still a a seeing organizations. social think -- going we're but that's be overall. seeing so more these going believe, them maturity we're adoption very those. of We're at of a across higher the I And a involvement size, organization within certainly higher I just that early, to level trend broadly higher because continue that, And we're to to see

I in you larger, right, Salesforce one Social That much some QX. but obviously, think seems like the I touch helpful. another the got It pointed want opportunity the on is pretty then But is you And that customers. space, good what thinking Salesforce. Salesforce penetrating -- there traction maybe to in out in Studio Social Studio core beyond base? little customers, you Studio talk we today? seeing those And about you're that rest weren't are are of bit core a before. the you Can How where about the process using service that in customers Social

continued develop that and we're mature. partnership and that we the Yes. it's early to in today. how about have excited process incredibly I'd say We're really

mentioned, with already exist went sales And with QX. added live the that service live that cloud As cloud you the we those in Slack. went in to service integration Tableau, the which piece, QX, of alongside cloud integrations and

to customer so Sprout the that's being for best And in all really choice invested that's Salesforce CRM. contributing really any

of all helped. that so really And has

go-to-market I teams we're in the sales think in of is front tremendous getting field, the seeing perspective, Salesforce the from a customers. other from piece support the

service of over that partner a many social from chance are AE thinking data. joint are So cloud cloud with perspective, that to where about the logos great a that not we in that we the moving were are spoke customer. Studio Social with Salesforce go that and on customers even they're sales about service that had And users,

how They're view of XXX-degree their these data the make for to to the be and thinking into best for base. integrate better become decisions able about to together taps social option and platforms And companies data Sprout to leverage those customer that that customer has that. clearly

opportunity So not it's opportunity, for go-to-market and to here great years product entire we say but Studio against base. have partnership tremendous the partnering Salesforce just Social early. come, again, great, I'd the teams. we're a think We the a across And customer in with

We'll Porter Elizabeth Stanley. question next our with take Morgan from

wanted to the existing high just there new prices, know new of landing understand any from some bit contribution ARR either drivers, customers net the I on hit of little of was a kind the outsized you record some the or Dreamforce? at ARR and higher of more. durable I to of XXXX? just net but added composition drivers at more I'm moderate into of QX, just the momentum how even those And of could in new for accelerate closing sense following out Salesforce renewals deals what a trying or better get higher

Thanks, off Ryan. start there. Elizabeth. It's I'll

across just of execution one nature, of durable a the we're proud the of our really is teams. from think things I that consistency

our you the we the current as new XX,XXX certainly well XX,XXX. plans see as have base increase which size, and in so And business customer seen in can

of account terms average There's lot whole concentration accounts direction. number here a one isn't or of is else couple ACVs important in I But think really one a a of in there is increase across this in these that single just the that customers. what skewed in all dramatic consistency of

terms use to what with this might back our few composition They're I a product coming about core minutes as analytics the thinking that go than listening been customers just these data customer ago, are of more probably I'd the and years something case care. a social social to we're in right? relates sophisticated thinking think ago is commented needs it just seeing few on marketing, They're product. I have in the value of our about across

it seeing XX,XXX. the core across and see customers, the which add-ons. main our that cases we're the the it are across seeing as we're So you volume in points as in many well use XX,XXX can And

and us, the just the reinstates So this. confidence that, of durability have we for

thing going watermark pure net only Yes. be -- number a has ARR itself, and now The Liz, is call out, the is new always been you QX with on quarter. to I'll high like consistently

is that especially that the in going definitely what years. versus to the we couple QX consistent just of seen momentum, rest we've XXXX, into factors the of outside out upmarket All kind outsized in think of last year. calling I but those So with are see definitely lead

pricing XXX the with the for Got just expansion. initial of know then -- line that. provided plus in follow-up see to And Great line Yes. the XXX that largely I bps you change. a in before the XXX margin on margins. to target

just there's of some to profitability? with elsewhere wanted sort you now otherwise understand investments accelerating change, upside there business? that to And be are So pricing a in would that the offsetting

Yes.

question, So Liz. great that's a

information more get the to adjusting we're I continue QX, now, and being towards obviously, of efficient a XX little outperforming that's do going the start bit sure we We to due to pricing of want think days extent end to acquire. just investments. the start that I to and right we But into kind revenue think before of that our we we make into saw the set pricing see QX more we the changes, a success changes.

of obviously, at to because changes. margin the do investments, before types model, the point, number guidance not we business of look of the kind sure those to revenue Outside in But the we investments. invest look make reset we opportunities decisions. that do there's that at make we at assuming pricing to we other outperformed we would we the we incremental then making expect outperform of And gave, want

from our Stifel. question next take with Lane Parker We'll

Kikkert for growth when announced top line changes to attribute is would Matthew last that outlook Parker. looking off, To This start you're on for pricing of that at XXXX, those how year? much you the growth you

Yes.

what's We changes existing in we're what pricing of the on the seeing we not guidance change? we're the what's seeing new So that gave hey, coming in Matt, I into we're year, all Salesforce, think probably we out pricing website? the impact think the calling that. specifically, contemplated, about the those contemplated what's momentum on is when the momentum customers, of pricing we this

we'd factored the confidence the fall, a of into think I level. we talked like to all was this into about So really guidance gave. guidance high at we giving come that When year

extent something we historically but changes. the to so something not we the continue not price from like things that guidance, done. feel these from year, about saw what call would specifically last And good late that pretty That's that percent we we've x coming

then little a And changing bit. pace Got it.

that your in fully of channel? base, TikTok a how across is you for And embrace big differentiator a social media? share say of you the as your channel As what social would support customers look

question. is Justyn. This Great Yes.

we've adoption So we're still past. kind I networks -- think the and curves in that similar with seen other of

about energy Certainly, we're pretty TikTok. early. a think there's excitement I of lot and still

I -- have the the that it side organizations number we're embraced embraced that still the there. they've on other networks some early the same is think way of of social

leading. functionality our think I category is

they about that across I map think We've few momentum of great a we with lot got go. things entire continue seen releasing one we've in the make TikTok our turning to cetera. in from et they're team to on a there. adoption road want that APIs, of a lot platform as We're their release that seeing talked in build. capabilities ago, functionality the exciting got We've initial quarters really their of more that of also things we investment partners, terms a

So feeling that. about great

adoption wouldn't curve what like. the I that we've looks think I -- to handicap want got

a than cases. still I the from think seen kind of us we historically, initial the it's relatively efforts I'd faster do how we've put beyond early use but organization this operationalize that most across

see develop. we'll that So

in lot there probably of movement I think XXXX. a

question next our Michael with take from KeyBanc. Turits We'll

you but not tough have of this good give things of but talk a -- just that and before, sure, very I forward-looking asked about the I'm in environment maybe could guide. some may you confidence indicators quarter, a obviously these terms solid been a most

that confidence what there? confidence things So are in guide the level and that most of give you the

Yes. Michael, good question.

things. the the momentum little couple areas only low really are there's the very look is with about talked we as market. for think there. changes end pushback on I we're that One all, us, let's of we existing The Ryan on if price of pushback. We've seen seeing a the about customers, So at start think of -- first

to we because roll out overall, we those churn seen feel so And across lot good our price just increases from of XXXX really a haven't strategy about that.

that Then you early on layer new the the in enterprise. new what so on it's in we website we're we our We in business I XX about, doubled in basis. year-over-year the rates. a we seeing increase talked We about saw days the the in doubled pricing attach ACV -- like December -- mid-market far. momentum talked what know attach from the the premium on

consider like And -- but our said, relationship, just that in lot in really of so Salesforce momentum seeing early that success of the all service think kind and the with customers, you Studio think Ryan the a I then not opportunity, cloud the Salesforce the with we're still And only ecosystem across we integration. with customers we're the of we we're what business. part and layer the seeing of Salesforce healthiest

there's couple there. a So of things

kind things, the key year, right us we're but seeing Michael, and those going that into of Now we lot XXXX. the obviously, momentum we're in give of see confidence are a kind that now, of early

a how not give you're think see long term, different. rounded, your X one or Thanks, do to us where where of something model ACV is Joe. I but places terms or term which of telling be There's you second the and obviously, a of could order this just X,XXX whether look not about tell you follow-up. I want quantitative that long going that's opportunity, But the at addressing the you you really the hey, in go like, X,XXX-ish, market? magnitude that give it's necessarily question, that's

Yes.

really A of come go, value. I investments customer this past more that are and things go Justyn. the think couple for just is ACVs think from about as adding we sizes as powerful long term where our us. deal -- where we're So Really

we about value average is and several when trend numbers see where today, growth our our look there's we've size we when top that there, five the the average where we is years ACV. customer when being consistent seen dollar at those like earlier sizes continuing top of scenario years at since we contemplate talked continue we customers, don't of day and in decline, that the we see X to than back no ago, the deal smaller look average consistent the of -- So line decile XXX

Some of that is execution. due to our

I the just investment and to of due we that in the to businesses. mentioned and are where is social curve the continued earlier value that of these Some maturity

extrapolate into look to the has So at where some these when of how things versus were the what's we -- decile in top in other, headroom grown and if happened of into our think a there's grown past, that one average that's we go. lot we our

And customers something like, think is that And certainly, growth, the line other is That good very many and deal. the a reliable. just what has we trend thing to XXXX. look remarks, that as in at prepared us I'll we eclipsing XX,XXX trajectory by looked the if for we of and that in point the XX,XXX accelerates and mentioned

question Sandler. VanVliet hearing Clarke move from to response, no on And We'll with Piper next Jeffries take Matt our BTIG. with

Studio very single-digit numbers still cadence XX, but you've First and a is there, Social have like a you thousand Do maybe how the sense conversations of potential conversions, XXXX? a much us give that established look are in percentage to pretty XXX? larger in on question of few what XX, sense Or pipeline customers. here compared impressive those XX early that active the -- on

Clark. to. Happy is here. This Yes. Thanks, Ryan

a to bit momentum. We quite see of continue

the had we the than year shared in prepared I been that this ending into bigger year. pipeline it there, just heading remarks think is the

see really we're Studio that with So customers. momentum the having in we're Social to the good conversations continuing

still decent There's amount a Studio. process for of on Social left time the

and But account Salesforce those that we're to these time. front Salesforce here certainly get teams in accounts. partnership with will we the over of happen So think working in

this good of feel really think So upside. plenty the there's we into heading momentum year. about that We

general. look to opportunities value We're going to also add to Salesforce for product additional Studio but Social continue even more customers customers, to in

opportunity us the healthy, year out after. and would the that continues look pipeline specifically, really for that year looks for to really So broken we say good this but haven't the number I and really

the Maybe just XX,XXX in prior gross additions And the around of really the change conversation below this logo maybe whole Great. quarters they question the basis cancellations? number Was to cancellations the a cohort here and don't just only on with round focus consistent end. Joe. then low in a and for out upmarket sort or

No. about before. We've this talked

mid-market way November As more December, the -- this we're we and the pricing going we customers. towards of end to talked the changes land website, enterprise on got about into Clark, for

because So bringing in that on less a not of bring overall, we're lot going low-end just those net to price low the plan. point customers SMB. we're in gross We even see new

see about so website. the that ARR the trade-off change, gross that's that of the been customers to pricing low and that logos definitely feel dwarfing going from that new the number generating those ARR would You're seeing we're as given But of from well changes we mean that market, conscious less end on customers gotten design. the by really the I good a in was have so we far. we've is

the illustrate as we've way the like having which on years, and this. to to use is opportunity conversation for from the been couple of add the focus I'll of this the and the last new an adds kind maybe to around customer revenue cleanest continue just And that may

from from you we where quarters when the had added roughly look much XXXX a a substantially perspective twice If early net adds we net revenue as versus high watermark of some back smaller QX number. adds

that changes out. see us, is we you with continue the enterprise, since the the we is us move were focus the to consistent to to revenue all be for that and of going be with where you're to price that for mid-market focus this the make want And yield, continue going the to sure play to particularly pointing

those to more business out thing but ARR, we to visibility cycling want we're have customers to time, to to on. smaller is the focus the be the start much We'll establish over net especially contemplating continue to baselines, as going

next Hynes with Canaccord our DJ from take Genuity. We'll question

you, and for start to Ryan for Joe. follow-up a One then

bridges do of need you you So go-to-market Ryan, in sales around high into well a in Or resonate 'XX? more model focus market? end as invest how on that the org touch trial-led the to any maybe the plan does enterprise? as of light you the kind at the conversation there And refinement

and product usually DJ, software sales cycle don't the that the it we with times and They long it approach categories, motion, Most that the same certainly think really lead trial incredibly is differentiated. the space, Yes. excited about in enterprise, solutions, are in our motion, many enterprise. that's especially a in lead is the with enterprise customized in services and and because demos I heavy way market. opposite incredibly really heavily the of we but

great prove RFPs them important it from seen Even and we in the into to conversations having make product, what And before the to Sprout a excitement keyboard get to contract. incredibly actually the we've but them, they customers. trial we on hands get we enterprise they with progress get sign for need these perfectly is fit fill for get them for when into out going customers, their certainly that to those and

customer secret every it, well so of been, engage the know actually I'd call and it's something customers. enterprise because for for that itself, try our have the product we the It's that So with proud product it in we a really works enterprise. us weapon and we're

of continue engineering outsized and going variety supporting continues our and teams BDRs in success to of and And -- the fastest-growing. enterprise solution we've enterprise outbound and then perspective, a part our into our investment and teams a the be adding been customer that terms largest capacity them well, of business and but certainly mid-market the as across mid-market investment from to teams that are

that Good mix follow-up billing the with annual you Perfect. your Joe, expectation will the versus with what's focus just enterprise, on and terms the to in hear. for business for Yes. is the of month-to-month? come

Yes.

that be to towards expect to we heavily DJ, weighted So annual. continue

paying new in the our that higher side this historically, talked right tell XX-XX. more annual ratio. like now, overall think I closer base probably about substantially than more probably is can we've you to an But is -- on customer I business coming

to that see And continue do you'll so line XXXX. continue trend of through XXXX, think I kind

that to on got love basis going And over way that business to XX% the definitely annual make coming more towards can to see you're ARR new think there We've to is mix definitely get month-to-month. but long weighted versus in a the I -- time, XX%, annual. to an go I'd mix. we get heavily

So margin leverage mean leverage? operating more we non-GAAP cash does than operating that should see

Yes.

and we we very expect -- talked about about this, we've what talked consistent. So is, we're yes,

free improvement expect points a basis operating hundred for We DJ. leverage Free cash over points of be of flow. of margin hundred cash a basis flow couple should operating couple

continue. So we expect to that trend .

our next from question with VanVliet Matt BTIG. take We'll

you Hopefully, right? it's working this all time. me Can hear

You're there. can you hear We Matt.

right. All

to Sorry switch that. I about phones. had

Okay.

I know when the guess signed of a this I you earlier, were, little much of So on this looking you year Studio the partnership, kind of a touched sort but curious Salesforce in clarifying couple customers. questions. of XXX-plus bit Social at how of customers fact,

would Any understanding early, XX,XXX of kind it's they be of customers, or bucket? consistently sort the what's on the So first that. should partnership come ACV the beyond also we as has think getting customers in XX,XXX helpful. you're component also partnerships, you're so very size but in average recent being more part Salesforce that getting that, within the those even on about are most expanded And of of that that the the of directionality the from and far then

Yes, Social Yes. in Dreamforce QX. but QX, until that go not majority the We them Studio Service we about are at launched it it of to Matt. in And live of integration. of those, terms Happy over, answer the talked customers, coming didn't Cloud. both a logos

the do really be tremendous XX certainly, X and just Service them incredibly as we might recently important think customers the value Cloud is with that see So so about of record. not opportunity the be what us, for the customer customers but to Studio we of today, going for Social they rest

core really upside, what I Social now comparison Studio So we say what overlap, the Studio of Social small is a for to us. some but but lot customers. see right it's you're seeing in was just There's would

on. customers spot Those XX,XXX. and that XX,XXX within fit an you're from perspective, then generally ACV And

supporting area a So where today. customers perfect fit already focus they're and we're for of our

about excited really generally our fit into they we're So how strategy. just

you're trends Okay. of Great. a investments, greater macro some what when at of the especially Is seemingly late. know those I on But And kind you've then in you had look there. the of seeing additional customers impacting some curious Europe to markets, international extent?

war and roll you you're through is mind them. pond? of there? of anything in that right front the of ACV -- perspective as sort of of over Ukraine seeing from in is more across price And uplift to Are yet much that increases The kind the getting top come an sort as or

Yes. business. really the part we continues the excited really we're be execution opportunity that From to be perspective, about the an EMEA the from especially in and our continue to about excited team, seeing fastest-growing international of EMEA.

well, group both from current that in team things We good our our total in the and Certainly, market as perspective. there's are terms in headroom executing well. of uplifts from incredibly been of a really in We've the seen customer markets, in has that new those but happening macro addressable Europe just see lot EMEA. ACV a business

we certainly, over time. the then got that to TAM rest well have of we're smaller we'll a amount investments, of but about as we think to when yet the about. invest excited we continue There's that where tremendous haven't world And

It's that performing operating America feel trends seeing. we So well with some good to upside. very North similarly really today about and we're the

Instructions] with take Cantor Fitzgerald. Brett We'll from question [Operator our Knoblauch next

XXX of what Did churn the expect that sure XXX where make similar price smallest of kind increases say for of out then of quarter Or correctly. churn to Or to? kind heard X And levels back that, in I or you is customers? year? point cycle churn? want and was ACV average bigger Just the have you the of customers? your I guess reference rolled was And you expect there's of total a do December off you percentage a would just the bigger a the you customer throughout base renewal there

Yes.

had about was average, talked we the higher -- than December that we we on the had had, in average. So logo December over XXX we trailing churn -- what

increase the in That that So just total December. saw was low we the wasn't return.

And about $X,XXX then we ACV XXX talked average the the logos of churn. is about the that of smallest

Actually, -- from we're that of low probably kind That's overall, we And really expected. worried it was not standpoint. what market, super the about turnover an had end less and so churn. that's of ARR we

That you so know, focused remained on growth Sprout. Brett, not highest quality our ARR As the retaining we're at churn and We're really customers. logo focused really much strong. more on the

revenue call think it talked our the the NDR December highest had side. I we we about in on on

So about the momentum feel there. really good

churn. As through -- months. come low it talked next standpoint, the increases, year as before. of through was last very December of saw and price this low we about year, kind ARR an very saw talked about this we've far we December this -- evenly like, of so we They through, like XX probably pushback earlier, of over And evenly from year

get already a We we just either might anticipate a pushback have higher a lot standpoint, pushback based and customers of we an churn, we've talked going the lot to. overall, didn't on logo forward, don't ARR saw of on but

of see, our impact. our talked ARR. we materially like a churn. might So We no about, you don't lower bit But little real believe on impact on

from take Markets. our DeGasperi from Andrew question Berenberg We'll next Capital

how is should think investments or about on you potential move I'm gain This Stephanie and going product if when these investments up more wondering on R&D forward? customers, see sophisticated we -- Andrew. market for you

Justyn. Yes. Great This you. question. is Thank

think sort in X products seen product that the the organized way last enterprise. market. ahead out progress mid-market the that that and I team our over and and road map, been of us years from we've generally, R&D the seen we're the investments, probably X So we've the of putting you've we've the in product

were getting sophisticated more the as of I customers anticipation being right, we're up think pulled as in into that, higher market. our

in our and those focused enterprise mid-market quite been map for time. we've really biased has the for been the against So road building -- sophisticated problems some

expect should certainly. that to you So continue

being we we across true -- a more those sophisticated with it's customers as are that But a exploring lens. can platform we're that also organizations be deals, large larger see customers intense more for we better how

the we tools figuring our largest And etcetera. areas the how be way the successful, can that customers across collaboration of team, need of so comes be building that the compliance, to in like out

quite investment building that need for maybe the of see answer is in biased going a You're to some the with than from larger large more short space the time. the more for and XXXX organizations us been we've lot enterprise and But you've things historically. seen

in and material shifts You're not going strategic R&D focus investment. see to the

You're needs meet going to incremental our largest to see -- investments continued of customers. the

We'll Schultz take our final question from with Baird. Patrick

Repustate be positions how the little does recently could you that Just acquisition? financial such machine bit learning, near-term I over competitively on AI, believe announced the cetera, about potentially operating immaterial should technology And Sprout the you advanced financial drive noted as but longer and behind better rationale goals, the acquisition, a just term some the impact more to talk et leverage?

Yes. Sure.

for familiar it is behind that time fact they've -- So technology been we've some building. that yes, and that that team been the the are one -- with organization

leverage our and going near our into listening able side that how areas the and get that things application, in very products accelerate in to about tools engagement think, we thinking like think are other be to like -- areas and to I map of wanted I we're things care to in and publishing in customer even road term ways quickly XXXX.

mentioned monetization applying that with what specifically their in opportunities on layering we we see of have also we increase to today. areas and prepared top some the technologies in some think I remarks addition,

been to is on is more as area effective and social, and how them and the related they of really with thinking efforts excited. focused What's for team some about customers' start AI, though, in has pursuits I that have long as advance interesting, ML even the think, reach, greater their social more in our can them make give where horsepower technologies get we that, greater

technologies and So thinking AI not learning parts about into leverage our technologies, how layer that only platform like their of leveraging, ways been the new working and start applying innovative but really on, that R&D across start generative thinking things they've the that into we and specifically, we things opportunity, about other they've to also as ones platform, well about again, ways a machine where team existing embedding lot their out see can to been I think we and as can on and but we're to where our the some think that's has exciting of start beyond of things XXXX expertise to going that built, focused more to their team that work. that

today. I'd the for the concludes over presentation Howard like turn that back closing to for or to remarks. Justyn any additional And call

Justyn Howard

make I'll Great. Thank a brief. you so much. closing Yes.

days And Thank Just weeks. and appreciate look forward everyone's We'll in time today. everyone day. the spending have a coming with to wonderful time all. you

you. your may Thank conclude now presentation. you does disconnect. Thank today's participation for and you That