Sprout Social at 45th Annual William Blair Conference: Strategic Growth Unveiled

On Tuesday, 03 June 2025, Sprout Social Inc. (NASDAQ:SPT) presented a strategic overview at the 45th Annual William Blair Growth Stock Conference. The discussion highlighted Sprout’s focus on enterprise growth, product innovation, and influencer marketing, while also addressing challenges in the macroeconomic environment. The company remains optimistic about its growth trajectory and market positioning.

Key Takeaways

• Sprout Social is focusing on enterprise clients and enhancing its product suite to drive growth.
• The company has a strong net retention rate, with expectations of future improvement.
• Influencer marketing, bolstered by the Tagger acquisition, is a key strategic area.
• Despite macroeconomic uncertainties, customer behavior has remained stable.
• Sprout is leveraging partnerships with platforms like Salesforce and Zendesk for social customer care.

Financial Performance & Outlook

• Net Retention Rate: Overall retention is at 104%, with enterprise clients showing a higher rate of 108%. The SMB segment, although facing challenges, is stable and improving in quality.
• Macroeconomic Environment: Sprout has not observed significant changes in customer behavior due to macroeconomic factors and is taking a cautious approach to its financial guidance.
• Shift to Enterprise: The company is focusing on attracting more sophisticated SMB customers with lower acquisition costs, aiming for long-term contracts.

Operational Updates

• Enterprise Upmarket Focus: Sprout is targeting Fortune 500 companies, investing in product development, and expanding sales strategies. The company gained three Fortune 500 customers in Q1.
• Adoption and Usage: Efforts are underway to increase the adoption of Sprout’s products, which is expected to improve gross retention rates.
• MultiProduct Strategy: By expanding its product suite, Sprout aims to address more enterprise client needs.
• Ecosystem and Partnerships: The company is strengthening relationships with social networks and tech partners globally.

Growth Strategy

• Influencer Marketing: The acquisition of Tagger enhances Sprout’s capabilities in influencer identification and campaign management, offering a high return on ad spend.
• Social Customer Care: Sprout’s solutions integrate with major platforms like Salesforce and Zendesk, providing a comprehensive view of customer interactions across channels.

Future Outlook

• Sprout Social is poised to leverage its strategic initiatives to drive growth, focusing on enterprise clients and expanding its influencer marketing platform. The company remains confident in its ability to navigate the current economic landscape and capitalize on market opportunities.

For more detailed insights, readers are encouraged to refer to the full transcript of the conference call.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Arjun, Analyst: Maybe we can kick things off with you, RB. You’ve been in the CEO seat now since October. Yep. So it’s been a few months Mhmm. Approaching the one year anniversary, but and you’ve been with Sprout, obviously, a lot longer.

RB, CEO, Sprout: Yeah.

Arjun, Analyst: But maybe Nine years. Nine years? Yep. Yeah. That’s a long time.

Yep. So maybe as you’ve taken over the CEO role, you can talk a little bit about how you’ve kind of wanted to change the business, what initiatives you’ve kind of put in place, and what your thoughts are just on the growth rate on how you drive the business strategy forward from from here because we’ve obviously kind of been in this environment of market changes. Right? The pandemic, the post pandemic, all these kind of tough challenges that you had to navigate. So I’d love to hear your perspective on that.

RB, CEO, Sprout: Yeah. Yeah. I appreciate it. So there’s four areas that we’ve been really leaning into where we see quite a bit of opportunity for Sprout. Number one has been on our enterprise upmarket focus.

So, you know, I’ve been here for nine years. Over that time, we’ve continued to see this really big opportunity with the largest companies in the world. For for those that have been following the story coming out of q one, we shared some success in our, you know, our 50 k plus cohort. We had three Fortune 500 customers that we talked about on the earnings call, but we continue to see a lot of opportunity for these enterprises that need to be thinking social first. So a lot of investment in terms of making sure that we have the right products, the right sales strategy and capacity and that we’re that we’re delivering for for the enterprise.

So that’s one. Number two, we just continue to see more opportunity within our customer base to to ensure that we’re driving great adoption and usage of all the products. We’ve added a lot of sophistication into the platform and new capabilities and features and making sure that our customers are getting great value both in the implementation phase, but then ongoing for the customers that have been here for a long time. So just continuing to invest in in that, which, you know, you’ll see benefits from a gross retention perspective. Then we we think about the the multiproduct strategy.

So anytime you’re going into the the enterprise, there’s more and more opportunity to solve more problems. So building out the the amount of products that we have in our approach to the platform has been a third one. And then the last one, we think about ecosystem and partnerships. Obviously, we have really important partnerships with the social networks that are partners, but also in the tech ecosystem and and even beyond that into, into, know, third party type partners globally will be will be an opportunity. So those those would be the four areas that we’ve been really leading in that I’ve been driving.

Arjun, Analyst: Okay. That’s good. We’ll we’ll come back to all of those. Before we go down that route, though, maybe it’s I think for the for for the generalists in the audience, it might be helpful just to give a little bit on the value prop. So you have 30,000 customers

Joe, CFO, Sprout: Yes.

Arjun, Analyst: All kind of various sizes, large enterprise, like you mentioned, that’s a focus area down to SMB. Yep. But what are customers using Sprout for? What do they need social media management for? And what’s the kind of ROI that they’re really getting out of adopting the solution?

RB, CEO, Sprout: Yeah. So the maybe the best way to think about this is we’ve been in business for fifteen years. I think as individuals, we probably think that social is really approachable and accessible, but when you think about it from a business perspective and an enterprise perspective, this is still a relatively new space and technology for companies. Half the world’s population is on social increasingly more. They’re spending about, on average, a person is spending about two and a half hours a day on social.

And we’ve seen these amazing trends in the way that consumers are engaging with social. It is now, you know, one of the primary place or becoming the primary place to do search, to do discovery. It’s becoming the place where, from a customer care perspective, people are not picking up the one eight hundred. They’re going directly to social. They’re purchasing on social.

And then there’s so many data there’s so much data and insights there. So all of these things are happening. It’s very horizontal in nature. And if brands, if businesses don’t have a platform like Sprout, they’re not engaged in the conversation. And so what we do is we provide that platform for brands and, as you mentioned, almost 30,000 customers across the globe, including some of the largest companies in the world, rely on Sprout’s product to do marketing, to do customer care, to to generate insights and trends, and and to really figure out how to develop their strategy.

Arjun, Analyst: And is it if if we’re just thinking of kind of the market broadly, does do most enterprises know that something like Sprout exists? Do they know they even have a problem in social that they’re missing out on customers reaching out to them on key kind of analytics that, you know, maybe are driving good insights on how to change their customer experience and how to change their business operations? Or is that still Yeah. Something you’re educating the market on?

RB, CEO, Sprout: I I would say that most folks know that it’s a place that they need to be. I think that we’re we’re when I say early in the adoption curve, I still spend a lot of time with executives and marketers where they’ve they’ve sort of outsourced the strategy. It’s the youngest person in the room. It’s somebody in the marketing department that owns it. And I think that the forward looking organizations and and CMOs are the ones that are starting to think about this in a new way.

Right? So I would say that most customers that we spend time with, they’re early in terms of adoption. They think about it oftentimes as another marketing channel that they might be executing against. But when they start to see these changes, you know, we’ve seen a lot in terms of how things are changing with search engine optimization and search engine marketing, what we’re seeing on traditional marketing channels, the volume of consumers there and how they’re engaging changing. I think it’s it’s it’s creating a very different conversation in the world of of social.

Arjun, Analyst: And maybe now we can switch to enterprise because that’s been a big focus area, as you said. And we’ve seen sort of the success, you know, with your 10 k customers, your 50 k customers. And I think even last quarter, you called out six and seven figure wins. So where are we on the enterprise journey? What have you changed?

And what is still kind of left to to do to make sure you’re winning upmarket in in the enterprise?

RB, CEO, Sprout: Yeah. I I mean, we’ve we’ve added a lot in terms of product. If you think about the capabilities that we’ve added in the platform, we’ve been doing a lot of work on the social customer care side, on the social listening side. We added influencer marketing to to our suite of of products about a year and a half ago. So continuing to spend time there.

In q one, I talked a little bit about the the governance and security and some of the other functionality that we’ve been adding into the platform. From a go to market perspective, Mike Wolf joined us as our CRO, midway through last year, and we’ve we’ve been really, like, adding a lot of horsepower to that teams and our operations from a go to market perspective. So I you know, I I think probably what I’d highlight is you you’ll continue to see us do more in terms of thinking about the product suite and the capabilities. From a go to market perspective, we’ve been incrementally adding folks to our enterprise capacity, but generally in that that direction of of of opportunity that we see.

Arjun, Analyst: Okay. And and since Mike has come on as CRO, has his role is it a wholesale change of how you go to market in the enterprise? Is it kind of evolution of things that you’ve been doing? What are the, I think, big the or the big initiatives that you might be working on?

RB, CEO, Sprout: Yeah. I I call it an evolution more than any wholesale changes. Like stability for us was very much a focus as we turned the year. Mike, you know, Mike did twenty years at Salesforce. He’s seen one of the largest software companies in the world scale.

So he brings a lot of operational excellence to us when I think about revenue operations and thinking about, you know, the mechanics of how to build a really successful go to market organization and scale it up into the enterprise, scale it globally, scale it into partnerships. Those those are all areas that he really spikes on that that he’s been investing in.

Arjun, Analyst: And as you’re focusing on enterprise, maybe from a product perspective, how how is it that your your go to market is actually changing? Like, are you selling individual products? Are you saying, here’s Core Social, here’s analytics, here’s influencer marketing? Are you selling the platform? What’s what’s changing there to resonate with enterprise?

Because we know enterprises love a platform approach, and they wanna buy everything kind of together.

RB, CEO, Sprout: Yeah. Yeah. I I mean, some of it from a go to market perspective is just the the product marketing of of this. And, you know, we see a Our vision is to be the social platform that brands leverage to execute on their social strategy.

And so that means that we’re solving many problems for customers across many different departments and many different use cases. So the team from if you think about an enablement perspective, they’re thinking about that a lot. Right? Like, how do I go in and knowing that on the marketing side, it might be selling to someone that’s on brand or content or PR or comms? On the care side, it might be somebody who owns customer experience or maybe owns part of the call center.

So there there’s there’s a cross training and enablement in terms of the opportunities that exist there. There’s a depth in terms of understanding those stakeholders and the products. And then for us, it’s continuing to ensure that we’re adding the right capabilities that that our customers are asking for.

Arjun, Analyst: And your when you’re thinking about your growth rate as a business, how much of it is dependent on getting more seats and kind of expanding the personas

RB, CEO, Sprout: Yeah.

Arjun, Analyst: As you talked about you’re selling to versus building the product set and saying, oh, here’s an add on. Here’s a premium module. Like, where does the growth come from?

RB, CEO, Sprout: Yeah. So I’d say that the the majority of the growth that that we see is is, you know, that going into accounts and expanding on the use cases. Like, when we go into marketing departments today, and this has changed a lot in my nine years here. Right? Nine years ago, our team was very much focused in on selling to a marketing generalist.

And then you show up in a lot of these enterprise accounts that we work with today, and you’ve got a VP or SVP of social who has a team of people underneath them. You’ll find people in the, that own brand or content or inside of Spread. So for us, when we’re going in, it’s very much making sure that we are in front of all of the various stakeholders that can benefit from this. And then on top of this, we’re constantly looking for tangential areas to continue to grow. Like, if I think about a few years ago, one of the things that we saw happening was reviews and reputation, and that was an organic build for us where we saw a lot of the people who are owning reviews and reputation had very similar job profiles, sometimes the same person that was doing social media management.

So we’ll continue to look for opportunities. Influencer marketing is another one where really coming up in our customer conversations is an opportunity that we felt like we needed to solve for our customers.

Arjun, Analyst: What and yeah. So you made this on influencer marketing. Maybe touch on that a little bit because you made this acquisition of Tagger a year and a half ago.

Joe, CFO, Sprout: Year and

Arjun, Analyst: a half ago? Yep. What is yeah. What is so maybe educate us. What is so unique about influencer marketing?

I think, you know, maybe people have different levels of familiarity with it, but I’d be curious what the value proposition is there is and how your customers are using I think you rebranded it now. It’s called influencer marketing. Yep. But how are they using that traditional tagger product to Yeah.

RB, CEO, Sprout: I’m happy to. And I’m also smiling because I’m thinking about how more and more kids now are, like, dreaming of being YouTubers versus athletes and singers and musicians and the rest of it. But but, essentially, what that product does for us today is well, I’ll I’ll I’ll take a step back. What we started to hear from our customers was that they were realizing that these creators, these influencers on the platform were were driving really engaging conversations. They had authenticity.

They had mind share. They had share of voice. And we realized in talking to a lot of our customers, they were trying to develop a strategy to bring more influencers behind their brand, but it was completely manual. Like, if you think about this, you know, how do you even figure out who the right influencers are? And oftentimes, what we’re seeing from customers is that they’re literally just on social, and they would discover someone and then try to figure out how to reach out to that person and then figure out how to contract that person, and then, you know, try and figure out if the work that they’re actually doing, the posts that they made on behalf of the brand were actually doing anything to drive revenue and value.

And, again, this is this is actually if we think about the concept, it looks very similar to how we think about celebrity endorsements, but at a much bigger scale. Right? So many of these brands now are bringing on tens to to hundreds to thousands of of creators and influencers to support their brand. And so what we do is we are the technology layer behind that. Our product or influencer marketing solution actually leverages all the data that we collect from the social networks and these creators.

It allows our brands to figure out based on their unique brand profile who are the right creators that have overlap with their audience and their target market that are perfect fit for their brand. We also have a brand fit score to make sure that they’re perfect overlap, but then we have a safety score to make sure that they’re not talking about anything that would be confrontational or misaligned with the brand. And then we can actually tell you for the folks that fit within that, what kind of performance do they have? What kind of engagement and reach do they have? So we’re doing all of that on our platform.

And historically, most of these people, again, were doing this manually and then they were putting it in spreadsheets. Wow.

Arjun, Analyst: So you’re you’re essentially identifying this influencer a is great for this demo of 25 to 30 year old males. And if that’s the that’s the demographic that the customer is going after, this this is the group or the particular influencer that they’re and otherwise, it’s like finding a needle in a haystack.

RB, CEO, Sprout: It’s a needle in a haystack. And and the interesting thing about this, I think, for so many of these folks is you think that there’s an influencer that might be great for your brand, but what we’ve actually identified with a lot of these brands is the folks that they think that are great fits aren’t necessarily great fits.

Arjun, Analyst: Yeah.

RB, CEO, Sprout: And and some of that may be by the way, they already do sponsored posts for your competitors. Right? So, like, authenticity matters a lot. You actually want someone that’s a unique fit, or they might seem like they’re a good fit, but in the past, they talked a lot about drugs and alcohol, and that doesn’t align with your brand. And so what we actually and and then sometimes what you’ll find is it’s okay.

It’s it’s even down a layer in terms of the overlap in your audience. So you may you may be a a sports brand or manufacturer, and you may think I just want folks who are into baseball bats. But what you actually realize is that you wanna go down a layer into specific markets, and there might be other sports that are outside of baseball that actually have a perfect overlap and can impact you. So what we’re actually doing with these customers is making sure that the the profiles are a perfect fit. And oftentimes, we’re bringing in insights that they didn’t even have about the types of creators that they should be hiring.

Joe, CFO, Sprout: And and and I would just add in one other couple things there too, though, that are important about the platform because we’ve talked about the discoverability, which is probably the huge competitive advantage that influencer marketing have has. It also gives you, like, estimated cost. So, like, a lot of times, they go, like, what do we what do these creators charge? And so it also we also have the ability to say, okay. This is what on average this creator would cost if you were to hire them.

Yeah. And then you can, you know, you can run your contracts. You can run the actual campaigns. And then there’s this huge analytic player that sits on top of it that allows them to do real ROI analysis to understand, okay, what was the actual impact? Yeah.

So, like, the whole other aspect of this is the post kind of campaign analysis that we can bring in Yeah. The equation.

Arjun, Analyst: And so maybe tying it back to the business a little bit too. So how big of growth driver can this be? Because it seems like a huge ROI, you know, we know every every brand consumer brand is leaning into the influencer channel. Are you selling it separately? Are you selling it like, is it monetized as a separate SKU?

How do you how do you think about Yeah.

Joe, CFO, Sprout: Yeah. So so it’s a separate SKU, and so we do monetize it separately. You you obviously, if we’re in a in a in a negotiation, we’re also selling core. We can sell influencer marketing. But one of the things that this has allowed us to do is, let’s say, there’s a an enterprise that we’ve been trying to sell into for the last couple years, but they already vended with one of our competitors, and the renewal’s not up for a couple of years.

What we’ll be able to do in those scenarios is go in and say, okay. I understand for the traditional, like, care, marketing, you know, analytics use case, you’re you’re not gonna make a move right now, but what about influencer marketing? None of our competitors none of your competitors our competitors have this product. And so what we’ve been able to do is use this. It’s almost like a Trojan horse in some of these larger accounts.

And so we’ll go in there. We’ll sell influencer marketing separately than the rest of it. And then I click, k, in, like, two years when the contract is up, now we’ve gotten in. And so the the nice thing about this is that can it is a standalone SKU, that we can go into to organization.

Arjun, Analyst: And a landing point, it sounds like, which is yeah.

RB, CEO, Sprout: Yeah. Interesting. The the other part that I really like about this as an opportunity is, you so many of our customers are talking about ROAS, return on ad spend. Mhmm. And in many places like traditional search engine marketing, they’re seeing the cost per click increase and the number of people clicking on those static ads decreasing.

And so all of these marketers have these finite budgets. Oftentimes, they’ve got more constraints on budgets than ever before, and they’re looking for high value places to get a return. And for every dollar in, we’re seeing 5.67 out on influencer marketing. So you’re seeing a lot of these marketers saying, wait a minute. This is this is something that we see there’s a lot of return on, better return than some of these other areas that we’re investing in, and we’ve got to build a strategy and go execute.

So we we actually have a, you know, I think a really nice value add for folks there and thinking about how they’re they’re investing their marketing dollars.

Arjun, Analyst: Yeah. Can we, so part of this, the value prop of influence marketing is all the data that you have underneath it. Yeah. And I wanna touch on that piece a little bit because, you know, one of the things that I always thought was fascinating about Sprout is you have access to all this data from all the different social platforms, and you’re ingesting it and you’re normalizing it and you’re kinda running analytics on it. And it’s very hard to do.

And it kind of has, I think, created this maybe moat to stop new entrants from coming in. But I’m curious how that data landscape has changed with all the change that we’ve seen with the social media platforms themselves. Right? Like, there’s been more focus on privacy. We have seen Twitter, has changed hands in terms of ownership.

Like, has your data asset or your ability to ingest and run analytics on this vast amount of social data changed at all, one way or another?

RB, CEO, Sprout: It’s it’s increased. Yeah. So I I think what you’re highlighting is something that’s been a massive competitive advantage and moat for us in that, you know, you you rewind nine, ten, twelve years ago, there was a lot more access to these APIs, less networks, obviously, that you needed to integrate with, but a lot more access to the data. And, and you’re right that the social networks today, for privacy, security have really limited the amount of partners that they have in the ecosystem. And so we’re we’re in this unique spot in that, you know, we’ve got 30,000 brands that are the biggest advertisers in the world for these social networks.

We’ve been in this space for fifteen years. We there’s a certain amount of security and trust and then also execution. Right? Because these these these social networks care about the security, the trust, the fact that we have their advertisers, but also that when they deliver capabilities and products that we can move fast enough to add value to customers. So it’s actually increased the amount of value and data that we have.

This is also one of the things that’s been really valuable for us when I think about our own data and AI models in that this is data that’s not readily available and accessible to any LLM. Right? This is stuff that’s gated behind these APIs, And so it’s a set of data that very few people in the world actually have access to. And we have it across all of these social networks to and and we have it tuned for the brands that we work with.

Arjun, Analyst: Yep. Okay. Very helpful. Maybe on the other product side, I wanna jump to so we we know influencer marketing and Tagger is kind of a big focus area. The other part is care.

Yep. You talked about that a little bit earlier. But, obviously, we see. Right? You know, customers go to Twitter, they go to Yeah.

Facebook, they go to Instagram, and they complain about brands. It’s much easier, right, to do that sometimes. So what do you what what is what is the role that Sprout is playing on this care customer service side? Because you have access to the data. Yep.

You have you’re looped into the platforms. So what what is your opportunity in in this customer service market for social?

RB, CEO, Sprout: Yeah. It’s it’s become massive. I mean, we were always doing an element of social customer care, but it wasn’t termed that way before. And and the reason I highlight that too is because before, you know, when I first started, it was a marketing generalist that was managing all of social. So if someone happened to complain on social, that marketing generalist would try and respond.

And if they needed to, they would send an email to someone in customer care to try and help that customer. Well, the reality is, like, you start to see these massive volumes of feedback on social where people are going and they’re looking for support. They’re not calling your +1 800. They’re not going to your website. Sometimes they’re not even going to your app.

They’re going directly to social, and that’s where they’re posting their complaint, their ask, their service requirement. And so what we started to see is huge volume spikes, too much, for any marketing journalist to manage, and the volumes in many places looked very similar to what you were managing in your traditional call center. And so we started to see this need for very sophisticated help desk like solutions with within side of social. And this just wasn’t addressed by anybody else that was operating in the traditional call center world. And so we started to build those capabilities out for our customers, and that’s what we see today.

Like, we you know, we’ve talked about we had McDonald’s speak for us at Dreamforce. Great example is these customers who literally get, you know, tens of thousands, if not more, of volume that’s coming in on a daily basis from customers across the globe where they’re trying to manage these care issues. And if you think about it, when it comes in as a tweet, you don’t know if it’s a sales opportunity, a product piece of product feedback, or a really big issue that you need to get in. So our products today capture all of that data. They funnel it into what we call the smart inbox, and then we can use things like AI to classify sentiment.

Like, this is a major issue that has potential to go viral, or this is a VIP client that’s complaining that has a massive audience that you wanna prioritize. So we started to really build out that tool set for our customer base today, and it’s it’s become a very big, very big use case for anybody that has any volume on on social.

Arjun, Analyst: And it seems like a big missing piece of to your point of a lot of the other traditional customer service platforms. So what is your like, do you integrate with them? Do you like, Salesforce, ServiceNow? Yep. And we obviously have the CCaaS players in the space too.

Is there a product integration? Is there a go to market partnership? How do you think about, you know, selling a cohesive kind of customer service solution to your customers? Yeah.

RB, CEO, Sprout: We we very much see it as a a partnership opportunity. Today, we have integrations into Salesforce Service Cloud and Zendesk. You know, if you think about for for us, our role in that is, we believe that no one does it better than us in terms of social. And for a lot of these other platforms, social is a missing link. And so what you continually to see from from brands is they’re trying to figure out how do you get the three sixty view, the omnichannel view of that customer.

And if I’m missing that social element, there’s a really big risk in how I’m addressing somebody’s issues. At the same time, it’s a surprise and delight when I come in and someone has a holistic record of, hey. I I sent an email before I called in or I tweeted, and then I collect that together to know what the case is. But I also know what’s my purchase history. Like, we have you know, in our platform, you can connect to things like Shopify, right, on top of the the CRM record.

And so now you have this holistic view, which means that when the agent shows up to serve that customer, regardless of the channel that you came in on, we we can provide that level of of support. So, it’s very much a a partnership view in terms of of how we think about these these other technologies.

Arjun, Analyst: Okay. Perfect. Well, we have a few minutes remaining. Joe, I don’t wanna leave you out. So I have a few I have a few questions maybe on the financials.

So I think last last year, it’s it’s 2024, they disclosed the net retention rate. I think it was one zero four, one hundred and four percent overall for the company. It was one zero eight excluding SMBs. So clearly, there’s some headwinds in the SMB market. Think a couple of years ago, right, you focused you pivoted to focus up markets.

What’s happening in the SMB base? Is that strategically important for you? Are you okay to kind of deprioritize, I’ll say, that market over the enterprise? How are you thinking about

Joe, CFO, Sprout: Yeah.

Arjun, Analyst: That and the impact it’s having on your financials overall?

Joe, CFO, Sprout: Yeah. I think overall, we feel good about the shift we made a couple years ago. And so I what I would say is we’re not, like, we’re not getting out of the SMB business. What we’re what we’ve done is and the and the moves we made is, okay. The SMB customers we’re bringing in now are higher quality, more sophisticated, and the cost to acquire them is much lower.

So the customers we’re bringing now into that segment, we actually are great. Right? They’re solid customers. They’re the kind of customers we want, and the and the unit economics around that part of the business are strong, but they’re still SMB. So net net, they’re always gonna perform from, like, you know, an NDR standpoint less than the enterprise, like, regardless.

The thing is now that that part of the business is is stable and growing, and we feel much better about it. So over the long term, it’ll it’ll continue to be a smaller part of our business. So I don’t think we’re ever gonna get out of that business, but we do like the customers we’re bringing

RB, CEO, Sprout: at this stage.

Arjun, Analyst: And as maybe the mix shift of the business changes, right, because it’s gonna get more enterprise over time, what is what is your sense on how net retention might change over the next couple years? Like, should we start to see it tick up? Or is it maybe too early to say at this point just as you analyze the new customer cohorts? How do you think about that?

Joe, CFO, Sprout: Yeah. We definitely believe it’ll tick up. Yeah. So, Arjun, we definitely believe, like, if we look at the customers we’re adding in, like, you know, now versus we’re adding a couple years ago, the quality, the the size of the the terms of the contracts are more annual multiyear than the historical month to month. And so we do believe overall, not only the quality, the contract duration is definitely gonna help drive higher NDR over over time.

Arjun, Analyst: Perfect. And we’re kind of in this now we’re in this environment and, you know, everyone’s kind of curious about what is the enterprise software spending environment like because it seems like there’s a bit of uncertainty in the world. But what are you I’m curious what you’re seeing from your customers. Has it shown up in the funnel? Has it shown up in any of the leading indicators?

Are customers still, hey. We’re, you know, we’re kind of maybe ignoring the noise and moving forward with our business priorities?

Joe, CFO, Sprout: Yeah. What we’ve said is, and this goes, you know, up and through when we we talked about this earnings a couple weeks ago, which is all the noise that’s been going on recently, we haven’t seen any change in our customers’ behavior. So the macro from our standpoint has been pretty consistent over the last two or three quarters. So I know there’s a lot of chaos going on right now or whatever you want to call it. We haven’t seen that shown up in any change in our customers’ behavior.

So we feel pretty good as, you know, as we sit here today that there hasn’t been any major shift in in our customer behavior.

Arjun, Analyst: Okay. And I can imagine as a CFO, maybe it’s a tough time to give guidance just because of this phenomenon. But how have you approached that for the rest of the year? Yeah. And what’s your maybe confidence, you know, with it’s not in the business, but yeah.

How how are you approaching that?

Joe, CFO, Sprout: I think we, you know, we talked about this last quarter and the quarter before. Just taking a much more measured approach to guidance this year overall. And, you know, just wanna make sure that we give ourselves plenty of room to succeed. We talked about, hey, we’re assuming the macro doesn’t change at all. And so there I think from that standpoint, we feel good about how we’re approaching guidance.

Okay.

Arjun, Analyst: Alright. Well, perfect. We are up on time. Joe, Ryan, thanks so much for coming. Appreciate it.

Fascinating conversation. Appreciate it.

Joe, CFO, Sprout: Thanks, Arjun.

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