Sprout Social at Goldman Sachs Conference: Strategic Growth and AI Focus

On Monday, 08 September 2025, Sprout Social (NASDAQ:SPT) presented at the Goldman Sachs Communicopia + Technology Conference 2025. The company discussed its strategic growth in the social media management space, focusing on enterprise market expansion and AI integration. Positive momentum was highlighted by significant revenue growth and strategic acquisitions, although challenges persist due to elongated sales cycles in a tough macro environment.

Key Takeaways

• Sprout Social’s revenue has surged from $50 million to over $400 million since 2017.
• The company is leveraging AI and acquisitions like NewsWhip to enhance real-time social media capabilities.
• A large market opportunity exists with 200 million businesses on social media, yet only 200,000 are currently served by Sprout Social and its competitors.
• Transitioning to annual and multi-year contracts is a strategic focus as the company moves upmarket.
• The rise of social media as a primary search tool presents new growth avenues.

Financial Results

• Revenue has grown from $50 million in 2017 to over $400 million, indicating strong business expansion.
• Forward-looking indicators like CRPO and billings may appear softer in the first half of the year due to deal renewal timing.
• A robust second half of the year is anticipated as deals signed in Q3 and Q4 come up for renewal.

Operational Updates

• The company has accelerated its addition of large customers, aligning with its upmarket strategy.
• A strategic shift from month-to-month to annual and multi-year contracts is underway.
• The NewsWhip acquisition enhances real-time listening capabilities, complementing existing products.
• Sprout Social processes about a billion messages daily and integrates with over three dozen networks.
• Tagger, the influencer marketing product, is the fastest-growing segment, underscoring the importance of influencers.

Future Outlook

• Sprout Social plans to continue moving upmarket and focus on securing multi-year deals.
• The company expects new logos to drive growth, particularly in markets lacking a social media management platform.
• Leaders in marketing are increasingly "social first," benefiting Sprout Social’s strategic position.
• The shift of consumers using social media for search offers a significant growth opportunity.

Q&A Highlights

• Sprout Social uses AI to provide real-time notifications and suggested responses to customer service issues.
• The NewsWhip acquisition aids in preemptively managing potential crises and leveraging positive trends.
• The company’s defensibility is attributed to its unique data access and long history with social media data.
• Value selling to enterprise customers is emphasized by demonstrating return on investment.
• Sprout Social differentiates itself with ease of use and a single code base for seamless integration.

For a detailed understanding, please refer to the full conference call transcript below.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Unidentified speaker: Well, great. Thanks so much everyone for for joining today. We’re really excited to have, Joe DelPritto, CFO of Sprout Social, as well as Alex Kurtz, VP of Investor Relations and Corporate Development, to actually kick off the the post keynotes part of the section sessions. You’re you’re one of the first sessions. So really happy to have you here, and thanks for coming.

Joe DelPritto, CFO, Sprout Social: Yeah. Happy to be here.

Unidentified speaker: Very excited. Fantastic. So, you know, I guess I guess maybe just to start, Joe, for those in the room who are a little bit less familiar with Sprout Social, what you’re trying to build as a company, maybe just lay that out for people.

Joe DelPritto, CFO, Sprout Social: Yeah. So I I mean, the the original idea of Sprout and still holds true today, which is what the founders, you know, came to market with, which was somewhere in a phone and email, social was gonna change the way brands and consumers interact. This was gonna be a new communication channel. This is where people would go to learn about brands. This is where they would discover them.

This is where they would complain about them. This is where they would say good things about them. And say, hey, by the way, this is gonna be something as consumers who are using social, but at some point, brands are gonna have to find you know, need a platform that’s gonna allow them to interact with those consumers. If you think about it today, you know, we inter you know, integrate with over three dozen networks. We consume about a billion messages a day.

And this is the number one place where, you know, consumers are going to learn about brands. Right? This is, you know, I think, you know, fifth over 50% of people before they buy something are checking social first. The average person on social spends two and a half hours a day on social, which is kinda crazy. And so the idea there was, like, hey, by the way, whether you’re going there to if you’re a brand and you wanna market on social, you wanna reach different consumers at different places, whether it’s social customer care, whether it’s all the data and analytics, which we’ll get into.

But, basically, the the the overarching idea was this is gonna be the next communication channel between brands and consumers.

Unidentified speaker: Great. That’s really helpful. And, Joe, you’ve you’ve been at Sprout since 2017. Maybe just talk a little bit about your career journey, what led you to Sprout, and then what maybe I mean, you’ve been through a lot of different iterations of Sprout over your time at the company. And so maybe where where are we today from your perspective?

What have you learned about that throughout that journey?

Joe DelPritto, CFO, Sprout Social: Yeah. For sure. So I start when I started at Sprout, it was about a $50,000,000 revenue business. And so, you know, as you know, we’re, you know, well over 400 now. And so prior to Sproud, I spent most of my career at mid stage fast growing businesses, like in the software technology services type of space.

Companies that were, you know, started out in the smaller end, but then upscaling very large. I was at, you know, Sparrow is the fourth company I’ve been at that was a private company that went public. So I had a lot of experience navigating that transition between, okay, when you’re a small private company, you’ve got VC and PE money, and then eventually become a public company, and then running working at these public companies for many years. And so what attracted me at Sprout, which is probably still the case today for me, which is when I met with Justin and Aaron, the you know, two of the original cofounders and and some of the smartest people I’ve ever met, most motivated people, probably the most humble people. And even, you know, Ryan Brett, our current CEO, was was there at the time as well.

The same thing, like, super impressive people but very low egos. That’s really how Sprout has been built over the years. And that’s really what’s kept me there. What really drew me to this company was, like, hey, we’re building something really cool. It’s a big believer in the space.

I was a believer that, hey, by the way, I do think social is gonna change the way brands and consumers interact. And these and these the people I’m working with have they just have those characteristics. Got it. And so I think what I what gets me excited to your question about the same thing that got me excited when I started at Sprout is what gets me excited and why I’m still there is, as consumers, we’ve been using social for a very long time. But as far as businesses adapt you know, adopting platforms like Sprout, we’re still very, very early.

And so, you know, we forget sometimes, you know, social moves very quickly from a on the consumer side. But from brands, there there are very few businesses that have adopted a platform like Sprout. There’s 200,000,000 businesses on social. Us and our competitors maybe have 200,000 businesses total. So you think about the market opportunity, it’s pretty massive.

But we’re still very early early stage as far as where the market is from maturity standpoint. So what gets me excited about Sprout is, like, we’re still very early on this journey.

Unidentified speaker: Mhmm.

Joe DelPritto, CFO, Sprout Social: And and that’s why I’ve I’ve I’ve loved staying at Sprout, and that’s why I really enjoy what we’re building here.

Unidentified speaker: That’s great. And then, Alex, you’re you’ve joined relatively recently. So maybe talk about your career path. I know you’ve you’ve been at other public companies before, and what what is different about Sprout from your perspective?

Alex Kurtz, VP of Investor Relations and Corporate Development, Sprout Social: Yeah. So, joined, what, last October? So I was actually on the sell side for fifteen years, covering software and other infrastructure companies. And then I helped take a a company called HashiCorp public, back in ’21, which was quite a quite an experience. And then I had actually take I had actually helped take, Sprout public when I was at KeyBank, covering the stock.

So I’d known Joe and Ryan and Justin, you know, years ago. So when the time timing came together, it was a a really good ex you know, opportunity to jump on board. Because I as Joe said, I I think the opportunity you had for social is very very early. And so I think joining the company along with a great group of people was a no brainer for me.

Unidentified speaker: Okay. Fantastic. Before digging in further on the business, just wanna touch on the most recent quarter. You had acceleration in large customer ads. Seems to be fitting with that upmarket strategy that you’ve been talking about for a number of quarters now.

Though forward looking indicators did decelerate a bit. You attributed this to to seasonality. Maybe just give us some more details on this dynamic and then what you’re expecting from your customer base ahead of a what is supposed to be an enterprise heavy renewal cycle in the second half.

Joe DelPritto, CFO, Sprout Social: Yeah. So for those that aren’t familiar, you know, the business really grew up more down market. Right? So a lot of month to month kinda contracts. And over the last, you know, three or four years, as we move more up mark, we’re moving away from more month to month to more annual and multi year.

But we still even on the enterprise side, you know, we’re they’re still mostly annual deals. So what that means is we signed a lot of deals in q three and q four. So we’re still second half, you know, pretty heavy. But because we’re not sending as as many multi year deals yet, those deals kinda burn off in the first couple quarters. So some of the forward leading indicators, like you maybe talked about, like, CRPO and billings, in the first couple quarters always seem a little softer.

But then when you get into the second half, when you get to the renewal of those deals from last year, we do a lot of business in q three and q four. I think what you’re gonna see, Adam, is you’ll see those metrics kind of turn back around, and they’ll look really solid. We feel really good about those metrics looking really strong in the back half. And so that’s kind of dynamic that’s going in our on on our businesses. We’ve gotta start moving more to multiyear deals.

We’ve moved away from month to month, which is great, more annual, but we need to start moving more into the multiyear deals as we get up more even more upmarket.

Unidentified speaker: Okay. Got it. And then you mentioned sort of the 200,000,000 businesses on social. Yeah. And you mentioned that there’s a massive gap between what you’re serving and what that opportunity is.

Maybe just talk a little bit about why that gap exists now that we’re so far I mean, I remember, you know, doing Myspace so many years ago, and then it was Facebook, then it was Instagram and TikTok. And I think, you know, a lot of investors have the question of what is going to cause this market to inflect from your perspective? How would you how would you think about that?

Joe DelPritto, CFO, Sprout Social: So there’s there’s a couple things that are going on. If you think about mo over the last, like, let’s say, ten years, most and let’s just start with the marketing use case, for example. Most marketing organizations have been built on traditional marketing strategies. And think about the people that are running those organizations, they did not grow up social first. Right?

They grew up in in in the SEO, SEM, offline advertising space. So a lot of these larger organizations, their whole team and everything built that they’ve they’ve built their organization around has been built off of these more traditional, what we would call, advertising approaches or marketing approaches. If now what’s happening or what you’re gonna see happen is, five to seven years or five or ten years ago, when we were selling into a marketing organization, we were probably selling into, like, the social media team, which was probably the intern and the youngest person on the team ten years ago. Right? What you’ve seen over the last ten years, and this is why we get excited over the next five years, is now those folks are finally becoming, like, the VPs.

Some of them have started becoming CMOs. And so we believe there’s a there’s a couple things going on in the world or or or in the market that’s gonna really help us. One is there’s more and more folks that grew up social first. They’re gonna start becoming leaders. They’ve they’re starting to become leaders in the organization.

Then they recognize, for example, the importance of social to their strategy. Number two is consumer behavior continues to shift. Right? You’ve seen a lot of even more recently, more and more search moving away from your traditional, you know, paid or SEO SEM methods and more and more folks going to social to search. And a lot of that’s caused direct you know, the disruption of some of some of these AI companies.

But what we believe, there’s there’s two things over the next five years that really help us. One is the leaders of these organizations grew up social first, and then the consumer behavior continues to shift more and more away from the traditional kind of where they’re finding brands. And so I think those two things will really help us. But a lot of these organizations a lot of these large organizations and you’d be surprised that the very mature enterprises that have very, I would say, nascent social strategies even today, which would surprise you. But that’s because the people on their teams just did not grow up in that kind of social environment.

Unidentified speaker: Understood. No. That makes a lot of sense. And then I think it’s natural segue to the way the world is changing, AI. It almost feels like when we’re talking about this gap and why it existed historically, it might not even matter in the next five to ten years.

And so talk about what your strategy is. What are you doing internally with AI? How are you embedding it in your product?

Joe DelPritto, CFO, Sprout Social: Yeah. So I think the one thing that gets us excited about the AI side of this for us is we’re one of the very few there’s probably a handful of companies that have access to the social networks, data, and APIs. Right? Like, we have a pretty big moat around the industry because, like I said earlier, we, you know, integrate with over three dozen networks, a billion messages a day, and there’s only a handful of us that have that access. And these if you think about it, a lot of these folks that are that we integrate with are not gonna be sharing data with any of the major AI players.

For example, Google is not gonna give all their YouTube data to Meta. Right? Meta is not gonna give all their data to OpenAI because they’re all trying to build their own. And so we kinda sit at Switzerland. And so what does that mean for us?

That means is that we then use for example, we use OpenAI, we use cloud, and we use that to run the you know, with all the social data that we have, we can then take that and apply our own AI against it. And what does that mean? That means I’ll take a a very basic example. Let’s say, historically, there was or let’s say there’s an issue brewing with a cuss like, a a brand’s got a a customer service issue brewing somewhere. Let’s say there’s a product recall or people are getting sick.

Historically, what happened is that would pop up and then there’d be all these internal communications that have to figure out what’s going on. What we can do now, for example, is say, okay. We identify we can automatically identify the situation. We see a bunch of support tickets coming up. We can then notify immediately the marketing organization that, hey, by the way, there’s an issue blowing up on TikTok.

There’s an issue blowing up on Instagram. And at the same time to AI, we can then say, okay. By the way, here’s suggested responses. Here’s where you should deal with it. This is the part of the here’s the part of, like, hey, this is a big deal on Instagram.

It’s we’re not seeing this we’re not seeing this on Facebook. We’re not seeing this on Reddit. Or maybe this is a completely Reddit issue. So what we can do is because we have all this data, we can very quickly, in that example, use AI to come across and tell you what you should be doing, like, real time versus, oh, by the way, I have to really be monitoring that on my own and understanding what’s going on.

Unidentified speaker: Yeah. And I think it’s a really good segue actually into NewsWhip, which you just acquired. Talk about what that adds for you. What what in particular, what does it do that you weren’t able to do before?

Joe DelPritto, CFO, Sprout Social: Yeah. And maybe I’ll let Alex, since Alex worked on that deal, kinda talk

Alex Kurtz, VP of Investor Relations and Corporate Development, Sprout Social: to the news with Yeah. We’re we’re super excited about it. It’s a really neat company. So we’d always been getting feedback from our customers that we needed a a real time component to our listening products. Right?

So our listening products are really deep and wide. They capture a lot of data. They give very thematic, you know, very detailed analysis and reporting to a customer. But to be able to identify a problem real time within minutes of something breaking on social, this is really where Newswhip, comes in. So they have a very wide net of, you know, they track a lot of different platforms with articles and press media, and then they attach all the kind of social interactions to all that content.

Right? So they actually have a dashboard, that can show you real time if an article’s good or an article’s bad and can be predictive. So if you’re in a PR and comms team, you can see within by the hour and by the minute if this thing’s gonna roll over or this thing’s gonna become a bigger issue for you and how to act against it. So that was something that was real and and the UI is beautiful. So all of it really worked well for us.

We saw it as a road map fit for us and and, like, something that our reps could sell pretty quickly. So we’ve been pretty happy with the fit so far.

Joe DelPritto, CFO, Sprout Social: Yeah. And I think one thing that’s that is we’ve seen a lot of momentum onto what Alex was hitting on is this overlap between traditional journalism and social. So what you’re seeing is you see these articles pop up in a local newspaper, for example, and then all of a sudden, they’re trending very quickly on Instagram. They’re trending really quickly on Reddit or vice versa. You now see journalists going into social to find articles.

Like, they’ll go deep into Reddit and find something, and then they’ll go write an article on it. But Newsweek did to Alex’s point is they it’s the intersection of those two things. So they can say, oh, by the way, there’s this local article that just got written in Kansas City. It’s popping up on YouTube. You better deal with this right now because we have enough data, and Alexa said this is gonna this is going this way.

And so it’s really interesting because we think there’s this overlap between all the traditional online media sources and social, and they’re solving for that overlap.

Unidentified speaker: And how were how were companies dealing with this, like, sort of crisis management prior to something like this?

Joe DelPritto, CFO, Sprout Social: Yeah. So a lot of the times, if they weren’t using a tool like Newswhip, it would it was already after it blew up. Right? Oh, by the way, this thing blew up on us, and we didn’t even know it. And, oh, by the way, now we’re now we’re now we’re on our heels.

And now we’re trying to figure out where this problem is the biggest. What networks is it on? Is this just a is this just a traditional media issue, or is this actually blowing up on on social? And so, historically, they would just be caught flat footed Okay. And be reactive.

Why what we’re what Newsweek will do is they’ll get ahead of it for you and say, oh, by the way, you you need to get ahead of this. And also, like, positively as well, you should go you can go to the website and see some of their customer stories. They have a really interesting customer story. Ford is one of their big clients, and they have a really positive scenario where, you know, there was this big powder power outage. And, basically, the local folks were using their, like, electric f one fifties to help provide power.

And Ford was able to news to understand this was happening in this really segment this really like, this happened, like, real time within minutes. And then they could go ahead and promote that across, you know, the the the neighborhoods and the locations because this was happening. So it’s not just necessarily always negative or crisis. Sometimes it can be a very positive thing that they’re trying to promote.

Unidentified speaker: Okay. Understood. Really helpful. I think it’s a really good segue into the question we’ve all been talking about for the last one to two months, which is this question of the death of software. Right?

And, you know, we’ve seen the frontier models, generative AI, more broadly, just a lot of commentary around what applications they may be able to come in and take care of themselves and displace at lower costs something, I’m not saying like Sprout, but Yeah. I’m just curious how you think about your defensibility and moat in a scenario where those companies do start to build out an application layer themselves.

Joe DelPritto, CFO, Sprout Social: Yeah. I think for us, and I mentioned this a little earlier, I think the the unique the unique place we sit is to access the actual data. Right? It’d be really hard for an AI company to come in and disrupt this because they don’t have access to all the data and they don’t have access to the APIs. And most of the networks or all the networks over the last five years actually downsized the number of folks they’re giving the data to for a couple reasons.

One is GDPR issues, privacy issues. Number two is they don’t want people building their own very proprietary, you know, tools off of their social data that they believe is, like remember, they use that for all their paid targeting. And, like, they that’s how they run their business. They’ve given it to us because, like, okay, Sprout. You’re one of the four or five companies that is kind of agnostic.

We’re not trying to, for example, monetize that data directly. We’re providing it to our customers who are their advertisers. And so one of the reasons we feel like we’ve got a pretty big moat around that kind of the AI, you know, the new AI companies is they’re just not gonna have access to the data.

Alex Kurtz, VP of Investor Relations and Corporate Development, Sprout Social: I I would just add, we also have ten plus years of working with really large sets of data across social media. Right? That can’t be replicated over by an AI tool, like, in a matter of days. Right? So petabytes and petabytes of data, a billion messages a day, all this stuff that we’ve been normalizing and building into all of our data warehousing inside of Sprout.

We think there’s a lot of value in that, and I think really strong moat to the business because we’re we’re allowing customers to interact with that with that data. It’s very rich, very deep with a a lot of context to it, that we think is pretty proprietary.

Joe DelPritto, CFO, Sprout Social: Okay. And maybe just give

Unidentified speaker: for for investors who might not be as familiar, just to maybe a little bit more detailed breakdown of what the difference is of a random company that wants to use an API to get certain low levels of Facebook or x data or something like that versus what you have access to? What what’s the fundamental difference?

Joe DelPritto, CFO, Sprout Social: The fundamental difference is that, like, if you call up, for example, Meta tomorrow and say, wanna access the full fire hose of all your data, they’re not they’re just not gonna do that. They won’t even pick up the phone. Right? They’re gonna be like, okay. What security do you have?

How many customers do you have? Are my advertisers like, their whole thing is, are my advertisers actually using your platform or not? And so the problem is because we have almost 30,000 customers in over a 100 countries, we’re at a size and scale now where if you’re a small company starting up and you don’t have any size or scale, you’re they’re not even gonna pick on phone. And then number two is, like, what’s your security around all this data information? What are you actually doing with it?

Are you actually repackaging and selling it? Mhmm. Because that’s where all the networks have really clamped down tremendously. It’s like, hey. If you’re just repacking my data and selling it out and you’re not actually helping facilitate their advertisers.

Remember, all our customers are their advertisers. Mhmm. And so there’s a real synergy between what we’re trying to do for them versus what someone else might be trying to do. And so because of that, you you couldn’t even call them up to get the access to the data at this point.

Unidentified speaker: Okay. That’s really, really helpful. Very helpful color there. Wanna dig in on the business, and I know we’ve talked a lot about AI, but let’s go back to the traditional metrics and traditional life cycle. So, just in terms of the enterprises, what do those conversations look like?

Where do you land a customer? And then what does that upsell slash cross sell process look like when we think about net retention expansion, etcetera?

Joe DelPritto, CFO, Sprout Social: Yeah. Yeah. So, you know, that’s evolved over time. I would say, you know, if you went back four or five years ago when you’re going into these enterprises, you might land with, like, the social media team. Maybe there were a couple of people and you kinda started in the traditional kinda marketing use case.

Oh, by the way, I’m on you know, 95% of our customers are on five or more networks. So I’m on a bunch of different networks, and I’ve gotta understand, like, I wanna make sure I’m engaging with the right audience at the right time of day on these different networks. So it’s the the old like, the original marketing use case. Now what happens is as that evolved over time, that could still be the core use case. But when you’re going in these organizations, it’s probably they probably have whole social if if they’re sophisticated enough where they’re calling us up.

So I’m getting past, like I said earlier, like, the sophistication level. So now I’m going into customers that actually where social actually is their strategy. Right? They have the resources. They have, like, the intention that they’re strict like, social is strategic to them.

They’ll have a team of of marketers usually. But sometimes now, Adam, we’ll go in there and it might be a customer care use case. Oh, by the way, we’re getting flooded with you know, if they do a really good job on social, most people these days aren’t going to email, the +1 800 number. They’re usually going to social. And so sometimes now they’ll come in the front door saying, hey, by the way, I’ve I’ve got thousands of thousands of support tickets coming in on social.

I need help. So sometimes it can be support, sometimes it can be marketing. But what’s happening now is it’s such a decentralized buying process, a lot of these large organizations. So back to your question. So, like, for example, Honda is one of our clients.

They have there’s 32 different divisions at Honda. We landed our first division, like, a year and a half ago, and now we’re trying to find our way across the rest of Honda. So usually what happens is, on these large enterprises, it’s broken down by brand or by geo. And then if we know we can get in in one of those brands or geos, we’ve gone through a procurement, we’ve got the MSA signed, we’ve gotten through the finance org, then we can go out. What our team does to your your thing about expansion is, we’ll try to go out across the different parts of the organization, or then we might come back with some of our additional, you know, modules that we have.

Social listening, you know, news web, influencer marketing, which we haven’t talked about. So some then what we’ll do is we’ll expand not only across the different business units, but also with some of our products. Universities Higher Ed is a great one. University is a huge vertical for us. And we might land at, like, you know, Ohio State University in, like, the school of music.

Mhmm. And then we’ll go into the business school and the law school because a lot of these organizations are you know, there’s not there’s not a centralized budget. And so that’s usually how we expand is we can get in there and then go across different parts of the org.

Unidentified speaker: K. Very helpful. And then, you know, you’ve been a couple of years now into really prioritizing that enterprise motion. And I remember when we were first talking about it when that shift we wouldn’t even have to call it a shift. But as you started to focus on that piece of the business more, started to really take shape, I remember you telling me, like, there there’s a lot we have to learn as we go through and we do this at a a much bigger scale.

So maybe talk about what you’ve learned about the enterprise sales motion, good and bad.

Joe DelPritto, CFO, Sprout Social: Yeah. I think what we’ve learned is that, know, a couple of things. One is, like I said earlier, like, there’s definitely way more process as it relates to procurement and finance versus when you’re down market, you know, you’re the practitioner can probably make the decision and buy that thing pretty quickly. When you as you move up market, the folks that are in the software every day, they want the software, but then they have to go convince the you know, they might have to convince the more senior executives in the team. So what we’ve realized is when we go to these accounts, and this is pretty common for most enterprise sales, which is we’ve gotta make sure we’ve got the CMO bought in or whoever the the head of customer support, whoever is ultimately the decision maker, we have to make sure they understand the problem we’re solving.

So we have to do more value selling than the, like, feature selling. Right? When you’re down market, it’s like, okay. A handful of features probably makes the difference. When you get up market, it’s like, okay.

Make sure you understand the problem you’re trying to solve and make sure you understand, like, what’s the return on this investment they’re gonna make. And so it’s a much like, you have to have enterprise sales reps understand you’re you’re solving a much bigger problem and not just trying to trade off this feature for that feature, which is more of, like, kinda probably the hand to hand combat that you get more down market. So we’ve really learned that you’ve gotta have that type of of enterprise sales rep that understands how to navigate that, you know. And so I think which is more on the bad side, which is you gotta figure that out. Right?

You don’t like, that’s part of these organizations is and then you also have to figure out in the space we’re in. It’s what I was saying earlier. How mature is it like, how much are they bought in a social? Do they already have do they have a one of our competitors? Because if they have one of our competitors, then we know that they’ve already allocated budget to this.

Mhmm. And then we can go hard at it. We don’t have to have that discussion of, like, oh, by the way, is this something you’ve already have in your budget or not, especially in today’s buying environment. And so that we also have to try to figure that out as well as making sure we understand where they are from a from a financial standpoint.

Unidentified speaker: And where are you in that journey of, you know, hey, we now understand we have to go to the help the CMO understand why they need this from a value perspective. I know you’re not gonna be obviously having a discussion with every CMO, but where how do you feel about where you are today in that in that part of the, buying situation? Yeah. I think

Joe DelPritto, CFO, Sprout Social: we’re I think we’re getting a lot better. I think we have we have we have we have room to grow there. Mhmm. I think one thing what we’re realizing is the amount of data and the if you look at some of the the analytics and the data we can provide with influencer marketing information and some of the social listening and some of the news with data, what we’re finding is we can package up a lot of these reports and then we can deliver them to CMOs. Hey, by the way, did you know this was happening with your brand?

Did you understand this was the sentiment? So usually, what we find with the CMOs and how to get in front of them more is with the data and reports. Right? Like, the the day to day stuff, yes, the practitioners need to be doing that. But what they really care about is, like, what’s the report if I’m a CMO that I can show my CEO?

So we try to package up for the CMO is, like, here’s a a one or two page, you know, depth that you could deliver to your CEO to tell you the impact that social’s having on the organization. Because that’s what they really care about. So that’s what we try to do as we’re moving more up market, but we’re still, I would say, pretty early in that journey.

Unidentified speaker: Okay. That’s great. And then just getting in the details around the growth algorithm, when you think about the mix of net new customers versus expansion versus seat additions, how how should we think about that breakdown versus maybe what it’s been historically? And what where do you think there’s maybe the most upside levers as you go in into the next couple of years?

Joe DelPritto, CFO, Sprout Social: I mean, over the next couple of years, the the new logos is still gonna be gonna be the bigger driver of growth and expansion. And most of it comes down to is what we talked about earlier, which is there’s just a huge amount of, like, TAM out there that is just, like we go in a lot of these businesses and they just don’t have a platform at all. So, like, new logos will still be more than half of the way we grow over the next couple of years. But I do think as we get more as a more mature software company, as you know, once you get a certain size and scale, then I do think the expansion kinda then overtakes that. Right?

Like, okay. You get to a point where you can go in these organizations and really expand across the organization. But in the near term, it’s something to be more no low new logos just because it’s a pretty big market. And we serve SMB up into enterprise. And so if you get below the high end enterprise, it’s a lot of, what I would say, folks that don’t have a platform like Spout.

Or maybe they have a couple, like, point solutions, and we can help consolidate those point solutions. And so that to me is what gets me excited is that there’s this huge opportunity on the new logo side. And although we are definitely focused don’t get me wrong in expansion and the team’s focused on that, a lot of what we wanna make sure we’re capturing is this this broader market that’s out there.

Unidentified speaker: K. Very helpful. And I think that’s a good segue into competition. Yeah. Right?

And, I know you have one big competitor upmarket. There are a number of them downmarket. How do you see yourself competing Yeah. With those different players today?

Joe DelPritto, CFO, Sprout Social: Yeah. So when we get upmarket, I think one of the things that kinda separates us from from our main competitors upmarket is, you know, all 30,000 of our customers are on a single code base. And so what that means is when the you know, especially in a space where the networks very move very quickly and there’s API changes happening all the time. There’s new features rolling out all the time. So when one of those when one of those networks makes a change, for example, we applied all 30,000 customers get that change the next day.

Most of our competitors upmarket were built over very, either via acquisition or built very siloed experiences to solve their every use case. So, like, for example, Instagram makes a change, for example, it might take them a month or two to get that changed because they have to go call professional services. Our competitors upmarket are very heavy professional services, nine to 12 implementations, a lot of hands on to able to get something up and running. For us, it does like, the up and running is within days and weeks. Like, we’re the only one upmarket that even in these large enterprises, you can go try our product.

You can use all you can add dozens of users. You can use all the advanced features, and you can actually make sure the product works the way you want it to before you buy it. Well, none of our competitors can do that. So the biggest differentiator up market is is that ease of use and the fact that all of the different things sit together. And like I mentioned earlier, in social, it’s very important.

For example, like, hey, if there’s an issue blowing up on the care side, I wanna real time be able to make sure my marketing team knows that right away. And in our platform, that’s very seamless because, like I said, it’s all on the same code base and the marketing can instantly understand what’s going on the care side and vice versa. And so that that, when you get into these large enterprise, really matters within these organizations. So I think that’s probably the biggest advantage we have when we go up market. When we go down market, you know, the the the thing is for us, especially down market is, a lot of the down market players are solving for maybe a couple of networks, one or two networks.

They don’t take all the data like we do in the back end and create it all in a one single inbox. Like, let’s say you’re on five or more networks and you’ve got all these different networks you’re trying to deal with, a lot of our competitors have siloed those networks in different experiences down market because it’s much easier to do that. We’re aggregating that data. So the biggest advantage we have down market, especially, that we aggregate all that information for you. And so it’s just much easier, like, you’re a one person shop down market or you’re the you only have two users, you could do all that in Sprout.

It becomes really hard to do that with with our competitors because their software is much harder to use if you’re on more than a couple of networks. If you’re only on one or two networks, probably don’t need Sprout. Okay. And so usually, like, if we’re down market and we’re going against one of our competitors down market and the and the customer only is on a couple networks and they wanna pay what Sprout cost, we’re also more expensive down market, then they’re probably gonna go with one of our low cost competitors.

Unidentified speaker: Yeah. No. That makes total sense. And then, I know you’ve announced sort of an increase in sales investments Could you just maybe talk about the interplay between, you know, what what what is the right and that you don’t have to give a number, but

Joe DelPritto, CFO, Sprout Social: just

Unidentified speaker: right way to think about the quota you want your carriers to hit versus the actual capacity of sales that you need? And what what makes you make the decision to say we we need more sales capacity versus not? And and I think this is just a question coming from the perspective of what how do you think about margin progression and margin expansion as you grow revenue?

Joe DelPritto, CFO, Sprout Social: Yeah. So the you know, we’re really big internally on the efficiency of the sales market. We measure it on a, you know, on a weekly, monthly, quarterly basis pretty aggressively. And a lot of that is because we grew up and still a lot of part of this is is what it is all driven inbounds. We have so much data information.

We understand, for example, as to be up in the enterprise, we understand after three months, how well how should this rep be performing after six months, after nine months, after twelve months. We have a lot of history. We understand the success. We can tell very early on whether or not a rep or an AE is gonna be successful if they’re on the right trajectory given how long we’ve been doing this. Like and so what we do internally is when we see those metrics moving in the right direction and we see, oh, by the way, these folks are ramping faster, there’s enough demand, then we and normally, what we do is we hire behind Right?

Because we we’re using the data and the information to drive the way we hire folks depending on what we’re seeing on the customer side. And that’s because, like I said, a lot of that is inbound. Like I said, we get folks in the trial even up in the enterprise. We understand, like, hey, how are these sales cycles maturing? What’s the level of of SDRs and BDRs we need?

And so, internally, it’s all driven by the data and the information. Mhmm. We’re not just, for example, hiring a bunch of AEs, account executives, and saying, okay. We hope you’re successful.

Unidentified speaker: Yeah. That’s great.

Joe DelPritto, CFO, Sprout Social: It’s like we like, we just never been run that way. It’s we’re always following the data.

Unidentified speaker: Okay. No. That’s great. And then, just spend a couple minutes on influencer marketing Yeah. With with the Tagger product that’s now integrated.

Yeah. How’s that going? And and what and what’s the value prop that your customers are seeing there now that’s maybe a little bit different than when you first bought Tagger?

Joe DelPritto, CFO, Sprout Social: Yeah. What I would say well, first of it’s our fastest growing product. You know, granted, it’s off a smaller base. We believe this is where, like, a lot of buying decisions are moving. I think already today, I think, 49% of consumers say that they were influenced by a creator before they bought a product.

Right? And and let’s just think about the demographics of, you know, who the consumers are. As that changes, I think creators are becoming more and more important. And what our influencer marketing product did that’s different than the other ones is it allows brands to find all the micro influencers or smaller influencers. Like, the large influencers, like the big celebrities like that, the ROI on that is not very strong.

What these brands wanna understand is what who are all the smaller influencers in these different areas, in these different geos? Like, let’s say I’m a big golfer. Who are the local folks in my area? Who do I follow? And what influence what Tagger product allows you to do is it allows you to search for those, type in all any search what you want.

It brings up all their videos. You can see their content. You can see what their engagement is. You can actually see how much they charge because we keep all that information. And then you could also we launched recently all this brand safety.

So let’s say, for example, I’m looking for you know, I’m a I’m I’m a in the kids toy business, and I wanna search for an influencer, I can put in certain safety words saying, hey. Have they ever talked about alcohol? Do they have any do they anything about drugs? Like, you can basically make sure that you’re not gonna hire some creator. A lot of brands are worried about hiring a creator that’s got some, like, bad history of videos they’ve done.

Sure. What we’ve done is we get we can get all their videos and say, hey. This person is a very good brand match for you. And so that’s really one of the the powers of the platform is the searchability is a big deal for them. And it’ll and then it allows them to run their campaigns and do that all as well.

It gives you all the analytics. It can tell you, like, the return on this investment and this creator versus this creator. And so we feel like there’s a huge opportunity in this space. We’ve also seen what surprised us is it makes a lot of sense for, like, your typical, like, retail brand. But what we found is we have, like, hospital groups that use us to run, like, their not for profit campaigns using influence.

We’ve seen, like, big real estate companies that are opening up buildings and they wanna have influence. Like, it’s amazing the industries that we’ve seen this this product resonate with is more than what we originally thought. Like, we thought Yeah. It it doesn’t go across all these other verticals, but it’s pretty impressive the different verticals that you’ll see folks buying this product in.

Unidentified speaker: Yeah. That’s really helpful. I know we’re cognizant of time. I want to, just quickly touch on the macro. I know you mentioned elongated sales cycles, that sort of thing.

How is that impacting your business? What are you seeing out out in the market? And Yeah. You know, as we think about future years, what what are you what are you hoping to see to help you reaccelerate growth?

Joe DelPritto, CFO, Sprout Social: Yeah. We haven’t you know, the macro hasn’t changed that much over the last, probably, three or four quarters. So what we saw probably, you know, you know, mid last year coming through today is is we’ve been operating in a pretty consistent macro environment. Mostly, the impact we’re seeing is on the new business side when there’s what I said earlier, when there’s not a budget already allocated. Right?

Like, if there’s a budget, they have our competitors, they’re invested, we’re seeing a lot of success. In the tougher macro now, it’s like, okay. We’ve gotta go create new budget for this product. Right? We don’t have something already in house.

And now I’ve gotta go internally and make sure that I can justify, like, spending the next new dollar. That’s probably the pressure we’ve seen on the macro, and that hasn’t changed over the last so so no major change from our from our standpoint.

Unidentified speaker: Great. And then for both of you, just in the last fifteen seconds here, what are you both most excited about, over the next year or two with Sprout?

Joe DelPritto, CFO, Sprout Social: Go ahead, Alex.

Alex Kurtz, VP of Investor Relations and Corporate Development, Sprout Social: I just think everything we’re doing with data. Right? I think, you know, the news of acquisition, the existing listing capabilities, and being able to execute against our large, you know, datasets, I think it’s pretty exciting.

Joe DelPritto, CFO, Sprout Social: Yeah. I think the one thing I’ll add to that is I do think there’s this shift happening. More and more consumers are going to social for search, and I think this trend is gonna start to continue. We’ve got customers coming to us and saying, hey, by the way, the same search words I used to see in Google, I’m now seeing in YouTube. I’m now seeing it in Instagram.

And so I do think there’s this shift happening because there are already a lot of consumers going to social to learn about brands, but I think you’re gonna see more and more move that way.

Unidentified speaker: Fantastic. Joe, Alex, thanks so much for being here.

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