Document
false0001517375 0001517375 2020-05-06 2020-05-06 0001517375 2020-01-01 2020-03-31


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 6, 2020
 
Sprout Social, Inc.
(Exact Name of Registrant as Specified in its Charter)
 
Delaware
001-39156
27-2404165
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
131 South Dearborn St., Suite 700
60603
Chicago
,
Illinois
 
(Address of Principal Executive Offices)
(Zip Code)

(866) 878-3231
(Registrant’s telephone number, including area code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share
SPT
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act 





Item 2.02. Results of Operation and Financial Condition.
On May 6, 2020, Sprout Social, Inc. (the “Company”) issued a press release announcing its results for the quarter ended March 31, 2020 and providing its business outlook. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure.

On May 6, 2020, the Company posted an investor presentation to its website at https://investors.sproutsocial.com (the “Investor Presentation”). A copy of the Investor Presentation is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. The Company expects to use the Investor Presentation, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts and others.

The information contained in the Investor Presentation is summary information that is intended to be considered in the context of the Company’s Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Investor Presentation speaks only as of the date of this Current Report on Form 8-K. The Company undertakes no duty or obligation to publicly update or revise the information contained in the Investor Presentation, although it may do so from time to time. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure. In addition, the exhibit furnished herewith contains statements intended as “forward-looking statements” that are subject to the cautionary statements about forward-looking statements set forth in such exhibit. By furnishing the information contained in the Investor Presentation, the Company makes no admission as to the materiality of any information in the Investor Presentation that is required to be disclosed solely by reason of Regulation FD.

This Current Report on Form 8-K and its contents (including Exhibits 99.1 and 99.2) are furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Note Regarding Forward-Looking Statements
Certain statements in this Current Report on Form 8-K constitute “forward-looking statements” within the meaning of the federal securities laws. These statements are based on management’s current opinions, expectations, beliefs, plans, objectives, assumptions or projections regarding future events or future results. These forward-looking statements are only predictions, not historical fact, and involve certain risks and uncertainties, as well as assumptions. Actual results, levels of activity, performance, achievements and events could differ materially from those stated, anticipated or implied by such forward-looking statements. While the Company believes that its assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect actual results. There are many risks and uncertainties that could cause actual results to differ materially from forward-looking statements made herein including the risks discussed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 to be filed with the SEC, as well as other factors described from time to time in the Company's filings with the SEC. Such forward-looking statements are made only as of the date of this Current Report on Form 8-K. The Company undertakes no obligation to publicly update or revise any forward-looking statement because of new information, future events or otherwise, except as otherwise required by law. If it does update one or more forward-looking statements, no inference should be made that the Company will make additional updates with respect to those or other forward-looking statements.

Item 9.01. Financial Statements and Exhibits.

(d)
Exhibits.






SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SPROUT SOCIAL, INC.
 
 
 
 
By:
/s/ Heidi Jonas
Name:
Heidi Jonas
Title:
General Counsel and Secretary
Date: May 6, 2020



Exhibit

https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sproutsociala01.gif

Sprout Social Announces First Quarter 2020 Financial Results Above Guidance Range
Revises 2020 Guidance
First Quarter Total Revenue of $30.5 Million
24,083 Customers as of March 31, 2020

CHICAGO, May 6, 2020 - Sprout Social, Inc. ("Sprout Social", the "Company") (Nasdaq: SPT), an industry-leading provider of cloud-based social media management software, today announced financial results for its first quarter ended March 31, 2020.
"As we all find ourselves in a very challenging time, we’re fortunate to have delivered a strong Q1 and durable growth outlook for 2020. Our data indicates stabilizing business trends through April. More importantly, I’m proud that our team has continued to deliver, adapt and look after the well-being of our people and our customers." said Justyn Howard, Sprout Social’s CEO and co-founder. "In the first quarter, strong execution and expanding adoption of Sprout Social’s platform drove total revenue growth of 31% year-over-year and organic revenue growth of 41% year-over-year."
"Our diverse customer base, agile team, strong culture and high-volume business model have provided resilience through this crisis, and the ability to make thoughtful decisions and investments in our growth as we look forward."

First Quarter 2020 Financial Highlights

Revenue

Total revenue was $30.5 million, up 31% compared to the first quarter of 2019.
Organic revenue (excluding the impact of legacy Simply Measured revenue) was up 41% compared to the first quarter of 2019.
Total ARR was $124.6 million, up 30% compared to the first quarter of 2019.
Organic ARR was $123.1 million, up 39% compared to the first quarter of 2019.
  
Operating Income (Loss)

GAAP operating loss was ($10.9) million, compared to ($5.4) million in the first quarter of 2019. The increase in operating loss was primarily a result of public-company operating expenses and higher stock-based compensation associated with the achievement of performance based goals.
Non-GAAP operating loss was ($7.4) million, compared to ($5.4) million in the first quarter of 2019.

Net Income (Loss)

GAAP net loss was ($10.5) million, compared to ($5.2) million in the first quarter of 2019.
Non-GAAP net loss was ($7.0) million, compared to ($5.2) million in the first quarter of 2019.
GAAP net loss per share was ($0.21) based on 50.1 million weighted-average shares of common stock outstanding, compared to ($0.31) based on 16.7 million weighted-average shares of common stock outstanding in the first quarter of 2019.
Non-GAAP net loss per share was ($0.14) based on 50.1 million basic shares of common stock outstanding, compared to ($0.31) based on 16.7 million weighted-average shares of common stock outstanding in the first quarter of 2019.

Cash

Cash and equivalents totaled $137.4 million as of March 31, 2020, up from $135.3 million as of December 31, 2019.
Net cash used by operating activities was ($4.5) million, compared to ($3.9) million in the first quarter of 2019.



Free cash flow margin improved by 146 basis points, from (17%) to (16%); free cash flow was ($4.8) million, compared to ($4.0) million in the first quarter of 2019.

See "Use of Non-GAAP Financial Measures" below for how Sprout defines total ARR, organic ARR, non-GAAP operating loss, non-GAAP net loss and non-GAAP net loss per share and the financial tables that accompany this release for reconciliations of these measures to their closest comparable GAAP measures.

Customer Metrics

Grew number of customers to 24,083 customers as of March 31, 2020, up from 23,693 customers as of December 31, 2019, and up from 21,718 customers as of March 31, 2019.
Grew number of customers contributing over $10,000 in ARR to 2,404 customers as of March 31, 2020, up 58% compared to March 31, 2019.

Business Awards

Sprout Social was announced as a winner in five different categories for G2’s annual 2020 Best Software Awards: (1) Top 100 software products, (2) Best software companies, (3) Best product for marketers, (4) Top 50 products and (5) Highest satisfaction award.
Sprout Social was ranked as the Top Solution in several categories by TrustRadius, including Social Media Analytics, Customer Service and Marketing.

Second Quarter and Revised 2020 Financial Outlook
For the second quarter of 2020, the Company currently expects:
Total revenue between $31.1 and $31.2 million, or overall growth of roughly 26%. We expect that our organic growth rate will exceed our reported growth rate by a mid to high single digit percentage point range.
Non-GAAP operating loss between ($8) million and ($7) million.
Non-GAAP net loss per share of between ($0.15) and ($0.14) based on approximately 50.5 million basic shares of common stock outstanding.
"We are pleased with our Q1 financial performance," said Joe Del Preto, CFO. "And we have seen many business indicators stabilize through the course of April and move within our historic ranges. The low end of our 2020 guidance range assumes that we see no improvement to our business, relative to what we saw in March and April, for the remainder of the year. The midpoint and high-end of our range reflect marginal improvements to the business, consistent with the trends we’ve seen during April, with variation based on how quickly those trends materialize."
For the full year 2020, the Company is revising guidance to reflect the following:
Total revenue between $125.5 to $130.5 million, or overall growth of 25% at the midpoint. We continue to expect that our organic growth rate will exceed our reported growth rate by a mid to high single digit percentage point range.
Non-GAAP operating loss between ($28.3) and ($25.3) million.
Non-GAAP net loss per share of between ($0.55) and ($0.50) based on approximately 50.6 million basic shares of common stock outstanding.

The Company’s second quarter and 2020 financial outlook is based on a number of assumptions that are subject to change and many of which are outside the Company’s control, including the impact of COVID-19 on our financial performance and customer demand. If actual results vary from these assumptions, the Company’s expectations may change. There can be no assurance that the Company will achieve these results.

The Company does not provide guidance for operating loss, the most directly comparable GAAP measure to non-GAAP operating loss, or net loss per share, the most directly comparable GAAP measure to non-GAAP net loss per share, and similarly cannot provide a reconciliation between its forecasted non-GAAP operating loss and non-GAAP net loss per share and these comparable GAAP measures without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company’s control and may vary greatly between periods and could significantly impact future financial results.



Conference Call Information
Sprout Social will host a conference call and webcast scheduled at 4:00 p.m. Central Time (5:00 p.m. Eastern Time) today, May 6, 2020 to discuss financial results and business highlights. The conference call can be accessed by dialing (877) 658-9099 from the United States and Canada or (602) 563-8734 internationally with conference ID 1086133. The live webcast of the conference call can be accessed from Sprout Social’s investor relations website at http://investors.sproutsocial.com.
Following the completion of the call through 8:00 p.m. Eastern Time on May 13, 2020, a telephone replay will be available by dialing (855) 859-2056 from the United States and Canada or (404) 537-3406 internationally with conference ID 1086133. A webcast replay will also be available at http://investors.sproutsocial.com for 12 months.
About Sprout Social
Sprout Social offers deep social media listening and analytics, social management, customer care, and advocacy solutions to more than 24,000 brands and agencies worldwide. Sprout’s suite of solutions supports every aspect of a cohesive social program and enables organizations of all sizes to extend their reach, amplify their brand and create the kind of real connection with their consumers that drives their businesses forward. Headquartered in Chicago, Sprout operates across major social and digital platforms, including Twitter, Facebook, Instagram, Pinterest, LinkedIn and Google.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "estimate," "expect," "intend," "outlook," "may," "might," "plan," "project," "will," "would," "should," "could," "can," "predict," "potential," "strategy, "target," "explore," "continue," or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These statements may relate to the impact on our business and the businesses of our prospective and existing customers of the COVID-19 pandemic, our market size and growth strategy, our estimated and projected costs, margins, revenue, expenditures and customer and financial growth rates, our Q2 and 2020 financial outlook, our plans and objectives for future operations, growth, initiatives or strategies. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. These assumptions, uncertainties and risks include that, among others, the effects of the COVID-19 pandemic and the governmental actions taken to combat the pandemic may materially affect how we and our customers operate our businesses, and the duration and extent to which this threatens our future results of operations and overall financial performance remains uncertain, any decline in new customers, renewals or upgrades, our limited operating history makes it difficult to evaluate our prospects and future results of operations, we operate in competitive markets, we may not be able to sustain our revenue growth rate in the future, our business would be harmed by any significant interruptions, delays or outages in services from our platform or certain social media platforms, and a cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks could negatively affect our business. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 28, 2020, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 to be filed with the SEC, as well as any other future quarterly and current reports that we file with the SEC. Moreover, you should interpret many of the risks identified in those reports as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic. Forward-looking statements speak only as of the date the statements are made and are based on information available to Sprout Social at the time those statements are made and/or management's good faith belief as of that time with respect to future events. Sprout Social assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Use of Non-GAAP Financial Measures

We have provided in this press release certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Our management uses these non-GAAP financial measures internally in analyzing our financial results and believes that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with



GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included in this press release, and investors are encouraged to review these reconciliations.
 
Total annual recurring revenue ("total ARR"). We define total ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period. We believe total ARR is an indicator of the scale of our entire platform while mitigating fluctuations due to seasonality and contract term.
 
Organic ARR. We define organic ARR as total ARR excluding the impact of recurring revenue generated from legacy Simply Measured products. We believe organic ARR is an indicator of the scale and visibility of our core platform while mitigating fluctuations due to seasonality and contract term.
 
Non-GAAP operating loss. We define non-GAAP operating loss as GAAP loss from operations, excluding stock-based compensation expense. We believe non-GAAP operating loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as it eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance, particularly given the impact of stock-based compensation expense recognized after the completion of our December 2019 IPO.
 
Non-GAAP net loss. We define non-GAAP net loss as GAAP net loss and comprehensive loss, excluding stock-based compensation expense. We believe non-GAAP net loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance, particularly given the impact of stock-based compensation expense recognized after the completion of our December 2019 IPO.
 
Non-GAAP net loss per share. We define non-GAAP net loss per share as GAAP net loss per share attributable to common shareholders, basic and diluted, excluding stock-based compensation expense. We believe non-GAAP net loss per share provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance, particularly given the impact of stock-based compensation expense recognized after the completion of our December 2019 IPO.
 
Free cash flow. We define free cash flow as net cash used in operating activities less purchases of property and equipment. Free cash flow does not reflect our future contractual obligations or represent the total increase or decrease in our cash balance for a given period. We believe free cash flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash used in our core operations that, after purchases of property and equipment, is not available for strategic initiatives.

Free cash flow margin. We define free cash flow margin as free cash flow as a percentage of revenue.
 
Customer Metrics

Dollar-based net retention rate. We calculate dollar-based net retention rate by dividing the organic ARR from our customers as of December 31st in the reported year by the organic ARR from those same customers as of December 31st in the previous year. This calculation is net of upsells, contraction, cancellation or expansion during the period but excludes organic ARR from new customers. We use dollar-based net retention to evaluate the long-term value of our customer relationships, because we believe this metric reflects our ability to retain and expand subscription revenue generated from our existing customers.

Dollar-based net retention excluding SMB customers. We calculate dollar-based net retention rate excluding SMB customers by dividing the ARR from all customers excluding ARR from customers exclusively using legacy products obtained through the acquisition of Simply Measured and excluding ARR from customers that we have identified or that self-identified as having less than 50 employees as of December 31st in the reported year by the organic ARR from those same customers as of December 31st of the previous year. This calculation is net of upsells, contraction, cancellation or expansion during the period but excludes organic ARR from new customers. We used dollar-based net retention excluding SMB customers to evaluate the long-term value of our larger customer relationships, because we believe this metric reflects our ability to retain and expand subscription revenue generated from our existing customers.




Number of customers. We define a customer as a unique account, multiple accounts containing a common non-personal email domain or multiple accounts governed by a single agreement. Number of customers excludes customers exclusively using legacy products obtained through the acquisition of Simply Measured. We believe that the number of customers using our platform is an indicator not only of our market penetration, but also of our potential for future growth as our customers often expand their adoption of our platform over time based on an increased awareness of the value of our platform and products.
 
Number of customers contributing more than $10,000 in ARR. We define number of customers contributing more than $10,000 in ARR as those on a paid subscription plan that had more than $10,000 in ARR as of a period end. We view the number of customers that contribute more than $10,000 in ARR as a measure of our ability to scale with our customers and attract larger organizations. We believe this represents potential for future growth, including expanding within our current customer base.

Availability of Information on Sprout Social’s Website and Social Media Profiles
Investors and others should note that Sprout Social routinely announces material information to investors and the marketplace using U.S. Securities and Exchange Commission (SEC) filings, press releases, public conference calls, webcasts and the Sprout Social Investors website. We also intend to use the social media profiles listed below as a means of disclosing information about us to our customers, investors and the public. While not all of the information that the Company posts to the Sprout Social Investors website or to social media profiles is of a material nature, some information could be deemed to be material. Accordingly, the Company encourages investors, the media, and others interested in Sprout Social to review the information that it shares at the Investors link located at the bottom of the page on www.sproutsocial.com and to regularly follow our social media profiles. Users may automatically receive email alerts and other information about Sprout Social when enrolling an email address by visiting "Email Alerts" in the "Shareholder Services" section of Sprout Social's Investor website at https://investors.sproutsocial.com/.

Social Media Profiles:
www.twitter.com/SproutSocial
www.facebook.com/SproutSocialInc
www.linkedin.com/company/sprout-social-inc-/
www.instagram.com/sproutsocial

Contact

Media:
Kristin Johnson
Email: kristin@sproutsocial.com
Phone: (312) 281-2073

Investors:
Jason Rechel
Email: jason.rechel@sproutsocial.com
Phone: (773) 570-4892



















Sprout Social, Inc.
Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share data)
 
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
Revenue
 
 
 
Subscription
$ 30,329
 
$ 23,332
Professional services and other
206
 
47
Total revenue
30,535
 
23,379
Cost of revenue(1)
 
 
 
Subscription
8,086
 
5,815
Professional services and other
122
 
30
Total cost of revenue
8,208
 
5,845
Gross profit
22,327
 
17,534
Operating expenses
 
 
 
Research and development(1)
7,281
 
6,352
Sales and marketing(1)
13,894
 
10,452
General and administrative(1)
12,096
 
6,084
Total operating expenses
33,271
 
22,888
Loss from operations
(10,944)
 
(5,354)
Interest expense
(95)
 
(52)
Interest income
460
 
105
Other income
102
 
149
Loss before income taxes
(10,477)
 
(5,152)
Income tax expense
3
 
11
Net loss and comprehensive loss
$ (10,480)
 
$ (5,163)
Net loss per share attributable to common shareholders, basic and diluted
$ (0.21)
 
$ (0.31)
Weighted-average shares outstanding used to compute net loss per share, basic and diluted
50,143,971
 
16,684,041
 
 
 
 
(1) Includes stock-based compensation expense as follows:
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
Cost of revenue
$ 295
 
$0
Research and development
484
 
0
Sales and marketing
469
 
0
General and administrative
2,274
 
0
Total stock-based compensation expense
$ 3,522
 
$0



Sprout Social, Inc.
Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
 
 
 
 
 
 
 
March 31, 2020
 
December 31, 2019
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$ 137,376
 
$ 135,310
Accounts receivable, net of allowances of $1,456 and $706 at
March 31, 2020 and December 31, 2019, respectively
12,311
 
11,099
Deferred Commissions
6,116
 
5,574
Prepaid expenses and other assets
5,337
 
5,050
Total current assets
161,140
 
157,033
Property and equipment, net
13,116
 
13,529
Deferred commissions, net of current portion
5,836
 
5,505
Operating lease, right-of-use asset
10,884
 
5,618
Goodwill
2,299
 
2,299
Intangible assets, net
5,126
 
5,482
Other assets, net
125
 
125
Total assets
$ 198,526
 
$ 189,591
Liabilities and Stockholders' (Deficit)/Equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$ 2,534
 
$ 2,049
Deferred revenue
33,794
 
29,566
Operating lease liability
2,139
 
2,331
Accrued wages and payroll related benefits
3,335
 
4,053
Accrued expenses and other
5,201
 
5,057
Total current liabilities
47,003
 
43,056
Deferred revenue, net of current portion
281
 
209
Operating lease liability, net of current portion
23,272
 
18,196
Total liabilities
70,556
 
61,461
 
 
 
 
Stockholders' (deficit)/equity
 
 
 
 
 
 
 
Class A common stock, par value $0.0001 per share;
1,000,000,000 shares authorized; 43,146,159 and 40,404,012
shares issued and outstanding at March 31, 2020, respectively;
41,714,870 and 39,041,065 shares issued and outstanding, at
December 31, 2019, respectively
4
 
4
Class B common stock, par value $0.0001 per share;
25,000,000 shares authorized; 10,045,764 and 9,945,952
shares issued and outstanding at March 31, 2020, respectively;
9,803,933 shares issued and outstanding at December 31,
2019
1
 
1
Additional paid-in capital
277,485
 
263,943
Treasury stock, at cost
(23,652)
 
(20,430)
Accumulated deficit
(125,868)
 
(115,388)
Total stockholders’ equity
127,970
 
128,130
Total liabilities and stockholders’ equity
$ 198,526
 
$ 189,591



Sprout Social, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
Cash flows from operating activities
 
 
 
Net loss
$ (10,480)
 
$ (5,163)
Adjustments to reconcile net loss to net cash (used in) operating activities
 
 
 
Depreciation of property and equipment
725
 
669
Amortization of line of credit issuance costs
65
 
47
Amortization of acquired intangible assets
357
 
385
Amortization of deferred commissions
1,627
 
1,020
Amortization of right-of-use operating lease asset
309
 
317
Stock-based compensation expense
3,522
 
0
Provision for accounts receivable allowances
910
 
222
Changes in operating assets and liabilities
 
 
 
Accounts receivable
(2,122)
 
(768)
Prepaid expenses and other current assets
(313)
 
(102)
Deferred commissions
(2,500)
 
(1,228)
Accounts payable and accrued expenses
(305)
 
(1,518)
Deferred revenue
4,299
 
2,565
Lease liabilities
(597)
 
(319)
Net cash (used in) operating activities
(4,503)
 
(3,873)
Cash flows from investing activities
 
 
 
Purchases of property and equipment
(313)
 
(156)
Net cash (used in) investing activities
(313)
 
(156)
Cash flows from financing activities
 
 
 
Proceeds from underwriters' purchase of over-allotment shares, related to the
Company's initial public offering, net of underwriters' discounts and
commissions
9,954
 
0
Payments for line of credit issuance costs
(132)
 
(47)
Proceeds from exercise of stock options
142
 
6
Employee taxes paid related to the net share settlement of stock-based awards
(3,082)
 
0
Payments of deferred offering costs
0
 
(202)
Net cash provided by (used in) financing activities
6,882
 
(243)
Net increase (decrease) in cash and cash equivalents
2,066
 
(4,272)
Cash and cash equivalents
 
 
 
Beginning of period
135,310
 
26,190
End of period
$ 137,376
 
$ 21,918



The following schedule reflects our non-GAAP financial measures and reconciles our non-GAAP financial measures to the related GAAP financial measures (in thousands, except per share data):

Summary of Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
 
 
 
 
Non-GAAP operating loss
$ (7,422)
 
$ (5,354)
Non-GAAP net loss
(6,958)
 
(5,163)
Non-GAAP net loss per share
(0.14)
 
(0.31)
Free cash flow
$ (4,816)
 
$ (4,029)
 
 
 
 
Reconciliation of Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
Three Months Ended March 31,
 
2020
 
2019
Reconciliation of Non-GAAP operating loss
 
 
 
Loss from operations
$ (10,944)
 
$ (5,354)
Stock-based compensation expense
3,522
 
0
Non-GAAP operating loss
$ (7,422)
 
$ (5,354)
 
 
 
 
Reconciliation of Non-GAAP net loss
 
 
 
Net loss and comprehensive loss
$ (10,480)
 
$ (5,163)
Stock-based compensation expense
3,522
 
0
Non-GAAP net loss
$ (6,958)
 
$ (5,163)
 
 
 
 
Reconciliation of Non-GAAP net loss per share
 
 
 
Net loss per share attributable to common shareholders, basic and diluted
$ (0.21)
 
$ (0.31)
Stock-based compensation expense per share
0.07
 
0
Non-GAAP net loss per share
$ (0.14)
 
$ (0.31)
 
 
 
 
Reconciliation of Non-GAAP free cash flow
 
 
 
Net cash (used in) operating activities
$ (4,503)
 
$ (3,873)
Purchases of property and equipment
(313)
 
(156)
Non-GAAP free cash flow
$ (4,816)
 
$ (4,029)



Exhibit


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https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf008.jpg





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https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf010.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf011.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf012.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf013.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf014.jpg





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https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf016.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf017.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf018.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf019.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf020.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf021.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf022.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf023.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf024.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf025.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf026.jpg





https://cdn.kscope.io/90564c78f84e8144b7bb57e0135c264b-sptinvestorpresentationf027.jpg