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Sprout Social (NASDAQ:SPT) Beats Q1 Sales Targets, Provides Encouraging Quarterly Guidance


Kayode Omotosho /
2022/05/03 4:27 pm EDT
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Social media management software company Sprout (NASDAQ:SPT) beat analyst expectations in Q1 FY2022 quarter, with revenue up 40.6% year on year to $57.4 million. Guidance for next quarter's revenue was $60.2 million at the midpoint, which is 1.74% above the analyst consensus. Sprout Social made a GAAP loss of $9.75 million, down on its loss of $6.36 million, in the same quarter last year.

Is now the time to buy Sprout Social? Access our full analysis of the earnings results here, it's free.

Sprout Social (SPT) Q1 FY2022 Highlights:

  • Revenue: $57.4 million vs analyst estimates of $56.2 million (2.08% beat)
  • EPS (non-GAAP): -$0.03 vs analyst estimates of -$0.04
  • Revenue guidance for Q2 2022 is $60.2 million at the midpoint, above analyst estimates of $59.2 million
  • The company lifted revenue guidance for the full year, from $249.5 million to $252.5 million at the midpoint, a 1.2% increase
  • Free cash flow of $5.08 million, up 129% from previous quarter
  • Customers: 32,800, up from 31,762 in previous quarter
  • Gross Margin (GAAP): 75.6%, in line with same quarter last year

“2022 is off to a great start and we believe it's shaping up to be a transformative year for our company,” said Justyn Howard, Sprout Social’s CEO and co-founder.

Founded by Justyn Howard and Aaron Rankin in 2010, Sprout Social (NASDAQ:SPT) provides a software as a service platform that companies can use to schedule and respond to posts on major social media networks like Twitter, Facebook, Instagram, Youtube and LinkedIn.

Whether or not companies market their products through social media, all businesses need to meet customers where they are; and increasingly, that is social media. As more and more people use a greater number of social media platforms, social media management software become more valuable to their customers.

Sales Growth

As you can see below, Sprout Social's revenue growth has been impressive over the last year, growing from quarterly revenue of $40.8 million, to $57.4 million.

Sprout Social Total Revenue

And unsurprisingly, this was another great quarter for Sprout Social with revenue up 40.6% year on year. Quarter on quarter the revenue increased by $4.16 million in Q1, which was in line with Q4 2021. This steady quarter-on-quarter growth shows the company is able to maintain a strong growth trajectory.

Guidance for the next quarter indicates Sprout Social is expecting revenue to grow 34.8% year on year to $60.2 million, slowing down from the 42.2% year-over-year increase in revenue the company had recorded in the same quarter last year. Ahead of the earnings results the analysts covering the company were estimating sales to grow 31.2% over the next twelve months.

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Customer Growth

You can see below that Sprout Social reported 32,800 customers at the end of the quarter, an increase of 1,038 on last quarter. That's in line with the customer growth we have seen last quarter but a bit below what we have typically seen over the last year, suggesting that sales momentum may be slowing a little.

Sprout Social Customers

Key Takeaways from Sprout Social's Q1 Results

With a market capitalization of $3.47 billion Sprout Social is among smaller companies, but its more than $179.3 million in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.

We enjoyed seeing Sprout Social’s impressive revenue growth this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. Overall, this quarter's results seemed pretty positive and shareholders can feel optimistic. The company is up 3.7% on the results and currently trades at $65 per share.

Should you invest in Sprout Social right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.