2430

Sprout Social (SPT) Q1 Earnings Report Preview: What To Look For


Radek Strnad /
2022/05/02 7:01 am EDT
Add to Watchlist

Social media management software company Sprout (NASDAQ:SPT) will be announcing earnings results tomorrow afternoon. Here's what to expect.

Last quarter Sprout Social reported revenues of $53.2 million, up 42.6% year on year, beating analyst revenue expectations by 3.87%. It was a solid quarter for the company, with an exceptional revenue growth and a very optimistic guidance for the next quarter. The company added 537 enterprise customers paying more than $10,000 annually to a total of 4,917.

Is Sprout Social buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Sprout Social's revenue to grow 37.8% year on year to $56.2 million, improving on the 33.6% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted loss is expected to come in at -$0.04 per share.

Sprout Social Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 3.26%.

Looking at Sprout Social's peers in the sales and marketing software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. Qualtrics delivered top-line growth of 40.6% year on year, beating analyst estimates by 3.06% and Zendesk reported revenues up 30.2% year on year, exceeding estimates by 0.96%. Qualtrics traded up 4.3% on the results, Zendesk was flat on the results. Read our full analysis of Qualtrics's results here and Zendesk's results here.

There has been a stampede out of high valuation technology stocks and software stocks have not been spared, with share price down on average 18.4% over the last month. Sprout Social is down 24.5% during the same time, and is heading into the earnings with analyst price target of $89.3, compared to share price of $63.01.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

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