What Happened:
Shares of social media management software company Sprout (NASDAQ:SPT) fell 15.3% in the after-market session after the company reported first-quarter results that narrowly beat analysts' revenue estimates. Earnings per share (EPS) and free cash flow also exceeded the Consensus estimates. However, ARR missed and the company lost customers compared to Q4, which is a worrying sign of potential competition or product issues. Additionally on the negative front, revenue and EPS guidance for the next quarter came in below the Consensus estimates. Overall, it was a weak quarter for the company.
What is the market telling us:
Sprout Social's shares are very volatile and over the last year have had 65 moves greater than 5%. But moves this big are very rare even for Sprout Social and that is indicating to us that this news had a significant impact on the market's perception of the business.
Sprout Social is down 32.2% since the beginning of the year, and at $39.53 per share it is trading 44.2% below its 52-week high of $70.90 from February 2023. Investors who bought $1,000 worth of Sprout Social's shares at the IPO in December 2019 would now be looking at an investment worth $2,370.
Is now the time to buy Sprout Social? Access our full analysis of the earnings results here, it's free.