Sprout Social, Inc · NASDAQ:SPT
Sprout Social — Investor Day (2023)
93 slides from Sprout Social's investor day presentation, 2023
Slide 1: Sprout Social Investor Day 2023
Sprout Social Investor Day 2023
Slide 2: Slide 2
Slide 3: Jason Rechel
Jason Rechel VP, Investor Relations & Corporate Development He/him/his
Slide 4: Disclaimers
Disclaimers Forward-Looking Statements This presentation and the accompanying oral commentary contain “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 i
Slide 5: Welcome & agenda
Our next great growth chapter Welcome Justyn Howard, Founder and CEO & agenda Defining a category Jamie Gilpin, CMO MJ Jordan, VP Field & Enterprise Marketing Ryan Barretto, President Platform vision Aaron Rankin, Founder and CTO Alan Boyce, SVP Engineering Building an iconic SaaS company Joe Del Pre
Slide 6: Our next great growth chapter
Our next great growth chapter
Slide 7: Justyn Howard
Justyn Howard Co-Founder and CEO He/him/his
Slide 8: Sprout has transformed since IPO
Sprout has transformed since IPO 2019 2023 2019 2023 ARR <$100M >$350M* RPO $31M >$200M Avg ACV <$5k >$10k* Employees 593 1,253 >$50K ARR customers 105 1,119 FCF Margin (11%) 8% Data marked (*) is current through September 27, 2023 All other data is as of June 30, 2019 or 2023, as applicable.
Slide 9: Track record of consistent outperformance
Track record of consistent outperformance Post IPO milestones Faster growth at Premium products 10 straight quarters >2,000bps FCF $300M ARR vs. accelerated to of positive FCF margin improvement $100M ARR nearly $100M ARR Acquired AI leader Landmark Extended industry Further Repustate and IM partner
Slide 10: Executives agree: social will soon become their primary channel
90% Executives agree: social will soon become their primary channel for / <5% Have adopted a social media management platform connecting with customers
Slide 11: Social is maturing and transforming the entire customer journey
Social is maturing—and transforming the entire customer journey. Marketing Influence Sales Success Support Product Strategy Social media Social team Social is strategic to marketer every business
Slide 12: Recent examples of transformation
Recent examples of transformation $600k ACV, $800k ACV, $1.9M TCV $2.2M TCV New Business Expansion $6k ACV to $650k ACV, $120k ACV $1.3M TCV Social Center of Excellence Expansion
Slide 13: Market evolution Customer lifecycle
Market evolution Customer lifecycle
Slide 14: The #1 customer-rated platform
Listening Analytics The #1 Publishing customer-rated platform Engagement Reporting Influencer Advocacy Marketing
Slide 15: >$91M ARR premium products accelerating
Premium products accelerating >$91M ARR 47% 2-year CAGR
Slide 16: Tagger has massive potential
Tagger has massive potential >$100M ARR Multi-year accelerant
Slide 17: Our next great growth chapter
Our next great growth chapter Business accelerators on our path >$1B Improved pricing Service Cloud strategic Premium module & packaging partnership acceleration Influencer marketing Accelerating industry Enterprise convergence maturity leadership
Slide 18: Defining a category
Defining a category
Slide 19: The future of social
The future of social i 4 sproutsocial
Slide 20: Jamie Gilpin and MJ Jordan
Jamie Gilpin CMO She/her/hers MJ Jordan VP, Enterprise and Field Marketing She/her/hers
Slide 21: Driving smarter, faster business impact with Sprout Social
Driving smarter, faster business impact with Sprout Social
Slide 22: Our path >$1B
Our path >$1B How we’ll get there, and why $1B is just the start.
Slide 23: Ryan Barretto
Ryan Barretto President He/him/his
Slide 24: Our path >$1B
Our path >$1B Platform leadership Winning culture Expanding partner ecosystem Bigger customers, accelerated ACVs Expanded global Loyal customer distribution community
Slide 25: Exceptional culture Exceptional product
Exceptional culture Exceptional product Ease Product Performance Ease of Admin Support of use Direction & Reliability setup 8.9 8.8 8.9 8.7 8.7 8.8 A 8.4 8.5 7.7 8.0 8.5 8.4 B 7.3 7.3 8.4 7.5 7.5 7.1 C 7.4 7.3 8.0 7.8 8.2 6.6 2022, 2021, 2020, 2018 & 2017
Slide 26: We're the #3 ranked company on G2
We’re the #3 ranked company on G2. And #1 in 138 Social Customer Service Social Media Analytics Social Media Management categories, Best Results for Social Media Social Media including: Monitoring Suites Enterprise Customers
Slide 27: Influencer marketing, too
Influencer marketing, too Leader 2023 Momentum High High Highest User High Leader Performer Performer Adoption Performer FALL FALL FALL FALL 2023 2023 2023 2023 2023 sproutsocial
Slide 28: Approachable software
Approachable software Hands on keyboard Speed of Expanding innovation use cases Scalability World-class customer success
Slide 29: GTM built to scale
GTM built to scale Segment focus Land and expand Unit economics Mid-market & enterprise 30-45 day initial sales cycle. >6:1 LTV/CAC leadership. Picking our spots in Built to solve more customer SMB & agency. challenges over time.
Slide 30: Disruptive and durable GTM model
Disruptive and durable GTM model Demand generation Customer marketing Sales development Biz dev Inbound Outbound Brand Inbound trials Community Partnerships Content Event marketing
Slide 31: Evolving upmarket
Evolving upmarket Enterprise Trial-led Larger land sizes Accelerating our outbound Leading with our trial Outbound customers likely marketing & sales motion in remains highly disruptive, land with greater seats, and enterprise especially in enterprise more premium products
Slide 32: Delivering differentiated value
Delivering differentiated value
Slide 33: Large customers landing larger
Large customers landing larger $50K $40K $30K $20K $10K The ACV of the top 10% of new Sprout customers in each period
Slide 34: And growing faster
And growing faster $60K $50K $40K $30K $20K The ACV of the top 10% of all Sprout customers
Slide 35: International upside is early
International upside is early
Slide 36: Network partners and tech partners
Network Tech partners partners Agencies System Integrators Referrers / Affiliates Resellers
Slide 37: Omnichannel care and Salesforce Social Studio
This is only Omnichannel carethe is beginning! the future state Social Studio The defining social platform for ANY Salesforce customer
Slide 38: Omnichannel care is the future state
Omnichannel care is the future state However, only 83% 30% of customers expect to of brands have adopted interact with someone processes and tools to engage immediately upon contact with customers on social Source: Salesforce State of Service, 5th Edition, 2022 Source: Sprout Social Index, 19th Edit
Slide 39: Casey's delivers world-class customer care with Sprout & Salesforce
Casey’s delivers world-class customer care with Sprout & Salesforce Results achieved: “The integration has been a game-changer. It’s opened 90% 10x Eliminated customer a floodgate of communication right message within the tool between our social Faster response Improvement in backlog for the time cro
Slide 40: The Sprout community of more than 10,000 members
The Sprout community of more than 10,000 members accelerates our brand leadership. z Scan the QR code to sign up
Slide 41: Winning our TAM where it matters
Winning our TAM where it matters Strategic Enterprise SMB Social-first +10% CAGR Enterprise >$120B >25% CAGR Mid-market Enterprise +40% CAGR Social-first SMB Mid-market & Agency +40% CAGR
Slide 42: We're defining our market
We’re defining our market Platform Winning culture Expanding partner leadership ecosystem Expanded global Bigger customers, Loyal customer distribution accelerated ACVs community
Slide 43: Platform vision
Platform vision i 4 sproutsocial
Slide 44: Aaron Rankin
Aaron Rankin Co-Founder and CTO He/him/his
Slide 45: We build product differently
We build product differently Solve for scale Obsess over workflows We start with the customer
Slide 46: Scalable and sustainable innovation
Scalable and sustainable innovation Network evolution Consumer preference evolution 40+ Product Squads Rapidly evolving Sprout feature set Business workflow penetration
Slide 47: Democratizing social
Democratizing social 96% of leaders: social strategies involve greater collaboration Marketing Care & Success Strategy Commerce
Slide 48: Social: becoming the source of truth
Social: becoming the source of truth Product-led features and design Marketing Care & Success Strategy Commerce
Slide 49: Elegant single codebase, one intuitive platform
Reporting Engagement Listening Publishing One intuitive Advocacy platform Elegant single Enterprise-grade security & AI at our core codebase permissions Exponential data volume growth
Slide 50: Data volume
Data volume Leading edge Opportunity of social Roles & teams Speed & Excellence
Slide 51: Data volume
Data volume It takes more than a village AI Roles & teams assist Speed & Excellence
Slide 52: 81% of social marketers agree AI has had a positive impact
81% of social marketers agree AI has already had a positive impact on their work
Slide 53: Alan Boyce
Alan Boyce SVP, Engineering He/him/his
Slide 54: AI delivers better product efficacy and more rapid innovation
AI delivers better product efficacy and more rapid innovation
Slide 55: AI adoption will require authenticity
AI adoption will require AI authenticity Brand voice adoption Security and risk mitigation
Slide 56: We're in the pole position for AI
Data scale We’re in the pole position for AI to Sprout AI strengthen Customer Time core features scale spent
Slide 57: Self-improving AI model
Customer Scale Self-improving Customer AI model Care Data Scale Conversation Scale
Slide 58: Tagger integration
Tagger integration Publishing Engagement Tagger Listening Reporting Growth UI Systems Global Mobile Infrastructure AI/ML
Slide 59: The future is social
The future is social Complete view Differentiated Unlock the full of the customer technical architecture potential of social
Slide 60: Joe Del Preto
Joe Del Preto Chief Financial Officer He/him/his
Slide 61: Financial overview
Financial overview i 4 sproutsocial
Slide 62: The future of Sprout is here
The future of Sprout is here.
Slide 63: >$350M ARR Q3 update
Q3 update >$350M ARR Broad enterprise strength and early Tagger upside
Slide 64: An iconic software company, an all-weather performer
An iconic software company. Proving to be an all-weather performer.
Slide 65: >$1B annual subscription revenue 2028
2028 >$1B Annual subscription revenue
Slide 66: Prior 2025 TAM forecast
Prior 2025 TAM forecast SMB +20% CAGR Enterprise >$100B +25% CAGR >20% CAGR Mid Market +45% CAGR
Slide 67: 2025 TAM forecast update
2025 TAM forecast update SMB Social-first +10% CAGR Enterprise >$120B +40% CAGR >25% CAGR Mid Market +40% CAGR
Slide 68: 2023 social SAM revision
2023 social SAM revision >$55B >$44B (2021 SAM)
Slide 69: Influencer marketing SAM
Influencer marketing SAM SMB Digital native brands Enterprise >$10B +50% CAGR >50% forward CAGR Mid Market +50% CAGR
Slide 70: TAM unlocks
Seat Workflow Expansion expansion Social is strategic TAM to every business Unlocks Market expansion
Slide 71: ACV a durable driver of growth
ACV a durable driver of growth Total Sprout customer average ACV
Slide 72: Multi-year ACV growth is accelerating
Multi-year ACV growth is accelerating Year-over-year ACV growth rate
Slide 73: Led by accelerating high end ACV
Led by accelerating high end ACV The ACV of the top 10% of all Sprout customers
Slide 74: Premium attach rates are accelerating
Premium attach rates are accelerating Percent of total customers that are subscribers of one or more premium products
Slide 75: Full suite adoption is early
Full suite adoption is early Percent of total customers that are subscribers of two or more premium products
Slide 76: Tagger 2028 >$100M ARR
Tagger 2028 >$100M ARR Further accelerant to our platform opportunity
Slide 77: Well positioned for expanding use cases
Well positioned for expanding use cases Total number of >$10k ACV customers Total number of >$50k ACV customers
Slide 78: Mid-market & Enterprise Mix Accelerating
Mid-market & Enterprise Mix Accelerating Mid-market & enterprise ARR as a percent of total ARR
Slide 79: >50% RPO growth: durable upmarket momentum
Durable upmarket momentum >50% RPO Growth 11 consecutive quarters
Slide 80: Building to future NDR upside
Building to future NDR upside >120% >120% >100 bps 400 bps 600 bps Annual contracts 109% Bigger problems High end mix 2022 Actual NDR NDR Target MM & Ent 2022 Actual
Slide 81: >$200M annual FCF 2028
2028 >$200M Annual FCF
Slide 82: And margin upside
And margin upside >25% >300 bps >20% 800 bps >900 bps Gross margin R&D 0.4% S&M G&A 2023* 2028 Target Long term *Prior 2023 Non-GAAP operating margin guidance (as of 8/3/23)
Slide 83: KPIs that distract from our strategy
KPIs that distract from our strategy Total customer count Core/non-core >$2k and <$2k Not a priority. We will continue Non-core is small and going to This proxy is confusing and to disclose, but it should not be zero. Our investments are steals focus from our your focus. aligned towards our future.
Slide 84: Medium term framework
Medium term framework Industry leading, durable growth 2028 Subscription Revenue >$1B 2028 Non-GAAP Operating Margin >20% 2028 FCF Margin 20-22% Assumes no future M&A
Slide 85: Long term forecast update
Long term forecast update New Old Revenue | ARR Durable Growth Durable Growth Non-GAAP Gross Margin 80-82% 78-81% Non-GAAP Operating Margin >25% >25% FCF Margin >30% >30% Assumes no future M&A
Slide 86: Final thoughts
Final thoughts
Slide 87: Our next great growth chapter
Our next great growth chapter Delivering & creating value as we climb past $1B
Slide 88: Executive Q&A
Executive Q&A i 4 sproutsocial
Slide 89: Thank you!
Thank you!
Slide 90: Financial appendix
Financial appendix Sprout Social, Inc. Summary and Reconciliation of Non-GAAP Financial Measures (Unaudited) (in thousands, except per share data) Reconciliation of Non-GAAP Financial Measures ‘Three Months Ended 06/30, aon Reconciliation of Non-GAAP operating income (loss) i be saneanees Stock-bese
Slide 91: Financial appendix
Financial appendix ‘Sprout Social, Inc. ‘Summary and Reconciliation of Non-GAAP Financial Measures (Unaudited) {in thousands) Three Months Ended June 30, 2019 2020 2021 2022 %of %of %ot % of $ Revenues $ Revenues $ Revenues $ Revenues Gross Margin Gross proft 18,549 749% 98,032 737% 141,071 75.1% 19
Slide 92: Data and financial disclaimers appendix
Data and financial disclaimers appendix Unless otherwise stated or noted throughout this presentation, all financial data is as of 6/30/2023. Slide 8 (and slide 63). References to current ARR and current customer data include the August 2023 acquisition of Tagger Media. Slide 9. Sprout Social Y/Y ARR
Slide 93: Definitions of ARR and non-GAAP measures
Annual recurring revenue (ARR). We define ARR as the annualized revenue run-rate of subscription agreements from all customers as of the last date of the specified period. We believe ARR is an indicator of the scale of our entire platform while mitigating fluctuations due to seasonality and contract te