Sprout Social, Inc · NASDAQ:SPT
Sprout Social — Investor Day (September 2023)
93 slides from Sprout Social's investor day presentation, Sep 27, 2023
Slide 1: Sprout Social Investor Day 2023
Sprout Social Investor Day 2023 1
Slide 2: Video
Video 2
Slide 3: Jason Rechel, VP Investor Relations & Corporate Development
Jason Rechel VP, Investor Relations & Corporate Development He/him/his 3
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
Welcome & agenda Our next great growth chapter Justyn Howard, Founder and CEO 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 Pr
Slide 6: Our next great growth chapter
Our next great growth chapter 6
Slide 7: Justyn Howard, Co-Founder and CEO
Justyn Howard Co-Founder and CEO He/him/his 7
Slide 8: Sprout has transformed since IPO
Sprout has transformed since IPO 2019 2023 2019 2023 <$100M >$350M* Data marked (*) is current through September 27, 2023 All other data is as of June 30, 2019 or 2023, as applicable. <$5k 105 $31M 593 (11%) >$10k* 1,119 >$200M 1,253 8% RPO Employees FCF Margin ARR Avg ACV >$50K ARR customers 8
Slide 9: Post IPO milestones
Post IPO milestones Track record of consistent outperformance Faster growth at $300M ARR vs. $100M ARR 10 straight quarters of positive FCF Further strengthened a world-class culture Landmark partnership with Salesforce Acquired AI leader Repustate and IM leader Tagger Extended industry product lead
Slide 10: Executives agree: social will become primary customer channel
90% <5% Executives agree: social will soon become their primary channel for connecting with customers Have adopted a social media management platform / 10
Slide 11: Social is maturing and transforming the customer journey
Social is maturing—and transforming the entire customer journey. ProductInfluenceMarketing Sales Success Support Strategy Social is strategic to every business Social media marketer Social team 11
Slide 12: Recent examples of transformation
Recent examples of transformation $650k ACV, $1.3M TCV Social Center of Excellence $800k ACV, $2.2M TCV Expansion $6k ACV to $120k ACV Expansion $600k ACV, $1.9M TCV New Business 12
Slide 13: Market evolution
Market evolution Customer lifecycle 13
Slide 14: The #1 customer-rated platform
Analytics Engagement Listening Influencer Marketing Publishing Advocacy The #1 customer-rated platform Reporting 14
Slide 15: Premium products accelerating
Premium products accelerating >$91M ARR 47% 2-year CAGR 15
Slide 16: Tagger has massive potential
Tagger has massive potential >$100M ARR Multi-year accelerant 16
Slide 17: Our next great growth chapter: business accelerators
Our next great growth chapter Business accelerators on our path >$1B Improved pricing & packaging Service Cloud strategic partnership Premium module acceleration Influencer marketing convergence Accelerating industry maturity Enterprise leadership 17
Slide 18: Defining a category
Defining a category , sproutsocial
Slide 19: The future of social
The future of social , sproutsocial
Slide 20: MJ Jordan and Jamie Gilpin
MJ Jordan VP, Enterprise and Field Marketing She/her/hers Jamie Gilpin CMO She/her/hers 20
Slide 21: Driving smarter, faster business impact with Sprout Social
Driving smarter, faster business impact with Sprout Social
Slide 22: How we'll get there, and why $1B is just the start
How we’ll get there, and why $1B is just the start. Our path >$1B 22
Slide 23: Ryan Barretto, President
Ryan Barretto President He/him/his 23
Slide 24: Our path to >$1B
Expanding partner ecosystem Platform leadership Winning culture Expanded global distribution Bigger customers, accelerated ACVs Loyal customer community Our path >$1B 24
Slide 25: Exceptional product
Exceptional product 2022, 2021, 2020, 2018 & 2017 Exceptional culture Ease of use Admin Product Direction Support Performance & Reliability Ease of 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 25
Slide 26: #3 ranked company on G2
We’re the #3 ranked company on G2. And #1 in 138 categories, including: Social Customer Service Social Media Analytics Social Media Management Social Media Suites Social Media Monitoring Best Results for Enterprise Customers 26
Slide 27: Influencer marketing, too
Influencer marketing, too 27
Slide 28: World-class customer success
World-class customer success Approachable software Hands on keyboard Speed of innovation Scalability Expanding use cases 28
Slide 29: Unit economics and GTM built to scale
>6:1 LTV/CAC Unit economics Mid-market & enterprise leadership. Picking our spots in SMB & agency. Segment focus 30-45 day initial sales cycle. Built to solve more customer challenges over time. Land and expand GTM built to scale 29
Slide 30: Disruptive and durable GTM model
Disruptive and durable GTM model Brand Event marketing Customer marketing OutboundInbound Sales development Partnerships Biz dev Content Community Inbound trials Demand generation 30
Slide 31: Accelerating outbound marketing and sales in enterprise
Accelerating our outbound marketing & sales motion in enterprise Enterprise Outbound customers likely land with greater seats, and more premium products Larger land sizes Leading with our trial remains highly disruptive, especially in enterprise Trial-led Evolving upmarket 31
Slide 32: Delivering differentiated value
Delivering differentiated value 32
Slide 33: Large customers landing larger
Large customers landing larger The ACV of the top 10% of new Sprout customers in each period $30K $20K $10K $40K $50K 33
Slide 34: And growing faster
And growing faster $60K $40K $20K $30K $50K The ACV of the top 10% of all Sprout customers 34
Slide 35: International upside is early
International upside is early 35
Slide 36: Partner ecosystem
Network partners Tech partners System IntegratorsAgencies Referrers / Affiliates Resellers 36
Slide 37: Omnichannel care is the future state
Omnichannel care is the future stateThis is only the beginning! Social Studio The defining social platform for ANY Salesforce customer 37
Slide 38: Omnichannel care is the future state
Omnichannel care is the future state 83% 30% of customers expect to interact with someone immediately upon contact of brands have adopted processes and tools to engage with customers on social However, only Source: Salesforce State of Service, 5th Edition, 2022 Source: Sprout Social Index, 19th Edit
Slide 39: Casey's delivers 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 a floodgate of communication right within the tool between our social and Guest Relations Teams.” 90% Faster response time 10x Improvement in cross-functional c
Slide 40: Sprout community of more than 10,000 members
The Sprout community of more than 10,000 members accelerates our brand leadership. Scan the QR code to sign up z 40
Slide 41: Winning our TAM where it matters
Winning our TAM where it matters Strategic Enterprise Enterprise Mid-market Social-first SMB & Agency Enterprise +40% CAGR SMB Social-first +10% CAGR Mid-market +40% CAGR >$120B >25% CAGR 41
Slide 42: We're defining our market
We’re defining our market Platform leadership Winning culture Expanding partner ecosystem Expanded global distribution Bigger customers, accelerated ACVs Loyal customer community 42
Slide 43: Platform vision
Platform vision , sproutsocial
Slide 44: Aaron Rankin, Co-Founder and CTO
Aaron Rankin Co-Founder and CTO He/him/his 44
Slide 45: We start with the customer
We start with the customer Obsess over workflows Solve for scale We build product differently 45
Slide 46: Scalable and sustainable innovation
Scalable and sustainable innovation Network evolution Consumer preference evolution Rapidly evolving Sprout feature set Business workflow penetration 40+ Product Squads 46
Slide 47: Democratizing social
Democratizing social 96% of leaders: social strategies involve greater collaboration Marketing Care & Success Strategy Commerce 47
Slide 48: Social: becoming the source of truth
Social: becoming the source of truth Product-led features and design Marketing Care & Success Strategy Commerce 48
Slide 49: AI at our core
Publishing AI at our coreElegant single codebase Enterprise-grade security & permissions Reporting Advocacy Engagement Listening One intuitive platform Exponential data volume growth 49
Slide 50: Leading edge of social
Roles & teams Speed & Excellence D at a vo lu m e Opportunity Leading edge of social 50
Slide 51: It takes more than a village
It takes more than a village D at a vo lu m e Roles & teams Speed & Excellence AI assist 51
Slide 52: Social marketers agree AI has had a positive impact
of social marketers agree AI has already had a positive impact on their work 81% 52
Slide 53: Alan Boyce, SVP Engineering
Alan Boyce SVP, Engineering He/him/his 53
Slide 54: AI delivers better product efficacy and rapid innovation
AI delivers better product efficacy and more rapid innovation 54
Slide 55: Brand voice and security AI adoption
Brand voice AI adoption Security AI adoption will require authenticity and risk mitigation 55
Slide 56: In the pole position for AI
Customer scale Data scale Time spent Sprout AI We’re in the pole position for AI to strengthen core features 56
Slide 57: Self-improving AI model
Self-improving AI model Conversation Scale Customer Care Data Scale Customer Scale 57
Slide 58: Product areas and Tagger integration
Publishing Engagement ReportingListening Global Tagger integration Growth UI Systems Mobile Infrastructure AI/ML Tagger 58
Slide 59: Complete view of the customer
Complete view of the customer Unlock the full potential of social Differentiated technical architecture The future is social 59
Slide 60: Joe Del Preto, Chief Financial Officer
Joe Del Preto Chief Financial Officer He/him/his 60
Slide 61: Financial overview
Financial overview , sproutsocial
Slide 62: The future of Sprout is here
The future of Sprout is here. 62
Slide 63: Q3 update
Q3 update >$350M ARR Broad enterprise strength and early Tagger upside 63
Slide 64: An iconic software company
An iconic software company. Proving to be an all-weather performer. 64
Slide 65: 2028 >$1B annual subscription revenue
2028 >$1B Annual subscription revenue 65
Slide 66: Prior 2025 TAM forecast
Prior 2025 TAM forecast Enterprise +25% CAGR SMB +20% CAGR Mid Market +45% CAGR >$100B >20% CAGR 66
Slide 67: 2025 TAM forecast update
2025 TAM forecast update Enterprise +40% CAGR SMB Social-first +10% CAGR Mid Market +40% CAGR >$120B >25% CAGR 67
Slide 68: 2023 social SAM revision
2023 social SAM revision >$55B >$44B (2021 SAM) 68
Slide 69: Influencer marketing SAM
Influencer marketing SAM Enterprise +50% CAGR SMB Digital native brands Mid Market +50% CAGR >$10B >50% forward CAGR 69
Slide 70: TAM unlocks
TAM Unlocks Seat Expansion Workflow expansion Social is strategic to every business Market expansion 70
Slide 71: ACV a durable driver of growth
ACV a durable driver of growth Total Sprout customer average ACV 71
Slide 72: Multi-year ACV growth is accelerating
Multi-year ACV growth is accelerating Year-over-year ACV growth rate 72
Slide 73: Led by accelerating high end ACV
Led by accelerating high end ACV The ACV of the top 10% of all Sprout customers 73
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 74
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 75
Slide 76: Tagger 2028 >$100M ARR
Tagger 2028 >$100M ARR Further accelerant to our platform opportunity 76
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 77
Slide 78: Mid-market & enterprise mix accelerating
Mid-market & Enterprise Mix Accelerating Mid-market & enterprise ARR as a percent of total ARR 78
Slide 79: Durable upmarket momentum
Durable upmarket momentum >50% RPO Growth 11 consecutive quarters 79
Slide 80: Building to future NDR upside
Building to future NDR upside 2022 Actual NDR NDR Target MM & Ent 2022 Actual >120%>120% Bigger problems High end mix Annual contracts 109% 600 bps 400 bps >100 bps 80
Slide 81: 2028 >$200M annual FCF
2028 >$200M Annual FCF 81
Slide 82: And margin upside
And margin upside 2023* 2028 Target Long term >25% >20% R&D S&M G&A Gross margin 0.4% >900 bps 800 bps >300 bps *Prior 2023 Non-GAAP operating margin guidance (as of 8/3/23) 82
Slide 83: KPIs that distract from our strategy
Not a priority. We will continue to disclose, but it should not be your focus. This proxy is confusing and steals focus from our upmarket acceleration. Non-core is small and going to zero. Our investments are aligned towards our future. KPIs that distract from our strategy Total customer count Core/
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 84
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 85
Slide 86: Final thoughts
Final thoughts , sproutsocial
Slide 87: Our next great growth chapter
Our next great growth chapter Delivering & creating value as we climb past $1B 87
Slide 88: Executive Q&A
Executive Q&A , sproutsocial
Slide 89: Thank you!
Thank you! 89
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 [Reconciliation of Non-GAAP operating Income (oss) {Loss from operations, . ‘Stock based compensation exp
Slide 91: Financial appendix
Financial appendix Sprout Social Inc. ‘Summary and Reconciliation of Non-GAAP Financial Measures (Unaudited) Tin thousands) Three Months Ended Three Months Ended June 30, 2019 2020 2024 2022 June 30, 2023, of Shot mot Sof ot $ Revenues $s Revenues $ Revenues s Revenues $ Revenues Gross Margin TT Gro
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 AR
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