Sprout Social : 1Q24 Investor Presentation

Investor Presentation

2024

Disclaimers

Forward-Looking Statements

This presentation contains "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 identify forward-looking statements by terms such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "explore," "intend," "long-term model," "may," "might" "outlook," "plan," "potential," "predict," "project," "should," "strategy," "target," "will," "would," or the negative of these terms, and similar expressions intended to identify forward-looking statements. However, not all forward-looking statements contain these identifying words. These statements may relate to our market size and growth strategy, our estimated and projected costs, margins, revenue, expenditures and customer and financial growth rates, our Q1 2024, 2024, medium term, and long-term financial outlook and performance against our multi-year financial framework, our plans and objectives for future operations, growth, initiatives or strategies, including our investments in research and development. By their nature, these statements are subject to numerous uncertainties and risks, including factors beyond our control, that could cause actual results, performance or achievement to differ materially and adversely from those anticipated or implied in the forward-looking statements. These assumptions, uncertainties and risks include that, among others: our rapid growth and limited history with our current pricing and platform features makes it difficult to evaluate our prospects and future operating results; we may not be able to sustain our revenue and customer growth rate in the future; price increases have and may continue to negatively impact demand for our products, customer acquisition and retention and reduce the total number of customers or customer additions; our business would be harmed by any significant interruptions, delays or outages in services from our platform, our API providers, or certain social media platforms; if we are unable to attract potential customers through unpaid channels, convert this traffic to free trials or convert free trials to paid subscriptions, our business and results of operations may be adversely affected; we may be unable to successfully enter new markets, manage our international expansion and comply with any applicable international laws and regulations; we may be unable to integrate acquired businesses or technologies successfully or achieve the expected benefits of such acquisitions and investments; unstable market and economic conditions, such as recession risks, effects of inflation, labor shortages, supply chain issues, high interest rates, and the impacts of current and potential future bank failures and ongoing overseas conflicts, could adversely impact our business and that of our existing and prospective customers, which may result in reduced demand for our products; we may not be able to generate sufficient cash to service our indebtedness; covenants in our credit agreement may restrict our operations, and if we do not effectively manage our business to comply with these covenants, our financial condition could be adversely impacted; any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business; and changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and harm our brand. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption "Risk Factors" and elsewhere in our filings with the Securities and Exchange Commission (the "SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 23, 2024, as supplemented by any future reports that we file with the SEC. Moreover, you should interpret many of the risks identified in those reports as being heightened as a result of the ongoing and current instability in market and economic conditions. Forward-looking statements speak only as of the date the statements are made and are based on information available to Sprout Social at the time those statements are made and/or management's good faith belief as of that time with respect to future events. Sprout Social assumes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made, except as required by law.

Use of Non-GAAP Financial Measures

We have provided in this presentation certain financial information that has not been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Our management uses these non-GAAP financial measures internally in analyzing our financial results and believes that use of these non-GAAP financial measures is useful to investors as an additional tool to evaluate ongoing operating results and trends and in comparing our financial results with other companies in our industry, many of which present similar non-GAAP financial measures. Non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable financial measures prepared in accordance with GAAP and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP. A reconciliation of our historical non-GAAP financial measures to the most directly comparable GAAP measures has been provided in the financial statement tables included at the end of this presentation, and investors are encouraged to review these reconciliations. The Company cannot provide reconciliations between its forecasted non-GAAP measures and the most comparable GAAP measures without unreasonable effort due to the unavailability of reliable estimates for certain items. These items are not within the Company's control and may vary greatly between periods and could significantly impact future financial results.

Customer Metrics and Market Data

This presentation includes useful customer metrics and other data, which are defined at the back of this presentation. Unless otherwise noted, information in this presentation concerning our industry, including industry statistics and forecasts, competitive position and the markets in which we operate is based on information from independent industry and research organizations, other third-party sources and management estimates. Management estimates are derived from publicly available information released by independent industry analysts and other third party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data, and our experience in, and knowledge of, such industry and markets, which we believe to be reasonable. Projections, forecasts, assumptions and estimates of the future performance of the industry in which we operate and our future performance are necessarily subject to uncertainty and risk due to a variety of factors. We have not independently verified the accuracy or completeness of the information provided by independent industry and research organizations, other third parties or other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that information nor do we undertake to update such information after the date of this presentation.

2023 Investor Presentation

41%	29%
ACV Growth	Revenue Growth

30,000+

Customers in 100+ countries	99%	77%
	Subscription	Gross Profit
	Revenue

*All financial metrics are as of or for the quarter ended 3/31/24. Revenue growth represents year-over-year growth of Q1 2024 over Q1 2023.

Investment highlights

Empowering	Recurring SaaS model	Disruptive product	Durable moats and
businesses to	(99% subscription)	led model and fast	barriers to entry
operationalize social		time to value

Social system of	Founder-led	Highly scalable	Large and rapidly
record, intelligence	leadership team and	single code base	growing TAM
and action	exceptional culture

Our history

Sprout was built on the premise that social media would change the way the world communicates and how virtually every aspect of business operates.

2010	2013
Founded	Hired 100th
employee
company

		2019		2021
		Became a public	Launched Social
		company	Commerce
2017		Launched Reviews
First business		add-on
acquisition
				2022
						Strategic
		2020		platform
			changes
	2018			Sprout Design Refresh

2023

Acquired Influencer Marketing leader, Tagger

Acquired AI/ML leader, Repustate

2011

2016

	Launched Premium
Opened Dublin office	Analytics add-on

Sprout platform	Series C	Launched first add-on
funding
introduced	module (Listening)

Social media has fundamentally transformed the way consumers connect with brands

With more than

5.04 billion

consumers using social media

Businesses must adapt or risk becoming irrelevant to nearly half of the world's population. The ways that business attract, acquire, sell to and service customers is being completely transformed.

Total Global Social Media Users per Statista, January 31, 2024

And changed the entire customer experience, across the enterprise

Social is a horizontal technology that has tangible benefits to nearly every department within a modern business; businesses must adapt and re-tool to harness the power of social and maximize the value of social data.

Marketing	Influence	Sales	Success	Support	Product	Strategy

Social media	Social team	Social is strategic to
marketer		every business

Requiring an entirely new system of record

Social media is massive, scattered, multi-purpose and does not conform to our existing business systems. A centralized platform is critical to creating strategic business value.

Marketing

Sales

Support

Success

Product

Strategy

Commerce

Influencer

Advocacy

Sprout is the platform solution

Sprout consolidates the complexity of social channels into a powerful, elegant and seamlessly integrated platform that can be leveraged across an organization.

Marketing

Sales

Support

Success

Product

Strategy

Commerce

Influencer

Advocacy

Influencer category expansion via August 2023 acquisition of Tagger. This product has not been fully integrated yet into Sprout.

Sprout Social has become mission-critical for more than 30,000 customers globally