Sprout Social, Inc

Please stand by, we're about to begin. Good afternoon, ladies and gentlemen, and welcome to Sprout Social's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, press star one again. And now I'd like to turn the call over to Mr. Jason Reckle, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Operator. Welcome to Sprout Social's first quarter 2022 earnings call. We'll be discussing the results announced in our press release issued after market closed today, and I've also released an updated investor presentation, which can be found on our website. With me are Sprout Social's CEO, Justin Howard, CFO Joe DelPretto, and President Ryan Barreto. Today's call will contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, among others, statements concerning financial and business trends, our expected future business and financial performance and financial condition, performance against our multi-year financial framework, our market size and opportunity, our plans and objectives for future operations, growth initiatives, or strategies, in our guidance for the second quarter of 2022 and the full year 2022, and can be identified by words such as expect, anticipate, intend, plan, believe, seek, or will. These statements reflect our views as of today only, should not be relied upon as representing our views at any subsequent date, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risks and uncertainties that could cause actual results to differ materially. For discussion of the risks and other important factors that could affect our actual results, please refer to our annual report on Form 10-K for the fiscal year ended December 31st, 2021, filed with the Securities and Exchange Commission, as well as any future quarterly and current reports that we file with the SEC. During the call, we'll discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures along with reconciliation to the most directly comparable gap financial measures, are included in our earnings press release, which has been furnished to the SEC and is available on our website at investors.sproutsocial.com. With that, let me turn the call over to Justin. Justin?

Thank you, Jason, and good afternoon, everyone. Thank you for joining us. 2022 is off to a great start and is shaping up to be a transformative year for our company. Our teams continue to execute at a high level, Our product roadmap is unlocking new ways for our customers to realize the full potential of social, and our new partnerships are accelerating our path towards industry leadership. We appreciate your ongoing support and guidance as we capitalize on this massive opportunity in front of us. Since we recently spoke with you in February, I'm planning only a few short highlights today before turning the call over to Ryan and Joe. We're pleased to again deliver greater than 40% year-over-year revenue growth with efficiency again hitting the rule of 50 benchmark. Our opportunity continues to be fundamentally driven by the mission-critical importance of social media management, our disruptive, efficient go-to-market strategy, and the differentiation of our platform. Our execution this quarter was strong. Our product pipeline, partnership momentum, and go-to-market execution continue to be highlights. With further Q1 momentum in the number of customers contributing more than 10,000 in ARR, up 52% year over year, and an acceleration in our number of customers contributing more than 50,000 in ARR, up 97% year over year. We believe we have the opportunity to elevate this performance in the quarters to come. This is particularly encouraging because at nearly 700 customers, our 50,000 customer cohort is already growing at a faster pace than our $10,000 customer cohort had been growing at a similar scale. We feel this underscores the magnitude of our ACB opportunity and the upside impact that partnerships have in the opportunity to contribute. We believe our strategy and execution are allowing us to pull away from the market and we plan to further accelerate our industry leadership social system of record intelligence at action. The free cash flow inflection in our business is validation of this as customers are making increasingly strategic commitments to Sprout and we're able to deliver incrementally capital efficient returns on our investments. While we remain prudent in acknowledging that many geopolitical and external factors face the world today, the underlying fundamental strength of our business puts us in a fortunate position to raise both our growth and margin expectations for the year. Last quarter, we outlined an aggressive R&D plan for 2022 with an ambitious product roadmap that we believe positions Sprout to define our category. Our announced partnership with Salesforce in March was an incredible validation of our technology, our market leadership, and our approach to customer success. It also represents a multi-year revenue opportunity. But it's our technology roadmap that we believe will deliver value to our customers and position our company to maximize our long-term potential. The innovation we are building for customers today and the roadmap we expect to deliver has never been more exciting. Our strategic platform investments in social commerce, messaging, publishing, and reporting are foundational to the ways our customers execute their social strategy. Our roadmap in social customer care has been prioritized, and we're on track for significant advancements this year in social listening, analytics, and advocacy. Building on our product leadership, our partner momentum has also never been greater, and you should expect new announcements from us in Q2 to further expand our footprint. We are working on powerful, elegant integrations with new partners and have multiple opportunities to go deeper in commerce, messaging, and listening with both new and existing partners. Our work here aligns well to both our product roadmap and the competitive modes that are strengthening around Sprout as we grow. The combination of our customer scale, our fully unified social media management platform, and the breadth and depth of our network and partner integrations are significant and compounded competitive advantages. We believe we have a true and unique opportunity to define this category as an overall platform and in each key product area. But this is not made possible without the incredible work and commitment from our teams. We're actively working to make Sprout a career destination across disciplines and to redefine the way that we work.