Sprout Social, Inc

All participants will be able to listen only until the question and answer portion of this call. Please note that today's call is being recorded. If you'd like to ask a question during the Q&A, simply press the star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star and number one again. I'd now like to introduce the call to Jason Reckle, Vice President of Investor Relations. You may now proceed.

Thank you, Operator. Welcome to Sprout Social's fourth quarter 2023 earnings call. We'll be discussing the results announced in our press release issued after market closed today, and have also released an updated investor presentation, which can be found on our website. With me are Sprout Social 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 Security Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking. These include, among others, statements concerning our expected future financial performance and business plans and objectives, and can be identified by words such as expect, anticipate, intend, plan, believe, seek, opportunity, or will. These statements reflect our views as of today only, and should not be relied upon as representing our views at any subsequent date. 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 31, 2023 to be filed with the SEC, as well as our most recently filed 10-K and 10-Qs. 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 the reconciliation to the most directly comparable GAAP financial measures, are included in our fourth quarter earnings release, which has been furnished to the SEC and is available on our website at investors.sproutsocial.com. And with that, let me turn the call over to Justin.

Thank you, Jason, and good afternoon, everyone. Thank you, as always, for joining us. We are proud to deliver fantastic fourth quarter results. We're entering 2024 with notable momentum and an expanding scope of growth opportunities. Earlier this month, we were rated as the number one best software product by G2 across the entire software industry, adding to leadership across all of the major categories in which we compete. We believe our product leadership and outstanding execution have sprout position for a breakout year as we define category leadership. During Q4, we saw continued record new business ACVs and total ACV growth of 43% year over year. We added record net new organic 10K and 50K customers, and our premium product attach rate is now 30%, with premium product ARR growing greater than 50% year over year. We added record net new ARR, a record increase in deferred revenue, and step change increase in RPO and CRPO. New RPO, or total contract value bookings, was nearly 80% higher than any quarter in our history. New CRPO bookings increased nearly 3x year over year. Our focus strategy is yielding powerful results. Our customers are making increasingly large and long duration investments in social, which we believe will converge reported leading indicators upwards towards CRPO over time. We believe this will have the compounding effect of accelerating the durability and efficiency of our future growth. Our industry is maturing and new research from Deloitte Digital says it far better than we could. Social first brands are repositioning social media at the core of the entire brand and customer experience as a key strategic priority. Our goal is to make Sprout industry standard publishing and engagement platform and to make social listening, social advocacy, influencer marketing, and sophisticated reporting core to the workflow of the world's most innovative brands. We see massive potential to unify what should be standard social capabilities for all global businesses and to accelerate premium product attach rates and ACV growth. Exiting 2023, our premium product attach rate increased to 30% and total premium module ARR is now growing greater than 50% year over year. Tagger will play an important role in our platform strategy and the growth potential entering 2024 is proving to be greater than we had planned. It is increasingly clear that social media management and influencer marketing demand to live together for both workflow and reporting. We continue to execute on our differentiated value position with inbound interest coming from a diverse set of current customers and geographies. With more than 3x current Sprout ACVs and a meaningful opportunity to further differentiate Sprout while cross-selling into our customer base, we believe Tagger is on track to achieve our $100 million ARR target. Stepping back to our broader product strategy, our customer-led rankings on G2 are an outcome of our aggressive product investments over the past 24 months. We've accelerated our platform investments in AI, social customer care, listening, advocacy, and industry-defining integrations. We believe differentiated product integrations with amazing partners like Salesforce, the product enhancing acquisitions of Tagger and Repustate, and rapidly expanding enterprise capabilities have positioned Sprout to lead our category. Last week's announcement of social customer care by Sprout is a notable output of this innovation as we seek to establish ourselves as the clear choice for social customer care. We're now delivering faster, more personalized, and more complete customer support with AI-powered case management, intuitive reporting, and out-of-the-box integrations with leading customer care platforms like Salesforce, Zendesk, and Microsoft. Social care is the fastest growing market in our SAM, and we believe we are well positioned to lead that market. We delivered more than 150 material new product enhancements in total during 2023. more than 25% greater than each of the prior three years. And we believe our pace of innovation is only getting started. This pace of change also aligns to the pace of change in the market, which is evolving faster than ever. We are proud to elevate our relationship with Reddit earlier this month, for Tagger to lead the new creator API with Snapchat, to join Meta's ad tech partner program, and to currently be working as an alpha partner for Meta's Threads API. We're deepening our relationships across our partner ecosystem and are proud to be core to many other key 2024 partner priorities that will deliver utility to our shared customers. We believe our single code base coupled with strong and dynamic partner relationships are key competitive differentiators for Sprout and are extending our moat as we scale. Sprout's recognition as the number one best software product ranked by G2 highlights the incredible success our customers are having In fact, during 2023, our customers cumulatively spent more than 6 million hours of time in Sprout, and we processed over 1.5 trillion messages and actions for them. We've doubled down on our thesis that social is maturing as the primary communication channel between brands and their customers. The continuing maturity of the market is solidifying Sprout as the social system of record, intelligence, and action. We aspire to set the bar for innovation in our industry and to emerge as the market leader. The logos you'll hear Ryan talk about shortly are equal parts humbling and indicative of where we are as an organization. We outlined our next great growth chapter last fall at Investor Day, and we're executing well as we progress toward our goal of $1 billion in annual revenue. Going into 2024, we believe we have the right team, platform, and approach to realize our full potential. And with that, I will turn the call over to Ryan.