Sprout Social, Inc

Ladies and gentlemen, this is the operator. Today's call is scheduled to begin momentarily. Until that time, your lines will be placed on music hold. Thank you for your patience. Thank you for standing by. My name is Kate and I will be your conference operator today. At this time, I would like to welcome everyone to the Sprout Social First Quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Alex Kirks, VP, Investor Relations and Corporate Development. Please go ahead.

Thank you, operator, and welcome to Sprout Social's first quarter 2025 earnings call. We will 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 Socials CEO Ryan Barreto and CFO Joe DelPretto. 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. All statements other than statements of historical fact are forward-looking. These include, among others, statements concerning our expected future financial performance, including our Q2 and 2025 outlook, 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, and we do not undertake any duty to update these statements. Forward-looking statements address matters that are subject to risk 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 quarterly report on Form 10-Q for the fiscal quarter ended March 31st, 2025 to be filed with the SEC, as well as our most recently filed 10-K. During the call, we will 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 reconciliations and the most directly comparable GAAP financial measures, are included in our first quarter earnings release. This has been furnished to the SEC and is available on our website at investors.sproutssocial.com. With that, let me turn the call over to Ryan. Ryan?

Thank you, Alex, and welcome to our first quarter earnings call for fiscal 2025. We reported first quarter results with revenue of $109.3 million, representing year-over-year growth of 13%, highlighted by strong revenue execution and operating margin expansion. Our current remaining performance obligations, which reached 255.8 million, represented 21% year-over-year growth. Our go-to-market teams delivered another solid quarter with 22% growth in the 50K ARR customer cohort. We also landed strategic wins with global brands like Palo Alto, NASCAR, Interscope Records, Avis Budget Car Rental, and Axos Bank. These customers demonstrate our continued execution and strategic fit with the most socially sophisticated enterprise customers. We are expanding our sales capacity this year and will continue to throughout the first half of the year, which we believe will drive further momentum in our pipeline generation and enterprise coverage as we move into FY 2025 and beyond. We're also excited about the continued momentum in our influencer marketing product, which has become increasingly strategic to how we engage with our most socially sophisticated customers. I also wanted to provide a quick update on the macro environment and what we experienced during the quarter. Q1 track is expected with spending patterns similar to those seen in 2024. We continue to see elongated procurement and purchasing processes that were very similar to the prior year. While we expect these impacts to persist through the remainder of 2025, we were encouraged by the enterprise pipeline generation during the quarter and are seeing the early signs of the improved process and discipline that our new GTM leadership is bringing to the company. Building on last quarter's discussion about Sprout's unique position in the social media management market, I want to share how our products are enabling brand discovery in today's rapidly evolving digital landscape. Also provide updates on our four key growth drivers before handing the call over to Joe. A growing trend we're seeing and hearing from our customers is the ongoing shift from traditional search engines to social platforms for discovery. Research from Forbes shows 46% of Gen Z now prefer social media over conventional search, a behavior that signals where brand engagement is headed. And we believe this isn't a passing trend, but a fundamental rewiring of online behavior that will play out over the next several years. As the majority of search is now zero click with AI, traditional content strategies face headwinds as their traffic is changing in real time. Social media's authenticity, immediacy, and community-driven nature fill the gap, offering businesses strong ROI outcomes. Social platforms enable real-time discovery and customer connections, fostering trust and driving conversions. Gen Z's preference for social search provides critical directional data pointing to a future where brands must view their social presence as a top business priority. This shift amplifies the role of influencer marketing, which is central to social search dynamics. Creators and influencers shape discovery by delivering relatable content that resonates in algorithm-driven feeds, guiding consumers from curiosity to purchase. Nearly 70% of consumers trust influencer recommendations over information from brands according to Marketing Drive. And Sprout's research shows just about half of consumers make purchases at least once a month because of influencer posts. This past quarter, we announced the rebrand of our influencer marketing platform, formerly AgriMedia, to sprout social influencer marketing. This product is designed to enable brands to turn creator strategies into a top driver and multiplier of ROI, which is crucial given the role influencer marketing plays in the current digital landscape. In mid-April, we launched significant enhancements to the product, including AI-powered natural language discovery to enable marketers to identify creators through topic-led search, A customizable brand safety solution to better align creator partnerships with a brand's value, and new creator vetting features that reduce the time spent in discovery so marketers can refocus on strategic creative tasks. A reimagined influencer marketing product is grounded in AI and is designed to help brands find and vet the most valuable creators that fit their unique strategy faster and safer than ever before. We are excited about the opportunity this opens for brands to maximize their impact in today's increasingly social first ecosystem. And we look forward to expanding on the success our customers are seeing from these updates next quarter. Equally critical is social customer care as the rise of social search heightens the need for seamless integration of care strategies. Consumers turning to social platforms for discovery expect immediate personalized responses. Sprouts updates to its customer care solutions and power brands to meet customers where they are, with the goal boosting satisfaction and retention. As social search grows, integrating robust care strategies is no longer optional. It's essential for building trust and loyalty. These innovations allow us to capitalize on the changes of an increasingly social-driven world and empower brands to reshape the future of the business, delivering measurable value. As we dive into our growth drivers, you'll see how these advancements paired with our vision are fueling enterprise business and helping solidify our leadership in the market. Similar to the last few quarters, I want to provide a quick update on our four key growth drivers for Sprout that include, number one, win the enterprise. Number two, customer health and adoption. Number three, expand our partnership and ecosystem. And number four, drive improved account penetration. Then I'll take a few minutes to provide some quick updates on each of these key focus areas. To win the enterprise, we intend to expand the pipeline, close more 50K plus deals, and accelerate adoption with a product roadmap built for enterprise needs. Let's start with key product releases in the quarter. For AI, we released Generate Post by AI Assist that enables social media managers to leverage fresh content ideas through Generate's recommendations. With a few clicks, users can create a range of concepts to captivate their audience. With convenient access from either the publishing calendar or compose window, users are able to generate creative written content in their unique brand voice to help drive productivity and inspiration for their social strategy. For Care, our latest innovations are built for brands managing high volume engagement at scale. During the quarter, we released our agent force integration to be generally available for Service Cloud and Sprout customers. With Sprout and Salesforce's agent force, brands can accelerate case resolution time with faster access to multi-channel case insights, personalized customer responses through consolidated contact summaries, and enhance brand experience with customer insights across case and channels. We also released LinkedIn DMs, which allows teams to reply to private messages sent to a LinkedIn business profile from Sprout's smart inbox or cases. By consolidating these messages in one place, care and community management teams can more efficiently engage with private inbound messages that could be sales leads, customer support issues, or job candidates. We're strengthening enterprise scalability, security, and compliance to help organizations manage complexity with confidence. Large distributed teams need consistency and control, and we're excited about a new release during Q1 called Dynamic Role Sync, which is designed to provide customers with greater oversight of user permissions and access security. As teams grow to meet the demands of social, brand safety continues to be top of mind for businesses, and this release is designed to offer customers further confidence in ensuring the right team members have the proper access. Finally, we are one of the first to market with a key accessibility feature where customers can now add or edit alt text on image posts on Instagram and Pinterest in Spro. including using AI Assist to generate image description in one click. Alt text is a simple but powerful way to make social content more accessible to those globally with visual impairments. It brings images to life for those using screen readers or other assistive tech and helps brands prioritize inclusivity while reaching a broader audience. This is especially impactful for our customers in state and local government that will need to comply with the updated digital accessibility requirements from the ADA by April 2026. I also want to spend a few minutes discussing some additional strategic enterprise wins in the quarter that you'll find in our earnings presentation. This quarter, we closed a seven-figure new business deal with a Fortune 500 medical device manufacturer looking to take an enterprise approach to social and to consolidate their tech stack for publishing, engagement, analytics, listening, and influencer marketing. They chose Sprite for our ability to deploy quickly. And because of the access they get to our team of expert professional services who can help enable a true enterprise strategy with stronger operations and increased visibility. Now, instead of managing siloed tech and multiple vendors, they'll be able to manage their entire social strategy in Sprout, which can enable a faster time to value and a stronger ROI. Another new business customer that closed in the quarter was with a Fortune 500 food and beverage manufacturer. This was another example of a company using multiple tools and seeking consolidation into one easy to use platform. They ultimately wanted a solution where they could understand current customer trends, pair them with their historical great products, and amplify that content while receiving immediate feedback on its performance. With Sprout, they're able to centralize marketing and customer support in one intuitive platform to monitor feedback, track campaign success, and engage with consumers in real time. We're also now going to be able to generate real-time reports to identify trends, leveraging that data to align with a product strategy, and ultimately drive loyalty and repeat purchases. The next customer story we want to highlight is a 600K expansion win, which highlights the growth opportunities within our existing customer base. This Fortune 500 restaurant chain was already managing their marketing care and experience through our platform and service cloud integration. Our expanded relationship was driven by their acute need to significantly increase their coverage of social profiles across 15,000 locations. Now they can easily manage guest interactions and reviews across thousands of locations, helping ensure that messages aren't missed and that complaints are efficiently addressed. This is a great example of how critical social is for the health of our customers' brand and reputation and our ability to meet the needs of a large-scale, complex enterprise organization globally. Our second growth driver is a sharper focus on customer health, onboarding, and adoption to maximize long-term value. This quarter, we successfully implemented a new customer success platform that enhances our ability to score and assess customer health. With this improved visibility, we're better equipped to proactively identify both renewal risks and expansion opportunities. We also continue to strategically scale our customer success team by tailoring our approach based on customer segments. SMB and mid-market customers now benefit from stronger community resources and enhanced technical support, while our enterprise clients receive a higher touch experience through professional services, AI-driven insights, and product usage signals. Moving on to our third driver, we will continue to invest in our partnerships with strong global partners that bring Sprout into strategic accounts and expand our reach into some of the largest digital marketing budgets. In the first quarter, we added new leaders and product partnerships and channels to lead and expand our efforts across Salesforce, AWS, and beyond. We also deepen our Salesforce alliance with a strong presence at the Sydney World Tour in February, the flagship event for APAC customers. Expect us to ramp up activity on the partnership front in fiscal 2025, as we believe our social network, technical integrations, and go-to-market partnerships can be a long-term acceleration to our business model. A key focus in the next few quarters will be working to build out our network of international resellers that can increase our access to more European-based customers and, over time, to replicate this in APAC. Our fourth growth driver is deepening customer engagement through use case expansion and premium modules. with our field team seeking to drive greater value across both new and existing customers. We built on our momentum from Q4 by launching a multi product campaign in Q1 across our go to market teams. Multi product selling is now a core component of every sales reps compensation plan. To support this shift, we're equipping our reps with a robust set of account based intent signals to help them identify high potential expansion opportunities and uncover untapped markets. Looking forward, we believe the strategic investments we are making in robust customer care, integrated AI-powered solutions, and influencer marketing will help define this product category in a world where social is not just important, but essential. I'm excited about what's ahead and look forward to sharing more progress along the way. And with that, I'll turn it over to Joe to run through the financials. Joe?