Sprout Social, Inc. (NASDAQ:SPT) Q2 2023 Earnings Call Transcript

Ryan Barretto: Yes, we feel great about the partnership, we delivered 176 logos in Q2, up 75% sequentially. A lot of value being viewed by these customers as it relates to the integrations that we had built across Tableau and Slack and more recently in Q4 service cloud and then we added the marketing cloud integration in this quarter as well, which we had a great opportunity to speak to customers live about at the Salesforce connections event. We share this previously, but we continue to see a lot of amazing opportunity with these customers, both social studio customers that need to transition off, that are very large in size, as well as just Salesforce customers in general, that are looking for a fully integrated solution into the Salesforce tech stack.

And so we feel really great the pipeline is continuing to grow, we anticipate we’ll continue to see strong results in the second half of this year. There’s been some amazing stories we’ve seen from customers coming in where – on this combination of moving from social studio, trialing our product, seeing all of the value ads that we have in Sprout that they can immediately get benefit from. And then for customers that are Salesforce customers that were on another social media management platform, realizing the importance of having that full 360-degree view of the customer and having that social data pervasive across the Salesforce CRM record. Now we are uniquely positioned to deliver this for customers, so feeling really good about the visibility and a lot of traction.

And we’ll be heavily active at Dreamforce coming up in September.

Arjun Bhatia: Perfect, thank you very much.

Operator: Our next question comes from the line of Parker Lane from Stifel. Please go ahead.

Parker Lane: Hi, guys, thanks for taking the question here. Joe wanted to go back to the non-core customer cohort here. And I know it’s not in the numbers and there’s a lack of certainty around modeling that, but what should we think about as a realistic timeframe for these 7,400 customers to either move off the platform or recent point of stabilization. I mean, we’re about 9 months into the price changes. A lot of these customers are month-to-month. Just give us a sense of what a realistic timeline is to approach a stabilization in that cohort, just an absolute customer logo-terms?

Joe Del Preto: Yes, Parker. So what we’ve mentioned on the call and the way we’re kind of giving our guidance, we’re actually assuming that that goes to zero by the end of the year. So we want to just kind of take that risk off the table. So from that standpoint, that’s how you can kind of think about that as it relates through the end of this year. So we’ve got that zeroing out by the end of this year from a guidance standpoint.

Parker Lane: Understood. And then maybe on Tagger, can you give us a sense of that business model? And who exactly they’re targeting, what size of organizations they’re looking at that tend to skew more enterprise given the higher ACV is there? Or is it you relatively balanced mix of organizations are targeting?

Ryan Barretto: Yes, thanks, Parker. I think – this is Ryan. So it skews very much in the system to getting customers in the enterprise. One of the reasons why it stood at so much to us is they have got customers like Estee Lauder, Bose, Omnicom and a stable of really great customers that they work with. Their technology, which we love is just incredibly scalable, it’s elegant, it looks and feels a lot like Sprout. And so our R&D team, who certainly bias to the internal side of building, this is one of the first companies we’ve ever seen that they’ve just been incredibly impressed with. And we liked it because we obviously have a certain go to market motion within the enterprise and the way that they’ve built their software and implemented customers and the way that customers get utility quickly, lines up really well to us.

So they’re definitely focused in on the enterprise part of the market. And so that again, speaks to just some of the ACV opportunities we see in the future as well as the impact we think that they can eventually have on our competitive win rates.

Parker Lane: Got it. I appreciate the responses here, guys. Thanks again.

Operator: Our next question comes from the line of Adam Hotchkiss from Goldman Sachs. Please go ahead.