Sprout Social, Inc. Price & Performance (SPT)

We will be discussing the results announced in our press release issued after market close today and have also released our updated investor presentation, which can be found on our website. With me are Sprout Social's CEO, Ryan Baredo and CFO, Joe Delpreto. Today's call will contain certain 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 Q1 and twenty twenty five outlook, and business plans and objectives, and can be identified by words such as expect, anticipate, intend, plan, believe, speak, 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 risks and uncertainties that could cause actual results to differ materially.

For a discussion of the risks and other important factors that could affect our actual results, please refer to our annual report on Form 10 ks for the fiscal year ended 12/31/2024, to be filed with the SEC. As well as our most recently filed 10 ks and 10 Qs. 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 the most directly comparable GAAP financial measures are included in our fourth quarter earnings release, which will be furnished to the SEC and is available on our website at investors.sproutsocsiorals.com Sprout.

With that, let me turn the call over to Ryan. Brian?

Thank you, Alex, and welcome to our fourth quarter earnings call for fiscal twenty twenty four.

We reported fourth quarter results with revenue of $107,100,000 representing year over year growth of 14%.

Our current remaining performance obligations, which reached $249,400,000 represented 26% year over year growth. I want to thank the Spro team for their focused execution to close out 2024.

Their hard work in the quarter has allowed us to build a stronger foundation for future growth in 2025 and beyond. We saw steady improvements in gross retention, continued ACV growth and momentum in our Enterprise segment The Q4 demand environment remained consistent with Q3 marked by budget scrutiny, cautious investments and prolonged sales cycles. Given these trends, we're taking a measured approach to FY 2025 expecting demand to track with FY 2024. Q4, our go to market teams delivered strong results in our 50 ks ARR customer net adds both clear indicators of a success in securing annual and multiyear enterprise agreements. We also saw steady pipeline trends with healthy year over year growth across both inbound and outbound channels, particularly in our enterprise business.

Further underscoring this momentum, revenue from the 50 ks segment grew over 35% in FY 2024 and continues to represent a larger share of our overall revenue base.

These results highlight the ongoing success of our upmarket strategy. We believe the competitive landscape is increasingly favorable for Sprout Sprout. Creating a unique opportunity to solidify our market position with enterprise level AI functionality, and influencer marketing capabilities. This momentum was evident in Q4 as we closed the largest new business ACV win in Sprout's history with a Fortune 500 financial services company. We also won a strategic opportunity with Under Armour, and I'm excited to share a quote from this amazing brand. We chose Sprout for its innovative features intuitive interface and the ability to seamlessly manage publishing, listening social engagement all in one platform. With the goal of reaching Gen Z audiences and tapping into deeper insights about this key demographic, Sprout has empowered us to respond quickly and effectively. The integration with Salesforce Service Cloud has also streamlined our customer service process allowing us to manage inquiries directly from one place.

Early successes like the Notre Dame Championship and the NBA All Star Weekend have shown the true value of Sprout in driving our social media strategy forward. Partnering with these industry leaders along with other significant enterprise wins this quarter underscores the value we bring to some of the world's most sophisticated brands. With that as the backdrop, I want to outline why we believe Spread is uniquely positioned to not just win, but help shape the future of social media management a market that has become indispensable for brands seeking authentic customer connections and deep business impact. I'll then touch on a few updates on our four key growth drivers before handing the call over to Joe. In today's rapidly evolving digital landscape, brands can no longer afford to tackle the complexities of social media without a powerful integrated platform. The question isn't whether they need one, the question is when they will hit the tipping point and which platform will drive their success. With a relentless focus on customer impact, growing partner ecosystem, real time data insights and strategic AI integration we believe we are the mission critical solution for enterprises looking to lead in social. Our customers see us as a trusted partner helping them engage their audiences drive action and deliver measurable results.

Our customers manage dozens to hundreds of social accounts while integrating insights from CRM, [indiscernible] [indiscernible] and collaboration platforms. Rather than juggling multiple tools and networks, that able to rely on Sprout as our central hub to help orchestrate and optimize their entire social strategy. This unified approach is a key differentiator in a market crowded with fragmented tools and it continues to drive our momentum in the enterprise space. Our partner ecosystem also continues to evolve with deepening integrations like Salesforce, and expanding relationships with both established and emerging social networks. This strategic expansion further strengthens our ability to provide single unified platform. This year, we are focused on expanding our footprint technical and go to market integrations with other platforms but also deepening our international partner reach as well. Our massive data vault isn't just big. We believe it differentiates Sprout from other solutions available in the marketplace. Processing more than 1,000,000,000 messages per day for almost 30,000 customers we believe we are uniquely positioned with a deep and proprietary understanding of the content and workflows that drive optimal performance for our customers across all social networks.

This dataset fuels our development of cutting edge solutions and actionable intelligence for our customers. Expect to hear more from us this year about our expanding data strategy. AI is woven through a Sprout platform. From automating the everyday to generating content and surfacing predictable insights, Sprout AI is designed to unlock customer efficiency. Our customers are able to elevate their strategic vision and creative execution all without leaving the platform. Ultimately, Spread's products win because they anticipate and address our customers' evolving needs. We're not just helping customers solve today's challenges, we're helping them build the foundation for future success.

Last quarter, I outlined four key growth drivers for Sprout Sprout. Number one, win the enterprise Number two, drive customer health and adoption. Number three, expand our partnership and ecosystem. Number four, drive improved account penetration. So today, I want to 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 50 ks 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 have seen strong growth in usage of our AI assessed [indiscernible] over the last year and a 300% year over year increase in AI generated content highlighting the accelerating adoption of our AI capabilities. We also just released Analyze Chart by AI Assist. AI Assist can now help our customers quickly and understand the key insights from their social charts with an automated summary of critical metrics. This marks our eleventh enhancement to our AISS capabilities that also includes features like summarizing conversations, enhancing posts, generating posts and recommending listening queries. For listening, we're expanding social intelligence with deeper, real time insights from high impact platforms.

Our full launch of Sprout's Sprout connection to Reddit gives brands access to richer conversations including comments, engagements and potential impressions unlocking a valuable source of unfiltered consumer sentiment. This builds on our expanded partnership with Reddit announced in February 2024 and we see significant opportunities for growth and innovation in 2025.

For Care, our latest innovations are built for brands managing high volume engagement at scale. Enhanced automation and governance tools enable agents to do faster with precision, while advanced sentiment analysis across social networks surfaces real time customer insights, By improving speed, oversight and intelligence, we're helping brands deliver exceptional service at scale. We're strengthening enterprise scalability, security and compliance to help organizations manage complexity with confidence. Large distributed teams need consistency and control. Our new content management tools help enterprises create and distribute approved messaging at scale aiming to establish brand alignment while reducing risk.

Managing access across complex organizations is also critical. Which is why our new admin controls simplify role based permissions, reducing administrative burden while strengthening security. And as data protection remains a top priority, our beta release of sensitive data masking allows brands to automatically redact personal identifiable information and other sensitive information assisting with regulatory compliance and protecting customer trust. As AI is tackling more tasks like basic social content creation, authentic human generated content is more important now than ever. We're seeing a generational shift in how people find and buy products and as a result, we believe effective influencer marketing has become mission critical In December, we sunset the TAGR brand paving the way for the official launch of Sprout Social influencer marketing.

In April, we'll launch an overhauled product making it easier than ever for brands to connect with the right influencers to reach their customers. We've designed AI enhancements that leverage natural language search to help find, recommend and vet creators that are brand safe and aligned to customer objectives. In 2025, we're excited to build on this momentum with major product updates planned under the Sprout Social Influencer Marketing brand, further demonstrating our commitment to this important market. I also want to spend a few minutes to that are also outlined in our earnings presentation. We closed the largest new business win in Spread's history with a Fortune 500 financial services company in a highly competitive deal. They needed a platform to unify social operations across their entire organization breaking down silos, streamlining workflows, and transforming complex data into real time actionable insights. Sprout won because of our intuitive experience, advanced reporting and strategic partnership approach. With premium analytics and listening, this customer can now drive data informed decisions and execute seamlessly across their large distributed teams, reinforcing Sprout as the platform of choice for enterprises managing social upscale. Our second story highlights a major expansion with a Fortune 500 pharmaceutical company that started with just five users their global corporate marketing team.

Due to this team's early success with Sprout, adoption quickly grew and marketing leaders took notice.

The company had long struggled with low adoption of their previous social media management platform with over 100 users still posting natively creating inefficiencies and security risks, When they implemented a new policy requiring all social posts to be managed through a centralized platform, they needed a solution that could scale fast and drive adoption. Sprout's intuitive experience secure access controls and streamlined workflows made it a clear choice for this customer. Now fully deployed across their organization, Sprout is not only aiding with compliance and efficiency, but also helping to provide deeper insights into their brand's performance reinforcing our role as the platform enterprises rely on to scale social effectively. Our third story highlights a major transformation for our Fortune 500 retailer that face challenges with standardization, inefficient workflows data inaccuracies, and inadequate support from their previous tool. Managing social, email, phone and reviews across multiple systems created unnecessary complexity and slowed their teams down. By switching to Sprout and leveraging our service cloud integration, they consolidated their customer interaction into a single platform eliminating silos and improving operational efficiency. This led to faster resolution times, fewer errors and reduced manual reporting. Driving both agent productivity and customer satisfaction.

With a more connected and scalable approach, they now have the insights and agility needed to deliver more seamless customer experiences at scale. Our second growth driver is a sharper focus on customer health, onboarding and adoption to maximize long term value.

In 2025, we are deepening our investment in customer behavioral insights, in our 16,000 plus user community and with targeted professional services, all designed to drive success and expansion across the platform. To accelerate adoption and in an effort to maximize ROI, we're also launching new customer education journeys that empower users to unlock Spread's full potential from day one. Moving on to our third driver, we'll 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.

We're excited to roll out our new integration with Salesforce's Agentforce Assistant for Service Cloud, reinforcing both our AI leadership and deep Sprout is the first and only social media solution integrated with Agentforce. Enabling businesses to seamlessly connect social data with Service Cloud for complete customer view and faster case resolution, This latest expansion not only strengthens our AI advanced capabilities, but also underscores our commitment to driving smarter, more efficient customer engagement at We're excited to announce that Sprout Social Influencer Marketing now integrates with the Meta partnership ads API, making it easier for brands to boost influencer content directly from campaign workflows. This allows businesses to amplify creator driven content through their own AdiCodes leveraging authentic endorsements to reach new audiences more effectively. By streamlining promotion and improving efficiency, this integration helps brands drive stronger engagement and better outcomes.

Our fourth driver is deepening customer engagement through use case expansion and premium modules, with our field teams seeking to drive greater value across both new and existing customers. In 2025, we're executing a more structured platform selling approach that guides customers through a clear expansion journey supported by targeted sales incentives to highlight the full value of Sprout. We're also strengthening pipeline generation with a disciplined playbook driven approach account identification and mapping. Lastly, we're refining our international sales coverage to focus on key growth markets across Europe, Asia, LatAm and emerging markets. We believe these efforts will position us to accelerate expansion, increase customer lifetime value and maximize the impact of our go to market strategy. This team from individual contributors to executive leadership as aligned focused and committed to executing on our vision. Social's role in business continues to evolve. Driven by shifting consumer behavior, deeper brand investment and increasing need for AI driven automation. These dynamics are expanding our opportunity and Sprout is well positioned to help organizations navigate the shift. I'm excited about what's ahead, look forward to sharing our progress along the way. And with that, I'll turn it over to Joe to run through the financials.

Joe? Thanks, Ryan. I'll now run through our financial results and guidance. Our fourth quarter results were highlighted by quarterly non GAAP operating margin reaching over 10% for the first time in operating history. Solid sequential growth in CRPO dollars, the quality of the larger enterprise wins a few that were outlined earlier by Ryan. We also ended the year with the highest mix of annual and multiyear contract duration in the company's history is our sales teams continue to increase our enterprise focus. But also note that Tagger, recently renamed to Influencer Marketing, and one of the strongest growth rates since the acquisition. We continue to see this product as broadening our market opportunity and allowing our fuel teams increase cross selling motion.

We generated $6,600,000 in non GAAP free cash flow during the quarter and 29,700,000.0 during fiscal twenty twenty four. Up 19,400,000.0 from our non GAAP free cash flow in fiscal twenty twenty three, up almost 2.9 times on a year over year basis. We remain committed to growing operating leverage on a fiscal year basis and we'll evaluate our ability to drive greater profitability as the year progresses we remain focused on funding key growth initiatives. Onto a summary of the quarter.

Revenue for the fourth quarter was 107,100,000.0 representing 14% year over year growth Subscription revenue $105,900,000 up 15% year over year. The number of customers contribute more than $10,000 in ARR grew 7% from a year ago.

The number of customers contributing more than $50,000 in ARR grew 23% from a year ago.

Q4 ACV was 14,651 up 19% year over year against a strong year over year comparison. As Ryan discussed earlier, our strategy to drive ACV growth remains focused on shifting to a higher enterprise mix and strengthening premium module attach rates such as influencer marketing and customer care. RPO totaled $351,500,000 up from $311,500,000 exiting Q3 and up 28% year over year. My implying a CRPO growth rate of 26% year over year. Non GAAP operating income totaled $11,400,000 which is well ahead of the high end of our outlook. This was up from $1,700,000 a year ago and equates to a non GAAP operating margin of 10.7%. A quarterly record for operating margin We're pleased that our progress here demonstrates our focus on continued growth in our margin profile. As we noted on our last call, we implemented a restructuring to Sprout the efficiency and effectiveness of our R and D organization. As a result, we recorded restructuring expense of approximately $3,000,000 that was excluded from our 4Q non GAAP results. In 2024, our overall dollar based net retention rate or NDR was 104% compared to 107% in 2023. Our dollar based net retention rate excluding SMB customers was 108% in 2024, compared to 111% in 2023.

Before moving on to guidance, few additional comments. Based on the data we gathered in fiscal twenty twenty four, reflects their current macro environment and traditional enterprise sales cycles, Expect us to take a more measured view on how we look at the business. As Ryan mentioned earlier, do not expect the demand environment to change in fiscal twenty twenty five from what we experienced in fiscal twenty twenty four. Please also note that during Q1, we implemented a restructuring with our primary focus on customer success. We expect to record a severance expense of approximately 2,600,000.0 that will be excluded from our 1Q non GAAP results Throughout the last quarter, we intend to reallocate resources back into our customer facing organization. Now on to guidance. For the first quarter of fiscal twenty twenty five, we expect revenue in the range of 107,200,000.0 to $108,000,000 We expect non GAAP operating income in the range of 8,500,000.0 to $9,500,000 We expect non GAAP net income per share of between $0.14 and $0.16 This assumes approximately 58,500,000.0 weighted average basic shares of common stock outstanding. Before year 2025, we expect revenue in the range of $448,100,000 dollars to $453,100,000 For the full year 2025, we expect non GAAP operating income in a range of $38,200,000 to $43,200,000 We expect non GAAP net income per share between $0.65 and $0.74 assuming approximately 59,300,000.0 weighted average basic shares of common stock outstanding.

A small note about non GAAP net income per share distribution across the four quarters in fiscal twenty twenty five. We expect our second quarter non GAAP net income per share to have a slight decrease from Q1 due to seasonality in our Q1 to Q2 operating expense trends, and then to grow from Q2 through Q4. Looking ahead, we believe the company has a sales capacity to deliver on our outlook for the fiscal year we intend to expand free cash flow and operating leverage on an annual basis as we demonstrated over the last two years. We look forward to continuing to innovate and create more opportunities our customers to grow with us. With that, Ryan, Alice and I are happy to take any of your questions. Operator? Thank you.

And at this time, just a reminder to ask a question Thank you. Your first question comes from the line of David Hynes from Canaccord Genuity. Your line is open.

Hey, good evening guys. Ryan, thanks for the color. So look, last year, I think in retrospect you would have said you entered 2024 with a little less pipeline than you would have liked. I'm curious kind of what that looks like entering 2025 and then you outlined initiatives that are underway, right, account identification and mapping, refining that international go to market guess, what's been done is it's still in progress. Just help me think about kind of what's going to get that pipeline growth going?

Hi, DJ. Thanks for the call. Yes, the best way to frame it as we enter this year, our pipeline has grown. I mentioned that in the prepared remarks that we saw some good growth in Q4 year on year with pipe creation that was both through inbound and outbound and specifically within the enterprise group. We've got a bunch of key initiatives that are going in there. Mike Wolf and the team have had a great focus in on really the key parts of our business where we see a tremendous amount of opportunity and growth and then just a lot of accountability on pipeline metrics and a lot of focus in on our ideal customer profile. So there's a bunch of those things that are in place today and we're seeing good success as we end the year.

Yes, helpful. Joe, maybe a follow-up for you. Just curious how we're thinking about the margin guidance for 25%, right? I think we're guiding the full year below levels that you delivered on in Q4. You have the small restructuring. I would have thought maybe with a little less growth in $25,000,000 we get a little bit more margin expansion that doesn't seem to be set up in the numbers. Just kind of talk through the thinking around margins as it should play out for '25 Yes, DJ, thanks for the question. I think similar to what we've done in the past, earlier in the year, when we're coming in to the first guide of the year, we want to give ourselves flexibility to invest if we see growth opportunities throughout the year. So very similar approach we've taken historically. And then to the extent that we're over performing on revenue, DJ, you will see incremental leverage in the business. And I think we've proven that over the last handful of years that where we kind of start the year from a leverage standpoint where we end are usually a lot higher and so feel good about our ability to over perform over the year on that.

Okay.

Sounds good. Thank you guys.

All right. Thanks, DJ. Next question please.

Your next question comes from the line of Raimo Lenschow from Barclays.

Your line is open.

Perfect. Thank you. I'm still trying to stay on the guidance a little bit. Like what were the assumptions on the economy that you're putting in there? [indiscernible] comes down further and everyone is kind of getting excited about maybe things are getting better out there like how? How did you marry that? Thank you. Yes. Thanks for the question, Raimo.

On the guidance to your point, one is, I called this out of my prepared prepared remarks. We're taking a little bit more measured approach overall on guidance coming 2025 or so we've done in the past. Number two, we called out, we're assuming that the demand environment in 2025 is unchanged from 2024, so it doesn't get any better. When you look at our guidance. The other thing is, we've got a full year now. If you look at 2024, of sales data and our ability to execute in this demand environment. So I will say coming into execution in this demand environment. And then the last thing I'll say is like if you think Sprout the way we ended the second half of Q4 and the momentum we saw in CRP and the big logo wins, we're really encouraged with the momentum we're seeing up market. And so feel good about the way we set guidance in 2025.

Okay, perfect. Thank you. And then, Brian, as we starting the New Year, any changes to go to market, etcetera? Obviously, it's the time of the year where that kind of happens. So we should be aware. Thank you.

Yes. Thanks for the question. I think like any change to a fiscal and going into the New Year, you're going to have some adjustments on the margin, some fine tuning.

I think these are all things that are pretty common course for us through the year, focusing in on revenue operations, We've turned the year faster than we've ever done before, focusing in on pipeline and then just making sure that the team is off to the races. So nothing else that I call out here.

Okay, perfect. Thank you. Good luck.

All right. Thank you. Next question please.

Your next question comes from the line of Parker Lane from Stifel. Your line is open.

Hi guys. Thanks for taking the question today. Ryan, you pretty specifically called out more of a platform selling approach and orientation around that going forward. Can you just talk about what goes into mapping out ideal path for a customer going forward, how that's going to impact the dollar based net retention rates we see here as you start to push more towards that selling motion. Yes. Thanks for the question. It starts off with making sure that we have the right profile of the customers that we really see a lot of opportunity with. So as I mentioned in the question before, just from a revenue operations perspective, really knowing our ideal customer profile and the accounts there, Seen a lot of success from us coming out of Q4 with some of the logos that we've talked about and the land and expands that we've discussed. The product team has just been doing a phenomenal job as we think about the innovation that we've delivered and the cross section of products that these enterprise customers need. So it really is this combination of knowing your ideal customer profile is, making sure that you've got the products that support those customers, and then just enablement and the go to market organization and making sure that we're really clear on those opportunities.

And that's what's gone into the playbook.

Got it. And Ryan, I wanted to ask you about the AI generated content Clearly, a ton of explosion in use cases around that recently. You've seen new video models, updates to those pretty frequently here.

A lot of application for social media. How do you think about Sprout's ability to directly benefit from that content? Creation explosion here in 2025? And what's the long term business model to make sure you're extracting enough value from Yes. We're incredibly excited As I mentioned in the prepared remarks, you think about the scale that we have with nearly 30,000 customers, And we're processing 1,000,000,000 messages a day There's just so much opportunity within all the unstructured data to help our customers get even smarter in the places that they're investing. And if you think about the work that we do today from a content creation a campaign management, insights that we're providing to customers, all these things are just tremendous opportunities. And I think we've now had 11 releases on our AI assist product and you can see the value that our customers are getting in terms of speed and productivity and just intelligence the way that they're showing up in front of customers. So I would expect to hear more from us on this as well.

Appreciate the responses.

Thanks. All right. Thanks, Parker. Next question please. Next question comes from the line of Arjun Battia from Williams Blair and Company.

Your line is open. Thank you.

Brian, to start off with you, the platform selling approach is interesting. But so when you think about care and influencer, you have a sense for what portion of the base you think can adopt those products and how you go about finding the right profile that might attract those? Like is every customer a candidate for those? Is it a certain size, a certain industry, a certain vertical? Like how do you think about Just going about that go to market change that you talked about earlier.

Yes. Thanks, Arjun. Appreciate the question. I mean, I do think every customer customer is a good target for these things. But when I think about these products, so much of this has to do with their sophistication within social and where they are More and more upmarket, you're going to see these customers needing care. If we think about it today from a trend perspective, There's a lot of volume that happens on social. For many organizations, it's becoming the number one channel. And so when you have a lot of volume, you need to manage through that.

From an influencer perspective, we're early innings here in terms of the and more companies are thinking about how organic and paid and now influencer impact their opportunity in front of them. So we're pretty early and we believe that we have a lot of upside and opportunity in front of us. Okay, helpful. Thank you. And then if I can touch on the net retention metric, I know that's one that you typically only disclose once a year, but I know it's trended down a bit in 2024. I think that was kind of expected, but as you look forward and you drive more cross sell, maybe more up sell, more expansions, like is that something we should expect to recover in 2025 Sprout is it going to take some time for the go to market motion to ramp up? And maybe that's '26 story, like how do you think about the health of the the existing customer base and when net retention might start to inflect higher? Arjun, this is Gerald.

I'll take this one.

Yes, we definitely saw pressure on NDR in 2024 and the real area where we saw that was the expansion within our existing customer base and that really was a result of the demand environment that we talked about throughout the year. I definitely put pressure on that part of the business. The flip side, we kind of were able to offset some of that pressure with really strong improvements on the gross retention side. But probably to the point of your question I'm looking forward you look at the customers that we're bringing in to Sprout in 2024, for example, right, these are much higher quality customers, right? They're on annual multiyear contracts. They're coming in at higher ACVs. And so we believe this overall shift in the quality of our customers will drive NDR heart higher going forward. And so very optimistic about the ability to improve upon that metric with our move up market. All right. Thank you. Next question please.

Next question comes from the line of Scott Berg from Needham. Your line is open.

Hi, everyone. Thanks for taking my questions here. I guess I got a couple of them here. R. B, if I looked at the bookings commentary in Q4, while we know it's a a little bit the whole environment behind what you saw last year. I think you Sprout pretty constructive, especially with the large booking kind of coming out of the quarter with some of the momentum that you have. But if I look at your Q1 guidance, it implies very de minimis kind of increase on a quarter over quarter base Is there something maybe unique about I don't know how you're thinking about Q1 sales pipelines or maybe those deals in Q4? Just trying to understand maybe why Q1 numbers and the guidance seems to touch higher?

Yes, Scott, I'll jump in here and if Bobbie wants anything, he can. I think I covered this kind of a little bit earlier, Scott. When we looked at our 2025 guidance, this includes Q1, right? We just want to be a little bit more measured with the approach. We're taking a guidance this year We're factoring in the fact that the demand environment doesn't get any better in '25 versus '24, And we were very encouraged with the momentum we saw in the second half of Q4, but really wanted to just be a little bit more measured with the way we give guidance out this year. I think that's really at the heart of it. There's nothing probably to read into the quarter.

Got it. Helpful. And then how do we think about the seasonality of the business? If we go back, I think it was in the Q1 call, you all had kind of talked about as you moved up market, you're expecting the business to be a little bit more back end weighted, typical enterprise sales cycles. I don't know how much of that you're truly able to see given the change in the end market this year, but as we start thinking about '25, should we see that seasonality be a little bit more pronounced or maybe is that not the case? And are you seeing something different with Alaska?

Yes, Scott. I would assume very similar seasonality in '25 versus 'twenty four and that's what we've kind of baked into our guidance that we're definitely more secular weighted, but I don't think '25 will be any different than the trends you saw in '24.

Very helpful. Thanks for taking my questions.

All right. Thank you. Next question please.

Your next question comes from the line of Elizabeth Porter from Morgan Stanley. Your line is open. Great. Thanks for the question. I wanted to ask a little bit on the influencer. Marketing rebrand. Kind of just if you could put a finer point on what exactly is changing in the rebrand? And what need to get kids in lock in terms of the demand side?

Yes. Thanks, Elizabeth. From a rebrand perspective, lot of brand equity. In Sprout Social Sprout we wanted to make sure that we are leveraging that brand equity We also want to make it really clear to our customers that this influencer marketing solution is by Sprout Social. So that was a big part of it. But as we come back and cover Q1, I'll be sharing a lot more about the product updates that we're releasing here going into Q2. But we're really excited about the environment. We talked a little bit about this on the prepared remarks. But we're seeing a lot of success across a number of verticals. And this is a product that's in the really early innings, and it's a great opportunity for for spread to lead in this category.

Great. And then just as a follow-up, I wanted to ask on the ACV. The 19% growth in Q4. Has slowed a little bit for the last couple of quarters. So how should we think about kind of that forward have the MAC go to market changes benefiting or what's kind of the upside downside on the ACV growth?

Yes, we're pleased with the ACV growth here. Clearly, we've seen a lot of of great execution in the enterprise with that business being up 35%. We expect to continue to have more opportunities to land and grow bigger with our customers, especially with our multi product opportunities in front of us. So I think it will continue to be one of those pieces that's an important part of our growth story.

Thank you.

Thank you. Next question please.

Your next question comes from the line of Patrick Schulz.

Your line is open.

Great.

I appreciate taking my questions. Maybe just first on the partner ecosystem. I know you called that out as a focus area for 2025. Just wanted to dig into that a little deeper.

Could you provide some color on the sales force relationship and how that performed relative to expectation And what type of traction you're seeing with other partners? I know AWS Marketplace was called it last quarter. And is this partner focused more on the technical integration side or the go to market Yes. Thanks, Patrick.

Yes, the Salesforce partnership continued to be a really strong part of our story here as we were in Q4. We actually just released the integration into Agentforce and I'm really excited about the work that we're doing from a service cloud perspective with Salesforce. You heard us talk a little bit about the success that we've had there. With a Fortune 500 retailer as well as Under Armour And then on the greater partnership side, it'll be a combination of technical and go to market that we see. Just if you think about where we exist today, there's such a great fit with so many organizations in the tech stack and and the data and the workflows that we provide back into things like CRM or help desk or marketing automation or any of those tools really enable us to be a great partner. So I think you'll expect to see things on both sides.

Thanks. Appreciate the color. And maybe just one quick follow-up too. I know you called out several competitive wins over the past quarter. Curious on why you think the competitive environment is coming more favorable for Sprout? Is it certain products that competitors don't offer I'm just curious to hear what you guys are seeing there and maybe how your win rates have trended in recent quarters. Thanks, guys.

Yes, thank you. Yes, I mean, I think there's few things that have really contributed to our success. We continue to have really great momentum from competitive perspective. I think one of the things that starts with is just really great Sprout. And if you look at the work that we've been doing across care or influencer or AI, great examples of where our product is showing up and adding a tremendous amount of value. On a lot of the stories that we shared today, these are large organizations. They're looking for speed to value, speed to adoption. Ensuring that there's going to be great compliance across a number of users within the platform. These are all things that really weigh heavily in the way that we filter products and the way that we deliver it. So I think those are all just really contributing to the differentiation that we have in the market.

All right. Thanks. Next question please. Your next question comes from the line of Jackson Ader from KeyBanc Capital Markets.

Your line is open.

Great. Good evening, guys. Thanks for taking our questions.

The first is on the the larger lands Are the like for example, the financial services company that you landed with, are these deals just social media that your customers is kind of RF being or looking to purchase or is there some sort of like larger marketing stack or larger marketing decision that the larger brands are making and social is a part of that.

Thank you. Yes. Thanks for the question, Jackson.

These are specifically within the realm of social media management. Now they might have different vectors underneath the social media management, whether it be a marketing lens or a customer care lens or an influencer lens. But these wins are primarily just in social media management.

Okay, okay, cool. And then just a housekeeping question, the wind down from social [indiscernible] I think when we came into 2024, it was expected to be like a $10,000,000 benefit. What did that end up being in [indiscernible] Yes, Jackson, this is Joe. That's not a number we've talked about in a while. So that's not a number we're disclosing publicly at this point.

Thank you. And with no further questions, Ryan, I'll turn the floor back over to you.

Great. Thanks, Christina. And I just want to say a huge thank you for everybody joining us tonight and for the thoughtful questions. Want to say a huge thank you to our team for their hard work and contributions to the business and of course to our customers who have put their trust [indiscernible] incredibly excited about the opportunities in front of us and look forward to spending more time with all of you in the future. Thanks and have a great night.

Thank you. And this does conclude today's conference call. You may now disconnect. Have a great day.