Ryan Barretto: Yeah. Thanks for the question. We’re really excited about what we’re seeing in care. I think there’s been a lot of great feedback from customers today. If you think about some of the stuff that we’ve been building out just in terms of our prioritization of cases and routing of cases and the analytics that come along with agent productivity, we feel really good about the opportunity that we’re developing in the marketplace. Our customer feedback has been really strong, because we know they are seeing more and more volume showing up in social and it is critical for them to be in front of these customers every single day. We know that the expectations for consumers on social is much higher than any other channel.
And so showing up fast and intelligently is what they expect when they’re leveraging a platform like Sprout. So, we are seeing lots of good opportunity. There’s still lots of roadmap that the team has been working on. And I think you’ll expect to see, as we go through the year, more and more features and functionality added in there and more and more success stories from us on that note.
Rob Morelli: Got it. Thanks for the color. And then regarding the go-to-market shifts, you touched on continuing to enable customer-facing teams with Tagger while also noting Tagger ARR meaningfully accelerated. Has this, I guess, outperformance shifted your outlook for Tagger for the remainder of the year? And I guess, what’s the overall opportunity here for the remainder of the year? Thanks.
Ryan Barretto: Yeah. All that’s contemplated in the guide. I’d highlight we feel really good just about the way that the team and the product is performing. There’s clearly a ton of value that we’re being able to deliver to customers. A big part of the thesis that we shared with all of you before is that, this is an area that our customers really cared about, and they were either doing this very manually, trying to figure out how to build a strategy around this or we’re leveraging things like – groups like agencies to execute. And so what we’ve seen from our customers today is that, they really appreciate the ability to be able to do their influencer discovery in our platform to be able to find the right folks that they should be leveraging for their strategy to be able to run campaigns through Sprout and then properly report on the ROI from all that – all in one place with one team.
And so we’ve seen a lot of great progress so far, both from a new business perspective as well as going back to our current customer installed base and attaching it. So all of this has been sort of contemplated within in the guide, but we certainly see good progress, and we’ll continue to update you on the things that are progressing here.
Rob Morelli: Got it. Thanks.
Operator: Your next question comes from the line of Jackson Ader with KeyBanc Capital Markets.
Jackson Ader: Great. Good evening, guys. Thanks for taking our questions. The first one is, Joe, I think you mentioned that there were still some go-to-market changes that are being, I guess, still being made or still being kind of flowed through here in the second quarter. Just curious, which ones have already gone into effect and which ones are still out there?
Joe Del Preto: Yeah. My comment was more about not necessarily the changes were still going on, but the impact of those has been contemplated in our Q2 guide in the back half of the year, Jackson, that’s what I was referring to.
Jackson Ader: Okay. So all of the – just for clarity, all the changes that you plan to make have already been made?
Joe Del Preto: I’ll refer to Ryan to reiterate what he was talking about earlier.
Ryan Barretto: Yeah. I think the commentary is really more along the lines of the changes have been made in Q1 and just a flow-through through Q2 as folks ramp into the roles. And then also just the focus areas that we are talking about in terms of where we’re directing the go-to-market teams. But there’s – and this ties back to something that Justyn said earlier, there’s no pivotal shifts that we are making in Q2 that should impact any of the data that we’ve shared.
Jackson Ader: Got you. Okay. And then I’m just curious about the timeline, when in the first quarter did these changes go into effect? And then how soon after those – that time did you start to see the issues in deal closures and pipeline and things like that?
Ryan Barretto: Yeah. And I want to call out, there was a few things that we highlighted here that all contributed to just the Q1 performance. We’ve highlighted some of the things that we believe were self-induced from an execution perspective in terms of introducing some new teams and changing some of the account coverage and taking the team off the floor for enablement. Those are all things that impacted the amount of customer-facing time that we had in Q1. There are other things that we highlighted as well just in terms of where our focus was in Q4 with execution versus building pipeline for Q1. And just some of this is also just the natural shift in our business that we’ve highlighted around longer sales cycles and larger deals that are going to fall in the back half.
So just highlight those all of those things contributed to the end result. And then clearly, the piece that we haven’t spent any time on but we’re aware of and we’ve generally not leaned into, but we know that it exists. It’s just the macro environment that we’re operating in, is challenging. And as I think about all of these things, and you’ve seen it from us over the last few years, this team has been able to navigate all of those headwinds and execute really well. And if we are operating in a different macro environment, I think these things probably wouldn’t have shown up in Q1. So just wanted to make sure that we’re properly framing all of those things. And I’d clarify that the self-induced changes or strategy shifts that we had made going into Q1 were really about sales focus and time in front of customers.
Jackson Ader: Okay. All right, thank you.
Operator: Your next question comes from the line of Elizabeth Porter with Morgan Stanley.
Ryan Bressner: Hi, thanks for taking my question. You have Ryan Bressner on for Elizabeth here. Just kind of curious if we could touch on Tagger here. Just how is progress on the platform? How ramped is the sales team with this and just how much work is there still have to do here?
Ryan Barretto: Yeah. We’ve seen a lot of great progress. We’ve been really excited about the things that the team has been shipping. From a sales team perspective, the maturity of the sales team, we did a lot of enablement in Q1 across our entire customer-facing or to make sure that we are up to speed with all of the elements of influencer and our Tagger platform. So we’re seeing really good progress from there. And that’s why we called it out as well just in the prepared remarks. Our customers really see value in this. We believe it is the best solution that is on the market. We’ve got this really exciting opportunity to educate customers on the value of influencer and how this can nicely fit into their social strategy.
And then we’re bringing along this incredible technology that allows them to execute. And then when you think about the value of the return on investment, you put it against the rest of the things that we do in core Sprout, it provides customers with really great opportunities to increase their share of voice and their brand and their only generation in revenue. So lots of good progress. The team is ramping really well, and we expect to continue coming back to you sharing the progress we’re making with the team and with customers.
Ryan Bressner: Got it. Very helpful. Thank you.
Operator: Your next question comes from the line of Matt VanVliet with BTIG.
Matt VanVliet: Good afternoon. Thanks for taking the question. You guys talked about quite a bit of changing dynamics in the business going after a different customer set over the last couple of years, the product is expanding quite a bit. What gives you confidence that the go-to-market team, especially the sales reps you have in place are trained, have the right skills are the right folks to lead this different market motion and go after a different set of customers, especially as you’re making changes, and it doesn’t seem to be sticking right away.
Ryan Barretto: Yeah. Thanks for the question. I mean, I think the first thing that I’d highlight is, we’ve seen a lot of success in this customer base of market. If we look at the 50,000 being up 44%, the ACV being up 41%, and once the metrics in RPO being up 54% and cRPO being up 48%. There’s a lot of good signal in the execution that we’ve seen. And then you add in a bunch of the logos that we’ve talked about over 2023. And here in Q1, we’re seeing good execution from this team. A lot of this, when we think about Q1 is also, again, just the shape of the way that our years are going to go in this new model as we shift the business. We’ve also, over time, just continued to add really great talent to the team. When I look at the folks that we have on the squad today, they’re really, really excellent.
We’ve taken the great people that have been at Sprout that have continued to own their skill set and prove that they can execute, and we’ve complemented them with great folks from across the SaaS industry that have joined our team. So I think it’s a combination of seeing it in the data today, and then feeling like we’ve been raising the bar and the talent we’re bringing in, and we’re confident that you’re going to see the fruit bared in future quarters here as we get into the back half.
Matt VanVliet: All right, great. Thank you.
Ryan Barretto: Thanks for the question.
Operator: Your next question comes from – apologies, your next question comes from the line of Clarke Jeffries with Piper Sandler.
Clarke Jeffries: Hello. Thank you for taking the question. Ryan, I think we’ve touched on it a lot, but what comes to mind is sort of endogenous, exogenous. And I think the biggest framework that we’ve always appreciated with the guidance is, it seems like the guidance is really set by the ARR that you exit at the prior quarter at. And so, when we think about that time spent away from customers aspect, was there anything surprising in terms of retention characteristics? Or was there just that lack of time in front of customers that may have contributed to something that you’d characterize as worse retention metrics? And then I have sort of one follow-up for Joe.
Ryan Barretto: Yeah. Thanks for the question. I wouldn’t characterize retention metrics within my commentary. In fact, our gross retention performed nicely above plan within the quarter. I think a lot of that is the moving upmarket and the dynamic of these larger customers that are going to have a greater lifetime value and be growing faster with us. I think a lot of that is also the strategic shifts that we had made last year and changing the dynamic of our customer base and the folks that we were proactively targeting and going after. And if I think about it, for us, it was really this combination of not enough customer-facing time from an execution perspective within the quarter. I feel good about the work that the team did to create future opportunity.
Our pipeline was up 37% within the quarter. But we just didn’t get the number of deals we want to get done in the quarter. And for me, that’s – this combination of we didn’t cultivate enough of it in Q4, and then we didn’t have enough time executing on deals in Q1 and then the shifting in that business model into the back half, had some natural pressures behind it as well.
Clarke Jeffries: Thank you for the color. And then, Joe, just before we put ARR to bed, I was hoping you could maybe frame maybe the exit growth rate of the business in any way you would choose. Just as we think about maybe a seasonality of the business that puts less time for ARR booked to be recognized as revenue. Just any way to frame maybe gross in net new ARR. Do you expect that to be higher in the second half year-over-year versus the Q1 commentary that being down year-over-year? Thank you.
Joe Del Preto: Yeah, Clarke. I think one of the things that you said definitely makes sense, which is – and Ryan talked about this, our years are becoming more Q3, Q4 loaded. And then within the quarters even in the third month in the quarter now becoming really heavily weighted. And so if you think about where our ARR is going to be, I think it’s definitely going to be higher, for example, than what our implied revenue growth rate is. And so, I think from that perspective, you’re definitely going to see way more ARR come from the back half of the year, Clarke. I think that’s a fair assumption as we move up into the enterprise business.
Clarke Jeffries: Thank you very much.
Operator: Your next question comes from the line of Surinder Thind with Jefferies.
Surinder Thind: Thank you. When I kind of think about all of the changes that were made on the quarter, how should we actually think about the impact on the opportunity pipeline here? Has it effectively been reset at this point? Do we need a couple of quarters to rebuild it? Also giving more focus on enterprise, which even has a longer sales cycle. So, is there perhaps a larger than anticipated air pocket here that we should be thinking about?
Ryan Barretto: Yeah. Thanks for the question. First off, all of those things are being contemplated and factored into the guide. I also want to highlight, we – my commentary was walking into Q1, we didn’t have enough pipeline built to close in Q1 that we needed to cover. And if I think about that combination and so much of that was tied to the back-end being so much more loaded than years past. And you can see it in the numbers that we delivered in Q3 and Q4. And so a lot of that time was focused in on execution, meaning that we walked in, in Q1 with not as much as we would want to be ready to close in Q1. And then, you add in some of the changes that we implemented there with meaning that we just didn’t have enough time, customer-facing time to go execute.
I feel really good about the pipeline that we’ve created. We’re up 37% within Q1. We also have a bunch of pipeline that we walked into the year with that wasn’t ready to close in Q1 that is very much alive and active for this year. We’ve also been in more longer-type sales cycles, RFPs, for example, from larger companies that are going to be back-end loaded. So, we feel really good about the opportunity in front of us. You take all of that and you add in that our ramps – our reps are continuing to ramp and the maturity of the team continues to get better, and we feel really good about the opportunity that we have in front of us.
Surinder Thind: Got it. And then kind of just shifting back to the decision to no longer report ARR. Is there perhaps a structural change in the business maybe that you’re feeling that there’s more churn in the business that makes it less predictable over a 12-month period? More – perhaps you’re going down the path of more transactional types of revenues. How should – I like – I’m a little puzzled by the decision there, because by definition, right, it’s the revenue over the next 12 months. But you – that’s on the books, right?
Justyn Howard: Yeah, this is Justyn. I’ll jump in. What I think the spirit of the question is here, we actually see it the other way. I think that if you look at how pronounced the move over the last couple of years has been towards the back of period, whether it be a quarter or a month or the full year, it has created a lot of noise in the ARR numbers in the ARR comparison. We have a business that is shifting toward the end of the year. The weigh and this is different than where our company was when we came out where it was highly predictable. It was smooth across months. It was smooth across quarters, it smooth across the year. And so as we go through this transition, as a publicly-traded company sharing metrics like this, we’re going through this in real-time using a metric that is challenging at scale in an enterprise at a business.
And it’s not, we think the best indicator for the health of the business. It is going to be – it is going to have big differences between the first half of the year and the second half of the year. And it’s – we don’t think the best way or the most productive way for us to be measuring the business or for us to be thinking about our internal decisions that we’re making executing on our long-term strategy to build the best value for this company.
Ryan Barretto: The only other thing I’ll add there is, we commented on this in our prepared remarks, is that, retention outperformed plan for Q1, and we anticipate that we’re going to continue to have strength there. And also just highlight the RPO and cRPO, I think, are really great indicators of the health of the business and where the business is going.
Surinder Thind: Thank you.
Ryan Barretto: Thanks for the question.
Operator: Your next question comes from the line of Brian Schwartz with Oppenheimer.
Brian Schwartz: Yeah. Hi, thanks for taking my question. Ryan, thank you so much. Lots of transparency on what’s going on with the business. And you talked a little bit about the macro. Can I just touch upon that? Do you feel that the macro had changed at all had deteriorated at all since you last reported Q1, because it’s been pretty tough for a while now and just wondering if you feel like it was the same or had deteriorated somewhat in the first quarter?
