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

Operator: Our next question comes from a line of Scott Berg from Needham & Company. Please go ahead.

Scott Berg: Hi, everyone. Thanks for taking my questions here. Joe, I wanted to just ask a couple of things on the Tagger guidance here together. I guess first of all, is there any purchase accounting impact on their revenues, don’t know what standards you have adopted this year and the transition around that. And then secondly, what’s the linearity of that $3 million looks like?

Joe Del Preto: Yes. So, on your first question, Scott, there is not going to be any purchase accounting adjustments or impact to the revenue number or the way that that the guidance we gave. So, we feel like that’s a pretty pure number, and nothing to worry about that on that front. And I know what you are talking about, but not the concerns you might see from other companies that have other services bundled in with the subscription side. And then as far as the linearity, we definitely see that there will be a little bit more of that in Q4, obviously, just given the deals are definitely more enterprise, similar to our business, and so a little bit more weighted in Q4.

Scott Berg: Got it. Helpful. And then from – a follow-up question, I guess just more strategically what this product is. I know a part of the rationale was on the differentiation side of the house. So, I guess as you think about other vendors out there that are selling the traditional social media product that you all have for a long time, it looks like you are probably the only vendor that really have – will have this functionality. But I guess in that question, how 50% of your RFPs have this and do you see this typically being selected in the sales cycle, or is the sales cycle maybe different than what you would usually see for your social media solutions? Thank you.

Ryan Barretto: Yes. Thanks for your question, Scott. Yes, so I would say, you are right, just on the stat in terms of half of the deals in the enterprise, and we are seeing this being a requirement. From a competitive perspective, as we did diligence on the market really looked at it, there really wasn’t much relevance from what we could see in our direct competitive set. It seem to be a lot of folks that just were competing directly against Tagger. And Tagger just stood out for us in terms of just their technology, and the solution and their approach to the market. And all of the things I mentioned before in terms of fit. And so we see this as a really great competitive advantage in our core business, as we move forward as well.

And some of that’s been referenced just in the last hour with all the inbound leads that we are seeing from these accounts. And then from a sales cycle perspective, the other piece that was just exciting for us is, as we spent time with the go to market team, their sales cycles aren’t quite as rapid as ours, with our trial model, but they are fast for enterprise. And we believe that from what we have seen, and how we are running the rest of our cycles, that they can attach nicely in the work that we are doing without elongating our core business. So, that was also part of the thesis for us on this as we are doing that cross-sell that we can, we can really tie these things together as we are going to market.

Justyn Howard: Yes. And I made it quickly out on the inbound demand, and what we are seeing in the asks from our prospects and customers, both in RFPs. And just generally, it was a very important part of their strategy and an important part of their ask. It wasn’t something that anyone to your point that anyone in this space was able to meet. And so it was a demand that was largely left unmet unless it was sourced separately. And now we have got an alternative for those customers that we are really excited about.

Scott Berg: Excellent. Thank you for taking the questions.

Operator: Our next question comes from the line of Michael Turits from KeyBanc. Please go ahead.