Consolidated Statements of Cash Flows (Unaudited)(in thousands) Twelve Months Ended December 31, 2024 2023Cash flows from operating activities Net loss$ (61,971)$ (66,427)Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization of property, equipment and software3,890 3,137Amortization of line of credit issuance costs206 86Accretion of discount on marketable securities(406) (3,203)Amortization of acquired intangible assets6,151 3,541Amortization of deferred commissions16,347 26,582Amortization of right-of-use operating lease asset1,827 1,553Stock-based compensation expense84,303 67,704Provision for accounts receivable allowances1,709 2,418Gain on lease modification(1,570) -Changes in operating assets and liabilities, excluding impact from business acquisition Accounts receivable(22,253) (26,982)Prepaid expenses and other current assets(5,452) 444Deferred commissions(34,219) (40,540)Accounts payable and accrued expenses3,124 (226)Deferred revenue38,230 41,918Lease liabilities(3,595) (3,549)Net cash provided by operating activities26,321 6,456Cash flows from investing activities Expenditures for property and equipment(2,950) (2,073)Payments for business acquisition, net of cash acquired(1,409) (145,636)Purchases of marketable securities- (63,085)Proceeds from maturity of marketable securities45,085 118,621Proceeds from sale of marketable securities- 5,538Net cash provided by (used in) investing activities40,726 (86,635)Cash flows from financing activities Borrowings from line of credit- 75,000Repayments of line of credit(30,000) (20,000)Payments for line of credit issuance costs- (1,031)Proceeds from exercise of stock options29 29Proceeds from employee stock purchase plan1,956 2,339Employee taxes paid related to the net share settlement of stock-based awards(2,309) (2,380)Net cash (used in) provided by financing activities(30,324) 53,957Net increase (decrease) in cash, cash equivalents, and restricted cash36,723 (26,222)Cash, cash equivalents, and restricted cash Beginning of period53,695 79,917End of period$ 90,418 $ 53,695 The following schedule reflects our non-GAAP financial measures and reconciles our non-GAAP financial measures to the related GAAP financial measures (in thousands, except per share data): Reconciliation of Non-GAAP Financial Measures Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2024 2023 Reconciliation of Non-GAAP gross profit Gross profit$ 83,677 $ 72,623 $ 314,433 $ 257,375Stock-based compensation expense1,046 895 3,936 3,224Amortization of acquired developed technology705 705 2,820 1,175Restructuring charges62 - 62 -Non-GAAP gross profit$ 85,490 $ 74,223 $ 321,251 $ 261,774 Reconciliation of Non-GAAP operating income (loss) Loss from operations$ (13,677) $ (18,223) $ (60,356) $ (69,277)Stock-based compensation expense22,453 18,659 84,303 67,704Acquisition-related expenses- 51 - 4,272Amortization of acquired intangible assets1,212 1,213 4,851 2,022Restructuring charges3,020 - 3,020 -Gain on lease modification(1,570) - (1,570) -Non-GAAP operating income$ 11,438 $ 1,700 $ 30,248 $ 4,721 Reconciliation of Non-GAAP net income (loss) Net loss$ (14,417) $ (20,077) $ (61,971) $ (66,427)Stock-based compensation expense22,453 18,659 84,303 67,704Acquisition-related expenses- 51 - 4,272Amortization of acquired intangible assets1,212 1,213 4,851 2,022Restructuring charges3,020 - 3,020 -Gain on lease modification(1,570) - (1,570) -Tax expense due to change in valuation allowance from business acquisition- 1,134 - -Non-GAAP net income$ 10,698 $ 980 $ 28,633 $ 7,571 Reconciliation of Non-GAAP net income (loss) per share Net loss per share attributable to common shareholders, basic and diluted$ (0.25) $ (0.36) $ (1.09) $ (1.19)Stock-based compensation expense0.39 0.34 1.48 1.22Acquisition-related expenses- - - 0.08Amortization of acquired intangible assets0.03 0.02 0.09 0.03Restructuring charges0.05 - 0.05 -Gain on lease modification(0.03) - (0.03) -Tax expense due to change in valuation allowance from business acquisition- 0.02 - -Non-GAAP net income per share$ 0.19 $ 0.02 $ 0.50 $ 0.
Consolidated Statements of Cash Flows (Unaudited)(in thousands) Three Months Ended December 31, 2024 2023 Cash flows from operating activities Net loss$ (14,417) $ (20,077)Adjustments to reconcile net loss to net cash provided by operating activities Depreciation and amortization of property, equipment and software1,064 835Amortization of line of credit issuance costs51 52Accretion of discount on marketable securities(23) (470)Amortization of acquired intangible assets1,474 1,604Amortization of deferred commissions4,698 7,518Amortization of right-of-use operating lease asset467 425Stock-based compensation expense22,453 18,659Provision for accounts receivable allowances236 835Gain on lease modification(1,570) -Tax expense due to change in valuation allowance from business acquisition- 1,134Changes in operating assets and liabilities, excluding impact from business acquisition Accounts receivable(29,908) (19,235)Prepaid expenses and other current assets(729) 3,979Deferred commissions(13,101) (14,522)Accounts payable and accrued expenses4,650 (473)Deferred revenue29,475 18,051Lease liabilities(678) (919)Net cash provided by (used in) operating activities4,142 (2,604)Cash flows from investing activities Expenditures for property and equipment(888) (629)Payments for business acquisition, net of cash acquired- 143Proceeds from maturity of marketable securities4,900 32,657Net cash provided by investing activities4,012 32,171Cash flows from financing activities Borrowings from line of credit- -Repayments of line of credit(5,000) (20,000)Payments for line of credit issuance costs- (208)Proceeds from employee stock purchase plan718 912Employee taxes paid related to the net share settlement of stock-based awards(309) (537)Net cash used in financing activities(4,591) (19,833)Net increase in cash, cash equivalents, and restricted cash3,563 9,734Cash, cash equivalents, and restricted cash Beginning of period86,855 43,961End of period$ 90,418 $ 53,695 Sprout Social, Inc.
These assumptions, uncertainties and risks include that, among others: we may not be able to sustain our revenue and customer growth rate in the future, including due to risks associated with our strategic focus on enterprise customers; price increases have and may continue to negatively impact demand for our products, customer acquisition and retention and reduce the total number of customers or customer additions; our business would be harmed by any significant interruptions, delays or outages in services from our platform, our API providers, or certain social media platforms; if we are unable to attract potential customers through unpaid channels, convert this traffic to free trials or convert free trials to paid subscriptions, our business and results of operations may be adversely affected; we may be unable to successfully enter new markets, manage our international expansion and comply with any applicable international laws and regulations; we may be unable to integrate acquired businesses or technologies successfully or achieve the expected benefits of such acquisitions and investments; unstable market and economic conditions, such as recession risks, effects of inflation, labor shortages, supply chain issues, high interest rates, and the impacts of current and potential future bank failures and impacts of ongoing overseas conflicts, have and could continue to adversely impact our business and that of our existing and prospective customers, which may result in reduced demand for our products; we may not be able to generate sufficient cash to service our indebtedness; covenants in our credit agreement may restrict our operations, and if we do not effectively manage our business to comply with these covenants, our financial condition could be adversely impacted; any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely could negatively affect our business; changing regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and harm our brand; and risks related to ongoing legal proceedings.
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