SPROUT SOCIAL, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q) – Marketscreener.com

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Overview
COVID-19
Key Factors Affecting Our Performance
Acquiring new customers
Expanding within our current customer base
Sustaining product and technology innovation
International expansion
Key Business Metrics
We review the following key business metrics to evaluate our business, measure our performance, identify trends, formulate financial projections and make strategic decisions.
Number of customers
Number of customers contributing more than $10,000 in ARR
We define customers contributing more than $10,000 in ARR as those on a paid subscription plan that had more than $10,000 in ARR as of a period end.
March 31,
2021
Number of customers contributing more than $10,000 in ARR 5,349
Number of customers contributing more than $50,000 in ARR
We define customers contributing more than $50,000 in ARR as those on a paid subscription plan that had more than $50,000 in ARR as of a period end.
31,
2021
351
Components of our Results of Operations
Revenue
Subscription
Professional Services and Other
Cost of professional services primarily consists of expenses related to our professional services organization and are comprised of personnel costs, including salaries, benefits, bonuses and allocated overhead.
Gross Profit and Gross Margin
Operating Expenses
Research and Development
Sales and Marketing
General and Administrative
Interest Income (Expense), Net
Other Expense, Net
Other expense, net primarily consists of foreign currency transaction gains and losses.
Results of Operations
_______________
(1)Includes stock-based compensation expense as follows:
Note: Certain amounts may not sum due to rounding
Cost of Revenue and Gross Margin
Subscription cost of revenue $ 3,994
General and administrative $ 3,755
Interest Income (Expense), Net
(1)Calculated metric is not meaningful.
The increase in interest income (expense), net was primarily driven by the increased investment in marketable securities.
– %
The increase in income tax expense is due to higher earnings in foreign jurisdictions.
Non-GAAP Financial Measures
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for
(dollars in thousands, except per
We define non-GAAP operating loss as GAAP loss from operations, excluding stock-based compensation expense. We believe non-GAAP operating loss provides our management and investors consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations, as this non-GAAP financial measure eliminates the effect of stock-based compensation, which is often unrelated to overall operating performance.
Non-GAAP Net Loss
Reconciliation of Non-GAAP net loss per share Net loss per share attributable to common shareholders, basic and diluted
Free Cash Flow
Liquidity and Capital Resources
SVB Credit Facility
In December 2017, we entered into a Loan and Security Agreement with Silicon Valley Bank, or SVB, which comprised a $15.0 million line of credit, or the Revolver, and a $5.0 million incremental revolving line commitment, or the Incremental Revolver, and, together with the Revolver, the SVB Credit Facility.
The SVB Credit Facility expired by its terms on January 31, 2022.
The following table summarizes our cash flows for the periods presented:
(25,452) $ (12,212)
Operating Activities
Investing Activities
Net cash used in investing activities for the three months ended March 31, 2022 was $29.9 million, which was primarily due to $66.1 million in purchases of marketable securities, partially offset by $36.5 million in proceeds from maturities and sale of marketable securities.
Net cash used in investing activities for the three months ended March 31, 2021 was $16.5 million, which was primarily due to $25.9 million in purchases of marketable securities, partially offset by $9.6 million in proceeds from maturities of marketable securities.
Financing Activities
Net cash used in financing activities for the three months ended March 31, 2022 was $1.0 million, primarily driven by $0.9 million in payments related to employee withholding taxes as a result of the net settlement of stock-based awards.
Contractual Obligations
Recent Accounting Pronouncements
Refer to section titled “Recently Adopted Accounting Pronouncements” in Note 1 of the notes to our unaudited condensed consolidated financial statements included in this Quarterly Report for more information.
Critical Accounting Policies and Estimates
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