Title

Chicago’s Sprout Social Files To Go Public With ARR Of Over $100M

Chicago-based social media management company Sprout Social has filed to go public, according to the Securities and Exchange Commission.

And since about 30 percent of its revenue came from customers in other countries in 2018, Sprout believes the international opportunity is “at least as large.”

The company’s IPO comes during a somewhat quiet period for technology offerings, despite such debuts having a strong start to the year in terms of offering volume and dollars raised.

According to Crunchbase data, Sprout Social has raised roughly $111.5 million in outside financing.

The company was founded in 2010 and raised its first outside funding from Chicago-based VC firm Lightbank in May of that year.

Sprout Social’s last private market financing was its Series D round, closed in December 2018, which valued the company at roughly $800 million, post-money.

Sprout Social’s business combines majority subscription revenue with a sliver of services income.

Strip out that cost, and the company’s net loss is smaller than in the preceding year; that fact could help Sprout secure a higher valuation than it might have if its rising losses were more heavily tied to cash-based results.

Its subscription revenue gross margin grew from 72.6 percent in the first three quarters of 2018 to 74.3 percent in the same period of this year.

Finally, this is a SaaS business so let’s explore how much Sprout’s customers raise their spend on its products each year:

Our dollar-based net retention rate for the years ended December 31, 2017 and 2018 was 108% and 106%, respectively.

Our dollar-based net retention rate excluding our SMB customers for the years ended December 31, 2017 and 2018 was 118% and 115%, respectively.

Full Article