spt-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________

FORM 10-Q

_________________________________

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-39156

__________________________________

SPROUT SOCIAL, INC.

(Exact name of registrant as specified in its charter)


Delaware		27-2404165
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

131 South Dearborn St.	,	Suite 700
Chicago	,	Illinois
60603
(Address of principal executive offices and zip code)

(866)	878-3231
(Registrant's telephone number, including area code)

__________________________________


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share	SPT	The Nasdaq Stock Market LLC

__________________________________

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ Yes ☒ No

As of April 29, 2022, there were 46,418,435 shares and 8,021,446 shares of the registrant’s Class A and Class B common stock, respectively, $0.0001 par value per share, outstanding.

TABLE OF CONTENTS


		Page
	Cautionary Note Regarding Forward-Looking Statements	2
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations	6
	Cond ensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
	1. Nature of Operations and Summary of Significant Accounting Policies	10
	2. Revenue Recognition	11
	3. Operating Leases	11
	4. Income Taxes	13
	5. Incentive Stock Plan	13
	6. Commitments and Contingencies	14
	7. Segment and Geographic Data	14
	8. Net Loss per Share	15
	9. Fair Value Measurements	15

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
SIGNATURES		39

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements in this Quarterly Report on Form 10-Q (“Quarterly Report”) not based on historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include statements about Sprout Social, Inc.’s (“Sprout Social”) plans, objectives, strategies, financial performance and outlook, trends, prospects or future events and involve known and unknown risks that are difficult to predict. As a result, our actual financial results, performance, achievements or prospects may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “outlook,” “intend,” “expect,” “predict,” “plan,” “strategy,” “potential” and similar expressions, or the negative of these terms and similar expressions, as they relate to Sprout Social, our business and our management. Forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by Sprout Social and our management based on their knowledge and understanding of the business and industry, are inherently uncertain. These forward-looking statements should not be read as a guarantee of future performance or results, and stockholders should not place undue reliance on forward-looking statements. There are a number of risks, uncertainties and other important factors, many of which are beyond our control, that could cause our actual results to differ materially from the forward-looking statements contained in this Quarterly Report. Such risks, uncertainties and other important factors include, among others, the risks, uncertainties and factors set forth under “Part I—Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our most recent Annual Report on Form 10-K under Part I—Item IA, “Risk Factors” and the risks and uncertainties related to the following:

•our ability to attract, retain and grow customers to use our platform and products;

•our future financial performance, including our revenue, cost of revenue, gross profit, operating expenses, ability to generate positive cash flow, and ability to achieve and maintain profitability;

•our ability to access third-party APIs and data on favorable terms;

•our ability to increase spending of existing customers;

•the evolution of the social media industry, including adapting to new regulations and use cases;

•worldwide economic conditions, including the macroeconomic impacts of the COVID-19 pandemic, and their impact on information technology spending;

•our ability to innovate and provide a superior customer experience;

•our ability to securely maintain customer and other third-party data;

•the effects of increased competition from our market competitors or new entrants to the market;

•our ability to maintain and enhance our brand;

•our estimates of the size of our market opportunities;

•our ability to comply with modified or new laws and regulations applying to our business, including privacy and data security regulations;

•our ability to successfully enter new markets, manage our international expansion and comply with any applicable laws and regulations;

•our ability to maintain, protect and enhance our intellectual property;

•the attraction and retention of qualified employees and key personnel;

•our ability to effectively manage our growth and future expenses;

•the sufficiency of our cash to meet our liquidity needs and our ability to raise additional capital on favorable terms or at all; and

•the other factors set forth under “Risk Factors.”

These factors are not necessarily all of the important factors that could cause our actual financial results, performance, achievements or prospects to differ materially from those expressed in or implied by any of our forward-looking statements. Other unknown or unpredictable factors also could harm our results. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements set forth above. Forward-looking statements speak only as of the date they are made, and we do not undertake or assume any obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes laws or in other factors affecting forward-looking information, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


Sprout Social, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)


	March 31, 2022		December 31, 2021

Assets
Current assets
Cash and cash equivalents	$	81,662	$	107,114
Marketable securities	97,655		69,821

Accounts receivable, net of allowances of $1,248 and $1,298 at March 31, 2022 and December 31, 2021, respectively	23,080		25,483
Deferred commissions	15,262		13,915
Prepaid expenses and other assets	9,114		6,199
Total current assets	226,773		222,532
Marketable securities, noncurrent	1,456		—
Property and equipment, net	12,472		12,854
Deferred commissions, net of current portion	15,352		14,402
Operating lease, right-of-use assets	9,279		9,459

Goodwill	2,299		2,299
Intangible assets, net	2,785		3,045
Other assets, net	71		126

Total assets	$	270,487	$	264,717
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	4,772	$	2,888
Deferred revenue	76,536		69,220
Operating lease liabilities	2,754		2,693
Accrued wages and payroll related benefits	11,776		12,556
Accrued expenses and other	11,509		11,072
Total current liabilities	107,347		98,429

Deferred revenue, net of current portion	153		132
Operating lease liabilities, net of current portion	20,233		20,946

Total liabilities	127,733		119,507


Sprout Social, Inc.
Condensed Consolidated Balance Sheets (Unaudited) (cont’d)
(in thousands, except share and per share data)


	March 31, 2022		December 31, 2021

Commitments and contingencies (Note 6)
Stockholders’ equity
Class A common stock, par value $0.0001 per share; 1,000,000,000 shares authorized; 49,167,066 and 46,333,745 shares issued and outstanding, respectively, at March 31, 2022; 48,663,781 and 45,844,325 shares issued and outstanding, respectively, at December 31, 2021	4		4
Class B common stock, par value $0.0001 per share; 25,000,000 shares authorized; 8,280,390 and 8,073,446 shares issued and outstanding, respectively, at March 31, 2022; 8,516,390 and 8,309,446 shares issued and outstanding, respectively, at December 31, 2021	1		1
Additional paid-in capital	360,172		351,774
Treasury stock, at cost	(31,763)		(30,824)
Accumulated other comprehensive loss	(160)		—
Accumulated deficit	(185,500)		(175,745)
Total stockholders’ equity	142,754		145,210
Total liabilities and stockholders’ equity	$	270,487	$	264,717

See Notes to Condensed Consolidated Financial Statements.


Sprout Social, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)


	Three Months Ended March 31,
		2022		2021
Revenue
Subscription		$	56,780	$	40,355
Professional services and other		649		463
Total revenue		57,429		40,818
Cost of revenue
Subscription		13,757		9,705
Professional services and other		234		292
Total cost of revenue		13,991		9,997
Gross profit		43,438		30,821
Operating expenses
Research and development		13,065		8,272
Sales and marketing		25,612		18,153
General and administrative		14,370		10,615
Total operating expenses		53,047		37,040
Loss from operations		(9,609)		(6,219)
Interest expense		(71)		(72)
Interest income		123		52
Other expense, net		(108)		(119)
Loss before income taxes		(9,665)		(6,358)
Income tax expense		90		9
Net loss		$	(9,755)	$	(6,367)
Net loss per share attributable to common shareholders, basic and diluted		$	(0.18)	$	(0.12)
Weighted-average shares outstanding used to compute net loss per share, basic and diluted		54,277,676		53,432,658

See Notes to Condensed Consolidated Financial Statements.


Sprout Social, Inc.
Condensed Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands)


	Three Months Ended March 31,
		2022		2021
Net loss		$	(9,755)	$	(6,367)
Other comprehensive loss:
Net unrealized loss on available-for-sale securities, net of tax		(160)		—
Comprehensive loss		$	(9,915)	$	(6,367)

See Notes to Condensed Consolidated Financial Statements.


Sprout Social, Inc.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)


	Voting Common Stock (Class A and B)			Additional Paid-in Capital		Treasury Stock			Accumulated other comprehensive loss		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balances at December 31, 2021	54,153,771	$	5	$	351,774	3,026,400	$	(30,824)	—		$	(175,745)	$	145,210
Exercise of stock options	13,545	—		6									6
Stock-based compensation expense				8,392									8,392
Issuance of common stock from equity award settlement	239,875	—											—
Taxes paid related to net share settlement of equity awards						13,865	(939)						(939)
Other comprehensive loss, net of tax									(160)				(160)
Net loss											(9,755)		(9,755)
Balances at March 31, 2022	54,407,191	$	5	$	360,172	3,040,265	$	(31,763)	$	(160)	$	(185,500)	$	142,754


	Voting Common Stock (Class A and B)			Additional Paid-in Capital		Treasury Stock			Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount				Shares	Amount
Balances at December 31, 2020	53,266,472	$	5	$	328,343	3,006,448	$	(29,206)	$	(147,043)	$	152,099
Exercise of stock options	35,500	—		23							23
Stock-based compensation expense				3,909							3,909
Issuance of common stock from equity award settlement	241,411	—									—
Taxes paid related to net share settlement of equity awards						12,630	(919)				(919)
Proceeds from disgorgement of stockholder short-swing profits				1,664							1,664
Net loss									(6,367)		(6,367)
Balances at March 31, 2021	53,543,383	$	5	$	333,939	3,019,078	$	(30,125)	$	(153,410)	$	150,409


Sprout Social, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(9,755)	$	(6,367)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation of property and equipment	696		737
Amortization of line of credit issuance costs	30		43
Amortization of premium on marketable securities	133		177
Amortization of acquired intangible assets	261		261
Amortization of deferred commissions	4,020		2,583
Amortization of right-of-use operating lease asset	179		190
Stock-based compensation expense	8,392		3,909
Provision for accounts receivable allowances	91		144
Changes in operating assets and liabilities
Accounts receivable	2,312		1,106
Prepaid expenses and other current assets	(2,868)		2,152
Deferred commissions	(6,317)		(4,529)
Accounts payable and accrued expenses	1,541		(3,738)
Deferred revenue	7,338		7,245
Lease liabilities	(651)		(293)
Net cash provided by operating activities	5,402		3,620
Cash flows from investing activities
Purchases of property and equipment	(313)		(173)
Purchases of marketable securities	(66,085)		(25,903)
Proceeds from maturity of marketable securities	33,500		9,600
Proceeds from sale of marketable securities	3,000		—
Net cash used in investing activities	(29,898)		(16,476)
Cash flows from financing activities
Payments for line of credit issuance costs	(23)		(124)
Proceeds from exercise of stock options	6		23
Proceeds from disgorgement of stockholders short-swing profits	—		1,664
Employee taxes paid related to the net share settlement of stock-based awards	(939)		(919)

Net cash (used in) provided by financing activities	(956)		644
Net decrease in cash and cash equivalents	(25,452)		(12,212)
Cash and cash equivalents
Beginning of period	107,114		114,515
End of period	$	81,662	$	102,303

See Notes to Condensed Consolidated Financial Statements.


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

1.Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Sprout Social, Inc. (“Sprout Social” or the “Company”), a Delaware corporation, began operating on April 21, 2010 to design, develop and operate a web-based comprehensive social media management tool enabling companies to manage and measure their online presence. Customers access their accounts online via a web-based interface or a mobile application. Some customers also purchase the Company’s professional services, which primarily consist of consulting and training services. The Company’s fiscal year end is December 31. The Company’s customers are primarily located throughout the United States, and a portion of customers are located in foreign countries. The Company is headquartered in Chicago, Illinois.

Principles of Consolidation and Basis of Presentation

The unaudited condensed consolidated financial statements and accompanying notes were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable regulations of the United States Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The Company has prepared the unaudited condensed consolidated financial statements on a basis substantially consistent with the audited consolidated financial statements of the Company as of and for the year ended December 31, 2021, and these unaudited condensed consolidated financial statements include all normal recurring adjustments necessary for a fair statement of the results of the interim periods presented but are not necessarily indicative of the results of operations to be anticipated for the full year or any future period. The consolidated balance sheet as of December 31, 2021 included herein was derived from the audited consolidated financial statements as of that date but does not include all disclosures including certain disclosures required by GAAP on an annual basis. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 23, 2022.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. The Company bases its estimates on historical experience and on other assumptions that its management believes are reasonable under the circumstances, including but not limited to the potential impacts arising from the COVID-19 pandemic. As the extent and duration of the impact of the COVID-19 pandemic remains uncertain, the Company’s estimates and judgments may evolve as conditions change. The Company is not aware of any events or circumstances that would require an update to its estimates and judgments or a revision of the carrying value of its assets or liabilities as of May 4, 2022, the date of issuance of this Quarterly Report on Form 10-Q. Actual results could differ from those estimates.

The Company’s estimates and judgments include, but are not limited to, the estimated period of benefit for incremental costs of obtaining a contract with a customer, the incremental borrowing rate for


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

operating leases, calculation of allowance for credit losses, useful lives of long-lived assets, stock-based compensation, income taxes, commitments and contingencies and litigation, among others.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 1, “Nature of Operations and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements as of and for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 23, 2022. There have been no significant changes to these policies during the three months ended March 31, 2022.

2.Revenue Recognition

Disaggregation of Revenue

The Company provides disaggregation of revenue based on geographic region in Note 7 and based on the subscription versus professional services and other classification on the condensed consolidated statements of operations, as it believes these best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.

Deferred Revenue

Deferred revenue is recorded upon establishment of unconditional right to payment under non-cancelable contracts and is recognized as the revenue recognition criteria are met. The Company generally invoices customers in advance in monthly, quarterly, semi-annual and annual installments. The deferred revenue balance is influenced by several factors, including the compounding effects of renewals, invoice duration, timing and size. The amount of revenue recognized during the three months ended March 31, 2022 and 2021 that was included in deferred revenue at the beginning of each period was $32.4 million and $18.2 million, respectively.

As of March 31, 2022, including amounts already invoiced and amounts contracted but not yet invoiced, $115.9 million of revenue is expected to be recognized from remaining performance obligations, of which 83% is expected to be recognized in the next 12 months, with the remainder thereafter.

3.Operating Leases

The Company has operating lease agreements for offices in Chicago, Illinois, and Seattle, Washington. The Chicago lease expires in January 2028 and the Seattle lease expires in January 2031. The Company’s existing operating leases require escalating monthly rental payments ranging from $72,000 to $280,000. Under the terms of the lease agreements, the Company is also responsible for its proportionate share of taxes and operating costs, which are treated as variable lease costs. The Company’s operating leases typically contain options to extend or terminate the term of the lease. The Company currently does not include any options to extend leases in its lease terms as it is not reasonably certain to exercise them. As such, it has recorded lease obligations only through the initial optional termination dates above.


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table provides a summary of operating lease assets and liabilities as of March 31, 2022 (in thousands):


Assets
Operating lease right-of-use assets	$	9,279
Liabilities
Operating lease liabilities	2,754
Operating lease liabilities, non-current	20,233
Total operating lease liabilities	$	22,987

The following table provides information about leases on the condensed consolidated statements of operations (in thousands):


	Three Months Ended March 31,
		2022		2021

Operating lease expense		$	503	$	499
Variable lease expense		866		839

Within the condensed consolidated statements of operations, operating and variable lease expense are recorded in General and administrative expenses. Cash payments related to operating leases for the three months ended March 31, 2022 and March 31, 2021 were $1.8 million and $1.4 million, respectively. As of March 31, 2022, the weighted-average remaining lease term is 6.8 years and the weighted-average discount rate is 5.6%.

Remaining maturities of operating lease liabilities as of March 31, 2022 are as follows (in thousands):


Years ending December 31,
2022	$	2,955
2023	4,021
2024	4,112
2025	4,205
2026	4,298
Thereafter	7,995
Total future minimum lease payments	$	27,586
Less: imputed interest	(4,599)

Total operating lease liabilities	$	22,987


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

4.Income Taxes

The provision for income taxes for interim periods is generally determined using an estimate of the Company’s annual effective tax rate, excluding jurisdictions for which no tax benefit can be recognized due to valuation allowances. The Company’s effective tax rate generally differs from the U.S. federal statutory rate primarily due to a valuation allowance related to the Company’s federal and state deferred tax assets.

The Company accounts for Global Intangible Low–Taxed Income (“GILTI”) as a current-period expense when incurred. Therefore, the Company has not recorded deferred taxes for basis differences expected to reverse in the future periods.

There has historically been no federal or state provision for income taxes because the Company has historically incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. For the three months ended March 31, 2022, the Company recognized an immaterial provision related to foreign income taxes.

5.Incentive Stock Plan

Stock-based compensation expense is included in the unaudited condensed consolidated statements of operations as follows:


	Three Months Ended March 31,
		2022		2021

		(in thousands)
Cost of revenue		$	448	$	184
Research and development		1,725		717
Sales and marketing		4,218		1,752
General and administrative		2,001		1,256
Total stock-based compensation		$	8,392	$	3,909


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

6.Commitments and Contingencies

Contractual Obligations

The Company has non-cancellable minimum guaranteed purchase commitments for primarily data and services. Material contractual commitments as of March 31, 2022 that are not disclosed elsewhere are as follows (in thousands):


Years ending December 31,
2022	$	22,543
2023	17,435
2024	1,860
2025	176
2026	—
Thereafter	—
Total contract commitments	$	42,014

Legal Matters

From time to time in the normal course of business, the Company may be subject to various legal matters such as threatened or pending claims or proceedings. There were no material such matters as of and for the period ended March 31, 2022.

Indemnification

In the ordinary course of business, the Company often includes standard indemnification provisions in its arrangements with third parties, including vendors, customers, investors and the Company’s directors and officers. Pursuant to these provisions, the Company may be obligated to indemnify such parties for losses or claims suffered or incurred. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. There were no material obligations under such indemnification agreements as of and for the period ended March 31, 2022.

7.Segment and Geographic Data

The Company operates as one operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer, who reviews financial information for purposes of making operating decisions, assessing financial performance and allocating resources. The Company’s CODM evaluates financial information on a consolidated basis. As the Company operates as one operating segment, all required segment financial information is found in the condensed consolidated financial statements.

Long-lived assets by geographical region are based on the location of the legal entity that owns the assets. As of March 31, 2022 and December 31, 2021, there were no significant long-lived assets held by entities outside of the United States.


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

Revenue by geographical region is determined by location of the Company’s customers. Revenue from customers outside of the United States was approximately 28% for each of the three months ended March 31, 2022 and 2021. Revenue by geographical region is as follows (in thousands):


	Three Months Ended March 31,
		2022		2021
Americas		$	45,230	$	32,078
EMEA		9,454		6,600
Asia Pacific		2,745		2,140
Total		$	57,429	$	40,818

8.Net Loss per Share

Basic net loss per share is calculated by dividing the net loss by the weighted average number of outstanding shares of common stock each period. Diluted net loss per share is calculated by giving effect to all potential dilutive common stock equivalents, which includes stock options, restricted stock units, and restricted stock awards. Because the Company incurred net losses each period, the basic and diluted calculations are the same. Basic and diluted net loss per share are the same for each class of common stock, as both Class A and Class B stockholders are entitled to the same liquidation and dividend rights.

The following table presents the calculation for basic and diluted net loss per share (in thousands, except share and per share data):


	Three Months Ended March 31,
		2022		2021
Net loss attributable to common shareholders		$	(9,755)	$	(6,367)
Weighted average common shares outstanding		54,277,676		53,432,658
Net loss per share, basic and diluted		$	(0.18)	$	(0.12)

The following outstanding shares of common stock equivalents were excluded from the calculation of diluted net loss per share for each period, as the impact of including them would have been anti-dilutive.


	March 31,
	2022	2021
Stock options outstanding	84,510	125,510
RSUs	2,674,435	2,146,001
Total potentially dilutive shares	2,758,945	2,271,511

9. Fair Value Measurements

The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most


Sprout Social, Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)

advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

•Level 1: Quoted prices in active markets for identical assets or liabilities.

•Level 2: Observable inputs, other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3: Unobservable inputs that are supported by little or no market activity.

The following tables present information about the Company’s financial assets that are measured at fair value and indicate the fair value hierarchy of the valuation inputs used (in thousands):


	March 31, 2022
	Level 1		Level 2		Level 3		Total
Marketable Securities:
Corporate bonds	$	—	$	17,769	$	—	$	17,769
Commercial paper	—		43,176		—		43,176
U.S. Treasury securities