Chicago-based social media management platform Sprout Social will soon go public, according to a Securities and Exchange Commission filing.
Sprout Social helps companies manage their social media presences with workflow, social media listening and messaging tools. It supports 380,000 social profiles for 23,000 companies in 100 countries across the globe, it said.
The filing showed a trend of recent growth — 32 percent in 2019 — high annual recurring revenue from SaaS subscribers and rising gross margins. Sprout is not yet profitable, and its losses rose slightly from 2018 to 2019. However, its growing margins and strong upsell rates are likely a good sign for investors.
The company’s aggregate annual recurring revenue as of the third quarter of 2019 was $109.5 million — that accounts for all the companies that pay to use Sprout’s social media management software. Its gross margins increased from 72.6 percent in the first three quarters of 2018 to 74.3 percent during the same period this year. Gross margins are the ratio of how much revenue a companies’ products bring in relative to how much it spends making them.
In terms of upsells, large companies that use Sprout increased their spending by 15 and 18 percent in 2017 and 2018, respectively.
Sprout Social has raised $111.5 million in venture funding to date, according to Crunchbase, including a $40.5 million Series D last December that valued the company at $800 million. Future Ventures, an investment fund raised by the Australian government, led that round.
The company estimated there’s a $13 billion annual market for its services both in the U.S. and overseas. If all companies spent as much as the top 10 percent of Sprout’s customers, that number would increase to $51 billion.
