Joseph Del Preto, the Chief Financial Officer and Treasurer of Sprout Social, Inc. (NASDAQ:SPT), recently sold shares of the company's Class A Common Stock. According to a filing with the Securities and Exchange Commission, Del Preto sold a total of 1,500 shares on November 4, 2024. The transactions were executed at prices ranging from $27.592 to $28.10 per share, amounting to a total of $41,438.
Following these transactions, Del Preto retains ownership of 157,114 shares, which includes a mix of directly owned shares and restricted stock units (RSUs) that are scheduled to vest in the future. The sales were conducted under a pre-established 10b5-1 trading plan, which Del Preto adopted on August 16, 2023.
In other recent news, Sprout Social reported a 25% year-over-year revenue increase to $99.4 million in the second quarter with $98.5 million coming from subscription revenue. The company also announced key leadership changes, appointing Ryan Barretto as the new CEO and Erika Trautman as the new Chief Product Officer. However, Sprout Social faced a downgrade by KeyBanc due to concerns over weaker bookings and the company's transition to prioritizing annual contracts. Canaccord Genuity maintained its Buy rating on Sprout Social with a steady price target of $50.00, while Baird maintained a neutral rating but increased the price target to $34 from $30. The company ended the quarter with $93.2 million in cash, cash equivalents, and marketable securities. Looking forward, Sprout Social projects a non-GAAP operating income between $6.5 million and $7.5 million for Q3, and between $28 million to $29 million for the full year 2024. These are some of the recent developments for Sprout Social.
InvestingPro Insights
While Joseph Del Preto's recent stock sale might raise eyebrows, it's important to consider Sprout Social's broader financial picture. According to InvestingPro data, the company boasts a market capitalization of $1.67 billion and has demonstrated strong revenue growth, with a 29.64% increase over the last twelve months as of Q2 2024. This growth trajectory aligns with one of the InvestingPro Tips, which notes that 7 analysts have revised their earnings upwards for the upcoming period, suggesting positive expectations for the company's financial performance.
Sprout Social's impressive gross profit margin of 77.09% underscores its operational efficiency, supporting another InvestingPro Tip that highlights the company's "impressive gross profit margins." This strong margin could provide a cushion as the company works towards profitability, which analysts predict will happen this year according to InvestingPro Tips.
Despite these positive indicators, investors should note that Sprout Social is currently trading at a high Price / Book multiple of 11.0, which may indicate that the stock is relatively expensive compared to its book value. This valuation metric, combined with the company's current lack of profitability over the last twelve months, may explain why insiders like Del Preto are taking the opportunity to sell some shares.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights with 7 more tips available for Sprout Social, providing a deeper understanding of the company's financial health and market position.
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