MeritValue

Sprout Social, Inc.

SPTdata completeness 100%8 fiscal years on file
The thesis, from the filings

Sprout Social, Inc. earns about -44% on invested capital, below its ~9% cost of capital, but has diluted owners by 9% over 5 years — no moat visible in the numbers. The estimate methods put fair value between $13.94 and $24.72 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2021FY 2022FY 2023FY 2024FY 2025
Revenue$187.9M1$253.8M2$333.6M3$405.9M3$457.5M3
Net income−$28.7M4−$50.2M5−$66.4M6−$62M6−$43.3M6
Operating cash flow$14.8M7$10.7M8$6.46M9$26.3M9$43.4M9
Capital expenditure$926,00010$1.82M11$2.07M12$2.95M12$4.11M12
Free cash flow (derived)$13.9M7$8.84M8$4.38M9$23.4M9$39.3M9
Total debt—$013$55M14$25M15$40M15
Cash & equivalents$107.1M16$79.9M17$49.8M18$86.4M18$95.3M18
Diluted shares53.8M54.6M55.7M56.9M58.6M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$34.7
your share of equity
Profit it earned you last year
−$7.39
Free cash flow it threw off
$6.71
Debt you’d be carrying
$6.82

10 shares is a claim on $34.7 of net worth that earned you −$7.39 and generated $6.71 of cash last year, against $6.82 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
-44% avg · 5y
FY21 -58%FY22 -63%FY23 -33%FY24 -43%FY25 -21%

It earned about -44% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
+9% shares · 5y

Share count is up 9% over 5 years — owners have been diluted. Worth asking what they got for it.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0

The 2 estimate methods that apply put fair value between $13.94 and $24.72 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$24.72
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears10
  • fcfGrowth20.0%
  • fcfBase$23.4M
DCF · Growth Exit 5Y
$13.94
assumptions (10)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • terminalGrowth2.5%
  • projectionYears5
  • fcfGrowth20.0%
  • fcfBase$23.4M
Earnings Power Value
not applicable
normalized (5y-median) earnings non-positive — EPV undefined
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years20.0%
Discount rate (WACC)8.93%
Terminal growth2.5%
At your growth, a share is worth $13.94
The three cases
Bear0.0%$6.64
Base20.0%$13.94
Bull20.0%$13.94

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 20.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

Sources — the receipts
  1. 10-K · period ending 2021-12-31 · accession 0001517375-24-000020 (RevenueFromContractWithCustomerExcludingAssessedTax)
  2. 10-K · period ending 2022-12-31 · accession 0001517375-25-000022 (RevenueFromContractWithCustomerExcludingAssessedTax)
  3. 10-K · period ending 2023-12-31 · accession 0001517375-26-000015 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 10-K · period ending 2021-12-31 · accession 0001517375-24-000020 (NetIncomeLoss)
  5. 10-K · period ending 2022-12-31 · accession 0001517375-25-000022 (NetIncomeLoss)
  6. 10-K · period ending 2023-12-31 · accession 0001517375-26-000015 (NetIncomeLoss)
  7. 10-K · period ending 2021-12-31 · accession 0001517375-24-000020 (NetCashProvidedByUsedInOperatingActivities)
  8. 10-K · period ending 2022-12-31 · accession 0001517375-25-000022 (NetCashProvidedByUsedInOperatingActivities)
  9. 10-K · period ending 2023-12-31 · accession 0001517375-26-000015 (NetCashProvidedByUsedInOperatingActivities)
  10. 10-K · period ending 2021-12-31 · accession 0001517375-24-000020 (PaymentsToAcquirePropertyPlantAndEquipment)
  11. 10-K · period ending 2022-12-31 · accession 0001517375-25-000022 (PaymentsToAcquirePropertyPlantAndEquipment)
  12. 10-K · period ending 2023-12-31 · accession 0001517375-26-000015 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 10-K · period ending 2022-12-31 · accession 0001517375-24-000020 (LongTermDebt)
  14. 10-K · period ending 2023-12-31 · accession 0001517375-25-000022 (LongTermDebt)
  15. 10-K · period ending 2024-12-31 · accession 0001517375-26-000015 (LongTermDebt)
  16. 10-K · period ending 2021-12-31 · accession 0001517375-24-000020 (CashAndCashEquivalentsAtCarryingValue)
  17. 10-K · period ending 2022-12-31 · accession 0001517375-25-000022 (CashAndCashEquivalentsAtCarryingValue)
  18. 10-K · period ending 2023-12-31 · accession 0001517375-26-000015 (CashAndCashEquivalentsAtCarryingValue)