Case Summary

Sprout Social

NASDAQ: SPT

Case Details

  • Munch v. Sprout Social, Inc. et al.
  • Class Period:November 2, 2023 - May 2, 2024
  • Date Filed:May 13, 2024
  • Jurisdiction:U.S. District Court, Northern District of Illinois
  • Docket Number: 1:24-cv-03867
  • Lead Plaintiff Deadline: July 12, 2024
Days Left to
Seek Plaintiff
48

Overview

A class action lawsuit has been filed against Sprout Social, Inc. (“Sprout Social” or the “Company”) (NASDAQ: SPT) and certain of the Company’s current and former senior executive officers alleging violations of the federal securities laws.  The Sprout Social lawsuit is brought on behalf of all persons and entities who purchased or otherwise acquired Sprout Social securities between November 2, 2023, and May 2, 2024, both dates inclusive (the “Class Period”).  Investors have until July 12, 2024, to seek appointment as lead plaintiff of the Sprout Social class action lawsuit.

Sprout Social is a software company which develops and operates a web-based social media management platform.  The Company’s software offers a centralized platform for customers to manage social media outreach, including integrated tools for social engagement, publishing, reporting, and analytics.  The Company generates revenue primarily from subscriptions to its social media management platform under a software-as-a-service model.  The Company serves multiple customer cohorts, including public relations, influencer marketing, customer service, small- and-medium-sized businesses, as well as mid-market companies, and enterprise customers.  On August 3, 2023, the Company announced it had acquired Tagger Media, Inc. (“Tagger”), a leading influencer marketing and social intelligence platform used by enterprise brands and agencies.

The Sprout Social lawsuit alleges Defendants, throughout the Class Period, made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects.  Specifically, Defendants failed to disclose to investors that: (1) the Company’s sales and revenue growth were not indicative of the Company’s growth as it transitioned to an enterprise sales cycle; (2) the Company faced integration challenges with its acquisition of Tagger; (3) as a result, the Company was self-inducing sales headwinds; (4) as a result, the Company would revise fiscal year 2024 revenue guidance; and (5) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

As alleged in the lawsuit, on May 2, 2024, after the markets closed, Sprout Social announced the Company’s operating results for the first fiscal quarter of 2024, disclosing that the Company had missed its revenue guidance for the quarter.  The Company also revised its full year 2024 revenue guidance downward $20 million.  The Company’s Chief Financial Officer, Joe Del Preto, stated that the Company had underestimated the magnitude of enterprise seasonality and that the Company had also been self-inducing sales execution headwinds.  During the earnings call held on the same day, the Company’s President and incoming Chief Executive Officer, Ryan Barretto disclosed that the Company made several important strategic decisions heading into the first quarter, which the Company thought it could manage without disruption, but ended up setting back.  Barretto stated that these decisions happened in the fourth quarter and the execution of it happened in the first quarter.  Barretto further disclosed that the Company’s shift in business had changed materially and affected revenue recognition and planning, which would now be heavily weighted to traditional enterprise buying cycles.

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If you purchased or otherwise acquired Sprout Social securities between November 2, 2023 and May 2, 2024, both dates inclusive, and you wish to serve as lead plaintiff in this lawsuit, we encourage you to submit your information to DiCello Levitt LLP via the form on this page. 

You can also contact DiCello Levitt partner Brian O’Mara by calling (888) 287-9005 or at investors@dicellolevitt.com. 

The deadline to apply to the Court to serve as a lead plaintiff in the Sprout Social lawsuit is July 12, 2024.

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