BENSALEM, Pa.–(BUSINESS WIRE)–Law Offices of Howard G. Smith announces that a class action lawsuit has been filed on behalf of investors who purchased Sprout Social, Inc. (“Sprout Social” or the “Company”) (NASDAQ: SPT) securities between November 2, 2023 and May 2, 2024, inclusive (the “Class Period”). Sprout Social investors have until July 12, 2024 to file a lead plaintiff motion.
Investors suffering losses on their Sprout Social investments are encouraged to contact the Law Offices of Howard G. Smith to discuss their legal rights in this class action at 888-638-4847 or by email to [email protected].
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 (“CFO”) Joe Del Preto (“Del Preto”) stated 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 Present and incoming Chief Executive Officer (“CEO”), Ryan Barretto (“Barretto”) disclosed that the Company “made several important strategic decisions heading into Q1” which the Company “thought [it] could manage [] without disruption, but they collectively set us back.” Barretto stated these decisions “happened in Q4 and the execution of it happened in Q1.” Barretto further disclosed the Company’s shift in business had “changed materially” and “affect[ed] revenue recognition and planning” which would now be “heavily weighted to traditional enterprise buying cycles.” Justyn Howard (“Howard”), the Company’s current CEO, also disclosed that the Company had to spend “energy and calorie” in the first quarter on “tactical decisions” including “spending time with the team on Tagger enablement.” Barretto explained further, stating “[f]rom a sales team perspective, the maturity of the sales team, we did a lot of enablement in Q1 across our entire customer-facing or to make sure that we are up to speed with all of the elements of influencer and our Tagger platform.”
On this news, Sprout Social’s stock price fell $19.33, or 40.1%, to close at $28.82 per share on May 3, 2024, on unusually heavy trading volume.
The complaint filed in this class action alleges that throughout the Class Period, Defendants 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: (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) that 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) that, 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.
If you purchased Sprout Social securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020, by telephone at (215) 638-4847 or by email to [email protected], or visit our website at www.howardsmithlaw.com.
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Contacts
Law Offices of Howard G. Smith
Howard G. Smith, Esquire
215-638-4847
[email protected]
www.howardsmithlaw.com
