Case Background:
This is a federal securities fraud class action lawsuit on behalf of those who purchased or otherwise acquired Sprout Social, Inc. (“Sprout Social”) (NASDAQ: SPT) securities between September 22, 2021 and May 2, 2024, inclusive (the “Class Period”).
On May 2, 2024, Sprout Social announced the company's operating results for the first fiscal quarter of 2024, disclosing that Sprout Social had missed its revenue guidance for the quarter and revised its full year 2024 revenue guidance downward by $20 million. In addressing the results, Sprout Social's CFO said that the company had "underestimated the magnitude of enterprise seasonality" and had also been "self-inducing sales execution headwinds." During the accompanying earnings call held that same day, Sprout Social's incoming CEO additionally disclosed that Sprout Social "made several important strategic decisions heading into Q1" which it "thought [it] could manage [] without disruption, but they collectively set us back."
On this news, Sprout Social's stock price fell $19.33 per share, or 40.15%, to close at $28.82 per share on May 3, 2024.
The complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Sprout Social's sales and revenue growth were not indicative of Sprout Social's growth as it transitioned to an enterprise sales cycle; (2) Sprout Social faced integration challenges with its acquisition of Tagger Media, Inc.; (3) as a result, Sprout Social was "self-inducing sales headwinds;" (4) as a result, Sprout Social would revise fiscal year 2024 revenue guidance; (5) as a result of the foregoing, Defendants' positive statements about Sprout Social's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
Current Status of Case:
On March 25, 2025, Defendants filed a Motion to Dismiss the Amended Complaint. This action is ongoing.
If you wish to discuss this action or have any questions, please contact Kessler Topaz Meltzer & Check, LLP: Jon Naji, Esq. (484) 270-1453; toll-free at (844) 887-9500; or via e-mail at info@ktmc.com. If you would like additional information about the suit, please click on the link "Submit Your Information" above and fill out the form as promptly as possible.