What changed in this filing

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Item 1. Business

2022-02-23 compared with 2021-02-24 · 103 added, 99 removed, 401 unchanged (33% of the section changed)

Sprout Social — Powering the Evolution of Customer Experience

With more than 3.4 billion global users consuming and sharing billions of posts per day, social media has fundamentally changed not only marketing but the entire customer experience.

With more than 3.9 billion global users consuming and sharing billions of posts per day, social media has fundamentally changed the entire customer experience.

Social media is becoming mission-critical to the way organizations reach, engage and understand their target audience and customers.

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We have made it increasingly easy to standardize on Sprout Social as the centralized system of record for social and to help customers maximize the value of this mission critical channel.

Currently, more than 26,000 customers across 100 countries rely on our platform.

Currently, more than 31,000 customers across more than 100 countries rely on our platform.

Sprout Social empowers businesses to tap into the power and opportunity presented by the shift to social communication.

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Billions of users are sharing their interests, opinions and values with their social networks every day and are using social media to communicate with and about businesses, organizations and causes on an unprecedented scale.

Virtually every aspect of business has been impacted by social media, from marketing, sales and public relations to customer service, product and strategy, creating a need for an entirely new category of software and an entirely new system of record.

Virtually every aspect of business has been impacted by social media, from marketing, sales and public relations to customer service, commerce, product and strategy, creating a need for an entirely new category of software and an entirely new system of record.

We offer our customers a centralized, secure and powerful platform that can scale horizontally across an organization to drive maximum business value.

Introduced in 2011, our cloud software brings together social messaging, data and workflows in a unified system of record, intelligence and action.

Operating across major networks, including Twitter, Facebook, Instagram, Pinterest, LinkedIn, Google, Reddit, Glassdoor and YouTube, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions.

Operating across major networks, including Twitter, Facebook, Instagram, Pinterest, LinkedIn, Google, Reddit, Glassdoor and YouTube, and commerce platforms Facebook Shops and Shopify, we provide organizations with a centralized platform to manage their social media efforts across stakeholders and business functions.

Our platform is easy-to-use and can be deployed rapidly by new customers without direct engagement from our sales or services teams.

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We operate a single code-base without the need for customizations or professional services, allowing us to efficiently scale our platform and quickly react to changes in the market.

Relative to our primary competitors, our platform is the top user-rated social media management software across all categories and customer segments according to G2, reinforcing our leading market position and brand.

Relative to our primary competitors, our platform is the top user-rated social media management software across all major categories and customer segments according to G2, reinforcing our leading market position and brand.

We have proven success in the SMB, Mid-market and Enterprise segments, a healthy agency business and have balanced revenue and growth in each.

We estimate that less than 5% of the more than 200 million businesses on social media have adopted software solutions to centrally manage their social media efforts, providing a large, nascent opportunity to drive significantly increased market adoption of our solution and continued growth across all customer segments.

We estimate that less than 5% of the millions of businesses on social media have adopted software solutions to centrally manage their social media efforts, providing a large, nascent opportunity to drive significantly increased market adoption of our solution and continued growth across all customer segments.

We have a highly efficient, product-driven go-to-market strategy that has enabled us to scale rapidly, attracting more than 31,000 current customers from small businesses to global brands as well as marketing agencies and government, non-profit and educational institutions.

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Our platform is licensed on a per-user basis with numerous upsell opportunities through additional users and product modules.

As social becomes a critical channel for all aspects of the customer experience, including brand awareness, customer acquisition, social customer care, commerce and reputation management, we expect that our customers will increase adoption of our platform across departments.

As social becomes a critical channel for all aspects of the customer experience, including brand awareness, customer acquisition, social customer care, commerce, advocacy and reputation management, we expect that our customers will increase adoption of our platform across departments.

With our efficient go-to-market model and over 99% of our revenue in 2021 from software subscriptions, we have experienced strong unit economics across all customer segments as we continue to grow and refine our sales and marketing efforts.

Our single code-base also creates a highly scalable and capital-efficient model that enables us to add new customers at little incremental cost.

We believe that the single code-base and scalability of our technology are also substantial technology differentiators.

Our single code-base also creates a scalable and capital-efficient model that enables us to add new customers at little incremental cost.

We believe that the single code-base and scalability of our technology are also meaningful technology differentiators.

Our success and innovation are driven by an experienced leadership team and award-winning culture with a reputation for caring deeply about the success of our customers and employees.

This strong employer brand allows us to attract and retain high-quality talent and deliver a premium experience for our customers.

Glassdoor has recognized us as one of the “Best Places to Work” in 2017, 2018, 2020 and 2021 and as having a “Highest Rated CEO” in 2017, 2018 and 2019.

Our strong culture, world-class management team, leading platform and efficient go-to market strategy have led to revenue of $132.9 million, $102.7 million and $78.8 million during the years ended December 31, 2020, 2019 and 2018, respectively, representing growth of 29% and organic growth of 36% from 2019 to 2020 and representing growth of 30% and organic growth of 44% from 2018 to 2019.

Additionally, we generated over $158 million in total annualized recurring revenue, or ARR, as of December 31, 2020.

For more information on how we define and calculate our organic growth rate and total ARR, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—Total ARR.” We generated net losses of $31.7 million, $46.8 million and $20.9 million during the years ended December 31, 2020, 2019 and 2018, respectively.

Glassdoor has recognized us as one of the “Best Places to Work” in 2017, 2018, 2020, 2021 and 2022.

Our strong culture, world-class management team, leading platform and efficient go-to market strategy have led to revenue of $187.9 million, $132.9 million and $102.7 million during the years ended December 31, 2021, 2020 and 2019, respectively, representing growth of 41% from 2020 to 2021 and representing growth of 29% from 2019 to 2020.

Additionally, we generated over $224 million in annualized recurring revenue, or ARR, as of December 31, 2021.

For more information on how we define and calculate ARR, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Business Metrics—ARR.” We generated net losses of $28.7 million, $31.7 million and $46.8 million during the years ended December 31, 2021, 2020 and 2019, respectively.

Social media began as a way for individuals to connect and share experiences.

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A new form of advertising was born and brands rushed to establish a presence and following on social media as a powerful new way to connect with their customers.

With more than 3.4 billion users and 200 million businesses adopting social media, it has fundamentally changed communication and commerce, and we are just beginning to understand its implications and importance.

With more than 3.9 billion users and millions of businesses adopting social media, it has fundamentally changed communication and commerce, and we are just beginning to understand its implications and importance.

We believe social media is simultaneously many things:

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Social media has evolved to impact aspects of marketing, public relations, sales, customer relationships, customer service, product feedback, commerce, business intelligence and strategy.

Social media is not just a new marketing channel, it is a new layer that will embed in the digital technology stack across an organization:

Social media is a new layer that will embed in the digital technology stack across an organization:

• Consumer influence has expanded .

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We believe social media provides the largest source of business intelligence that has ever existed.

This represents a real time pulse of consumer sentiment that is unbiased and includes a broad universe not only of current customers, but of potential future customers.

This represents a real time pulse of consumer sentiment that is unbiased and includes a broad universe not only of current

customers, but of potential future customers.

Real-time consumer opinions, market trends, competitive insights, product performance and market research can be measured and analyzed using social data.

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Security and privacy issues have dominated the discussion around social media in recent years, leading to increased complexity, risk and regulation.

Conforming to these requirements and maintaining security

across dozens to hundreds of social profiles on multiple social networks reinforces the need for centralized management.

Conforming to these requirements and maintaining security across dozens to hundreds of social profiles on multiple social networks reinforces the need for centralized management.

• Brands need a centralized solution .

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Our relationships with Twitter, Facebook, Instagram, Pinterest, LinkedIn and Google, among others, allow us to build robust solutions that meet today’s business needs while maintaining our focus on innovation as the market evolves.

Our relentless focus on customer relationships and building the highest-quality products have made our platform the highest customer-rated product in every category and customer segment relative to our primary competitors according to G2.

Our relentless focus on customer relationships and building the highest-quality products have made our platform the highest customer-rated product across all major categories and customer segments relative to our primary competitors according to G2.

The key benefits of our solution include:

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Our customers have immediate access to social analytics, competitive insights, peer benchmarking, market research and consumer trend information.

Combining and

benchmarking billions of data points, we help our customers measure their performance, identify opportunities for improvement and understand how their brands should evolve.

Combining and benchmarking billions of data points, we help our customers measure their performance, identify opportunities for improvement and understand how their brands should evolve.

• Proven scale, reliability and security .

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Our Market Opportunity

Due to social media’s rapidly growing strategic importance, we believe all organizations of adequate scale around the globe would benefit from using a social media management solution to

engage with their consumers and drive insights from social data.

Due to social media’s rapidly growing strategic importance, we believe all organizations of adequate scale around the globe would benefit from using a social media management solution to engage with their consumers and drive insights from social data.

We also believe our platform addresses this significant capability gap, serving what we refer to as the social media management market.

We estimate that, based on our current average customer spending levels, the annual served available market (SAM) for our solution is in excess of $25 billion.

We also believe there is a significant opportunity to expand the use of our platform across our customers’ organizations and increase our average customer spending levels.

If we assume spending levels reach the average for the top 10% of our current customers in each segment, we believe our expanded total available market (TAM) opportunity is greater than $50 billion.

We calculated these estimates by multiplying our current annualized contract value (ACV) (calculated as ending 2020 annualized revenue run-rate, or ARR, divided by ending 2020 total customer count) and the ACV of our top 10% customers by half of the businesses that are currently actively engaged on Facebook, according to public statements made by Facebook.

Our SAM and TAM estimates are what we view as addressable as of today.

We estimate that, based on our current average customer spending levels, the annual served addressable market (SAM) for our platform in 2021 exceeded $44 billion.

We estimate that our SAM opportunity will exceed $100 billion by 2025, an annual market growth rate of greater than 20%.

We calculated our current SAM estimate as follows:

(i) utilized data from The U.S.

Small Business Administration, The U.S.

Census Bureau, The Organisation for Economic Co-operation and Development and Statista to estimate the total number of businesses in the United States and globally in each of our served market segments (Enterprise, Mid-Market, SMB) with a social media presence;

(ii) utilized internal data and estimates to estimate the number of such businesses that require a social media management platform (the “Target Businesses”);

(iii) calculated the average of our ACV and our estimate of our primary competitors’ ACVs in each segment;

and (iv) multiplied the estimated average segment ACVs by the estimated number of Target Businesses in each segment.

We calculated our greater than $100 billion 2025 SAM forecast using the methodology above.

We used internal estimates informed by research from the Harris Poll to determine the projected business presence on social media in 2025 that will require a social media management platform, multiplied by our internal projected average segment ACVs in 2025 for Sprout Social and its primary competitors in the applicable segment.

Our Growth Strategies

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Social media has created significant opportunities for businesses to reach, acquire, retain and connect with their customers.

It has also introduced a high level of complexity and the need for a

centralized platform to manage these efforts across the organization.

It has also introduced a high level of complexity and the need for a centralized platform to manage these efforts across the organization.

Our platform brings all of the necessary tools together for organizations to expertly and efficiently manage this new channel and create compelling experiences for their audience.

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• Reputation Management;

• Social Commerce;

• Employee Advocacy;

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business intelligence at scale

Every day, hundreds of millions of data points are created across social networks that contain information that can help businesses better understand their markets, their customers and their competition.

Every day, hundreds of millions of data points are created across social networks that contain information that can help businesses better understand their markets, their customers and their

We provide affordable, powerful and approachable tools to access this rich data in order to make better business decisions.

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We respond to these increasing demands by continuously enhancing our platform and expanding our offering.

• Social Commerce .

Commerce transactions are shifting to social, which is a primary point of product discovery for consumers.

We allow brands to easily link their commerce platforms, currently Shopify and Facebook Shops, for a unified view of product catalogs, SKU availability and purchase history, which help inform proactive marketing efforts and create seamless, unified customer service experiences.

• Reputation management .

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There are a number of established and emerging competitors in the social media management software market.

The market is highly fragmented, rapidly evolving and highly competitive with rising barriers to entry.

While the market remains fragmented, there has been increasing consolidation in recent years with rising barriers to entry.

We consider the competitive differentiators in our market to be:

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• scalability of the platform;

• ease of use and reliability;

• cost to deploy and run the platform.

• ease of use, security and reliability;

• ease & cost to deploy and run the platform.

We believe we compete favorably on all of these factors.

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Intellectual Property

We rely on a combination of patent, trade secret, copyright and trademark laws, a variety of contractual arrangements, such as license agreements, assignment agreements, confidentiality and non-disclosure agreements, and confidentiality procedures and technical measures to gain rights to and protect the intellectual property used in our business.

We have three issued U.S.

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We actively pursue registration of our trademarks, logos, service marks and domain names in the United States and in other key jurisdictions.

We are the registered holder of a variety of U.S.

and international domain names that include the term “Sprout Social” and similar variations.

We also own numerous trademarks, trade names, service marks, logos and design marks, including SPROUT SOCIAL.

We are the registered holder of a variety of domain names that include the term “Sprout Social” and similar variations.

We also own numerous trademarks, trade names, service marks, logos and design marks, including SPROUT SOCIAL and our leaf logo.

In addition to our registered intellectual property, we rely on trade secrets and confidential information to develop and maintain our competitive position.

We seek to protect our trade secrets and confidential information through a variety of methods, including confidentiality agreements with employees and third parties who may have access to our proprietary information.

We seek to protect our trade secrets and

confidential information through a variety of methods, including confidentiality agreements with employees and third parties who may have access to our proprietary information.

We also require most employees to sign agreements, pursuant to which such they assign to us any inventions, developments and other technology generated by them on our behalf.

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The manner in which existing laws and regulations are applied in this environment, and how they will relate to our business in particular, both in the United States and internationally, is often unclear.

For example, we sometimes cannot be certain which laws will be deemed applicable to us given the

global nature of our business, including with respect to such topics as data privacy and security, pricing, credit card fraud, advertising, taxation, content regulation and intellectual property ownership and infringement.

For example, we sometimes cannot be certain which laws will be deemed applicable to us given the global nature of our business, including with respect to such topics as data privacy and security, pricing, credit card fraud, advertising, taxation, content regulation and intellectual property ownership and infringement.

Our customers, and those with whom they communicate using our platform, upload and store data onto our platform, generally without any restrictions imposed by us.

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Data Privacy and Security Laws

Data privacy, data protection and information security with respect to the collection, storage, use, retention and deletion of personally identifiable information continues to be the focus of worldwide legislation and regulation.

We are subject to data privacy and security regulations by data protection authorities in countries throughout the world, by the U.S.

federal government and by the states in which we conduct our business.

In the EU, the General Data Protection Regulation, or GDPR, which came into effect in May 2018, imposes stringent privacy, data protection, data transfer, and information security requirements, which include expanded requirements to disclose to data subjects how their personal data is used and increased rights for data subjects to access, control and delete their personal data.

In addition, there are mandatory data breach notification requirements and significantly increased penalties of the greater of €20 million or 4% of global turnover for the preceding financial year.

GDPR also has requirements regarding the cross border transfer of personal data.

In the past, we have self-certified adherence to the U.S.

Department of Commerce’s EU-U.S.

Privacy Shield Framework (the “Privacy Shield”), which established a means for legitimizing the transfer of personal data from the European Economic Area (“EEA”) to the United States in compliance with GDPR.

On July 16, 2020, the Court of Justice of the European Union invalidated the Privacy Shield as a valid mechanism for the legal transfer of personal data outside of the EEA.

As a result, we have adopted the European Commission-approved Standard Contractual Clauses (“SCCs”) as a transfer mechanism to cover data transfers from an EU controller to a non-EU or EEA processor.

We are continuing to monitor changes in the applicable regulations and guidance and we may need to implement additional measures deemed necessary by applicable law, regulation, or data protection authorities.

Following a referendum and enactment of legislation by the government of the United Kingdom, the United Kingdom formally withdrew from the European Union on January 31, 2020, known as Brexit, and the parties finalized a trade agreement prior to the end of the transition period on December 31, 2020.

As part of the trade agreement, the United Kingdom and the European Union have agreed to a bridging mechanism to ensure data flows freely between the EEA and UK for a period of six months from January 1, 2021 until the European Union issues an adequacy decision for the UK.

Although it is expected that the EU will confer an adequacy decision for the UK, there still remains uncertainty as to the timing of when the adequacy decision will be issued, how the UK version of the GDPR will be implemented alongside its existing UK data protection regulations, and how data transfers to and from the United Kingdom will generally be regulated.

We are self-certified under the U.S.-Swiss Privacy Shield Frameworks with regard to our transfer of certain personal data from the EU and Switzerland to the United States, and some regulatory uncertainty remains surrounding the future of data transfers from the EU and Switzerland to the United States pursuant to this Framework.

In the United States, we are subject to Federal and state laws and regulations regarding privacy and information security.

California also recently enacted legislation, the California Consumer Privacy Act of 2018, or CCPA, that affords consumers expanded privacy protections.

The CCPA went into effect on

January 1, 2020 and the final regulations were approved on August 20, 2020.

The CCPA required modification of our data processing practices and policies in order to address the expanded rights the CCPA provides to California residents, including rights to access and deletion of their personal information, and the right to opt out of certain personal information sharing and receive detailed information about how their personal information is used.

The CCPA also provides for civil penalties for violations, as well as a private right of action for data breaches that may increase data breach litigation.

The California Privacy Rights Act, or CPRA, which expands on the provisions of the CCPA, will become operative on January 23, 2023, and will introduce additional compliance requirements, such as enhanced opt out and deletion rights, categorization of sensitive personal information, and principles of purpose limitation and data minimization.

There are also a number of other pending U.S.

state privacy laws that contain similar, but potentially stricter and/or conflicting, obligations to the CCPA.

These laws, if enacted, may require material alteration of our internal procedures and could potentially limit the ability of data providers or our customers to provide certain personal information to us that is necessary for our business operations.

In recent years, there have been a number of well-publicized data breaches involving the improper use and disclosure of individuals’ personal information of individuals.

Many governing authorities have responded to these incidents by enacting laws requiring holders of personal information to maintain safeguards and to take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals and public officials, or amending existing laws to expand compliance obligations.

In addition, certain laws and regulations that protect the collection, use and disclosure of particular types of data may hinder our ability to provide services to customers and potential customers subjected to such laws.

For example, rules under the Health Insurance Portability and Accountability Act of 1996 governing the collection, use and disclosure of certain health information impose specific data protection obligations on any organization providing services to covered organizations.

As another example, the Gramm-Leach-Bliley Act of 1999 imposes specific obligations on companies that process certain financial data on behalf of covered entities.

We do not currently certify that our platform complies with these regulations.

In order to compete in such highly regulated markets, we may have to invest in additional resources, establish processes and introduce additional measures to satisfy regulatory requirements applicable to companies serving such covered entities.

In the ordinary course of our business, we may process personal data.

Accordingly, we are, or may become, subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards related to data privacy, security, and protection.

Such obligations may include, without limitation, the Federal Trade Commission Act, the California Consumer Privacy Act of 2018 (“CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), and the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”).

In addition, several states within the United States have enacted or proposed data privacy laws.

For example, Virginia passed the Consumer Data Protection Act, and Colorado passed the Colorado Privacy Act.

The CCPA and EU GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal data processing that may increase our compliance obligations and exposure for any noncompliance.

For example, the CCPA imposes obligations on covered businesses to provide specific disclosures related to the business’s collection, use, and disclosure of personal data and to respond to certain requests from California residents related to their personal data (for example, requests to know of the business’s personal data processing activities, to delete the individual’s personal data, and to opt out of certain personal data disclosures).

Also, the CCPA provides for civil penalties and a private right of action for data breaches which may include an award of statutory damages.

In addition, the California Privacy Rights Act of 2020 (“CPRA”), which becomes effective on January 1, 2023, will expand the CCPA.

The CPRA will, among other things, give California residents the ability to limit a business’s use of certain sensitive personal data, establish restrictions on personal data retention, expand the types of data breaches that are subject to the CPRA’s private right of action, and establish a new California Privacy Protection Agency to implement and enforce the new law.

European data privacy and security laws (including the EU GDPR and UK GDPR) impose significant and complex compliance obligations on entities that are subject to those laws.

For example, the EU GDPR applies to any company established in the European Economic Area (“EEA”) and to companies established outside the EEA that process personal data in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA.

These obligations may include limiting personal data processing to only what is necessary for specified, explicit, and legitimate purposes;

requiring a legal basis for personal data processing;

requiring the appointment of a data protection officer in certain circumstances;

increasing transparency obligations to data subjects;

requiring data protection impact assessments in certain circumstances;

limiting the collection and retention of personal data;

increasing rights for data subjects;

formalizing a heightened and codified standard of data subject consents;

requiring the implementation and maintenance of technical and organizational safeguards for personal data;

mandating notice of certain personal data breaches to the relevant supervisory authority(ies) and affected individuals;

and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.

See the section titled “Risk Factors—Legal and Regulatory Risks” for additional information about the laws and regulations to which we are or may become subject and about the risks to our business associated with such laws and regulations.

and international copyright and trademark laws protect the rights of third parties from infringement of their intellectual property.

Our customers and those with whom they communicate on our platform can generally use our platform to upload and present a wide variety of content.

We maintain a copyright infringement policy and respond to takedown requests by third-party intellectual property right owners that might result from content uploaded to our platform.

As our business expands to other countries, we must also respond to regional and country-specific intellectual property considerations, including takedown and cease-and-desist notices in foreign languages, and we must build infrastructure to support these processes.

The Digital Millennium Copyright Act, or DMCA, also applies to our business.

Our customers can use our platform to upload and present a wide variety of content.

In general, our customer terms of service state that customers agree not to, nor authorize or permit any third parties to use our products to post, upload, link to, send, distribute, or store any content that is protected by copyright, trademark, or any other proprietary right without first having obtained all rights, permissions, and consents necessary to make such content available on or through our products.

As our business expands to other countries, we must respond to regional and country-specific intellectual property considerations, including takedown and cease-and-desist notices in foreign languages, and we must build infrastructure to support these processes.

The Digital Millennium Copyright Act, or DMCA, also applies to our business in the United States.

This statute provides relief for claims of circumvention of copyright-protected technologies but includes a safe harbor that is intended to reduce the liability of online service providers for listing or linking to third-party websites or hosting content that infringes copyrights of others.

The copyright infringement policies that we have implemented for our platform are intended to satisfy the DMCA safe harbor.

Human Capital

The copyright infringement practices that we have implemented for our platform are intended to satisfy the DMCA safe harbor.

Culture and Workforce

As of December 31, 2021, we had a total of 887 full-time employees, including 141 employees located outside the United States.

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Our commitment to our employees is to foster a culture that enables every member of the Sprout team to do their best work in the most fulfilling way possible.

We strive to honor this commitment by prioritizing employee engagement and development, diversity equity and inclusion, and employee benefits and wellness.

We strive to honor this commitment by prioritizing employee engagement and development;

diversity, equity and inclusion (DEI);

and employee benefits and wellness.

Employee Engagement & Development:

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In 2021, topics included the remote work environment, talent development needs, and our culture of feedback.

The feedback we received regarding remote work directly shaped our strategy for a more distributed work environment and performance-focused culture.

• We have developed programs to ensure Sprout is a career accelerator for employees of all backgrounds, including our New Leader Training and Emerging Leaders Mentor Program (with focus on underrepresented talent seeking to move into leadership).

Both programs consistently experience strong employee participation.

Our Grow@ digital and on-demand platform provides education and development opportunities through internal programs and third party vendors.

The feedback we received regarding remote work continues to inform and shape our strategy for our future as a distributed and hybrid work environment as well as our performance-focused culture.

• We have developed programs designed to ensure Sprout is a career accelerator for employees of all backgrounds, including introducing our comprehensive leadership development program known as GOLD (Growth Oriented Leadership Development).

GOLD consists of three targeted programs.

Ignite focuses on new leaders including those new to the role of leadership itself or to leadership at Sprout.

Evolve is tailored towards experienced managers and directors, and Amplify (launching in 2022) is designed for our most senior leaders including members of our executive team.

In addition, our Grow@ digital and on-demand platform provides education and development opportunities through internal programs and third party vendors.

Diversity, Equity and Inclusion:

• As a step towards establishing future workforce goals, we released our first demographic report to provide transparency into where we stand, where we’ve progressed and where we need to improve in the areas of diversity, equity and inclusion.

We intend to report our progress against the initiatives identified on an ongoing basis.

• In August 2021, we released our second demographic report to provide transparency into where we stand, where we’ve progressed and where we need to improve in the areas of DEI.

We intend to continue to report our progress against the initiatives identified on an ongoing basis.

• We focused our sourcing efforts on underrepresented backgrounds and held our Recruitment Team accountable to prospecting diverse talent.

• We launched a program to encourage our hiring managers to proactively build diverse networks, adding hundreds of diverse prospects to our candidate pipelines.

• To ensure our employees support and help drive our Diversity, Equity, and Inclusion efforts, all new hires complete a two-part unconscious bias training as part of their onboarding.

• We encourage our employees to attend our monthly, employee-led DEI Guild meetings to discuss relevant topics such as the criminal justice system and voter suppression.

• To ensure our employees support and help drive our DEI efforts, all new hires participate in unconscious bias training as part of their onboarding.

• We encourage our employees to attend our monthly, employee-led DEI Guild meetings to discuss relevant topics such as centering marginalized voices within the queer community, ableism, and elevating women in the workplace.

We avoid scheduling any other meetings during this time so employees can prioritize DEI education.

• Our Business Resource Groups (BRGs), such as Black@, LGBTQ@, Women@, and Accessibility (A11y), provide space for team members to connect with those who share a common identity.

BRGs support business initiatives through four lenses:

culture, colleagues, commercial interests and community.

• Our Community Resource Groups (CRGs), such as Black@, LGBTQ@, Women@, and Accessibility (A11y), provide space for team members to connect with those who share a common identity.

CRGs are centered around common identities and life experiences.

These volunteer-led groups work to serve the unique needs of their community members and foster a sense of belonging through connection, support and empathy.

Each group works with an executive sponsor and presents their strategic plans to our Executive Team.

In 2021, we added two new CRGs, Veterans@ and Interfaith@, bringing the total number of CRGs to ten.

• Our Always Be Growing Enrichment Program is a leadership-sponsored program focused on investing additional instruction, education, and support to our Black, Indigenous, and People of Color employees who are individual contributors.

• We partner with community organizations like re:work, Chicago Scholars, and Black Girls Code to improve hiring, retention and promotion of underrepresented talent.

• We actively recruit from Historically Black Colleges and Universities, and Hispanic Serving Institutions, partnering with student organizations that serve traditionally underrepresented groups in tech.

• We partner with community organizations like re:work to improve hiring, retention and promotion of underrepresented talent.

• We actively recruit from Historically Black Colleges and Universities, and Hispanic Serving Institutions, including partnering with student organizations that serve traditionally underrepresented groups in tech.

In 2021, we partnered with the United Negro College Fund (UNCF) to create a scholarship program for Black/African American software engineering students.

Compensation, Benefits, and Employee Wellness:

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paid time off, family leave, flexible work schedules and 401(k) matching.

• Amidst the COVID-19 pandemic, we increased our confidential and comprehensive health and wellness offerings.

• In March 2020, we suspended office operations for all of our offices, following local and state-level recommendations, CDC and WHO guidance.

We provided a stipend to assist employees with covering costs for internet and home office equipment.

• In addition to providing employees tools through platforms like Modern Health and our Employee Assistance Program, in December 2020, our DEI Guild meeting topic was “How Mental Health Affects Us All,” providing a resource deck, reading and listening materials, community support, and points of contact for employees looking for education or additional support on mental health.

• As part of our progression towards a true hybrid work environment, we reopened our offices in 2021 on a voluntary basis to provide options to those who prefer or need an office based setting.

Numerous safety protocols were implemented to create a safe environment for those wishing to work within our office spaces.

We continue to provide a stipend to all new employees to ensure an optimal home setup.

In addition to providing employees tools through platforms like Modern Health and our Employee Assistance Program, in October 2021, our DEI Guild meeting topic was “Work Reset:

Redefining our Work Environment” providing employees the opportunity to hear from a best-selling author and psychotherapist on building resilience and combating burnout.

Our Website and Availability of SEC Reports and Other Information

11 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business