EX-99.1 2 shsp_ex991.htm PRESS RELEASE shsp_ex991.htm

 EXHIBIT 99.1

 

SharpSpring Reports Second Quarter 2021 Results

 

Strategic Acquisition by Clearlake Capital and Siris-Backed Constant Contact to Maximize Growth and Audience Engagement for Small Businesses

 

GAINESVILLE, FL – August 12, 2021 – SharpSpring, Inc. (NASDAQ: SHSP), a leading cloud-based revenue growth platform, reported financial results for the second quarter ended June 30, 2021.  

 

Recent Operational Highlights

 

·

 Signed definitive agreement to be acquired by Clearlake Capital and Siris-backed Constant Contact, an established leader in online marketing. Under the terms of the agreement, Constant Contact will acquire all the outstanding common stock of SharpSpring for $17.10 per share in cash. The transaction is expected to close in the third quarter of 2021 subject to customary closing conditions including a SharpSpring stockholder approval.

 

 

 

 

·

 Appointed marketing technology leader Suaad Sait as President. Sait brings an extensive background leading product, engineering, and marketing at high-growth SaaS companies.

 

 

 

 

·

 Appointed senior finance executive and capital markets veteran Jason Costi to Board of Directors, who has also been named a member of the Company’s Audit, Nominating and Corporate Governance Committees.

 

Second Quarter 2021 Key Performance Indicators (KPIs)

 

·

 Total monthly recurring revenue (MRR) from new customers in the second quarter of 2021 was approximately $100,000 compared to $159,000 in the second quarter of 2020 and $100,000 in the first quarter of 2021.

 

 

 

 

·

 New customer additions are expected to generate approximately $1.2 million in annual recurring revenue (ARR).

 

 

 

 

·

 Finished the quarter with approximately 1,900 agency customers, over 500 direct customers, and more than 10,000 total businesses across all SharpSpring sales and marketing platforms including SharpSpring Ads and legacy products.

 

 

 

 

·

 Average monthly logo attrition in the second quarter of 2021 improved to 2.4% compared to 4.31% in the second quarter of 2020.

 

 

 

 

·

 On a year-over-year basis, Q2 2021 net revenue retention was 92.5%, a decrease from 94.4% in Q1 2021.

 

 
1

 

 

Second Quarter 2021 Financial Results

 

·

 Total revenue increased 11% to a record $8.1 million from $7.3 million in the same year-ago period.

 

 

 

 

·

 Gross profit increased 13% to a record $ 6.1 million (76% of total revenue) from $--5.4 million (74% of total revenue) in the same year-ago period.

 

 

 

 

·

 Net loss was $354,000, or $0.03 per share, compared to net loss of $970,000, or $0.08 per share, in the same year-ago period.

 

 

 

 

·

 Adjusted EBITDA loss (a non-GAAP metric reconciled below) totaled $2.1 million, compared to an adjusted EBITDA loss of $122,000 in the same year-ago period.

 

 

 

 

·

 Core net loss (a non-GAAP metric reconciled below) totaled $2.6 million or $0.20 per share, compared to core net loss of $381,000, or $0.03 per share, in the same year-ago period.

 

 

 

 

·

 At quarter-end, the Company had $25.2 million in cash, compared to $28.3 million at December 31, 2020.

 

Conference Call

Due to the Company’s entry into the agreement and plan of merger previously announced on June 22, 2021, SharpSpring will only be issuing a press release and will not be conducting a conference call.

 

About SharpSpring, Inc.

SharpSpring, Inc. (NASDAQ: SHSP) is a rapidly growing, highly-rated, global and affordable revenue growth platform delivered via a cloud-based Software-as-a-Service (SaaS) solution. More than 10,000 businesses around the world rely on SharpSpring platforms to generate leads, improve conversions to sales, and drive higher returns on marketing investments. Known for its innovation, open architecture and free customer support, SharpSpring offers flexible contracts at a fraction of the price of competitors making it an easy choice for growing businesses and digital marketing agencies. Learn more at sharpspring.com.

 

Non-GAAP Financial Measures

Adjusted EBITDA, core net loss and core net loss per share are "non-GAAP financial measures" presented as supplemental measures of the Company’s performance. These metrics are not presented in accordance with United States generally accepted accounting principles, or GAAP. The Company believes these measures provide additional meaningful information in evaluating its performance over time. However, the measures have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. A reconciliation of net loss to these measures is included for your reference in the financial section of this earnings press release.

 

 
2

 

 

Important Cautions Regarding Forward-Looking Statements

The information posted in this release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can identify these statements by use of the words “may,” “will,” “should,” “plans,” “explores,” “expects,” “anticipates,” “continues,” “estimates,” “projects,” “intends,” and similar expressions. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, but are not limited to, general economic and business conditions, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing new customer offerings, changes in customer order patterns, changes in customer offering mix, continued success in technological advances and delivering technological innovations, our ability to successfully utilize our cash to develop current and future products, delays due to issues with outsourced service providers, those events and factors described by us in Item 1. A “Risk Factors” in our most recent Form 10-K, and other risks to which our Company is subject, and various other factors beyond the Company’s control. Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

 

Company Contact:

Aaron Jackson

Chief Financial Officer

Phone: 352-448-0967

Email: IR@sharpspring.com

 

Investor Relations:

Gateway Investor Relations

Matt Glover or Tom Colton

Phone: 949-574-3860

Email: SHSP@gatewayir.com

 

 
3

 

 

SharpSpring, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

 8,106,243

 

 

 $ 7,270,905

 

 

 $ 16,095,473

 

 

 $ 14,323,634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services

 

$

 1,984,662

 

 

 $ 1,873,029

 

 

 

 3,874,675

 

 

 $ 4,240,671

 

Gross profit

 

 

 6,121,581

 

 

 

 5,397,876

 

 

 

 12,220,798

 

 

 

 10,082,963

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

 3,915,096

 

 

 

 2,395,100

 

 

 

 7,706,478

 

 

 

 5,429,222

 

Research and development

 

 

 2,111,540

 

 

 

 1,484,890

 

 

 

 4,227,280

 

 

 

 3,063,029

 

General and administrative

 

 

 3,522,971

 

 

 

 2,244,560

 

 

 

 6,294,610

 

 

 

 4,658,401

 

Intangible asset amortization

 

 

 171,549

 

 

 

 183,746

 

 

 

 343,098

 

 

 

 336,547

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

 9,721,156

 

 

 

 6,308,296

 

 

 

 18,571,466

 

 

 

 13,487,199

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Operating loss

 

 

 (3,599,575 )

 

 

 (910,420 )

 

 

 (6,350,668 )

 

 

 (3,404,236 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

 (21,354 )

 

 

 (2,777 )

 

 

 (14,519 )

 

 

 (59,556 )

Gain on extinguishment of debt

 

 

 3,271,101

 

 

 

 -

 

 

 

 3,438,077

 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

 

 (349,828 )

 

 

 (913,197 )

 

 

 (2,927,110 )

 

 

 (3,463,792 )

Provision (benefit)  for income taxes

 

 

 3,947

 

 

 

 57,187

 

 

 

 10,520

 

 

 

 (1,505,331 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

 (353,775 )

 

$ 

 (970,384 )

 

$

 (2,937,630 )

 

$

 (1,958,461 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

 $ (0.03 )

 

 $ (0.08 )

 

 $ (0.23 )

 

 $ (0.17 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, basic and diluted

 

 

 12,852,131

 

 

 

 11,529,324

 

 

 

 12,833,148

 

 

 

 11,525,258

 

 

 
4

 

 

SharpSpring, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

June 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

 25,157,240

 

 

 $ 28,267,792

 

Accounts receivable

 

 

 300,149

 

 

 

 323,130

 

Unbilled receivables

 

 

 1,265,527

 

 

 

 1,248,060

 

Income taxes receivable

 

 

 143,498

 

 

 

 54,449

 

Other current assets

 

 

 1,293,952

 

 

 

 1,433,543

 

Total current assets

 

 

 28,160,366

 

 

 

 31,326,974

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

 1,861,067

 

 

 

 2,188,948

 

Goodwill

 

 

 10,230,917

 

 

 

 10,250,088

 

Intangibles, net

 

 

 3,672,753

 

 

 

 4,015,851

 

Right-of-use assets

 

 

 7,934,913

 

 

 

 8,352,028

 

Other long-term assets

 

 

 584,435

 

 

 

 611,857

 

Total assets

 

$

 52,444,451

 

 

 $ 56,745,746

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$ 

 964,933

 

 

 $ 1,074,594

 

Accrued expenses and other current liabilities

 

 

 2,242,981

 

 

 

 1,259,836

 

Line of credit

 

 

 1,900,000

 

 

 

 1,900,000

 

Deferred revenue

 

 

 862,767

 

 

 

 845,265

 

Income taxes payable

 

 

 23,755

 

 

 

 81,221

 

Lease liability, current portion

 

 

 748,499

 

 

 

 724,627

 

Notes payable, current portion

 

 

 -

 

 

 

 2,630,962

 

Total current liabilities

 

 

 6,742,935

 

 

 

 8,516,505

 

 

 

 

 

 

 

 

 

 

Lease liability, net of current portion

 

 

 7,358,118

 

 

 

 7,771,898

 

Notes payable, net of current portion

 

 

 -

 

 

 

 768,538

 

Total liabilities

 

 

 14,101,053

 

 

 

 17,056,941

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value

 

 

 -

 

 

 

 -

 

Common stock, $0.001 par value

 

 

 12,902

 

 

 

 12,819

 

Additional paid in capital

 

 

 77,141,573

 

 

 

 75,544,966

 

Accumulated other comprehensive loss

 

 

 (219,736 )

 

 

 (215,269 )

Accumulated deficit

 

 

 (38,507,341 )

 

 

 (35,569,711 )

Treasury stock

 

 

 (84,000 )

 

 

 (84,000 )

Total shareholders' equity

 

 

 38,343,398

 

 

 

 39,688,805

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

 52,444,451

 

 

 $ 56,745,746

 

 

 
5

 

 

SharpSpring, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

 (353,775 )

 

 $ (970,384 )

 

 $ (2,937,630 )

 

 $ (1,958,461 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to reconcile loss from operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

 597,230

 

 

 

 417,560

 

 

 

 1,041,311

 

 

 

 774,140

 

Gain on extinguishment of debt

 

 

 (3,271,101 )

 

 

 -

 

 

 

 (3,438,077 )

 

 

 -

 

Amortization of costs to acquire contracts

 

 

 203,009

 

 

 

 202,329

 

 

 

 407,282

 

 

 

 404,767

 

Non-cash stock compensation

 

 

 582,820

 

 

 

 370,418

 

 

 

 1,138,405

 

 

 

 741,051

 

Loss on disposal of property and equipment

 

 

 1,773

 

 

 

 -

 

 

 

 3,299

 

 

 

 -

 

Unrealized foreign currency (gain) loss

 

 

 1,704

 

 

 

 29,201

 

 

 

 (45,204 )

 

 

 109,928

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 -

 

Accounts receivable

 

 

 67,482

 

 

 

 (20,988 )

 

 

 20,362

 

 

 

 (106,260 )

Unbilled receivables

 

 

 4,081

 

 

 

 (40,819 )

 

 

 (27,704 )

 

 

 (133,315 )

Right-of-use assets

 

 

 210,137

 

 

 

 (3,069,671 )

 

 

 417,115

 

 

 

 (3,475,390 )

Other assets

 

 

 (46,303 )

 

 

 63,772

 

 

 

 (239,733 )

 

 

 (279,099 )

Income taxes, net

 

 

 (151,437 )

 

 

 1,596,583

 

 

 

 (144,864 )

 

 

 33,639

 

Accounts payable

 

 

 86,004

 

 

 

 (1,010,945 )

 

 

 (108,933 )

 

 

 (120,934 )

Lease liabilities

 

 

 (196,534 )

 

 

 3,090,202

 

 

 

 (389,909 )

 

 

 3,511,291

 

Accrued expenses and other current liabilities

 

 

 588,966

 

 

 

 106,198

 

 

 

 975,631

 

 

 

 (288,041 )

Deferred revenue

 

 

 (91,145 )

 

 

 (107,604 )

 

 

 20,294

 

 

 

 (201,893 )

Net cash provided by (used in) operating activities

 

 

 (1,767,089 )

 

 

 650,348

 

 

 

 (3,308,355 )

 

 

 (994,081 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

 (139,457 )

 

 

 (211,970 )

 

 

 (169,328 )

 

 

 (352,900 )

Capitalization of software development costs

 

 

 (136,728 )

 

 

 (151,842 )

 

 

 (204,302 )

 

 

 (424,124 )

Net cash used in investing activities

 

 

 (276,185 )

 

 

 (363,812 )

 

 

 (373,630 )

 

 

 (777,024 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows used in financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from line of credit

 

 

 -

 

 

 

 

 

 

 

 -

 

 

 

 1,900,000

 

Proceeds from note payable

 

 

 -

 

 

 

 3,399,500

 

 

 

 -

 

 

 

 3,399,500

 

Proceeds from exercise of stock options, net

 

 

 321,950

 

 

 

 12,288

 

 

 

 502,037

 

 

 

 23,462

 

Payments for taxes related to net share settlement of equity awards

 

 

 (11,234 )

 

 

 (1,869 )

 

 

 (36,252 )

 

 

 (28,402 )

Net cash provided by financing activities

 

 

 310,716

 

 

 

 3,409,919

 

 

 

 465,785

 

 

 

 5,294,560

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate on cash

 

 

 29,863

 

 

 

 (34,609 )

 

 

 105,648

 

 

 

 (118,509 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

$

 (1,702,695 )

 

$

 3,661,846

 

 

$

 (3,110,552 )

 

$

 3,404,946

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

$

 26,859,935

 

 

$

 11,625,049

 

 

$

 28,267,792

 

 

$

 11,881,949

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

 25,157,240

 

 

$

 15,286,895

 

 

 

 25,157,240

 

 

$

 15,286,895

 

 

 
6

 

 

SharpSpring, Inc.

RECONCILIATION TO ADJUSTED EBITDA

(Unaudited, in Thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

 (354 )

 

 $ (970 )

 

 $ (2,938 )

 

 $ (1,958 )

Provision (benefit)  for income taxes

 

 

 4

 

 

 

 57

 

 

 

 11

 

 

 

 (1,505 )

Other (income) expense, net

 

 

 21

 

 

 

 3

 

 

 

 15

 

 

 

 60

 

Gain on extinguishment of debt

 

 

 (3,271 )

 

 

 -

 

 

 

 (3,438 )

 

 

 -

 

Depreciation & amortization

 

 

 597

 

 

 

 418

 

 

 

 1,041

 

 

 

 774

 

Non-cash stock compensation

 

 

 583

 

 

 

 370

 

 

 

 1,138

 

 

 

 741

 

Restructuring

 

 

 273

 

 

 

 -

 

 

 

 273

 

 

 

 -

 

Adjusted EBITDA

 

$

 (2,147 )

 

$ 

 (122 )

 

$

 (3,898 )

 

$

 (1,888 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SharpSpring, Inc.

RECONCILIATION TO CORE NET LOSS AND CORE NET LOSS PER SHARE

(Unaudited, in Thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Net loss

 

$

 (354 )

 

 $ (970 )

 

 $ (2,938 )

 

 $ (1,958 )

Amortization of intangible assets

 

 

 172

 

 

 

 184

 

 

 

 343

 

 

 

 337

 

Non-cash stock compensation

 

 

 583

 

 

 

 370

 

 

 

 1,138

 

 

 

 741

 

Gain on extinguishment of debt

 

 

 (3,271 )

 

 

 -

 

 

 

 (3,438 )

 

 

 -

 

Restructuring

 

 

 273

 

 

 

 -

 

 

 

 273

 

 

 

 -

 

Tax adjustment

 

 

 (4 )

 

 

 35

 

 

 

 (6 )

 

 

 (112 )

Core net loss

 

$

 (2,601 )

 

$ 

 (381 )

 

 $ (4,628 )

 

 $ (992 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core net loss per share

 

 $ (0.20 )

 

 $ (0.03 )

 

 $ (0.36 )

 

 $ (0.09 )

Weighted average common shares outstanding

 

 

 12,852

 

 

 

 11,529

 

 

 

 12,833

 

 

 

 11,525

 

 

 

7