Exhibit 99.1
SharpSpring Reports Second Quarter 2018 Results
Quarter Highlighted by Continued Record Performances in Revenue and
New Customer Wins
GAINESVILLE, FL – August 2, 2018 – SharpSpring,
Inc. (NASDAQ: SHSP),
a leading cloud-based marketing automation platform, reported
financial results for the second quarter ended June 30,
2018.
Second Quarter 2018 Operational Highlights
●
Added 301 new
SharpSpring customers, who selected the platform to generate leads,
convert more leads to sales and measure the ROI of their marketing
campaigns.
●
Surpassed 1,500
agency customers and had 7,000 businesses using the flagship
SharpSpring platform.
●
Recognized as
“Marketing Automation Software Leader” by G2 Crowd
based on strong customer satisfaction scores and growth in market
share.
●
Strengthened the
Board of Directors with the appointment of Daniel Allen, who brings
significant investment, financial, and operational experience to
SharpSpring.
Second Quarter 2018 Financial Results
●
Flagship
SharpSpring product revenues grew 40% to a record $4.3 million from
$3.1 million in the same year-ago period.
●
Total revenue (which includes legacy products) increased
37% to a record $4.4 million from $3.2 million in the same year-ago
period.
●
Gross profit
increased to $2.9 million (66% of total revenue), compared to $2.0
million (60% of total revenue) in the
same year-ago period.
●
Net loss was $2.5
million, or $0.29 per share, compared to net loss of $1.3 million,
or $0.15 per share, in the second quarter of 2017.
●
Adjusted EBITDA
loss (a non-GAAP metric reconciled below) totaled $1.5 million,
compared to an adjusted EBITDA loss of $1.3 million in the same
year-ago period.
●
Core net loss (a
non-GAAP metric reconciled below) totaled $1.7 million, or $0.21
per share, compared to core net loss of $1.0 million, or $0.12 per
share, in the same year-ago period.
●
At quarter-end, the
company had $12.5 million in cash, which includes the benefit of a
net tax refund of $2.0 million received primarily related to net
operating loss (NOL) carrybacks.
Management Commentary
“The second quarter represented a continuation of the solid
progress we have made over the last year,” said SharpSpring
CEO Rick Carlson. “We acquired a record 301 new customers
during Q2, bringing SharpSpring’s total customer count to
over 1,500 digital marketing agencies and 7,000 businesses using
our platform. Our successes in adding new customers produced a 37%
year-over-year increase in our topline to a record $4.4
million.
1
“This acceleration of growth is a direct result of our
ongoing sales and marketing investment, which has been compounding
in value over time and should provide continued growth in the
coming quarters. Looking to the second half of the year, our
pipeline remains at record levels, providing significant
opportunities for expansion. We are working diligently to convert
these opportunities as well as increase our lead flow to drive
accelerated levels of new sales which will, in turn, lead to
increased revenues and long-term value creation for our
shareholders.”
Conference Call
SharpSpring
management will hold a conference call today August 2, 2018 at 4:30
p.m. Eastern time (1:30 p.m. Pacific time) to discuss these
results.
Company
CEO Rick Carlson and CFO Edward Lawton will host the call, followed
by a question and answer period.
U.S.
dial-in number: 877-407-9124
International
number: 201-689-8584
Please
call the conference telephone number 5-10 minutes prior to the
start time. An operator will register your name and organization.
If you have any difficulty connecting with the conference call,
please contact Liolios at 949-574-3860.
The conference call will be broadcast live and available for
replay here
and via the investor relations section
of the company’s website at investors.sharpspring.com.
A
replay of the conference call will be available after 7:30 p.m.
Eastern time on the same day through August 16, 2018.
Toll-free
replay number: 877-481-4010
International
replay number: 919-882-2331
Replay
Passcode: 33518
About SharpSpring, Inc.
SharpSpring, Inc. (NASDAQ:
SHSP) is a rapidly growing,
highly-rated global provider of affordable marketing automation
delivered via a cloud-based Software-as-a Service (SaaS) platform.
Thousands of businesses around the world rely on SharpSpring 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
monthly contracts at a fraction of the price of competitors making
it an easy choice for growing businesses and digital marketing
agencies. Learn more at
www.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 Forms 10-K and 10-Q
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:
Edward Lawton
Chief Financial Officer
617-500-0122
IR@sharpspring.com
Investor Relations:
Liolios
Matt Glover or Tom Colton
949-574-3860
SHSP@liolios.com
3
SharpSpring, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended
|
Six Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
Revenue
|
$4,442,289
|
$3,246,420
|
$8,626,952
|
$6,269,853
|
|
|
|
|
|
|
|
Cost
of services
|
1,507,362
|
1,294,944
|
2,907,659
|
2,566,265
|
|
Gross
profit
|
2,934,927
|
1,951,476
|
5,719,293
|
3,703,588
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Sales
and marketing
|
2,356,400
|
1,536,289
|
4,727,431
|
3,085,811
|
|
Research
and development
|
1,008,019
|
731,187
|
1,958,694
|
1,390,918
|
|
General
and administrative
|
1,424,404
|
1,231,708
|
2,850,638
|
2,587,906
|
|
Intangible
asset amortization
|
115,000
|
131,869
|
230,000
|
263,392
|
|
|
|
|
|
|
|
Total
operating expenses
|
4,903,823
|
3,631,053
|
9,766,763
|
7,328,027
|
|
|
|
|
|
|
|
Operating
loss
|
(1,968,896)
|
(1,679,577)
|
(4,047,470)
|
(3,624,439)
|
|
|
|
|
|
|
|
Other
income (expense), net
|
(338,431)
|
11,761
|
(269,803)
|
78,605
|
|
Change
in fair value of embedded derivative features
|
(453,449)
|
-
|
(453,449)
|
-
|
|
|
|
|
|
|
|
Loss
before income taxes
|
(2,760,776)
|
(1,667,816)
|
(4,770,722)
|
(3,545,834)
|
|
Benefit
from income taxes
|
(294,544)
|
(395,094)
|
(252,547)
|
(893,840)
|
|
|
|
|
|
|
|
Net
loss
|
$(2,466,232)
|
$(1,272,722)
|
$(4,518,175)
|
$(2,651,994)
|
|
|
|
|
|
|
|
Basic
net loss per share
|
$(0.29)
|
$(0.15)
|
$(0.53)
|
$(0.32)
|
|
Diluted
net loss per share
|
$(0.29)
|
$(0.15)
|
$(0.53)
|
$(0.32)
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
|
|
|
Basic
|
8,474,616
|
8,381,748
|
8,459,036
|
8,375,499
|
|
Diluted
|
8,474,616
|
8,381,748
|
8,459,036
|
8,375,499
|
4
SharpSpring, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
June 30,
|
December 31,
|
|
|
2018
|
2017
|
|
Assets
|
|
|
|
Cash
and cash equivalents
|
$12,536,507
|
$5,399,747
|
|
Accounts
receivable
|
689,272
|
639,959
|
|
Income
taxes receivable
|
207,678
|
2,132,616
|
|
Other
current assets
|
991,814
|
899,127
|
|
Total
current assets
|
14,425,271
|
9,071,449
|
|
|
|
|
|
Property
and equipment, net
|
825,547
|
799,145
|
|
Goodwill
|
8,864,710
|
8,872,898
|
|
Intangibles,
net
|
2,096,000
|
2,326,000
|
|
Deferred
income taxes
|
2,148
|
-
|
|
Other
long-term assets
|
607,777
|
612,631
|
|
Total
assets
|
$26,821,453
|
$21,682,123
|
|
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
|
Accounts
payable
|
$1,094,284
|
$504,901
|
|
Accrued
expenses and other current liabilities
|
595,197
|
625,680
|
|
Deferred
revenue
|
318,586
|
279,818
|
|
Income
taxes payable
|
81,045
|
171,384
|
|
Total
current liabilities
|
2,089,112
|
1,581,783
|
|
|
|
|
|
Deferred
income taxes
|
62,016
|
168,132
|
|
Convertible
notes, including accrued interest
|
8,155,146
|
-
|
|
Convertible
notes embedded derivative
|
267,579
|
-
|
|
Total
liabilities
|
10,573,853
|
1,749,915
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred
stock, $0.001 par value
|
-
|
-
|
|
Common
stock, $0.001 par value
|
8,528
|
8,456
|
|
Additional
paid in capital
|
29,080,351
|
28,362,397
|
|
Accumulated
other comprehensive loss
|
(365,220)
|
(480,762)
|
|
Accumulated
deficit
|
(12,392,059)
|
(7,873,883)
|
|
Treasury
stock
|
(84,000)
|
(84,000)
|
|
Total
shareholders' equity
|
16,247,600
|
19,932,208
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
$26,821,453
|
$21,682,123
|
5
SharpSpring, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ended
|
Six Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
Net
loss
|
$(2,466,232)
|
$(1,272,722)
|
$(4,518,175)
|
$(2,651,994)
|
|
|
|
|
|
|
|
Adjustments
to reconcile loss from operations:
|
|
|
|
|
|
Depreciation
and amortization
|
200,733
|
201,976
|
391,716
|
398,582
|
|
Non-cash
stock compensation
|
238,806
|
175,406
|
476,221
|
359,752
|
|
Deferred
income taxes
|
(129,061)
|
28,373
|
(108,265)
|
(1,185)
|
|
Non-cash
interest
|
100,000
|
-
|
104,301
|
-
|
|
Change
in fair value of embedded derivative features
|
453,449
|
-
|
453,449
|
-
|
|
Amortization
of debt issuance costs
|
6,359
|
-
|
6,632
|
-
|
|
Unearned
foreign currency gain/loss
|
217,308
|
14,120
|
167,912
|
(19,745)
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
Accounts
receivable
|
32,104
|
290,511
|
(52,793)
|
505,384
|
|
Other
assets
|
(56,352)
|
73,870
|
(89,343)
|
33,430
|
|
Income
taxes, net
|
1,734,309
|
(422,520)
|
1,838,379
|
(497,814)
|
|
Accounts
payable
|
(186,807)
|
(78,286)
|
564,696
|
77,185
|
|
Accrued
expenses and other current liabilities
|
30,250
|
(412,397)
|
(31,587)
|
(453,488)
|
|
Deferred
revenue
|
20,287
|
(37,648)
|
40,910
|
(37,987)
|
|
Net
cash used in operating activities
|
195,153
|
(1,439,317)
|
(755,947)
|
(2,287,880)
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
Purchases
of property and equipment
|
(115,298)
|
(49,544)
|
(188,118)
|
(133,331)
|
|
Acquisitions
of customer assets from resellers
|
-
|
(61,152)
|
-
|
(64,268)
|
|
Proceeds
from the sale of discontinued operations
|
-
|
1,000,000
|
-
|
1,000,000
|
|
Net
cash used in investing activities
|
(115,298)
|
889,304
|
(188,118)
|
802,401
|
|
|
|
|
|
|
|
Cash flows used in financing activities:
|
|
|
|
|
|
Proceeds
from issance of convertible note
|
-
|
-
|
8,000,000
|
-
|
|
Debt
issuance costs
|
-
|
-
|
(141,657)
|
-
|
|
Proceeds
from exercise of stock options
|
233,249
|
1,359
|
241,805
|
1,359
|
|
Net
cash provided by financing activities
|
233,249
|
1,359
|
8,100,148
|
1,359
|
|
|
|
|
|
|
|
Effect
of exchange rate on cash
|
(35,766)
|
22,630
|
(19,323)
|
35,641
|
|
|
|
|
|
|
|
Change
in cash and cash equivalents
|
$277,338
|
$(526,024)
|
$7,136,760
|
$(1,448,479)
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
$12,259,169
|
$7,728,919
|
$5,399,747
|
$8,651,374
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$12,536,507
|
$7,202,895
|
$12,536,507
|
$7,202,895
|
6
SharpSpring, Inc.
RECONCILIATION TO ADJUSTED EBITDA
(Unaudited, in Thousands)
|
|
Three Months Ended
|
Six Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
Net
loss
|
$(2,466)
|
$(1,273)
|
$(4,518)
|
$(2,652)
|
|
Benefit
from income taxes
|
(295)
|
(395)
|
(253)
|
(894)
|
|
Other
income (expense), net
|
338
|
(12)
|
270
|
(79)
|
|
Change
in fair value of embedded derivative features
|
453
|
-
|
453
|
-
|
|
Depreciation
& amortization
|
201
|
202
|
392
|
399
|
|
Non-cash
stock compensation
|
239
|
175
|
476
|
360
|
|
Acquistion-related
charges
|
-
|
30
|
-
|
30
|
|
Adjusted EBITDA
|
(1,530)
|
(1,273)
|
(3,180)
|
(2,836)
|
SharpSpring, Inc.
RECONCILIATION TO CORE NET LOSS AND CORE LOSS PER
SHARE
(Unaudited, in Thousands)
|
|
Three Months Ended
|
Six Months Ended
|
||
|
|
June 30,
|
June 30,
|
||
|
|
2018
|
2017
|
2018
|
2017
|
|
Net
loss
|
$(2,466)
|
$(1,273)
|
$(4,518)
|
$(2,652)
|
|
Amortization
of intangible assets
|
115
|
132
|
230
|
263
|
|
Non-cash
stock compensation
|
239
|
175
|
476
|
360
|
|
Acquistion-related
charges
|
-
|
30
|
-
|
30
|
|
Change
in fair value of embedded derivative features
|
453
|
-
|
453
|
-
|
|
Tax
adjustment
|
(86)
|
(79)
|
(79)
|
(158)
|
|
Core net loss from operations
|
$(1,745)
|
$(1,015)
|
$(3,438)
|
$(2,157)
|
|
|
|
|
|
|
|
Core net loss per share from operations
|
$(0.21)
|
$(0.12)
|
$(0.41)
|
$(0.26)
|
|
Weighted
average common shares outstanding
|
8,475
|
8,382
|
8,459
|
8,375
|
7