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