EX-99.1 3 shsp_ex991.htm PRESS RELEASE Blueprint
Exhibit 99.1 
SharpSpring Reports Third Quarter 2018 Results
 
Continued Operational and Financial Outperformance Leads to Record New Customer Wins and Record Revenue
 
GAINESVILLE, FL – November 7, 2018 – SharpSpring, Inc. (NASDAQ: SHSP), a leading cloud-based marketing automation platform, reported financial results for the third quarter ended September 30, 2018.
 
Third Quarter 2018 Operational Highlights
●
Added a record 346 new SharpSpring customers, who selected the platform to generate leads, convert more leads to sales and measure the ROI of their marketing campaigns.
 
●
Finished the quarter with 1,605 agency customers and 7,000 businesses using the flagship SharpSpring platform.
 
●
Recognized as the #1 “Marketing Automation Category Leader” for Q3 2018 by GetApp, a business software review platform.
 
●
Recognized as the 2018 “Top Rated Supplier” by WSI, the world’s largest network of digital marketing consultants.
 
Third Quarter 2018 Financial Results
●
Flagship SharpSpring product revenues grew 48% to a record $4.8 million from $3.2 million in the same year-ago period.
 
●
Total revenue (which includes legacy products) increased 43% to a record $4.9 million from $3.4 million in the same year-ago period.
 
●
Gross profit increased 54% to $3.4 million (70% of total revenue) from $2.2 million (65% of total revenue) in the same year-ago period.
 
●
Net loss was $2.7 million, or $0.32 per share, compared to net loss of $1.6 million, or $0.19 per share, in the third quarter of 2017.
 
●
Adjusted EBITDA loss (a non-GAAP metric reconciled below) totaled $1.5 million, compared to an adjusted EBITDA loss of $1.25 million in the same year-ago period.
 
●
Core net loss (a non-GAAP metric reconciled below) totaled $1.9 million, or $0.22 per share, compared to core net loss of $1.2 million, or $0.15 per share, in the same year-ago period.
 
●
At quarter-end, the company had $11.2 million in cash, compared to $5.4 million at December 31, 2017.
 
 
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Management Commentary
“The third quarter was an extension of the superior performance we’ve demonstrated throughout 2018 and even into the end of last year," said SharpSpring CEO Rick Carlson. “Financially, we grew our topline 43%, which was driven by the continued strength of our flagship marketing automation platform, which grew by 48% during the period. Due to the inherent leverage in our operating model, our success has led to additional positive downstream effects, most notably through our expanded gross margins, which reached 70% in the third quarter.
 
“Operationally, we secured a record 346 new SharpSpring customers. SharpSpring now has 1,605 agency customers and 7,000 businesses using our platform. This consistent and accelerating growth remains driven by our ongoing efforts geared toward our sales and marketing engine, which continues to fire on all cylinders. Given the attractive low acquisition costs we enjoy relative to the lifetime value that customers generate, we plan to continue allocating resources to this major growth engine through the remainder of the year and into 2019. Looking ahead, we remain in prime positioning to continue on our current growth trajectory, which we believe will lead to greater recurring revenue streams, and, ultimately, value for our shareholders.”
 
Subsequent Events
SharpSpring also announced today that Chief Financial Officer Ed Lawton will step down from his current position in early December and will be replaced by Brad Stanczak. Lawton, who has commuted regularly from New England to Florida for the past four years, has agreed to step aside so that the Company can bring in a Chief Financial Officer located full time at the Company’s headquarters in Florida.
 
“Ed has played an integral role in the history of SharpSpring, helping to bring the company to the position of strength it now occupies,” added Carlson. “With SharpSpring's continued growth and expansion, both Ed and I mutually agreed that the company needed its CFO to be based in Gainesville full-time to handle the increasing duties of the role. We respect Ed's decision to put his family first by staying in New England and appreciate his many efforts and contributions to SharpSpring over the years. We wish him all the best in his future endeavors.”
 
Lawton added: “I’m proud to have been a part of SharpSpring’s growth and development into the business it is today, and I would like to thank Rick and the board for supporting my decision. The company is in the best position it’s ever been, and I am confident in the leadership team’s ability to guide SharpSpring through many additional years of success and prosperity.”
 
Carlson continued, “We are excited to have Brad Stanczak join the company as CFO next month. Brad brings a wealth of experience to the role, most recently as VP of Finance and Accounting with Resonate. We look forward to having Brad join the team and contribute to the company’s growth.”
 
 
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Conference Call
SharpSpring management will hold a conference call today November 7, 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 November 21, 2018.
 
Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: #37661
 
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
 
 
4
 
 
 
 
SharpSpring, Inc.
 
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2018
 
 
2017
 
 
2018
 
 
2017
 
Revenue
 $4,873,329 
 $3,411,580 
 $13,500,281 
 $9,681,433 
 
    
    
    
    
Cost of services
  1,472,410 
  1,210,088 
  4,380,069 
  3,776,353 
Gross profit
  3,400,919 
  2,201,492 
  9,120,212 
  5,905,080 
 
    
    
    
    
Operating expenses:
    
    
    
    
Sales and marketing
  2,640,697 
  1,702,221 
  7,368,128 
  4,788,032 
Research and development
  1,106,995 
  703,392 
  3,065,689 
  2,094,310 
General and administrative
  1,518,106 
  1,353,972 
  4,368,744 
  3,941,878 
Non-employee stock issuance expense
  508,561 
  - 
  508,561 
  - 
Intangible asset amortization
  115,000 
  132,298 
  345,000 
  395,690 
 
    
    
    
    
Total operating expenses
  5,889,359 
  3,891,883 
  15,656,122 
  11,219,910 
 
    
    
    
    
Operating loss
  (2,488,440)
  (1,690,391)
  (6,535,910)
  (5,314,830)
 
    
    
    
    
Other income (expense), net
  (243,956)
  (2,708)
  (513,759)
  75,897 
Change in fair value of embedded derivative features
  27,295 
  - 
  (426,154)
  - 
 
    
    
    
    
Loss before income taxes
  (2,705,101)
  (1,693,099)
  (7,475,823)
  (5,238,933)
Income tax expense (benefit)
  5,130 
  (111,059)
  (247,415)
  (1,004,899)
 
    
    
    
    
Net loss
 $(2,710,231)
 $(1,582,040)
 $(7,228,408)
 $(4,234,034)
 
    
    
    
    
Basic net loss per share
 $(0.32)
 $(0.19)
 $(0.85)
 $(0.51)
Diluted net loss per share
 $(0.32)
 $(0.19)
 $(0.85)
 $(0.51)
 
    
    
    
    
Weighted average common shares outstanding
    
    
    
    
Basic
  8,530,858 
  8,399,920 
  8,482,976 
  8,383,639 
Diluted
  8,530,858 
  8,399,920 
  8,482,976 
  8,383,639 
 
 
5
 
 
 
SharpSpring, Inc.
 
 
CONSOLIDATED BALANCE SHEETS
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
September 30,
 
 
December 31,
 
 
 
2018
 
 
2017
 
Assets
 
 
 
 
 
 
Cash and cash equivalents
 $11,183,784 
 $5,399,747 
Accounts receivable
  741,160 
  639,959 
Income taxes receivable
  2,109 
  2,132,616 
Other current assets
  1,081,498 
  899,127 
Total current assets
  13,008,551 
  9,071,449 
 
    
    
Property and equipment, net
  908,165 
  799,145 
Goodwill
  8,867,319 
  8,872,898 
Intangibles, net
  1,981,000 
  2,326,000 
Other long-term assets
  644,321 
  612,631 
Total assets
 $25,409,356 
 $21,682,123 
 
    
    
Liabilities and Shareholders' Equity
    
    
Accounts payable
 $1,196,504 
 $504,901 
Accrued expenses and other current liabilities
  639,883 
  625,680 
Deferred revenue
  338,419 
  279,818 
Income taxes payable
  87,565 
  171,384 
Total current liabilities
  2,262,371 
  1,581,783 
 
    
    
Deferred income taxes
  14,229 
  168,132 
Convertible notes, including accrued interest
  8,261,505 
  - 
Convertible notes embedded derivative
  240,284 
  - 
Total liabilities
  10,778,389 
  1,749,915 
 
    
    
Shareholders' equity:
    
    
Preferred stock, $0.001 par value
  - 
  - 
Common stock, $0.001 par value
  8,609 
  8,456 
Additional paid in capital
  30,045,943 
  28,362,397 
Accumulated other comprehensive loss
  (237,294)
  (480,762)
Accumulated deficit
  (15,102,291)
  (7,873,883)
Treasury stock
  (84,000)
  (84,000)
Total shareholders' equity
  14,630,967 
  19,932,208 
 
    
    
Total liabilities and shareholders' equity
 $25,409,356 
 $21,682,123 
 
 
6
 
 
 
SharpSpring, Inc.
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2018
 
 
2017
 
 
2018
 
 
2017
 
Net loss
 $(2,710,231)
 $(1,582,040)
 $(7,228,408)
 $(4,234,034)
 
    
    
    
    
Adjustments to reconcile loss from operations:
    
    
    
    
Depreciation and amortization
  240,416 
  204,198 
  632,132 
  602,780 
Non-cash stock compensation
  234,659 
  199,685 
  710,879 
  559,437 
Non-employee stock issuance expense
  508,561 
  - 
  508,561 
  - 
Deferred income taxes
  (45,625)
  25,960 
  (153,890)
  24,775 
(Gain)/loss on disposal of property and equipment
  - 
  3,481 
  - 
  3,481 
Non-cash interest
  100,000 
  - 
  204,301 
  - 
Change in fair value of embedded derivative features
  (27,295)
  - 
  426,154 
  - 
Amortization of debt issuance costs
  6,359 
  - 
  12,991 
  - 
Unearned foreign currency gain/loss
  122,475 
  72,091 
  290,386 
  52,346 
Changes in assets and liabilities:
    
    
    
    
Accounts receivable
  (50,670)
  112,756 
  (103,463)
  618,140 
Other assets
  (126,547)
  (168,539)
  (215,890)
  (134,162)
Income taxes, net
  211,913 
  (181,536)
  2,050,292 
  (680,297)
Accounts payable
  104,774 
  289,284 
  669,474 
  366,469 
Accrued expenses and other current liabilities
  59,370 
  130,110 
  27,784 
  (323,378)
Deferred revenue
  19,063 
  24,894 
  59,972 
  (13,093)
Net cash used in operating activities
  (1,352,778)
  (869,656)
  (2,108,725)
  (3,157,536)
 
    
    
    
    
Cash flows from investing activities
    
    
    
    
Purchases of property and equipment
  (208,035)
  (15,224)
  (396,153)
  (148,555)
Acquisitions of customer assets from resellers
  - 
  - 
  - 
  (64,268)
Proceeds from the sale of discontinued operations
  - 
  - 
  - 
  1,000,000 
Net cash provided by (used in) investing activities
  (208,035)
  (15,224)
  (396,153)
  787,177 
 
    
    
    
    
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
  207,455 
  17,500 
  449,259 
  18,859 
Net cash provided by financing activities
  207,455 
  17,500 
  8,307,602 
  18,859 
 
    
    
    
    
Effect of exchange rate on cash
  635 
  (18,632)
  (18,687)
  17,009 
 
    
    
    
    
Change in cash and cash equivalents
 $(1,352,723)
 $(886,012)
 $5,784,037 
 $(2,334,491)
 
    
    
    
    
Cash and cash equivalents, beginning of period
 $12,536,507 
 $7,202,895 
 $5,399,747 
 $8,651,374 
 
    
    
    
    
Cash and cash equivalents, end of period
 $11,183,784 
 $6,316,883 
 $11,183,784 
 $6,316,883 
 
 
7
 
 
 
SharpSpring, Inc.
 
 
RECONCILIATION TO ADJUSTED EBITDA
 
 
(Unaudited, in Thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2018
 
 
2017
 
 
2018
 
 
2017
 
Net loss
 $(2,710)
 $(1,582)
 $(7,228)
 $(4,234)
Income tax expense (benefit)
  5 
  (111)
  (247)
  (1,005)
Other income (expense), net
  244 
  3 
  514 
  (76)
Change in fair value of embedded derivative features
  (27)
  - 
  426 
  - 
Depreciation & amortization
  240 
  204 
  632 
  603 
Non-cash stock compensation
  235 
  200 
  711 
  559 
Non-employee stock issuance expense
  509 
  - 
  509 
  - 
Acquisition related charges
  - 
  38 
  - 
  68 
Adjusted EBITDA
  (1,504)
  (1,248)
  (4,683)
  (4,085)
 
 
SharpSpring, Inc.
 
 
RECONCILIATION TO CORE NET LOSS AND CORE NET LOSS PER SHARE
 
 
(Unaudited, in Thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
Nine Months Ended
 
 
 
September 30,
 
 
September 30,
 
 
 
2018
 
 
2017
 
 
2018
 
 
2017
 
Net loss
 $(2,710)
 $(1,582)
 $(7,228)
 $(4,234)
Amortization of intangible assets
  115 
  132 
  345 
  396 
Non-cash stock compensation
  235 
  200 
  711 
  559 
Non-employee stock issuance expense
  509 
  - 
  509 
  - 
Change in fair value of embedded derivative features
  (27)
  - 
  426 
  - 
Acquisition related charges
  - 
  38 
  - 
  68 
Tax adjustment
  2 
  (23)
  (77)
  (181)
Core net loss
 $(1,876)
 $(1,235)
 $(5,314)
 $(3,392)
 
    
    
    
    
Core net loss per share
 $(0.22)
 $(0.15)
 $(0.63)
 $(0.40)
Weighted average common shares outstanding
  8,531 
  8,400 
  8,483 
  8,384 
 
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