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8-K - CURRENT REPORT - SharpSpring, Inc.smtp_8k.htm


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EXHIBIT 99.1


SMTP, INC. REPORTS FIRST QUARTER 2015 FINANCIAL RESULTS


NASHUA, N.H., May 11, 2015 – SMTP, Inc. (NASDAQ: SMTP), a global provider of cloud-based email marketing technologies, today reported its financial results for the first quarter ended March 31, 2015.


First Quarter Financial Highlights


·

Revenues for the first quarter 2015 were $3.3 million, a 120% increase, compared to $1.5 million for the first quarter 2014;

·

Gross profit for the first quarter 2015 was $2.5 million, or 76% of revenue, compared to $1.2 million, or 78% of revenue, for the first quarter of 2014;

·

Net loss for the first quarter 2015 was $1.2 million, compared to net income of $0.2 million for the same period last year;

·

The net loss in the first quarter of 2015 included acquisition-related charges of $0.8 million, amortization of intangible assets of $0.4 million and stock compensation of $0.2 million, compared to stock compensation of $0.2 million in the first quarter of 2014;

·

Adjusted EBITDA was a loss of $0.1 million, in part due to one-time costs associated with kicking off international sales of SharpSpring and higher commissions on new SharpSpring sales during the period; and

·

Core net loss was $0.2 million, or core loss per share of $0.03 for the first quarter of 2015. Core results exclude acquisition-related costs, stock compensation expenses and restructuring expenses, adjusted for taxes, as detailed in the reconciliation below.


Recent Operational Highlights


·

Added over $1 million in new annual recurring revenue to the SharpSpring platform during Q1, showing 45% growth from last quarter and 120% growth in bookings compared to Q3;

·

Announced we are on track to achieve or exceed the target of having $5 million of revenue under contract for SharpSpring by the end of 2015, which would be five times the level of revenue under contract at the time SharpSpring was acquired in August 2014;

·

Successfully integrated SMTPs email delivery capabilities into the GraphicMail and SharpSpring sending platforms, allowing customers to benefit from improved deliverability of emails; and

·

Announced SharpSpring had achieved a major milestone in January 2015 by surpassing 1,000 companies using its advanced marketing automation platform.


We had a strong start to the year and saw our acquisition strategy gain real traction in the market on a domestic and international scale. During the first quarter, we had tremendous success selling our SharpSpring solution to both marketing agencies and end customers, with over $1 million of new annual recurring revenues added this quarter alone,” said Jonathan Strimling, CEO of SMTP. “We are now reaching larger, higher-value customers and our international sales channel is just beginning to ramp up. We also expect revenues per customer to grow over time for both new and existing customers. Although Q1 is a seasonally weaker quarter for the GraphicMail product and our relay businesses, and we experienced some currency headwinds in Q1 related to our international operations, we are pleased with the results of the quarter and look forward to capitalizing on the significant growth opportunities in front of us.”






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Investor Conference Call


SMTP management will host its first quarter 2015 earnings conference call today, May 11, 2015, at 9 a.m. ET. Investors interested in participating on the live call can dial (877) 407-8133 within the U.S. or (201) 689-8040 from abroad. Investors can also access the call online through a listen-only webcast on SMTP’s website at http://investors.smtp.com/.


The webcast will be archived on the SMTP investor relations website at http://investors.smtp.com/ for 90 days and a telephonic playback of the conference call will be available by calling (877) 660-6853 within the U.S. and (201) 612-7415 from abroad. The telephonic playback will be available beginning at 12:00 p.m. ET on, May 11, 2015, and continuing through 11:59 p.m. ET on Thursday, May 25, 2015. The replay passcode is 13608990.


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 accounting principles generally accepted in the United States, 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 income (loss) to these measures is included for your reference in the financial section of this earnings press release.


About SMTP, Inc.

SMTP, Inc. (NASDAQ: SMTP) is a global provider of cloud-based marketing solutions ranging from sophisticated marketing automation (via subsidiary SharpSpring) to comprehensive email and mobile marketing (via subsidiary GraphicMail) and scalable, cost-effective email deliverability services. The company’s product family is hallmarked by its flexible architecture, ease-of-use and cost-effectiveness. SMTP augments its industry-leading technology with high-quality, multilingual customer service and support. SMTP, Inc. is headquartered in Nashua NH, and can be found on the web at www.smtp.com. SharpSpring, based in Gainesville, FL, can be found on the web at www.SharpSpring.com. GraphicMail, based in Geneva, Switzerland, can be found on the web at www.GraphicMail.com.


To download SMTP’s investor relations app please visit Apple’s App Store for the iPhone and iPad or Google Play for Android mobile devices.






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Safe Harbor Statement
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 involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. These risks and uncertainties 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, 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.


Investor Relations Contact:

Edward Lawton

Chief Financial Officer

617-500-0122

ir@smtp.com


Note: Financial Schedules Attached














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SMTP, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2015

 

 

2014

 

 

  

                       

  

  

                       

  

Revenue

 

$

3,285,502

 

 

$

1,490,054

 

 

 

 

 

 

 

 

 

 

Cost of services

 

 

790,966

 

 

 

327,230

 

Gross profit

 

 

2,494,536

 

 

 

1,162,824

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

1,372,361

 

 

 

168,300

 

Research and development

 

 

471,214

 

 

 

118,622

 

General and administrative

 

 

1,084,016

 

 

 

483,815

 

Change in earn out liability

 

 

704,000

 

 

 

 

Intangible asset amortization

 

 

378,895

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

4,010,486

 

 

 

770,737

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

(1,515,950

)

 

 

392,087

 

 

 

 

 

 

 

 

 

 

Total other income (expense)

 

 

(50,024

)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

(1,565,974

)

 

 

392,087

 

Provision (benefit) for income tax

 

 

(395,946

)

 

 

168,765

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(1,170,028

)

 

$

223,322

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

Basic

 

$

(0.21

)

 

$

0.05

 

Diluted

 

$

(0.21

)

 

$

0.05

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

5,456,735

 

 

 

4,239,363

 

Diluted

 

 

5,456,735

 

 

 

4,302,443

 










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SMTP, Inc.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


 

 

March 31,

 

 

December 31,

 

 

 

2015

 

 

2014

 

Assets

  

                       

  

  

                       

  

Cash and cash equivalents

 

$

2,156,500

 

 

$

2,825,520

 

Accounts receivable

 

 

487,356

 

 

 

393,922

 

Deferred income taxes

 

 

240,650

 

 

 

240,648

 

Income taxes receivable

 

 

774,370

 

 

 

328,807

 

Other current assets

 

 

233,042

 

 

 

197,719

 

Total current assets

 

 

3,891,918

 

 

 

3,986,616

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

332,506

 

 

 

281,555

 

Goodwill

 

 

8,893,611

 

 

 

8,901,106

 

Intangibles, net

 

 

7,445,572

 

 

 

7,895,238

 

Deferred income taxes

 

 

612,941

 

 

 

612,941

 

Deposits

 

 

28,512

 

 

 

30,172

 

Total assets

 

$

21,205,060

 

 

$

21,707,628

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

 

 

 

 

Accounts payable

 

$

355,781

 

 

$

397,262

 

Accrued expenses and other current liabilities

 

 

227,593

 

 

 

355,796

 

Deferred revenue

 

 

993,652

 

 

 

1,006,031

 

Income taxes payable

 

 

13,904

 

 

 

14,622

 

Deferred income taxes

 

 

5,749

 

 

 

2,119

 

Total current liabilities

 

 

1,596,679

 

 

 

1,775,830

 

 

 

 

 

 

 

 

 

 

Earn out liabilities

 

 

8,384,096

 

 

 

7,679,311

 

Total liabilities

 

 

9,980,775

 

 

 

9,455,141

 

 

 

 

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value

 

 

 

 

 

 

Common stock, $0.001 par value

 

 

5,462

 

 

 

5,447

 

Additional paid in capital

 

 

13,454,283

 

 

 

13,248,992

 

Accumulated other comprehensive income (loss)

 

 

(241,238

)

 

 

(177,767

)

Accumulated deficit

 

 

(1,994,222

)

 

 

(824,185

)

Total shareholders' equity

 

 

11,224,285

 

 

 

12,252,487

 

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders' equity

 

$

21,205,060

 

 

$

21,707,628

 









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SMTP, Inc.

RECONCILIATION TO ADJUSTED EBITDA

(Unaudited, in Thousands)


 

 

Three Months Ended

March 31,

 

 

 

2015

 

 

2014

 

 

  

                       

  

  

                       

  

Net income (loss)

 

$

(1,170

)

 

$

223

 

Provision (benefit) for income tax

 

 

(396

)

 

 

169

 

Other (income) expense

 

 

50

 

 

 

 

Depreciation & amortization

 

 

425

 

 

 

30

 

Non-cash stock compensation

 

 

202

 

 

 

156

 

Acquisition related charges

 

 

752

 

 

 

 

Restructuring charges

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(106

)

 

$

578

 



SMTP, Inc.

RECONCILIATION TO CORE NET INCOME (LOSS)

AND CORE EARNINGS (LOSS) PER SHARE

(Unaudited, in Thousands)


 

 

Three Months Ended

March 31,

 

 

 

2015

 

 

2014

 

 

  

                       

  

  

                       

  

Net income (loss)

 

$

(1,170

)

 

$

223

 

Amortization of intangible assets

 

 

379

 

 

 

 

Non-cash stock compensation

 

 

202

 

 

 

156

 

Acquisition related charges

 

 

752

 

 

 

 

Restructuring charges

 

 

31

 

 

 

 

Tax impact of above items

 

 

(345

)

 

 

(67

)

 

 

 

 

 

 

 

 

 

Core net income (loss)

 

$

(151

)

 

$

312

 

 

 

 

 

 

 

 

 

 

Core net income (loss) per share

 

$

(0.03

)

 

$

0.07

 

Weighted average common shares outstanding

 

 

5,457

 

 

 

4,302