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8-K - CURRENT REPORT - SharpSpring, Inc. | shsp_8k.htm |
Exhibit 99.1
SharpSpring Reports First Quarter 2018 Results
Record Quarterly Revenue Driven by Continued Growth of Flagship
Platform
GAINESVILLE, FL – May 8, 2018 – SharpSpring,
Inc. (NASDAQ: SHSP),
a leading cloud-based marketing automation platform, reported
financial results for the first quarter ended March 31,
2018.
First Quarter 2018 Operational Highlights
●
Added 223 new
SharpSpring customers, who selected the platform to generate leads,
convert more leads to sales and measure the ROI of their marketing
campaigns.
●
Recognized as a
“Top Rated Marketing Automation Software for 2018” by
TrustRadius, a B2B software technology review
platform.
●
Appointed veteran
technology executive Jeffrey Imm to the new position of Chief
Operating Officer (COO).
●
Dramatically
improved available growth capital with a privately-placed offering
of $8 million in unsecured convertible notes due March 2023 from a
group of existing institutional investors.
First Quarter 2018 Financial Results
●
Flagship
SharpSpring product revenues grew 43% to $4.1 million from $2.8
million in the same year-ago period.
●
Total revenue (which includes legacy products) increased
38% to a record $4.2 million from $3.0 million in the same year-ago
period.
●
Gross profit
increased to $2.8 million, or 67% of total revenue, compared to
$1.8 million, or 58% of total revenue, in the same year-ago period.
●
Net loss totaled
$2.1 million, or $0.24 per share, compared to a net loss of $1.4
million, or $0.16 per share, in the first quarter of
2017.
●
Adjusted EBITDA
loss (a non-GAAP metric reconciled below) totaled $1.7 million,
compared to an adjusted EBITDA loss of $1.6 million in the same
year-ago period.
●
Core net loss (a
non-GAAP metric reconciled below) totaled $1.7 million, or $0.20
per share, compared to core net loss of $1.1 million, or $0.14 per
share, in the same year-ago period.
●
At quarter-end, the
company had $12.3 million in cash.
Management Commentary
“We continued to
execute against our goals during the first quarter of 2018, posting
record revenue, bolstering our balance sheet and accelerating sales
and marketing initiatives to acquire new customers at an even more
rapid pace,” said SharpSpring CEO Rick Carlson. “We
realized a year-over-year improvement in new customers wins
despite a heavier impact from
seasonality experienced during the period. With our recently
enhanced balance sheet, we can continue to be aggressive in
pursuing the large greenfield opportunity within the marketing
automation space.
1
“Moving forward, our focus in 2018 is on building for the
future to systematically scale our business and accelerate growth.
We’ve already seen the positive effects of our increased
sales and marketing spend over the latter half of 2017, which is
why we committed to further expand new programs as well as to
strategically invest in further advancements to our platform. With
the additions of Jeffrey Imm as our new COO and Daniel Allen to our
Board of Directors, we have also enhanced our leadership team with
the right people that will enable us to reach the next level in our
long-term growth strategy. As we progress further in 2018, our
pipeline is greater than it’s ever been, and we are in prime
positioning to capitalize on the opportunities now in front of
us.”
Conference Call
SharpSpring
management will hold a conference call today May 8, 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 Group 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 May 22, 2018.
Toll-free
replay number: 877-481-4010
International
replay number: 919-882-2331
Replay
Passcode: 28054
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 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, 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. Except to the extent required by law, the
Company undertakes no obligation to update or revise (publicly or
otherwise) any forward-looking statements to reflect subsequent
events, new information or future circumstances.
Company Contact:
Edward Lawton
Chief Financial Officer
617-500-0122
IR@sharpspring.com
Investor Relations:
Liolios Group, Inc.
Matt Glover or Tom Colton
949-574-3860
SHSP@liolios.com
3
SharpSpring, Inc.
|
||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||
(Unaudited)
|
||
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2018
|
2017
|
Revenue
|
$4,184,663
|
$3,023,433
|
|
|
|
Cost
of services
|
1,400,297
|
1,271,321
|
Gross
profit
|
2,784,366
|
1,752,112
|
|
|
|
Operating
expenses:
|
|
|
Sales
and marketing
|
2,371,030
|
1,549,522
|
Research
and development
|
950,675
|
659,731
|
General
and administrative
|
1,426,234
|
1,356,198
|
Intangible
asset amortization
|
115,000
|
131,523
|
|
|
|
Total
operating expenses
|
4,862,939
|
3,696,974
|
|
|
|
Operating
loss
|
(2,078,573)
|
(1,944,862)
|
|
|
|
Other
income (expense), net
|
68,628
|
66,844
|
|
|
|
Loss
before income taxes
|
(2,009,945)
|
(1,878,018)
|
Provision
(benefit) for income tax
|
41,997
|
(498,746)
|
|
|
|
Net
loss
|
$(2,051,942)
|
$(1,379,272)
|
|
|
|
Basic
net loss per share
|
$(0.24)
|
$(0.16)
|
Diluted
net loss per share
|
$(0.24)
|
$(0.16)
|
|
|
|
Weighted
average common shares outstanding
|
|
|
Basic
|
8,443,455
|
8,369,249
|
Diluted
|
8,443,455
|
8,369,249
|
4
SharpSpring, Inc.
|
||
CONSOLIDATED BALANCE SHEETS
|
||
(Unaudited)
|
||
|
|
|
|
March 31,
|
December 31,
|
|
2018
|
2017
|
Assets
|
|
|
Cash
and cash equivalents
|
$12,259,169
|
$5,399,747
|
Accounts
receivable
|
729,036
|
639,959
|
Income
taxes receivable
|
2,034,668
|
2,132,616
|
Other
current assets
|
957,354
|
899,127
|
Total
current assets
|
15,980,227
|
9,071,449
|
|
|
|
Property
and equipment, net
|
795,982
|
799,145
|
Goodwill
|
8,882,393
|
8,872,898
|
Intangibles,
net
|
2,211,000
|
2,326,000
|
Other
long-term assets
|
774,049
|
612,631
|
Total
assets
|
$28,643,651
|
$21,682,123
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
Accounts
payable
|
$1,263,329
|
$504,901
|
Accrued
expenses and other current liabilities
|
563,870
|
625,680
|
Deferred
revenue
|
303,004
|
279,818
|
Income
taxes payable
|
200,820
|
171,384
|
Total
current liabilities
|
2,331,023
|
1,581,783
|
|
|
|
Deferred
income taxes
|
168,132
|
168,132
|
Convertible
notes
|
8,048,787
|
-
|
Total
liabilities
|
10,547,942
|
1,749,915
|
|
|
|
Shareholders'
equity:
|
|
|
Preferred
stock, $0.001 par value
|
-
|
-
|
Common
stock, $0.001 par value
|
8,467
|
8,456
|
Additional
paid in capital
|
28,608,357
|
28,362,397
|
Accumulated
other comprehensive loss
|
(511,289)
|
(480,762)
|
Accumulated
deficit
|
(9,925,826)
|
(7,873,883)
|
Treasury
stock
|
(84,000)
|
(84,000)
|
Total
shareholders' equity
|
18,095,709
|
19,932,208
|
|
|
|
Total
liabilities and shareholders' equity
|
$28,643,651
|
$21,682,123
|
5
SharpSpring, Inc.
|
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CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||
(Unaudited)
|
||
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2018
|
2017
|
Net
loss
|
$(2,051,942)
|
$(1,379,272)
|
|
|
|
Adjustments
to reconcile loss from operations:
|
|
|
Depreciation
and amortization
|
190,983
|
196,606
|
Non-cash
stock compensation
|
237,415
|
184,346
|
Deferred
income taxes
|
-
|
(29,558)
|
Non-cash
interest
|
274
|
-
|
Amortization
of debt issuance costs
|
4,301
|
-
|
Unearned
foreign currency gain/loss
|
(49,397)
|
(33,865)
|
Changes
in assets and liabilities:
|
|
|
Accounts
receivable
|
(84,896)
|
214,873
|
Other
assets
|
(32,991)
|
(40,440)
|
Income
taxes, net
|
124,866
|
(75,294)
|
Accounts
payable
|
751,502
|
155,471
|
Accrued
expenses and other current liabilities
|
(61,837)
|
(41,091)
|
Deferred
revenue
|
20,623
|
(339)
|
Net
cash used in operating activities
|
(951,099)
|
(848,563)
|
|
|
|
Cash
flows from investing activities
|
|
|
Purchases
of property and equipment
|
(72,820)
|
(83,787)
|
Acquisitions
of customer assets from resellers
|
-
|
(3,116)
|
Net
cash used in investing activities
|
(72,820)
|
(86,903)
|
|
|
|
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
|
8,555
|
-
|
Net
cash provided by financing activities
|
7,866,898
|
-
|
|
|
|
Effect
of exchange rate on cash
|
16,443
|
13,011
|
|
|
|
Change
in cash and cash equivalents
|
$6,859,422
|
$(922,455)
|
|
|
|
Cash
and cash equivalents, beginning of period
|
$5,399,747
|
$8,651,374
|
|
|
|
Cash
and cash equivalents, end of period
|
$12,259,169
|
$7,728,919
|
6
SharpSpring, Inc.
|
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RECONCILIATION TO ADJUSTED EBITDA
|
||
(Unaudited, in Thousands)
|
||
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2018
|
2017
|
Net
loss from operations
|
$(2,052)
|
$(1,379)
|
Provision
(benefit) for income tax
|
42
|
(499)
|
Other
(income) expense, net
|
(69)
|
(67)
|
Depreciation
& amortization
|
191
|
197
|
Non-cash
stock compensation
|
237
|
184
|
Adjusted EBITDA
|
(1,651)
|
(1,564)
|
SharpSpring, Inc.
|
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RECONCILIATION TO CORE NET LOSS AND CORE LOSS PER
SHARE
|
||
(Unaudited, in Thousands)
|
||
|
|
|
|
Three Months Ended
|
|
|
March 31,
|
|
|
2018
|
2017
|
Net
loss from operations
|
$(2,052)
|
$(1,379)
|
Amortization
of intangible assets
|
115
|
132
|
Non-cash
stock compensation
|
237
|
184
|
Tax
adjustment
|
7
|
(80)
|
Core net loss from operations
|
$(1,693)
|
$(1,143)
|
|
|
|
Core net loss per share from operations
|
$(0.20)
|
$(0.14)
|
Weighted
average common shares outstanding
|
8,443
|
8,369
|
7