Attached files
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| 8-K - CURRENT REPORT - SharpSpring, Inc. | shsp_8k.htm |
Exhibit 99.1
SharpSpring Reports First Quarter 2020 Results
Strong New Agency Customer Additions in the First Two Months of the
Year Drive Twelfth Consecutive Quarter of Record Revenue; Improved
Cash Position and Conservative Cost Reduction Plan Balance
Long-Term Growth with Improved Profitability
GAINESVILLE, FL – May 14, 2020 – SharpSpring,
Inc. (NASDAQ: SHSP),
a leading cloud-based marketing automation platform, reported
financial results for the first quarter ended March 31,
2020.
First Quarter 2020 and Recent Operational Highlights
●
Added 321 new
SharpSpring customers, of which approximately 80% were agency
customers, who selected the platform to generate leads, convert
more leads to sales and measure the ROI of their marketing
campaigns. New customer additions are expected to generate
approximately $2.3 million over the next year in annual recurring
revenue.
●
Finished the
quarter with approximately 2,000 agency customers, over 500 direct
customers and over 8,500 total businesses using the SharpSpring
Marketing Automation platform.
●
On a year-over-year
basis, Q1 2020 net revenue retention was 99.6%, when compared to
first quarter of 2019. On a monthly basis, first quarter 2020
average net revenue retention increased to 102.2%.
●
Launched integrated
Video Calls, a free solution for SharpSpring customers built to
help marketing agencies and SMBs connect with leads, contacts, and
clients in the new remote work environment.
●
Launched Chatbots,
a personalized communications tool deeply integrated within
SharpSpring that allows users to provide automated support to site
visitors with performance tracking and other features
included.
●
Provided an update
on the company’s operations and its response to the ongoing
COVID-19 pandemic through a publicly
available letter to shareholders from CEO Rick
Carlson.
First Quarter 2020 Financial Results
●
Total revenue increased 32% to a record $7.1 million
from $5.3 million in the same year-ago period.
●
Gross profit
increased 24% to $4.7 million (66% of total revenue) from $3.8 million
(71% of total revenue) in the same year-ago period.
●
Net loss was
$988,000, or $0.09 per share, compared to net loss of
$2.9 million, or $0.33 per share, in
the same year-ago period.
●
Adjusted EBITDA
loss (a non-GAAP metric reconciled below) totaled $1.8 million, compared to an adjusted EBITDA
loss of $1.8 million in the same year-ago period.
●
Core net loss (a
non-GAAP metric reconciled below) totaled $785,000, or
$0.07 per share, compared to
core net loss of $2.1 million, or $0.23 per share, in the same
year-ago period.
2020 Financial Outlook
For the fiscal year ending December 31, 2020, SharpSpring is
reaffirming its previously disclosed revenue forecast. The Company
expects total revenue to range between $30 million and $31 million,
which would represent an approximate increase of 32% to 37%,
respectively, compared to the prior year. The Company’s
guidance is based on recurring revenue from its current customer
base and performance results tracked through April of this year.
These expectations also include an anticipated impact from the
COVID-19 global pandemic based on information available as of the
date of this report.
Management Commentary
“In the face of an uncertain economic environment as well as
a major transition in how work is being conducted, we still
successfully delivered a strong start to the
year,” said SharpSpring
CEO Rick Carlson. “In Q1 we recorded our twelfth straight
period of record revenue, reflecting three years’ worth of
consistent topline improvements and also demonstrating our
resilience against the initial onset of COVID-19. In the transition
to primarily remote work, we believe our technology is even
more critical to our customers’ success. With some of our newest features, including
integrated Video Calls, we are also providing real-time help to
improve connectivity and support business continuity
online.
“Responding
to the potential headwinds in the coming months, we’ve also
taken decisive action to ensure the long-term viability of our
operations. Across the company, we have reduced our expense base by
more than 20%, which should result in over $6 million in cost
savings for the remainder of 2020 and also allow us to meet our
target cash usage for the year at under $4.5 million. Through a
handful of other transactions, we’ve also increased our
available funds by roughly $7 million, raising our pro forma
balance to over $16 million. While the
long-term economic impact of this pandemic remains opaque at
best, we have a number of factors within our business model
working in our favor that will allow us to continue to operate and
grow effectively both during and after this unprecedented
period.”
Conference Call
SharpSpring
management will hold a conference call today, May 14, 2020 at 4:30
p.m. Eastern time (1:30 p.m. Pacific time) to discuss these
results.
Company
CEO Rick Carlson and CFO Michael Power will host the call, followed
by a question and answer period.
U.S.
dial-in number: 844-602-0380
International
number: 862-298-0970
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 Gateway Investor Relations 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 28, 2020.
Toll-free
replay number: 877-481-4010
International
replay number: 919-882-2331
Replay
ID: 34625
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 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.
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 Form 10-K 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:
Michael Power
Chief Financial Officer
Phone: 352-448-0967
Email:
IR@sharpspring.com
Investor Relations:
Gateway Investor Relations
Matt Glover or Tom Colton
Phone: 949-574-3860
Email:
SHSP@gatewayir.com
SharpSpring, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
2019
|
|
Revenue
|
$7,052,729
|
$5,326,285
|
|
|
|
|
|
Cost
of services
|
2,367,642
|
1,548,381
|
|
Gross
profit
|
4,685,087
|
3,777,904
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Sales
and marketing
|
3,034,121
|
3,008,203
|
|
Research
and development
|
1,578,139
|
1,258,728
|
|
General
and administrative
|
2,413,842
|
2,227,675
|
|
Intangible
asset amortization
|
152,801
|
95,250
|
|
|
|
|
|
Total
operating expenses
|
7,178,903
|
6,589,856
|
|
|
|
|
|
Operating
loss
|
(2,493,816)
|
(2,811,952)
|
|
|
|
|
|
Other
expense, net
|
(56,778)
|
(104,126)
|
|
Gain
on embedded derivative
|
-
|
24,574
|
|
|
|
|
|
Loss
before income taxes
|
(2,550,594)
|
(2,891,504)
|
|
Provision
(benefit) for income taxes
|
(1,562,517)
|
2,339
|
|
|
|
|
|
Net
loss
|
$(988,077)
|
$(2,893,843)
|
|
|
|
|
|
Basic
net loss per share
|
$(0.09)
|
$(0.33)
|
|
Diluted
net loss per share
|
$(0.09)
|
$(0.33)
|
|
|
|
|
|
Weighted
average common shares outstanding
|
|
|
|
Basic
|
11,521,192
|
8,840,281
|
|
Diluted
|
11,521,192
|
8,840,281
|
SharpSpring, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
March 31,
|
December 31,
|
|
|
2020
|
2019
|
|
Assets
|
|
|
|
Cash
and cash equivalents
|
$11,625,049
|
$11,881,949
|
|
Accounts
receivable
|
425,918
|
340,344
|
|
Unbilled
receivables
|
1,091,122
|
998,048
|
|
Income
taxes receivable
|
1,577,927
|
15,010
|
|
Other
current assets
|
1,500,627
|
1,363,366
|
|
Total
current assets
|
16,220,643
|
14,598,717
|
|
|
|
|
|
Property
and equipment, net
|
2,206,156
|
1,996,722
|
|
Goodwill
|
10,919,403
|
10,922,814
|
|
Intangibles,
net
|
4,505,199
|
4,658,000
|
|
Right-of-use
assets
|
5,687,249
|
5,281,530
|
|
Other
long-term assets
|
547,333
|
549,022
|
|
Total
assets
|
$40,085,983
|
$38,006,805
|
|
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
|
Accounts
payable
|
$2,942,268
|
$2,052,538
|
|
Accrued
expenses and other current liabilities
|
524,844
|
919,089
|
|
Line
of credit
|
1,900,000
|
-
|
|
Deferred
revenue
|
766,715
|
860,820
|
|
Income
taxes payable
|
12,284
|
13,944
|
|
Lease
liability, current portion
|
420,977
|
370,340
|
|
Total
current liabilities
|
6,567,088
|
4,216,731
|
|
|
|
|
|
Lease
liability, net of current portion
|
5,347,179
|
4,976,727
|
|
Total
liabilities
|
11,914,267
|
9,193,458
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred
stock, $0.001 par value
|
-
|
-
|
|
Common
stock, $0.001 par value
|
11,546
|
11,537
|
|
Additional
paid in capital
|
59,206,549
|
58,851,285
|
|
Accumulated
other comprehensive loss
|
(233,620)
|
(224,793)
|
|
Accumulated
deficit
|
(30,728,759)
|
(29,740,682)
|
|
Treasury
stock
|
(84,000)
|
(84,000)
|
|
Total
shareholders' equity
|
28,171,716
|
28,813,347
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
$40,085,983
|
$38,006,805
|
SharpSpring, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
2019
|
|
Net
loss
|
$(988,077)
|
$(2,893,843)
|
|
|
|
|
|
Adjustments
to reconcile loss from operations:
|
|
|
|
Depreciation
and amortization
|
356,579
|
227,253
|
|
Amortization
of costs to acquire contracts
|
202,439
|
202,945
|
|
Non-cash
stock compensation
|
370,632
|
303,517
|
|
Non-cash
interest
|
-
|
100,000
|
|
Amortization
of debt issuance costs and embedded derivative
|
-
|
(2,000)
|
|
Gain
on embedded derivative
|
-
|
(24,574)
|
|
Unrealized
foreign currency loss
|
80,727
|
10,739
|
|
Changes
in assets and liabilities:
|
|
|
|
Accounts
receivable
|
(85,272)
|
14,448
|
|
Unbilled
receivables
|
(92,496)
|
(93,772)
|
|
Right-of-use
assets
|
(405,719)
|
106,215
|
|
Other
assets
|
(342,872)
|
(42,855)
|
|
Income
taxes, net
|
(1,562,944)
|
2,339
|
|
Accounts
payable
|
890,013
|
(274,640)
|
|
Lease
liabilities
|
421,089
|
(92,035)
|
|
Other
liabilities
|
(394,239)
|
(69,280)
|
|
Deferred
revenue
|
(94,289)
|
39,585
|
|
Net
cash used in operating activities
|
(1,644,429)
|
(2,485,958)
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Purchases
of property and equipment
|
(140,930)
|
(169,976)
|
|
Capitalization
of software development costs
|
(272,282)
|
(177,198)
|
|
Net
cash used in investing activities
|
(413,212)
|
(347,174)
|
|
|
|
|
|
Cash
flows used in financing activities:
|
|
|
|
Proceeds
from line of credit
|
1,900,000
|
-
|
|
Proceeds
from exercise of stock options, net
|
11,174
|
603,865
|
|
Proceeds
from issuance of common stock, net
|
-
|
10,672,444
|
|
Payments
for taxes related to net share settlement of equity
awards
|
(26,533)
|
-
|
|
Net
cash provided by financing activities
|
1,884,641
|
11,276,309
|
|
|
|
|
|
Effect
of exchange rate on cash
|
(83,900)
|
(11,285)
|
|
|
|
|
|
Change
in cash and cash equivalents
|
$(256,900)
|
$8,431,892
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
$11,881,949
|
$9,320,866
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$11,625,049
|
$17,752,758
|
SharpSpring, Inc.
RECONCILIATION TO ADJUSTED EBITDA
(Unaudited, in Thousands)
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
2019
|
|
Net
loss
|
$(988)
|
$(2,894)
|
|
Provision
(benefit) for income taxes
|
(1,563)
|
2
|
|
Other
expense, net
|
57
|
104
|
|
Non-cash
gain on embedded derivative
|
-
|
(25)
|
|
Depreciation
& amortization
|
357
|
227
|
|
Non-cash
stock compensation
|
371
|
304
|
|
Restructuring
|
-
|
133
|
|
Franchise
tax settlement
|
-
|
318
|
|
Adjusted EBITDA
|
(1,766)
|
(1,831)
|
SharpSpring, Inc.
RECONCILIATION TO CORE NET LOSS AND CORE NET LOSS PER
SHARE
(Unaudited, in Thousands)
|
|
Three Months Ended
|
|
|
|
March 31,
|
|
|
|
2020
|
2019
|
|
Net
loss
|
$(988)
|
$(2,894)
|
|
Amortization
of intangible assets
|
153
|
95
|
|
Non-cash
stock compensation
|
371
|
304
|
|
Non-cash
gain on embedded derivative
|
-
|
(25)
|
|
Restructuring
|
-
|
133
|
|
Franchise
tax settlement
|
-
|
318
|
|
Tax
adjustment
|
(321)
|
1
|
|
Core net loss
|
$(785)
|
$(2,068)
|
|
|
|
|
|
Core net loss per share
|
$(0.07)
|
$(0.23)
|
|
Weighted
average common shares outstanding
|
11,521
|
8,840
|