Exhibit
99.1
SharpSpring Reports Fourth Quarter and Full Year 2020
Results
Strong Finish Amidst Challenging Conditions Led by Improvements to
Net Revenue Retention and Net Agency Client Expansion
Early Investments in Sales and Marketing in 2021 Setting the Table
for Accelerated Sales Growth as the Year Progresses
GAINESVILLE, FL – March 16, 2021 – SharpSpring,
Inc. (NASDAQ: SHSP),
a leading cloud-based revenue growth platform, reported financial
results for the fourth quarter and full year ended December 31,
2020.
Recent Operational Highlights
●
Company CEO Rick Carlson provided a
Letter to
Investors on
SharpSpring’s long-term business outlook, outlining the
Company’s ability and plan to achieve long-term, sustainable,
high-margin growth. The assumptions in the Company’s
long-term projections are supported by over six years of individual
cohort data and historical Company performance
to-date.
●
Further
solidified Company balance sheet through underwritten public
offering of common stock, adding $13.9 million in net proceeds, to
support current health of the business, expand future sales and
marketing initiatives and pursue additional growth
opportunities.
●
Appointed
Aaron Jackson as Chief Financial Officer. Prior to his appointment,
Jackson had been acting as interim CFO and has spent four years at
SharpSpring in various finance and accounting leadership roles.
Jackson brings a comprehensive understanding of SharpSpring Company
culture, goals and objectives and has expert knowledge of the
Company’s core business model and growth
strategy.
●
Earned
TrustRadius awards for Best Usability, Best Feature Set Award and
Best Customer Support based directly on feedback from
SharpSpring’s customers. These accolades mark the fourth year
in a row that SharpSpring has been honored as a top choice for
customers through TrustRadius.
Management Commentary
“In
what was an eventful and trying year, both for SharpSpring and the
rest of the world, we were able to consistently grow our business,
expand our platform and position ourselves effectively for
long-term success,” said Company CEO Rick Carlson.
“Financially, we achieved our fifteenth consecutive record
revenue performance and are now at the precipice of a $30 million
run rate. During the fourth quarter, we also recorded a number of
positive, incremental data points that support our belief that
business is slowly, but surely, returning to normalized conditions.
Within our customer base, we logged diminished attrition and also
saw net revenue retention return to pre-COVID levels with a second
straight period of net client expansion, all positive indicators
for the future. Our Perfect Audience business also showed
encouraging growth in Q4, aided mainly from larger customer
campaigns. As we complete PA’s integration into our marketing
automation platform, we should begin to further realize benefits of
cross-selling into our current user base as SharpSpring
Ads.”
“With
the effects of the pandemic appearing to be moving to the rearview
in 2021, we expect the coming year will be a period of major
investment in our business, which will put us on the path to
accelerated growth. After our successful capital raise in December,
we have additional resources to drive new sales, marketing and
product initiatives that are designed to have a long-term positive
impact on the business. In Q1 we began the process of ramping
spend, which should translate to new customer growth as the year
progresses. As we introduce new go-to market strategies and pricing
options, including free trials, annual client licenses and freemium
offerings, we believe the universe of potential SharpSpring
customers will expand. As a leading provider of revenue growth
tools for small to medium businesses and digital marketing
agencies, we are reducing the barriers to entry for all businesses
to participate in ongoing digital transformation.”
Fourth Quarter 2020 Key Performance Indicators (KPIs)
●
Total
monthly recurring revenue (MRR) from new customers in the fourth
quarter of 2020 was $132,000 compared to $165,000 in the fourth
quarter of 2019 and $176,000 in the third quarter of 2020. The
decrease in MRR was largely due to delayed new customer adoption
resulting from the ongoing COVID-19 pandemic as well as reduced
sales and marketing spend during the quarter. The Company expects
sales and marketing spend to increase meaningfully in 2021, which
should have a material positive impact on new sales beginning in
the second quarter of the year.
●
New
customer additions are expected to generate approximately $1.6
million in annual recurring revenue (ARR).
●
Finished the quarter with approximately 2,000
agency customers, over 500 direct customers, and more than
10,000 total businesses across all
SharpSpring sales and marketing platforms including SharpSpring Ads
and legacy products.
●
On
a year-over-year basis, Q4 2020 net revenue retention was 91.7%, an
improvement over 90.1% in Q3 2020.
Fourth Quarter 2020 Financial Results
●
Total
revenue increased 25% to a record $7.7 million from $6.1 million in
the same year-ago period.
●
Gross
profit increased 42% to a record $5.7 million (75% of total
revenue) from $4.0 million (65% of total revenue) in the same
year-ago period.
●
Net
loss, including non-cash impairment charges, was $2.3 million, or
$0.20 per share, compared to net loss of $2.7 million, or $0.24 per
share, in the same year-ago period.
●
Adjusted
EBITDA loss (a non-GAAP metric reconciled below) totaled $869,000,
compared to an adjusted EBITDA loss of $1.9 million in the same
year-ago period.
●
Core
net loss (a non-GAAP metric reconciled below) totaled $1.1 million,
or $0.09 per share, compared to core net loss of $2.1 million, or
$0.19 per share, in the same year-ago period.
●
At
year-end, the Company had $28.3 million in cash, compared to $11.9
million at December 31, 2019.
Full Year 2020 Financial Results
●
Total
revenue increased 29% to a record $29.3 million from $22.7 million
in 2019.
●
Gross
profit increased 36% to a record $21.2 million (72% of total
revenue) from $15.6 million (69% of total revenue) in
2019.
●
Net
loss, including non-cash impairment charges, was $5.8 million, or
$0.50 per share, compared to net loss of $12.4 million, or $1.20
per share, in 2019.
●
Adjusted
EBITDA loss (a non-GAAP metric reconciled below) totaled $3.2
million, compared to an adjusted EBITDA loss of $7.4 million in
2019.
●
Core
net loss (a non-GAAP metric reconciled below) totaled $4.2 million,
or $0.36 per share, compared to core net loss of $8.2 million, or
$0.79 per share, in 2019.
2021 Financial Outlook
For the fiscal year ending December 31, 2021, SharpSpring expects
total revenue to range between $34 million and $36 million. The
Company’s guidance is based on recurring revenue from its
current customer base and performance results tracked through
February of this year. These expectations include the impact of
increased sales and marketing spend that began in January 2021
which will support a related revenue ramp as the year
progresses.
Conference Call
SharpSpring
management will hold a conference call today, March 16, 2021 at
4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these
results.
Company
CEO Rick Carlson and CFO Aaron Jackson will host the call, followed
by a question and answer period.
U.S.
dial-in number: 877-545-0320
International
number: 973-528-0016
Entry
Code: 441277
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 today through March 30, 2021.
Toll-free
replay number: 877-481-4010
International
replay number: 919-882-2331
Replay
ID: 40092
About SharpSpring, Inc.
SharpSpring, Inc. (NASDAQ:
SHSP) is a rapidly growing, highly-rated, global and affordable
revenue growth platform delivered via a cloud-based
Software-as-a-Service (SaaS) solution. More than 10,000 businesses
around the world rely on SharpSpring platforms 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 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 under
Part II, Item 1A. and “Risk Factors” contained in our
most recent Form 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:
Aaron
Jackson
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
|
Year Ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenue
|
$7,657,416
|
$6,131,690
|
$29,287,882
|
$22,699,386
|
|
|
|
|
|
|
|
Cost
of services
|
1,952,615
|
2,127,453
|
8,062,564
|
7,142,416
|
|
Gross
profit
|
5,704,801
|
4,004,237
|
21,225,318
|
15,556,970
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Sales
and marketing
|
2,754,581
|
2,808,761
|
10,888,944
|
11,785,227
|
|
Research
and development
|
1,628,147
|
1,352,299
|
6,072,103
|
5,036,613
|
|
General
and administrative
|
2,843,472
|
2,462,779
|
10,227,128
|
8,617,073
|
|
Intangible
asset amortization
|
152,801
|
95,250
|
642,149
|
381,000
|
|
Impairment
of goodwill
|
710,000
|
-
|
710,000
|
-
|
|
|
|
|
|
|
|
Total
operating expenses
|
8,089,001
|
6,719,089
|
28,540,324
|
25,819,913
|
|
|
|
|
|
|
|
Operating
loss
|
(2,384,200)
|
(2,714,852)
|
(7,315,006)
|
(10,262,943)
|
|
|
|
|
|
|
|
Other
income (expense), net
|
53,642
|
14,537
|
(19,988)
|
(147,338)
|
|
Loss
on induced conversion
|
-
|
-
|
-
|
(2,162,696)
|
|
Gain
on embedded derivative
|
-
|
-
|
-
|
214,350
|
|
|
|
|
|
|
|
Loss
before income taxes
|
(2,330,558)
|
(2,700,315)
|
(7,334,994)
|
(12,358,627)
|
|
(Benefit)
provision for income taxes
|
(2,340)
|
28,514
|
(1,505,965)
|
29,349
|
|
|
|
|
|
|
|
Net
loss
|
$(2,328,218)
|
$(2,728,829)
|
$(5,829,029)
|
$(12,387,976)
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
$(0.20)
|
$(0.24)
|
$(0.50)
|
$(1.20)
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding, basic and diluted
|
11,828,706
|
11,210,816
|
11,611,020
|
10,323,889
|
SharpSpring, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
December 31,
|
December 31,
|
|
|
2020
|
2019
|
|
Assets
|
|
|
|
Cash
and cash equivalents
|
$28,267,792
|
$11,881,949
|
|
Accounts
receivable, net
|
323,130
|
340,344
|
|
Unbilled
receivables
|
1,248,060
|
998,048
|
|
Income
taxes receivable
|
54,449
|
15,010
|
|
Other
current assets
|
1,433,543
|
1,363,366
|
|
Total
current assets
|
31,326,974
|
14,598,717
|
|
|
|
|
|
Property
and equipment, net
|
2,188,948
|
1,996,722
|
|
Goodwill
|
10,250,088
|
10,922,814
|
|
Intangibles,
net
|
4,015,851
|
4,658,000
|
|
Right-of-use
assets
|
8,352,028
|
5,281,530
|
|
Other
long-term assets
|
611,857
|
549,022
|
|
Total
assets
|
$56,745,746
|
$38,006,805
|
|
|
|
|
|
Liabilities
and Shareholders' Equity
|
|
|
|
Accounts
payable
|
1,074,594
|
2,052,538
|
|
Accrued
expenses and other current liabilities
|
1,259,836
|
919,089
|
|
Line
of credit
|
1,900,000
|
-
|
|
Deferred
revenue
|
845,265
|
860,820
|
|
Income
taxes payable
|
81,221
|
13,944
|
|
Lease
liability, current portion
|
724,627
|
370,340
|
|
Notes
payable, current portion
|
2,630,962
|
-
|
|
Total
current liabilities
|
8,516,505
|
4,216,731
|
|
|
|
|
|
Lease
liability, net of current portion
|
7,771,898
|
4,976,727
|
|
Notes
payable, net of current portion
|
768,538
|
-
|
|
Total
liabilities
|
$17,056,941
|
$9,193,458
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred
stock, $0.001 par value
|
-
|
-
|
|
Common
stock, $0.001 par value
|
12,819
|
11,537
|
|
Additional
paid in capital
|
75,544,966
|
58,851,285
|
|
Accumulated
other comprehensive loss
|
(215,269)
|
(224,793)
|
|
Accumulated
deficit
|
(35,569,711)
|
(29,740,682)
|
|
Treasury
stock
|
(84,000)
|
(84,000)
|
|
Total
shareholders' equity
|
39,688,805
|
28,813,347
|
|
|
|
|
|
Total
liabilities and shareholders' equity
|
56,745,746
|
$38,006,805
|
SharpSpring, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Three Months Ended
|
Year Ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Net
loss
|
$(2,328,218)
|
$(2,728,829)
|
$(5,829,029)
|
$(12,387,976)
|
|
|
|
|
|
|
|
Adjustments
to reconcile loss from operations:
|
|
|
|
|
|
Depreciation
and amortization
|
416,984
|
282,250
|
1,596,146
|
1,010,123
|
|
Impairment
of goodwill
|
710,000
|
-
|
710,000
|
-
|
|
Amortization
of costs to acquire contracts
|
204,328
|
200,173
|
816,100
|
804,780
|
|
Non-cash
stock compensation
|
388,172
|
354,313
|
1,526,693
|
1,204,213
|
|
Deferred
income taxes
|
4,157
|
-
|
359
|
-
|
|
Loss
(gain) on disposal of property and equipment
|
262
|
-
|
262
|
(617)
|
|
Non-cash
interest
|
-
|
-
|
-
|
139,372
|
|
Amortization
of debt issuance costs and embedded derivative
|
-
|
-
|
-
|
2,903
|
|
Gain
on embedded derivative
|
-
|
-
|
-
|
(214,350)
|
|
Loss
on induced conversion
|
-
|
-
|
-
|
2,162,696
|
|
Unrealized
foreign currency (gain) loss
|
(72,733)
|
(18,045)
|
48,069
|
25,425
|
|
Changes
in assets and liabilities:
|
|
|
|
|
|
Accounts
receivable, net
|
(42,980)
|
(189,203)
|
21,989
|
(204,217)
|
|
Unbilled
receivables
|
(93,377)
|
(65,979)
|
(230,895)
|
(254,987)
|
|
Right-of-use
assets
|
203,891
|
110,800
|
(3,070,498)
|
433,980
|
|
Other
assets
|
(209,195)
|
(116,516)
|
(949,881)
|
(837,082)
|
|
Income
taxes, net
|
(10,698)
|
28,759
|
22,941
|
(2,094)
|
|
Accounts
payable
|
(1,208,626)
|
435,137
|
(978,825)
|
439,028
|
|
Lease
liabilities
|
(186,325)
|
(96,621)
|
3,149,459
|
(377,264)
|
|
Other
liabilities
|
313,037
|
(355,841)
|
340,808
|
(392,480)
|
|
Deferred
revenue
|
276,336
|
162,414
|
(21,048)
|
421,405
|
|
Net
cash provided by (used in) operating activities
|
(1,634,985)
|
(1,997,188)
|
(2,847,350)
|
(8,027,142)
|
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
|
|
Acquisition
of business
|
-
|
(4,566,402)
|
-
|
(4,566,402)
|
|
Purchases
of property and equipment
|
-
|
249,712
|
(401,831)
|
(529,001)
|
|
Proceeds
from the sale of property and equipment
|
-
|
-
|
-
|
617
|
|
Capitalization
of software development costs
|
(181,732)
|
(552,508)
|
(744,654)
|
(836,047)
|
|
Net
cash used in investing activities
|
(181,732)
|
(4,869,198)
|
(1,146,485)
|
(5,930,833)
|
|
|
|
|
|
|
|
Cash
flows used in financing activities:
|
|
|
|
|
|
Proceeds
from line of credit
|
-
|
-
|
1,900,000
|
-
|
|
Proceeds
from note payable
|
-
|
-
|
3,399,500
|
-
|
|
Proceeds
from exercise of stock options, net
|
1,075,816
|
42,636
|
1,266,695
|
968,986
|
|
Proceeds
from issuance of common stock, net
|
13,942,446
|
4,938,985
|
13,942,446
|
15,587,990
|
|
Payments
for taxes related to net share settlement of equity
awards
|
(7,050)
|
-
|
(40,872)
|
-
|
|
Net
cash provided by financing activities
|
15,011,212
|
4,981,621
|
20,467,769
|
16,556,976
|
|
|
|
|
|
|
|
Effect
of exchange rate on cash
|
54,690
|
12,772
|
(88,091)
|
(37,918)
|
|
|
|
|
|
|
|
Change
in cash and cash equivalents
|
$13,249,185
|
$(1,871,993)
|
$16,385,843
|
$2,561,083
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
$15,018,607
|
$13,753,942
|
$11,881,949
|
$9,320,866
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
$28,267,792
|
$11,881,949
|
$28,267,792
|
$11,881,949
|
SharpSpring, Inc.
RECONCILIATION TO ADJUSTED EBITDA
(Unaudited, in Thousands)
|
|
Three Months Ended
|
Year Ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Net
loss
|
$(2,328)
|
$(2,729)
|
$(5,829)
|
$(12,388)
|
|
(Benefit)
provision for income taxes
|
(2)
|
29
|
(1,506)
|
29
|
|
Other
(income) expense , net
|
(54)
|
(15)
|
20
|
147
|
|
Non-cash
gain on embedded derivative
|
-
|
-
|
-
|
(214)
|
|
Non-cash
loss on induced conversion
|
-
|
-
|
-
|
2,163
|
|
Depreciation
& amortization
|
417
|
282
|
1,596
|
1,010
|
|
Non-cash
stock compensation
|
388
|
354
|
1,527
|
1,204
|
|
Restructuring
|
-
|
176
|
-
|
309
|
|
Sales
Tax Contingent Liability
|
-
|
-
|
256
|
-
|
|
Franchise
tax settlement
|
-
|
-
|
-
|
318
|
|
Impairment
of goodwill
|
710
|
-
|
710
|
-
|
|
Adjusted EBITDA
|
$(869)
|
$(1,903)
|
$(3,226)
|
$(7,422)
|
SharpSpring, Inc.
RECONCILIATION TO CORE NET LOSS AND CORE NET LOSS PER
SHARE
(Unaudited, in Thousands)
|
|
Three Months Ended
|
Year Ended
|
||
|
|
December 31,
|
December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Net
loss
|
$(2,328)
|
$(2,729)
|
$(5,829)
|
$(12,388)
|
|
Amortization
of intangible assets
|
153
|
95
|
642
|
381
|
|
Non-cash
stock compensation
|
388
|
354
|
1,527
|
1,204
|
|
Non-cash
gain on embedded derivative
|
-
|
-
|
-
|
(214)
|
|
Non-cash
loss on induced conversion
|
-
|
-
|
-
|
2,163
|
|
Restructuring
|
-
|
176
|
-
|
309
|
|
Sales
Tax Contingent Liability
|
-
|
-
|
256
|
-
|
|
Franchise
tax settlement
|
-
|
-
|
-
|
318
|
|
Impairment
of goodwill
|
710
|
-
|
710
|
-
|
|
Tax
adjustment
|
(2)
|
29
|
(1,506)
|
32
|
|
Core net loss
|
$(1,079)
|
$(2,075)
|
$(4,200)
|
$(8,195)
|
|
|
|
|
|
|
|
Core net loss per share
|
$(0.09)
|
$(0.19)
|
$(0.36)
|
$(0.79)
|
|
Weighted
average common shares outstanding
|
11,829
|
11,211
|
11,611
|
10,324
|