SharpSpring Reports Fourth Quarter and Full Year 2016 Results

GAINESVILLE, FL — March 15, 2017 – SharpSpring, Inc. (NASDAQ: SHSP), a global provider of cloud-based marketing technologies, reported financial results for the fourth quarter and fiscal year ended December 31, 2016.  

Fourth Quarter 2016 Operational Highlights

  • Added 213 new SharpSpring customers and finished the year with 1,139 agency customers and more than 5,250 businesses using the flagship platform.
  • Ranked 391 on Deloitte’s Technology Fast 500™, a ranking of the 500 fastest growing companies in North America.
  • Finalized the closure of the South African office to improve efficiencies and organizational alignment.
  • Elected technology executive Steven Huey to the board of directors and approved a plan to increase the size of the board to seven directors, five of which would be independent.

Fourth Quarter 2016 Financial Results from Continuing Operations

  • Revenue increased 10% to $2.9 million from $2.6 million in the same year-ago period. The improvement was driven by strong growth from the company’s flagship marketing automation solution, which increased 87% to $2.7 million during the fourth quarter of 2016.
  • Gross profit remained consistent at $1.7 million in the fourth quarter of 2016, compared to the same year-ago period.
  • Including non-cash impairment charges, net loss from continuing operations totaled $2.2 million or ($­­0.26) per share, compared to a net loss of $4.4 million or ($0.60) per share in the fourth quarter of 2015.
  • Adjusted EBITDA loss (a non-GAAP metric reconciled below) totaled $1.2 million, compared to an adjusted EBITDA loss of $1.0 million in the same year-ago period.
  • Core net loss from continuing operations (a non-GAAP metric reconciled below) totaled $851,000 or ($0.10) per share, compared to core net loss of $1.1 million or ($0.16) per share in the same year-ago period.
  • At quarter-end, cash totaled $8.7 million, compared to $11.6 million at the end of the prior quarter, reflecting $1.1 million of cash tax payments related to the gain on the sale of the SMTP email relay business, which was divested in June 2016.

Full Year 2016 Financial Results from Continuing Operations

  • Revenue increased 26% to $11.5 million from $9.2 million in 2015, driven by strong growth from the flagship SharpSpring marketing automation solution, which increased 109% to $9.1 million.
  • Gross profit was $7.0 million, an increase of 10% from $6.4 million in 2015.
  • Including non-cash impairment charges, net loss from continuing operations totaled $5.2 million or ($0.66) per share, compared to a net loss from continuing operations of $9.6 million or ($1.51) per share in 2015.
  • Adjusted EBITDA loss totaled $3.8 million, compared to adjusted EBITDA loss of $2.9 million in 2015.
  • Core net loss totaled $2.5 million or ($0.31) core net loss per share, compared to core net loss of $2.5 million or ($0.40) core net loss per share in 2015. 

Management Commentary
“2016 was a pivotal year for SharpSpring,” said company CEO, Rick Carlson. “We entered the period as essentially three distinct businesses, but emerged as a leaner, more focused, and stronger organization. We grew our flagship product revenues by 109% during 2016 and finished the year with more than 1,100 agency partners and over 5,250 businesses using our platform. Although we succeeded in migrating a portion the GraphicMail customer base to a new product, SharpSpring Mail+, we were ultimately unable to retain customers at the rates that we originally hoped.

“Over the past few months, we have taken some dramatic steps to transform our business. These measures included closing the South African office, adding sales and marketing resources, enhancing our R&D team, and securing partnerships with adjacent solution providers, such as Shutterstock, to strengthen the value of our offering and enable us to become more entrenched within our growing customer base.

“With the corporate restructuring now fully behind us, we are in a stronger position to capitalize on the rapidly expanding marketing automation industry. Although there is still work to be done, we believe we entered 2017 with a completely clean slate, looking leaner and more focused than ever. We expect to leverage this focus over the coming months in the form of accelerated sales starting in Q2 and through the rest of 2017.”

Conference Call
SharpSpring management will hold a conference call today (March 15, 2017) 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: 877-407-4018
International number: 201-689-8471

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 April 5, 2017.

Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 13654839

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.

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 Form 10-Q 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 Najim Mostamand
949-574-3860
SHSP@liolios.com