Tenth Consecutive Record Topline Performance Highlighted by Steady New Customer Additions, Improving Retention Efforts and Agency Customer Expansion
GAINESVILLE, FL – November 7, 2019 – SharpSpring, Inc. (NASDAQ: SHSP), a leading cloud-based marketing automation platform, reported financial results for the third quarter ended September 30, 2019.
- Added 264 new SharpSpring 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 $1.9 million in annual recurring revenue.
- Agency sales were 221 in Q3 2019, compared to 221 in the prior quarter and 243 in the third quarter of 2018.
- Direct customer sales were 43 in Q3 2019, of which 84% are annual contracts, compared to 69 in the prior quarter (35% annual contracts), and 103 in the third quarter of 2018 (3% annual contracts).
- Finished the quarter with 1,933 agency customers, 526 direct customers and nearly 8,500 businesses using the SharpSpring Marketing Automation platform.
- Reduced average monthly net revenue attrition to 1.2% for comparable cohorts.
- Strengthened the Company’s leadership and improved shareholder representation on its Board of Directors through the appointment of Scott Miller, a multi-decade investment manager with significant operating experience, to the SharpSpring Board.
- Announced the release of Meetings, a fully integrated calendar tool for individuals and sales teams built to streamline scheduling and increase conversions.
Third Quarter 2019 Financial Results
- SharpSpring Marketing Automation revenues grew 18% to a record $5.7 million from $4.8 million in the same year-ago period.
- Total revenue (which includes legacy products) increased 17% to a record $5.7 million from $4.9 million in the same year-ago period.
- Gross profit increased 14% to $3.9 million (68% of total revenue) from $3.4 million (70% of total revenue) in the same year-ago period.
- Net loss was $2.5 million, or $0.23 per share, compared to net loss of $2.7 million, or $0.32 per share, in the third quarter of 2018.
- Adjusted EBITDA loss (a non-GAAP metric reconciled below) totaled $2.0 million, compared to an adjusted EBITDA loss of $1.5 million in the same year-ago period.
- Core net loss (a non-GAAP metric reconciled below) totaled $2.1 million, or $0.20 per share, compared to core net loss of $1.9 million, or $0.22 per share, in the same year-ago period.
- At quarter-end, the company had $13.8 million in cash, compared to $9.3 million at December 31, 2018.
2019 Financial Outlook
For the fiscal year ending December 31, 2019, SharpSpring expects total revenue to range between $22.4 million and $22.5 million, which would represent an approximate increase of 20% to 21%, respectively, compared to the prior year. The company’s guidance is based on recurring revenue from our current customer base and year-to-date performance continuing in Q4.
Going forward, the Company plans to continue providing revenue guidance on an annual basis. At this time, SharpSpring intends to release a preliminary 2020 financial outlook early in the coming fiscal year.
“In the third quarter, we continued to make considerable progress against a number of our long-term company initiatives while generating consistent financial results in all of our key operating segments,” said SharpSpring CEO Rick Carlson. “Q3 marked our tenth consecutive quarter of record revenue at $5.7 million, which was driven by steady growth in new agency customer wins as well as expansions within existing customers. Year-to-date, we’ve generated 23% topline growth and currently have over 1,900 agency customers and nearly 8,500 businesses on our platform, which speaks to the ability of our team to continue generating long-term returns.
“Operationally, we made encouraging progress in one of our major ongoing initiatives, which is to reduce customer attrition and increase expansion revenue opportunities, as evidenced by the improvement in our net revenue attrition, which fell to a monthly average of 1.2% for comparable cohorts during the third quarter. We are also pleased with the initial traction we’re seeing from our Account Management efforts, where Q3 represented the first quarter with both our agency and direct teams fully staffed. In addition to increasing the lifetime value of our customers, which is always a top priority, we’re also continually looking at ways to drive new customer acquisition efficiency at all stages of the funnel. Heading into the end of the year, we’re making all the right moves to keep our company headed decisively in the right direction. With our inaugural annual guidance introduced at $22.4 million to $22.5 million, as well as our expectation for higher growth in the new year, we feel strongly that our best results lie ahead of us.”
SharpSpring management will hold a conference call today, November 7, 2019 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.
Company CEO Rick Carlson and CFO Brad Stanczak will host the call, followed by a question and answer period.
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.
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 21, 2019.