SHSP - SharpSpring Reports Second Quarter 2021 Results
Strategic Acquisition by Clearlake Capital and Siris-Backed Constant Contact to Maximize Growth and Audience Engagement for Small Businesses
GAINESVILLE, FL / ACCESSWIRE / August 12, 2021 / SharpSpring, Inc. (NASDAQ:SHSP), a leading cloud-based revenue growth platform, reported financial results for the second quarter ended June 30, 2021.
Recent Operational Highlights
- Signed definitive agreement to be acquired by Clearlake Capital and Siris-backed Constant Contact, an established leader in online marketing. Under the terms of the agreement, Constant Contact will acquire all the outstanding common stock of SharpSpring for $17.10 per share in cash. The transaction is expected to close in the third quarter of 2021 subject to customary closing conditions including a SharpSpring stockholder approval.
- Appointed marketing technology leader Suaad Sait as President. Sait brings an extensive background leading product, engineering, and marketing at high-growth SaaS companies.
- Appointed senior finance executive and capital markets veteran Jason Costi to Board of Directors, who has also been named a member of the Company's Audit, Nominating and Corporate Governance Committees.
Second Quarter 2021 Key Performance Indicators (KPIs)
- Total monthly recurring revenue (MRR) from new customers in the second quarter of 2021 was approximately $100,000 compared to $159,000 in the second quarter of 2020 and $100,000 in the first quarter of 2021.
- New customer additions are expected to generate approximately $1.2 million in annual recurring revenue (ARR).
- Finished the quarter with approximately 1,900 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.
- Average monthly logo attrition in the second quarter of 2021 improved to 2.4% compared to 4.31% in the second quarter of 2020.
- On a year-over-year basis, Q2 2021 net revenue retention was 92.5%, a decrease from 94.4% in Q1 2021.
Second Quarter 2021 Financial Results
- Total revenue increased 11% to a record $8.1 million from $7.3 million in the same year-ago period.
- Gross profit increased 13% to a record $ 6.1 million (76% of total revenue) from .4 million (74% of total revenue) in the same year-ago period.
- Net loss was $354,000, or $0.03 per share, compared to net loss of $970,000, or $0.08 per share, in the same year-ago period.
- Adjusted EBITDA loss (a non-GAAP metric reconciled below) totaled $2.1 million, compared to an adjusted EBITDA loss of $122,000 in the same year-ago period.
- Core net loss (a non-GAAP metric reconciled below) totaled $2.6 million or $0.20 per share, compared to core net loss of $381,000, or $0.03 per share, in the same year-ago period.
- At quarter-end, the Company had $25.2 million in cash, compared to $28.3 million at December 31, 2020.
Conference Call
Due to the Company's entry into the agreement and plan of merger previously announced on June 22, 2021, SharpSpring will only be issuing a press release and will not be conducting a conference call.
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 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 |
| Six Months Ended |
| June 30, |
| June 30, |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
Revenue |
| 8,106,243 |
| $ |
| 7,270,905 |
| $ |
| 16,095,473 |
| $ |
| 14,323,634 |
Cost of services |
| 1,984,662 |
| $ |
| 1,873,029 |
| 3,874,675 |
| $ |
| 4,240,671 |
Gross profit |
| 6,121,581 |
| 5,397,876 |
| 12,220,798 |
| 10,082,963 |
Operating expenses: |
Sales and marketing |
| 3,915,096 |
| 2,395,100 |
| 7,706,478 |
| 5,429,222 |
Research and development |
| 2,111,540 |
| 1,484,890 |
| 4,227,280 |
| 3,063,029 |
General and administrative |
| 3,522,971 |
| 2,244,560 |
| 6,294,610 |
| 4,658,401 |
Intangible asset amortization |
| 171,549 |
| 183,746 |
| 343,098 |
| 336,547 |
Total operating expenses |
| 9,721,156 |
| 6,308,296 |
| 18,571,466 |
| 13,487,199 |
| - |
Operating loss |
| (3,599,575 |
| ) |
| (910,420 |
| ) |
| (6,350,668 |
| ) |
| (3,404,236 |
| ) |
Other income (expense), net |
| (21,354 |
| ) |
| (2,777 |
| ) |
| (14,519 |
| ) |
| (59,556 |
| ) |
Gain on extinguishment of debt |
| 3,271,101 |
| - |
| 3,438,077 |
| - |
Loss before income taxes |
| (349,828 |
| ) |
| (913,197 |
| ) |
| (2,927,110 |
| ) |
| (3,463,792 |
| ) |
Provision (benefit) for income taxes |
| 3,947 |
| 57,187 |
| 10,520 |
| (1,505,331 |
| ) |
| - |
Net loss |
| (353,775 |
| ) |
| (970,384 |
| ) |
| (2,937,630 |
| ) |
| (1,958,461 |
| ) |
Net loss per share, basic and diluted |
| $ |
| (0.03 |
| ) |
| $ |
| (0.08 |
| ) |
| $ |
| (0.23 |
| ) |
| $ |
| (0.17 |
| ) |
Weighted average common shares outstanding, basic and diluted |
| 12,852,131 |
| 11,529,324 |
| 12,833,148 |
| 11,525,258 |
SharpSpring, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, |
| December 31, |
| 2021 |
| 2020 |
Assets |
Cash and cash equivalents |
| 25,157,240 |
| $ |
| 28,267,792 |
Accounts receivable |
| 300,149 |
| 323,130 |
Unbilled receivables |
| 1,265,527 |
| 1,248,060 |
Income taxes receivable |
| 143,498 |
| 54,449 |
Other current assets |
| 1,293,952 |
| 1,433,543 |
Total current assets |
| 28,160,366 |
| 31,326,974 |
Property and equipment, net |
| 1,861,067 |
| 2,188,948 |
Goodwill |
| 10,230,917 |
| 10,250,088 |
Intangibles, net |
| 3,672,753 |
| 4,015,851 |
Right-of-use assets |
| 7,934,913 |
| 8,352,028 |
Other long-term assets |
| 584,435 |
| 611,857 |
Total assets |
| 52,444,451 |
| $ |
| 56,745,746 |
Liabilities and Shareholders' Equity |
Accounts payable |
| 964,933 |
| $ |
| 1,074,594 |
Accrued expenses and other current liabilities |
| 2,242,981 |
| 1,259,836 |
Line of credit |
| 1,900,000 |
| 1,900,000 |
Deferred revenue |
| 862,767 |
| 845,265 |
Income taxes payable |
| 23,755 |
| 81,221 |
Lease liability, current portion |
| 748,499 |
| 724,627 |
Notes payable, current portion |
| - |
| 2,630,962 |
Total current liabilities |
| 6,742,935 |
| 8,516,505 |
Lease liability, net of current portion |
| 7,358,118 |
| 7,771,898 |
Notes payable, net of current portion |
| - |
| 768,538 |
Total liabilities |
| 14,101,053 |
| 17,056,941 |
Shareholders' equity: |
Preferred stock, $0.001 par value |
| - |
| - |
Common stock, $0.001 par value |
| 12,902 |
| 12,819 |
Additional paid in capital |
| 77,141,573 |
| 75,544,966 |
Accumulated other comprehensive loss |
| (219,736 |
| ) |
| (215,269 |
| ) |
Accumulated deficit |
| (38,507,341 |
| ) |
| (35,569,711 |
| ) |
Treasury stock |
| (84,000 |
| ) |
| (84,000 |
| ) |
Total shareholders' equity |
| 38,343,398 |
| 39,688,805 |
Total liabilities and shareholders' equity |
| 52,444,451 |
| $ |
| 56,745,746 |
SharpSpring, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Three Months Ended |
| Six Months Ended |
| June 30, |
| June 30, |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
Net loss |
| (353,775 |
| ) |
| $ |
| (970,384 |
| ) |
| $ |
| (2,937,630 |
| ) |
| $ |
| (1,958,461 |
| ) |
Adjustments to reconcile loss from operations: |
Depreciation and amortization |
| 597,230 |
| 417,560 |
| 1,041,311 |
| 774,140 |
Gain on extinguishment of debt |
| (3,271,101 |
| ) |
| - |
| (3,438,077 |
| ) |
| - |
Amortization of costs to acquire contracts |
| 203,009 |
| 202,329 |
| 407,282 |
| 404,767 |
Non-cash stock compensation |
| 582,820 |
| 370,418 |
| 1,138,405 |
| 741,051 |
Loss on disposal of property and equipment |
| 1,773 |
| - |
| 3,299 |
| - |
Unrealized foreign currency (gain) loss |
| 1,704 |
| 29,201 |
| (45,204 |
| ) |
| 109,928 |
Changes in assets and liabilities: |
| - |
Accounts receivable |
| 67,482 |
| (20,988 |
| ) |
| 20,362 |
| (106,260 |
| ) |
Unbilled receivables |
| 4,081 |
| (40,819 |
| ) |
| (27,704 |
| ) |
| (133,315 |
| ) |
Right-of-use assets |
| 210,137 |
| (3,069,671 |
| ) |
| 417,115 |
| (3,475,390 |
| ) |
Other assets |
| (46,303 |
| ) |
| 63,772 |
| (239,733 |
| ) |
| (279,099 |
| ) |
Income taxes, net |
| (151,437 |
| ) |
| 1,596,583 |
| (144,864 |
| ) |
| 33,639 |
Accounts payable |
| 86,004 |
| (1,010,945 |
| ) |
| (108,933 |
| ) |
| (120,934 |
| ) |
Lease liabilities |
| (196,534 |
| ) |
| 3,090,202 |
| (389,909 |
| ) |
| 3,511,291 |
Accrued expenses and other current liabilities |
| 588,966 |
| 106,198 |
| 975,631 |
| (288,041 |
| ) |
Deferred revenue |
| (91,145 |
| ) |
| (107,604 |
| ) |
| 20,294 |
| (201,893 |
| ) |
Net cash provided by (used in) operating activities |
| (1,767,089 |
| ) |
| 650,348 |
| (3,308,355 |
| ) |
| (994,081 |
| ) |
Cash flows from investing activities |
Purchases of property and equipment |
| (139,457 |
| ) |
| (211,970 |
| ) |
| (169,328 |
| ) |
| (352,900 |
| ) |
Capitalization of software development costs |
| (136,728 |
| ) |
| (151,842 |
| ) |
| (204,302 |
| ) |
| (424,124 |
| ) |
Net cash used in investing activities |
| (276,185 |
| ) |
| (363,812 |
| ) |
| (373,630 |
| ) |
| (777,024 |
| ) |
Cash flows used in financing activities: |
Proceeds from line of credit |
| - |
| - |
| 1,900,000 |
Proceeds from note payable |
| - |
| 3,399,500 |
| - |
| 3,399,500 |
Proceeds from exercise of stock options, net |
| 321,950 |
| 12,288 |
| 502,037 |
| 23,462 |
Payments for taxes related to net share settlement of equity awards |
| (11,234 |
| ) |
| (1,869 |
| ) |
| (36,252 |
| ) |
| (28,402 |
| ) |
Net cash provided by financing activities |
| 310,716 |
| 3,409,919 |
| 465,785 |
| 5,294,560 |
Effect of exchange rate on cash |
| 29,863 |
| (34,609 |
| ) |
| 105,648 |
| (118,509 |
| ) |
Change in cash and cash equivalents |
| (1,702,695 |
| ) |
| 3,661,846 |
| (3,110,552 |
| ) |
| 3,404,946 |
Cash and cash equivalents, beginning of period |
| 26,859,935 |
| 11,625,049 |
| 28,267,792 |
| 11,881,949 |
Cash and cash equivalents, end of period |
| 25,157,240 |
| 15,286,895 |
| 25,157,240 |
| 15,286,895 |
SharpSpring, Inc.
RECONCILIATION TO ADJUSTED EBITDA
(Unaudited, in Thousands)
| Three Months Ended |
| Six Months Ended |
| June 30, |
| June 30, |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
Net loss |
| (354 |
| ) |
| $ |
| (970 |
| ) |
| $ |
| (2,938 |
| ) |
| $ |
| (1,958 |
| ) |
Provision (benefit) for income taxes |
| 4 |
| 57 |
| 11 |
| (1,505 |
| ) |
Other (income) expense, net |
| 21 |
| 3 |
| 15 |
| 60 |
Gain on extinguishment of debt |
| (3,271 |
| ) |
| - |
| (3,438 |
| ) |
| - |
Depreciation & amortization |
| 597 |
| 418 |
| 1,041 |
| 774 |
Non-cash stock compensation |
| 583 |
| 370 |
| 1,138 |
| 741 |
Restructuring |
| 273 |
| - |
| 273 |
| - |
Adjusted EBITDA |
| (2,147 |
| ) |
| (122 |
| ) |
| (3,898 |
| ) |
| (1,888 |
| ) |
SharpSpring, Inc.
RECONCILIATION TO CORE NET LOSS AND CORE NET LOSS PER SHARE
(Unaudited, in Thousands)
| Three Months Ended |
| Six Months Ended |
| June 30, |
| June 30, |
| 2021 |
| 2020 |
| 2021 |
| 2020 |
Net loss |
| (354 |
| ) |
| $ |
| (970 |
| ) |
| $ |
| (2,938 |
| ) |
| $ |
| (1,958 |
| ) |
Amortization of intangible assets |
| 172 |
| 184 |
| 343 |
| 337 |
Non-cash stock compensation |
| 583 |
| 370 |
| 1,138 |
| 741 |
Gain on extinguishment of debt |
| (3,271 |
| ) |
| - |
| (3,438 |
| ) |
| - |
Restructuring |
| 273 |
| - |
| 273 |
| - |
Tax adjustment |
| (4 |
| ) |
| 35 |
| (6 |
| ) |
| (112 |
| ) |
Core net income |
| (2,601 |
| ) |
| (381 |
| ) |
| $ |
| (4,628 |
| ) |
| $ |
| (992 |
| ) |
Core net loss per share |
| $ |
| (0.20 |
| ) |
| $ |
| (0.03 |
| ) |
| $ |
| (0.36 |
| ) |
| $ |
| (0.09 |
| ) |
Weighted average common shares outstanding |
| 12,852 |
| 11,529 |
| 12,833 |
| 11,525 |
SOURCE: SharpSpring, Inc.
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