GAINESVILLE, Fla., Nov. 08, 2017 (GLOBE NEWSWIRE) -- SharpSpring, Inc. (NASDAQ:SHSP), a global provider of cloud-based marketing technologies, reported financial results for the third quarter ended September 30, 2017. 

Third Quarter 2017 Financial Results from Continuing Operations

  • Flagship SharpSpring product revenues grew 29% from $2.5 million in Q3 last year to $3.2 million this year, and was 95% of total revenues in the quarter.
  • Overall revenue increased 13% to $3.4 million from $3.0 million in the same year-ago period, which includes legacy products.
  • Gross profit increased to 65% of revenue, or $2.2 million, in the third quarter of 2017 from 58% of revenue, or $1.7 million, in the third quarter of 2016. 
  • Net loss from continuing operations totaled $1.7 million, or $0.20 per share, compared to a net loss from continuing operations of $1.2 million, or $0.15 per share, in the third quarter of 2016.
  • Adjusted EBITDA loss (a non-GAAP metric reconciled below) totaled $1.3 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 $1.3 million, or $0.16 per share, compared to core net loss from continuing operations of $693,000, or $0.08 per share, in the same year-ago period.
  • At quarter-end, the company had $6.3 million in cash and no debt.

Third Quarter 2017 Operational Highlights

  • Added a record 258 new SharpSpring customers, up 24% from the prior quarter, and finished the quarter with 1,327 agency customers and over 6,400 businesses using the flagship platform.
  • Expanded integration with PieSync, further extending the SharpSpring platform by providing users with native in-app two-way contact syncing with more than 80 cloud-based platforms.
  • Launched a new visual workflow builder to enhance the SharpSpring solution by simplifying the creation of complex automation tasks and allowing marketers to visualize the process as their campaigns are created.

Management Commentary
“The third quarter represented a significant return to growth in new customer wins with the best sales quarter in SharpSpring’s history,” said company CEO Rick Carlson. “After adding a record 258 new customers in Q3, we now have more than 1,327 agency partners and over 6,400 businesses using our platform.

“As expected, we are now seeing the positive effects of our increased sales and marketing initiatives and are reaping the benefits from the strengthening customer pipeline that we built up in the first half of the year. We are working to continually refine and improve those strategies to attract and win new customers in a more efficient and profitable manner. Looking ahead, SharpSpring is increasingly well positioned to benefit from the growing adoption of marketing automation solutions. As we continue to execute on our long-term growth plan, we believe we have the right foundation in place to capitalize on our pipeline and leverage our infrastructure as we grow.”

Conference Call
SharpSpring management will hold a conference call today (November 8, 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: 877-451-6152
International number: 201-389-0879

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 November 29, 2017.

Toll-free replay number: 844-512-2921  
International replay number: 412-317-6671
Replay ID: 13671804

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 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 Tom Colton
949-574-3860
SHSP@liolios.com

  
SharpSpring, Inc. 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited) 
         
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
  2017   2016   2017   2016  
Revenue$3,411,580  $3,010,307  $9,681,433  $8,688,723  
         
Cost of services 1,210,088   1,269,473   3,776,353   3,350,996  
Gross profit 2,201,492   1,740,834   5,905,080   5,337,727  
         
Operating expenses:        
Sales and marketing 1,801,701   1,445,152   5,025,539   4,084,446  
Research and development 703,392   612,117   2,094,309   1,651,809  
General and administrative 1,353,972   1,232,996   3,941,877   3,171,052  
Change in earn out liability -   -   -   219,473  
Intangible asset amortization 132,298   298,823   395,690   1,068,839  
         
Total operating expenses 3,991,363   3,589,088   11,457,415   10,195,619  
         
Operating loss (1,789,871)  (1,848,254)  (5,552,335)  (4,857,892) 
         
Other income (expense), net (2,708)  105,104   75,895   474,983  
         
Loss before income taxes (1,792,579)  (1,743,150)  (5,476,440)  (4,382,909) 
Provision (benefit) for income tax (111,059)  (519,293)  (1,004,899)  (1,334,800) 
         
Net loss from continuing operations (1,681,520)  (1,223,857)  (4,471,541)  (3,048,109) 
Net income from discontinued operations, net of tax -   -   -   10,187,451  
Net income (loss)$(1,681,520) $(1,223,857) $(4,471,541) $7,139,342  
         
Net loss per share from continuing operations        
Basic net loss per share$(0.20) $(0.15) $(0.53) $(0.39) 
Diluted net loss per share$(0.20) $(0.15) $(0.53) $(0.39) 
         
Net income per share from discontinued operations        
Basic net income per share$-  $-  $-  $1.32  
Diluted net income per share$-  $-  $-  $1.32  
         
Net income (loss) per share        
Basic net income (loss) per share$(0.20) $(0.15) $(0.53) $0.92  
Diluted net income (loss) per share$(0.20) $(0.15) $(0.53) $0.92  
         
Weighted average common shares outstanding        
Basic 8,399,920   8,345,750   8,383,639   7,741,351  
Diluted 8,399,920   8,345,750   8,383,639   7,741,351  
         
         
         
SharpSpring, Inc.     
CONSOLIDATED BALANCE SHEETS     
(Unaudited)     
         
 September 30, December 31,     
  2017   2016      
Assets        
Cash and cash equivalents$6,316,883  $8,651,374      
Accounts receivable 687,491   1,261,923      
Income taxes receivable 2,043,479   1,355,180      
Other current assets 298,801   1,396,642      
Total current assets 9,346,654   12,665,119      
         
Property and equipment, net 843,606   905,345      
Goodwill 8,870,649   8,845,394      
Intangibles, net 2,458,128   2,850,635      
Deferred income taxes 34,732   32,996      
Deposits 26,022   30,464      
Total assets$21,579,791  $25,329,953      
         
Liabilities and Shareholders' Equity        
Accounts payable$887,474  $498,534      
Accrued expenses and other current liabilities 575,406   953,171      
Deferred revenue 276,673   280,159      
Income taxes payable 448,694   484,349      
Total current liabilities 2,188,247   2,216,213      
         
Deferred income taxes 287,434   195,495      
Total liabilities 2,475,681   2,411,708      
         
Shareholders' equity:        
Preferred stock, $0.001 par value -   -      
Common stock, $0.001 par value 8,433   8,381      
Additional paid in capital 28,134,643   27,556,398      
Accumulated other comprehensive loss (365,945)  (445,055)     
Accumulated deficit (8,589,021)  (4,117,479)     
Treasury stock (84,000)  (84,000)     
Total shareholders' equity 19,104,110   22,918,245      
         
Total liabilities and shareholders' equity$21,579,791  $25,329,953      
         
         
SharpSpring, Inc. 
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited) 
         
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
  2017   2016   2017   2016  
Net income (loss)$(1,681,520) $(1,223,857) $(4,471,541) $7,139,342  
Deduct: Income from discontinued operations, net of income taxes -   -   -   10,187,451  
Net loss from continuing operations (1,681,520)  (1,223,857)  (4,471,541)  (3,048,109) 
         
Adjustments to reconcile income from continuing operations:        
Depreciation and amortization 204,197   355,026   602,780   1,169,043  
Non-cash stock compensation 199,686   163,935   559,437   499,763  
Deferred income taxes 25,960   -   24,775   (82,974) 
(Gain)/loss on disposal of property and equipment 3,481   120,225   3,481   128,978  
Non-cash change in value of earn out liability -   -   -   219,473  
Non-cash gain from escrow claim -   -   -   (84,000) 
Unearned foreign currency gain/loss 72,091   (77,163)  52,346   (159,089) 
Changes in assets and liabilities:        
Accounts receivable 112,757   (258,588)  618,140   (301,602) 
Other assets (69,059)  (79,019)  103,345   (334,641) 
Income taxes, net (181,537)  (3,078,095)  (680,297)  (3,369,621) 
Accounts payable 289,283   173,658   366,469   120,660  
Accrued expenses and other current liabilities 130,111   480,868   (323,378)  379,324  
Deferred revenue 24,895   (191,053)  (13,093)  (228,472) 
Net cash provided by (used in) operating activities - Continuing operations (869,655)  (3,614,063)  (3,157,536)  (5,091,267) 
Net cash provided by (used in) operating activities - Discontinued operations -   -   -   785,830  
Net cash provided by (used in) operating activities (869,655)  (3,614,063)  (3,157,536)  (4,305,437) 
         
Cash flows from investing activities        
Purchases of property and equipment (15,224)  (290,950)  (148,555)  (442,231) 
Acquisitions of customer assets from resellers -   (71,764)  (64,268)  (548,278) 
Changes in restricted cash -   250,000   -   -  
Net cash provided by (used in) investing activities - Continuing operations (15,224)  (112,714)  (212,823)  (990,509) 
Net cash provided by (used in) investing activities - Discontinued operations -   -   1,000,000   13,945,548  
Net cash provided by (used in) investing activities (15,224)  (112,714)  787,177   12,955,039  
         
Cash flows used in financing activities:        
Payment to reduce earn out -   -   -   (1,207,929) 
Proceeds from exercise of stock options  17,500   -   18,859   1,125  
Net cash provided by (used in) financing activities - Continuing operations 17,500   -   18,859   (1,206,804) 
Net cash provided by (used in) financing activities - Discontinued operations -   -   -   -  
Net cash provided by (used in) financing activities 17,500   -   18,859   (1,206,804) 
         
Effect of exchange rate on cash (18,633)  7,588   17,009   14,730  
         
Change in cash and cash equivalents (886,012)  (3,719,189)  (2,334,491)  7,457,528  
         
Cash and cash equivalents, beginning of period 7,202,895   15,335,363   8,651,374   4,158,646  
         
Cash and cash equivalents, end of period$6,316,883  $11,616,174  $6,316,883  $11,616,174  
         
         
SharpSpring, Inc. 
RECONCILIATION TO ADJUSTED EBITDA 
(Unaudited, in Thousands) 
         
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
  2017   2016   2017   2016  
Net loss from continuing operations$(1,682) $(1,224) $(4,472) $(3,048) 
Provision (benefit) for income tax (111)  (519)  (1,005)  (1,335) 
Other (income) expense, net 3   (105)  (76)  (475) 
Depreciation & amortization 204   355   603   1,169  
Non-cash stock compensation 200   164   559   500  
Acquisition-related charges 38   -   68   219  
Restructuring charges -   294   -   394  
Adjusted EBITDA   (1,348)    (1,035)    (4,323)    (2,576) 
         
         
SharpSpring, Inc. 
RECONCILIATION TO CORE NET LOSS AND CORE LOSS PER SHARE 
(Unaudited, in Thousands) 
         
 Three Months Ended Nine Months Ended 
 September 30, September 30, 
  2017   2016   2017   2016  
Net loss from continuing operations$(1,682) $(1,224) $(4,472) $(3,048) 
Amortization of intangible assets 132   299   396   1,069  
Non-cash stock compensation 200   164   559   500  
Acquisition-related charges 38   -   68   219  
Restructuring charges -   294   -   394  
Gain from escrow claim -   -   -   (260) 
Tax adjustment (23)  (226)  (181)  (518) 
Core net loss from continuing operations$   (1,335) $   (693) $   (3,630) $   (1,644) 
         
Core net loss per share from continuing operations$   (0.16) $   (0.08) $   (0.43) $   (0.21) 
Weighted average common shares outstanding 8,400   8,346   8,384   7,741