SharpSpring, Inc. revenue jumped on 38.7% and EBITDA Margin increased on 3.2 pp from -45.9% to -42.7%
02/27/2019 • About SharpSpring, Inc. (
$SHSP) • By InTwits
SharpSpring, Inc. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- SharpSpring, Inc. is a fast growth stock: 2018 revenue growth was 38.7%, 5 year revenue CAGR was 26.5% at 2018 ROIC -42.1%
- The company operates at negative EBITDA Margin: -42.7%
- SharpSpring, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -48.5% for the sames years
- SharpSpring, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.4%. At the same time it's a lot of higher than industry average of 3.6%.
- CAPEX is quite volatile: $1m in 2018, $0m in 2017, $0m in 2016, $1m in 2015, $0m in 2014
- The company has unprofitable business model: ROIC is -42.1%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
SharpSpring, Inc.'s Revenue surged on 38.7%. Revenue growth showed small slowdown in 18Q4 - it was 36.7% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin dropped on 15.4 pp from -9.7% to -25.2% in FY2018. During 2014-2018 EBITDA Margin bottomed in 2015 at -87.6% and was growing since that time.
Gross Margin increased on 6.1 pp from 62.8% to 68.9% in 2018. During the last 5 years Gross Margin bottomed in 2016 at 61.3% and was growing since that time. SG&A as a % of Revenue decreased slightly on 1.2 pp from 89.4% to 88.2% in 2018.
Net Income margin dropped on 16.1 pp from -34.7% to -50.8% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 SharpSpring, Inc. had CAPEX/Revenue of 4.8%. The company's CAPEX/Revenue decreased on 2.0 pp from 6.8% in 2015 to 4.8% in 2018. Average CAPEX/Revenue for the last three years was 3.4%.
Return on investment
The company operates at negative ROIC (-42.1%) and ROE (-57.9%). ROIC dropped on 11.0 pp from -31.1% to -42.1% in 2018. ROE dropped on 36.1 pp from -21.8% to -57.9% in 2018.
Leverage (Debt)
Debt level is -47.1x Net Debt / EBITDA and Debt / EBITDA. Debt surged while cash jumped on 72.6%.
The company has no short term refinancing risk: short term debt is zero.
Financial and operational results
FY ended 12/31/2018
SharpSpring, Inc. ($SHSP) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 7.499 | 9.184 | 11.542 | 13.449 | 18.652 | 38.7% |
| Gross Profit | 5.784 | 6.403 | 7.079 | 8.452 | 12.853 | 52.1% |
| SG&A | 4.970 | 9.045 | 9.759 | 12.024 | 16.451 | 36.8% |
| EBITDA | -0.531 | -8.042 | -6.508 | -6.176 | -7.972 | |
| Net Income | -0.841 | -8.244 | 4.951 | -4.670 | -9.479 | |
Balance Sheet
|
|---|
| Cash | 2.826 | 4.159 | 8.651 | 5.400 | 9.321 | 72.6% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 8.342 | |
Cash flow
|
|---|
| Capex | 0.000 | 0.626 | 0.456 | 0.177 | 0.894 | 404.7% |
Ratios
|
|---|
| Revenue growth | 30.3% | 22.5% | 25.7% | 16.5% | 38.7% | |
| EBITDA growth | -126.0% | 1,413.0% | -19.1% | -5.1% | 29.1% | |
|
|---|
| Gross Margin | 77.1% | 69.7% | 61.3% | 62.8% | 68.9% | 6.1% |
| EBITDA Margin | -7.1% | -87.6% | -56.4% | -45.9% | -42.7% | 3.2% |
| SG&A, % of revenue | 66.3% | 98.5% | 84.6% | 89.4% | 88.2% | -1.2% |
| Net Income Margin | -11.2% | -89.8% | 42.9% | -34.7% | -50.8% | -16.1% |
| CAPEX, % of revenue | 0.0% | 6.8% | 3.9% | 1.3% | 4.8% | 3.5% |
|
|---|
| ROIC | -14.5% | -78.4% | -42.8% | -31.1% | -42.1% | -11.0% |
| ROE | -11.9% | -64.3% | 27.3% | -21.8% | -57.9% | -36.1% |
SharpSpring, Inc. ($SHSP) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 4 | 4 | 5 | 5 | | 38.4% | 36.8% | 42.8% | 36.7% |
| EBITDA | -2 | -2 | -2 | -2 | | | | | |
| Net Income | -2 | -2 | -3 | -2 | | | | | |
Balance Sheet
|
|---|
| Cash | 12 | 13 | 11 | 9 | | 58.6% | 74.0% | 77.0% | 72.6% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 8 | 8 | 8 | 8 | | | | | |
Ratios
|
|---|
| Gross Margin | 66.5% | 66.1% | 69.8% | 72.5% | | 8.6% | 6.0% | 5.3% | 4.9% |
| EBITDA Margin | -45.1% | -39.8% | -46.1% | -40.1% | | 12.7% | 5.7% | -2.6% | -1.3% |
| Net Income Margin | -49.0% | -55.5% | -55.6% | -43.7% | | -3.4% | -16.3% | -9.2% | -32.1% |
Peers in Application Software
Below you can find SharpSpring, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 13.5% | 13.6% | 14.8% | 15.2% |
|---|
| SharpSpring, Inc. ($SHSP) | | 22.5% | 25.7% | 16.5% | 38.7% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 64.2% | 64.6% | 65.7% |
|---|
| SharpSpring, Inc. ($SHSP) | 77.1% | 69.7% | 61.3% | 62.8% | 68.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.3% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| SharpSpring, Inc. ($SHSP) | -7.1% | -87.6% | -56.4% | -45.9% | -42.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| SharpSpring, Inc. ($SHSP) | 0.0% | 6.8% | 3.9% | 1.3% | 4.8% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| SharpSpring, Inc. ($SHSP) | -14.5% | -78.4% | -42.8% | -31.1% | -42.1% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
