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Edited Transcript of SHSP earnings conference call or presentation 6-Mar-18 9:30pm GMT

Q4 2017 SharpSpring Inc Earnings Call

Cambridge Mar 8, 2018 (Thomson StreetEvents) -- Edited Transcript of SharpSpring Inc earnings conference call or presentation Tuesday, March 6, 2018 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Edward Seymour Lawton

SharpSpring, Inc. - CFO

* Richard Alan Carlson

SharpSpring, Inc. - CEO, President, Secretary and Director

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Conference Call Participants

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* Bynum Hunter

* Eric Martinuzzi

Lake Street Capital Markets, LLC, Research Division - Director of Research & Senior Research Analyst

* Michael Fawzy Malouf

Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team

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Presentation

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Operator [1]

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Good afternoon. Welcome to SharpSpring's Fourth Quarter and Full Year 2017 Earnings Conference Call. Joining us for today's call are SharpSpring's CEO, Rick Carlson; and CFO, Ed Lawton.

(Operator Instructions) Then, before we conclude today's call, I'll provide the necessary cautions regarding the forward-looking statements made by management during this call.

I would now like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's website at investors.sharpspring.com.

Now I would like to turn the call over to SharpSpring's CEO, Rick Carlson. Sir, please proceed.

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [2]

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Welcome, everyone, and thank you for joining us today. After the market close, we issued a press release announcing our results for the fourth quarter and full year ending December 31, 2017. A copy of the press release is available in the Investor Relations section of our website.

The fourth quarter represented the culmination of a strong 2017, highlighted by increased investment in our business, resulting in accelerated growth of our new customer wins. In Q4 specifically, we had our second consecutive new sales record and grew our revenues by more than 32%, all while improving our margins for the fourth consecutive quarter. These positive results for both the quarter and full year were driven by the continued strength of our flagship marketing automation platform, whose top line grew over 40% during the year, leading to more than 1,400 agency customers and over 6,700 businesses now using our solution.

Going forward, we are looking to continue our significant growth into the new year. Our targeted marketing campaigns, new business development initiatives, and bolstered R&D have all collectively worked to not only enhance our sales execution but also improve the overall experience for our customers.

I plan to dive into more detail on all of these topics shortly, but before I go any further, I'm going to turn the call over to our CFO, Ed Lawton, who'll provide our financial results for the quarter end year. After that, I'll jump back on to give you more detail -- a more detailed recap of 2017 as well as provide color on some of our more current developments and finish with a look into the present quarter and outlook for the rest of 2018.

And with that, I'll turn it over to Ed. Ed?

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Edward Seymour Lawton, SharpSpring, Inc. - CFO [3]

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Thank you, Rick. Turning to our financial results for the fourth quarter and full year ended December 31, 2017. Our overall revenue in the fourth quarter increased 32% to $3.8 million from $2.9 million in Q4 of last year. Our flagship SharpSpring marketing automation solution grew by 36% to $3.6 million compared to $2.7 million last year. Flagship product revenues were 96% of total revenues, an improvement from 93% in the same period a year ago. With this quarter's revenue results, we have now surpassed a $15 million annualized revenue run rate on a consolidated basis.

For the full year 2017, our overall revenue increased 17% to $13.4 million from $11.5 million in 2016. Our flagship marketing automation solution grew by 41% to a record $12.8 million compared to $9.1 million last year. As a percentage of total revenue, our flagship price was 95% for the full year of 2017 compared to 79% in 2016.

Our gross margin for the fourth quarter of 2017 increased to 68% from 59% last year and 65% last quarter. In dollar terms, gross profit increased 50% to $2.5 million from $1.7 million in Q4 of last year. For the full year of 2017, gross profit increased 19% to $8.5 million or 63% of total revenue, from $7.1 million or 61% of total revenue in 2016.

Over the past few years, we have invested in our hosting infrastructure and support organization to reinforce the current and future growth of our product. Now as we continue to add more and more revenues onto the platform, we are seeing some leverage in our operating model through improved gross margins. Over the past 4 quarters, our gross margins have been 58%, 60%, 65% and 68% sequentially. Although, we have some planned expenses in Q1 related to things such as GDPR compliance, consulting and the hiring of a new COO, which will suppress margins in the short-term. We expect our margins to continue the progress we saw in Q3 and Q4 and expand gradually in the near future to reach 70% by the end of 2018.

Turning to our operating expenses. For the fourth quarter of 2017, our operating expenses decreased 13% to $4.3 million from $4.9 million in Q4 of last year. Excluding an intangible asset impairment in Q4 of last year, operating expenses increased 23% from Q4 of last year, due primarily to increased investments in sales and marketing initiatives this year.

Our GAAP net loss from continuing operations for the fourth quarter totaled $504,000 or $0.06 per share. This was an improvement from a GAAP net loss from continuing operations of $2.2 million or 26% -- $0.26 per share in Q4 of 2016. For the full year 2017, GAAP net loss from continuing operations totaled $5 million or $0.59 per share, an improvement from GAAP net loss from continuing operations of $5.7 million or $0.72 per share in 2016.

On the balance sheet, we have $5.4 million in cash at the end of the quarter compared to $6.3 million at the end of the prior quarter. Additionally, based on our current assessment, we're expecting a cash tax refund related to the use of NOL carrybacks in the amount of $1.7 million during the middle of 2018.

Looking at our non-GAAP measures. Our adjusted EBITDA loss for the quarter, which we defined as earnings before interest, taxes, depreciation, amortization, noncash stock-based compensation, restructuring expenses, acquisition-related charges and impairment -- intangible impairments totaled $1.3 million. This compares to an adjusted EBITDA loss of $1.2 million in the same year-ago period.

For the full year of 2017, our adjusted EBITDA loss totaled $5.6 million. We expect our EBITDA loss to increase somewhat in Q1 2018, as we continue to invest in new sales and marketing programs to drive additional growth and incur some additional expenses in Q1 related to our audit. Those types of expenses are expensed in the period in which the services are performed.

Our core net loss, which excludes amortization, acquisition-related costs, restructuring expenses and stock compensation expenses while adjusting for taxes for the fourth quarter of 2017 totaled $386,000 or $0.05 core net loss per share, an improvement from our core net loss of $851,000 or $0.10 core net loss per share in Q4 of last year.

For the full year, core net loss totaled $4 million or $0.48 core net loss per share compared to core net loss of $2.5 million or $0.31 core net loss per share in 2016.

During Q4, our customer acquisition costs were very consistent with prior periods at $6,700 per customer. As a reminder, this is our all-in sales and marketing costs from Q3 divided by the new wins from Q4. Using the prior quarter cost provides a better estimate of our customer acquisition cost to account for the average sales and marketing time line we experience, however, this is still an imperfect measure because marketing spend in 1 quarter impacts the deals we win in many future quarters.

Our continued low customer acquisition cost shows that we can consistently acquire customers at attractive all-in rates that will deliver a significant lifetime value for the business in the future. Based on our historical customer data set, we expect the lifetime value of these new customers to be approximately $50,000 for agency customers and approximately $40,000 for all customers on a blended basis. These values reflect the benefit to the company on a discounted basis after reducing for gross margin cost to support the customers on the platform. Based on these figures, our expected lifetime value to customer acquisition cost ratio continues to be exceptional. These LTV to CAC ratios continue to be extremely compelling and serve as an argument to raise capital to grow faster.

For these reasons, we will continue to monitor the capital markets as we move forward in an effort to assess the best long-term value and growth opportunities for our shareholders. For more details on our adjusted EBITDA and core net income metrics, please see the reconciliation to GAAP terms included in the supplementary tables of today's earnings release.

And one final note before I hand the call back over to Rick. We filed a shelf registration statement last month, which replaces the prior shelf registration statement that expired this past January. We believe having a shelf on file is an example of good corporate practice and will allow us to act more expeditiously in the future, should certain opportunities arise. This completes my financial summary.

I'd now like to now turn the call back over to Rick for additional insights into our operational progress in Q4 and all of 2017 as well as our outlook for 2018. Rick?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [4]

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Thanks, Ed. As I said in my opening remarks, 2017 was a very solid year for our company with the last 2 quarters, in particular, yielding results from the initiatives we began at the start of the year. We accomplished the goals we set out for ourselves in 2017 and did exactly what we said we were going to do, accelerate new growth with increased investment in sales and marketing and align 100% of our focus on our core marketing automation business.

After getting through some corporate distractions and business -- and major business shifts in 2016, we started 2017 as a unified, linear and more focused organization. We've talked enough about this in past calls but the activities in 2016 set us on the path to achieving our goals for 2017, so that we can spend the year focused on what is really going to drive our business forward. The accelerated growth we saw in the latter half of the year was possible because of the initial foundation we laid in the first half of the year, combined with the predictability and consistency of our customer acquisition process.

Put another way, we know that when we spend money on marketing activities, those dollars generate leads in consistent ways. We also know that we can convert a consistent portion of those leads into demos, and we know that our sales team is highly incented to close those prospects after the demo process, and that the close rate has remained consistently high since the inception of the company. All of these factors allow us to believe in the predictability of our process and provide confidence in our decision to align and focus our SharpSpring marketing automation brand and our increased deployment of funds on sales and marketing.

Returning to our most recent quarter, in addition to being another consecutive new sales record for SharpSpring, Q4 reinforced the effectiveness of our increased sales and marketing outreach, building on the positive results we began seeing in Q3. This improved -- improving performance has been driven by an increasingly robust customer pipeline, strong sales execution and our improved product offering. From a product perspective, we continue to introduce powerful features and integrations over the course of 2017.

In the last year, our advanced Visual Workflow Builder as well as our integrations with Shutterstock and PieSync have all contributed to the strengthening of our flagship offering and have entrenched us even further with our growing customer base.

As a result, our current offering has never been more competitive than it is today. Building on these strengths, we recently introduced additional exciting new features centered around social media management, that I'd like to spend some time on now.

As you might have seen from our press release in December, we officially launched 2 new significant product features, SharpSpring Social and an integrated Content Calendar, giving SharpSpring users a compressive solution to centrally manage their entire digital marketing strategy. With these new social features, our customers will be able to grow their businesses by giving them powerful conversion tools that turn social interactions in the opportunities to generate sales. Put another way, by fully integrating social media management with marketing automation, SharpSpring Social empowers marketers to increase brand awareness, generate leads and boost prospect and customer engagement in ways that stand-alone social tools cannot.

Users can identify hot prospects by adjusting lead scores based on social engagement, trigger sales notifications, e-mails and other automation based on social activity and measure the end-to-end ROI of their social marketing strategy.

SharpSpring Social also offers other popular social media management capabilities such as social publishing and social listening. Customers can schedule and publish posts at Facebook, LinkedIn and Twitter directly from SharpSpring and social listening allows users to focus conversations with -- excuse me, allows users to follow conversations with hashtags, keywords, competitive profiles and more. SharpSpring's integrated Content Calendar not only allows customers to create and publish social content right from the calendar, but the interactive interface also offers a compressive view of all scheduled marketing content including e-mails, blog posts and social content.

On a strategic level, SharpSpring Social and the Content Calendar also give our agency partners an additional opportunity to expand digital marketing services that they provide to their clients. Incorporating tools and features around social, in our opinion, represents the closing of the last major gap in our platform when compared to competing solutions. We're extremely excited about closing this last gap and think, it's going to be huge for SharpSpring moving forward.

As I've said before, we believe quality SMB software does not need to be prohibitively expensive. And what that means for our customers is that we will continue to build upon our brand's reputation as the very best value in the industry and the clear choice for digital marketing agencies. What it means for us is that we will remain focused on refining and improving strategies to attract and win new customers more efficiently and profitably.

On that note, we talked a lot about SharpSpring's LTV to CAC ratio. It's an important metric that underlies our ability to make our solution so affordable. When looking at it another way, it also gives us an opportunity and room to further invest in our growth. As you heard from Ed, with the solid ratios, we had the ability to invest even more in our sales process to acquire more customers. And with that increased efficiency gain from recent experience, we're inclined to consider that path of increased spending.

Marketing automation remains a multibillion-dollar opportunity in front of us, and we've put ourselves in a great position to take advantage of that opportunity. Shifting gears, as we look to Q1 for -- Q1 of 2018, we'd like to remind listeners that this period has historically been characterized by some mild seasonality. January, in particular, is typically a slower month for SharpSpring sales. This is typical for our business. This January, we also instituted a price increase, which caused a number of customers to sign up in December to take advantage of grandfathered pricing. For this reason, we expect Q1 sales to be in the 230 range.

As always, we're focused on long-term growth and not seasonal fluctuations that occur during the normal cadence of our business. We'll continue to invest in our sales and marketing as well as other resources that will support our growth trajectory for years to come.

Along that line, during February, we added to our leadership team with the appointment of Jeff, him as our new Chief Operating Officer. Jeff brings a wealth of operations expertise to our company, hold by more than 2 decades of experience in operations and sales through successful SaaS companies. We're excited to have Jeff join the team and look forward to the impact he'll have on our operations. In summary, through the hard work of many people in the business, we achieved the goals we set out for ourselves at the beginning of 2017 to significantly grow our top line to expand our customer base and to increase our market share within the multibillion-dollar marketing automation industry.

At the beginning of the year, we made a conscious choice to bet on ourselves, our people and our product and company. That decisiveness, both in 2016 and in this year have been rewarded. With the solid 2017 in our rearview and a solid foundation to build upon, we are as motivated as ever to keep our foot on the gas pedal. We're dedicated to making SharpSpring better, more functional and easier to use while remaining priced at a fraction of the cost of our competitors.

We believe this commitment, combined with our ongoing initiative to judiciously allocate resources toward sales and marketing, will lead to long-term growth and ultimately, value for our shareholders. And with that, we're ready to open the call for your questions. Operator, please provide the appropriate instructions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Eric Martinuzzi from Lake Street Capital.

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Eric Martinuzzi, Lake Street Capital Markets, LLC, Research Division - Director of Research & Senior Research Analyst [2]

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Congratulations on the successful finish to a good strong year you had -- 266 new customer ads is really exciting to see. You did give a little color on the Q1 new customer ads, that would be around 230. Am I right to compare that to a year ago at 211 new customers, Rick?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [3]

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Yes, I think so. That's right. We -- typically, January, it's one of -- we've only been doing this about 4 years, but it's one of the consistent seasonal effects that we've been able to identify. January, for whatever reason people just getting back from the holidays and so forth, its just a matter of days in the month where people are active, and so we have -- we're always seemed to be a little slow out of the gates in January and compounding that effect this year, we did a price increase we've -- we now for new agency partners are at $600 -- starting price of $600 for 3 licenses, and that's up from $500 for 3 licenses of core a new agency joining us. Because of that, somewhere between a dozen and 2 dozen deals have -- were probably brought forward into January that might have more in naturally closed -- in January brought forward to December. So we wanted to just make people aware of that, as you all are doing your projections.

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Eric Martinuzzi, Lake Street Capital Markets, LLC, Research Division - Director of Research & Senior Research Analyst [4]

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Understand. So the -- as far as translating that into a revenue number, I know there's a definitely some distance in between the billings, the new customer ads and the revenue, but as far as that you guys just printed a quarter with $3.8 million, I think the consensus number is $3.8 million for next quarter, but would you expect to be sequentially up as opposed to sequentially flat in Q1, revenue-wise?

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Edward Seymour Lawton, SharpSpring, Inc. - CFO [5]

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Yes, that's right, Eric. This is Ed. We've got new customers in Q4, the 266 new customers that we signed up in Q4, we'll see the full quarter impact of those plus the new customers that we signed up in Q1 here, partial quarter for that group. And we do have still a little bit of headwind on the SharpSpring Mail+ side. I would expect that to go down to around $100,000 but aside from that slight headwind, we are expecting definitely to grow quarter-over-quarter.

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Eric Martinuzzi, Lake Street Capital Markets, LLC, Research Division - Director of Research & Senior Research Analyst [6]

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Okay. And then on the product side, you did dive into a little bit, Rick, the addition of Social, the addition of the Calendar. I'm curious to know, is that -- I am sure the answer is, it's helping customer retention on the one side, but it's also helping new customer acquisition. Where is it kind of helping the most between those 2 buckets?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [7]

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All right. That's -- I don't even know how to answer that without sounding evasive. It's just really -- it's a game changer for us in terms of really filling out the platform and extending the power of marketing automation for everybody. For our -- for new customers, it's -- or new prospects looking at SharpSpring, it puts us on even footing and actually because of some of the sub-features within that section of the app, I think puts us ahead of our competitors. And so it certainly should give us more yeses on the sales side over the long-term. As we touched on in our remarks, for current agency partners, it gives them a whole new revenue opportunity and allows them to deliver better results for their clients, so it's huge in that. It really extends the value for our current customers, and so really hard to pick and choose between those 2 items, but we're really excited about it. I'll just say that, it really helps across the board, both new wins and existing customers.

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Eric Martinuzzi, Lake Street Capital Markets, LLC, Research Division - Director of Research & Senior Research Analyst [8]

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Did you see anything -- do you have between the new product and the new price point, did you see any change in retention of the installed base, as you, I guess, it's still early days here, but at least for January and February, anything out of the ordinary there?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [9]

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Well, we announced those price changes, so in Q4, and so the answer -- so we actually -- we try not to surprise our agency partners, and so we gave them 60-days notice, and we really saw no impact. Certainly, nobody is excited about price increases, but at the same time, our -- by and large, our agency partners really understood the value that the new features brought to the table. And I think just as importantly, it's not as though these agencies or their customers were not using another solution for social, it's now that it's built into SharpSpring, those features can be rolled into SharpSpring and the payments that were maybe going to another provider could go to SharpSpring on what amounts to an integrated solution, that's got a lot more power to it, because it belongs as part of a marketing automation solution. So the short answer is, no. We're not -- our agency partners are by and large very, very happy with the rollout of the social, and we've gotten nothing but really positive feedback from the rollout.

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Operator [10]

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Our next question comes from the line of Mike Malouf from Craig-Hallum Capital.

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Michael Fawzy Malouf, Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team [11]

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Well. If we could just talk a bit more on pricing. I know that you raised the price from $500 to $600 for a new agency. What was the pricing increase for an existing client?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [12]

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Yes, we've increased pricing roughly $25, I believe. Ed correct me, if I'm wrong for existing users, and that affected about 70% of the agency clients, utilizing the platform of the businesses -- I should say, utilizing the platforms. We rolled out the social features as part of the license rather than nickel-and-diming our agency partners and making a confusing pricing model where we're kind of committed to a one price for the entire solution type of pricing model. And so we rolled that out, it's about $25. So depending on when an agency joined us, we always like to be respectful of agency who were the first adopters and those who joined us in 2016 and '17 at each point along the way, there were slightly different pricing, and so we bumped that up. What amounts to a modest amount of $25 a month, when we included social.

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Michael Fawzy Malouf, Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team [13]

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Okay, great. And then, I'm sort of curious about your comments about accelerating growth. Right now, I think you're spending -- in the last quarter, you spent about 54% of your revenues on SG&A on marketing. And that's very similar to what HubSpot spent, and actually they grew quite in line with you last quarter, if you look at the fourth quarter. But if you rewind HubSpot a while, in 2010 and '11, when they were about the same size as you -- they were growing at almost 100% but their SG&A was also -- sales and marketing was also at about 100% of their revenue. So I am just wondering, how much will you go you think?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [14]

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Yes, so we're constantly evaluating it. I think the underlying principles for us are that we believe that we're in a multibillion-dollar market, and so as long as we feel like we can acquire customers at similar efficiency, we're committed to acquiring customers in an efficient manner. As not the first movers in the space, we recognize that it's very important to us to continue to be an efficient company and maintain really attractive CAC to LTV ratios and SaaS metrics overall. And so as long as we -- the governing factor for us is knowing that the market is out there for us. It's really limited by our confidence in acquiring customers at very efficient rates, and so we -- through the history of the company, we'll take a step up for several months, test the waters, make sure that we're continuing to be efficient and then repeat the process, and we'll -- I think we'll continue to -- that's served us well, and I think we'll continue to pursue that sort of strategy.

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Michael Fawzy Malouf, Craig-Hallum Capital Group LLC, Research Division - Partner, Senior Research Analyst & Head of Boston Team [15]

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Okay, great. And then as you look at gross margins over the next few years, I know you've done a great job of marching them up and, I think, Ed you said, 70% for '18 or maybe you can clarify that, was that 70% by the end of '18, but as you look out again just, sort of, looking at HubSpot's gross margins at 85%, where do you think those can go as you scale up over the next few years?

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Edward Seymour Lawton, SharpSpring, Inc. - CFO [16]

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Yes, just to clarify. I believe, I said either 70% by the end of this year, so that would be, kind of, a Q4 target number for us to get back up to, with a slight dip here in Q1, and then gradually increase back up to that level in Q4 of 2018. I think, we've done some analysis, and we think right now today, we're acquiring new customers. Every time we put a new customer, the incremental gross margin for those new customers is around 85% or could be even a little higher than that, and so we're still small, but as we grow and we add more customers to the platform, we'll start seeing that gross margin tick up and up into the future, and I do think, 85% is a realistic target for us within, let's say, 4 or 5 years on an overall basis.

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Operator [17]

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(Operator Instructions) Our next question comes from the line of Bynum Hunter from Fisher Park Capital.

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Bynum Hunter, [18]

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I had a question about the shelf. You yourselves are not looking to sell shares, is that correct?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [19]

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You're probably referring to the listing of myself and Travis Whitton, our CTO. That is a contractual -- we were listed on the shelf based on the fulfillment of the agreement of the sale of SharpSpring LLC to what is now SharpSpring Inc. back in 2015. I can't speak for Travis. I don't believe that he has any immediate plans to sell significant shares, and I can tell you that I don't have plans to sell significant shares, either with the S-3 was filed as a result of really fulfilling those contract obligations from the sale of the company that we started to what was then SMTP and is now SharpSpring Inc. So hope that answers your question.

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Bynum Hunter, [20]

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Yes, that's great. And my next question, just looking back to when SMTP acquired the company. Did you guys, as I recall, did you guys take a bunch of stock or was that cash? Or exactly how was the deal structured?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [21]

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Yes, we actually, it was a little bit of both. We took -- actually, it's little bit of ancient history here. But we took some cash and some stock and actually, we ended up converting, I believe, an extra $4 million, Ed correct me, if I'm wrong, but I believe we converted an extra $4 million into stock that we were going to take as cash, but hopefully, that speaks to the belief that both Travis and I had in the company and continue to have today, so am I right on that, Ed?

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Edward Seymour Lawton, SharpSpring, Inc. - CFO [22]

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Yes, that's right. It was a $4 million conversion, kind of midway through the earn-out process that we converted a cash payment into an equity payment. At the end of the day it ended up being $8 million in cash and $7 million in shares of company stock.

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Bynum Hunter, [23]

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Okay, fantastic. And then under your current incentive plan, what are the sort of targets and goals for your incentive plan as it stands today?

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [24]

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I believe we've got those -- we're still in a recent 8-K, but we are certainly incentivized with stock options and as owners of the business, and of course, we're highly incentivized to grow the business as well, but we're -- based on revenue and EBITDA targets as well. So hopefully, I am answering your question. I'm not sure if you're looking for something more specific than that, but our goals are to grow the business and then grow the business efficiently and that's -- our bonus points reflect that.

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Bynum Hunter, [25]

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Okay, fantastic. And then just a business-specific question. I was just looking through your deck and you talked about the potential of acquiring more stand-alone businesses as customers as opposed to just agencies. Is there any opportunity to sort of simplify the product for businesses? And would you say that there's any -- with the complexity of the current product, is that a barrier at all for adoption among just individual stand-alone businesses?

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Edward Seymour Lawton, SharpSpring, Inc. - CFO [26]

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Let's say, it's -- you asked a multipart question there and all parts of that were good. The first thing I want to say is we're focused on agencies. We believe that the agency market is sufficiently large for us to compete in and win. We are in just 4 years of being around, have moved solidly into the #2 position. HubSpot had something like an 8- or 10-year head start on us, and we seem to be closing in on those guys in terms of being the choice of 4 marketing automation of digital agency. And that's what our entire company is focused on. There's nothing -- there's no inherent imitation of our platform to be perfect for businesses all the way up to enterprises, but we view those as future markets. The businesses that land on SharpSpring today are the businesses that find us through word-of-mouth and understand what a great platform it is. We feel like we're simpler to use than most platforms that are out there, which is kind of a nice segue in to the second part of your question, the entire industry, these are really powerful tools and the entire industry, I think suffers from underutilization of the power of the platforms that are out there. So we work very hard to make our platform easy. We can always do better at that, and we strive to do that not just for businesses but for agencies. We want to make our platform the easiest to use for anybody that uses it. So while we feel like we do fairly well there, there's always opportunity for us to do better in terms of making the platform easy -- easier to use as well. So -- but I want to be really clear that we're very excited about the agency market. We think the agency market has tens of thousands of agencies that are yet to adopt marketing automation, and are still on that journey, trying to decide on who they're going to utilize. And we think we're well positioned to compete and win in that market. And that's our major focus right now.

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Operator [27]

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At this time, this concludes our question-and-answer session. I now like to turn the call back over to Mr. Carlson for his closing remarks.

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Richard Alan Carlson, SharpSpring, Inc. - CEO, President, Secretary and Director [28]

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Well, thank you all for joining us on today's call. As always, I especially want to thank our employees, our partners and our investors for your continued support. We look forward to updating you on our next call. Operator?

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Operator [29]

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Before we conclude today's call, I would like to revise SharpSpring's safe harbor statement that includes important cautions regarding forward-looking statements made during this call.

During today's call, there were forward-looking statements made regarding future events, including SharpSpring's future financial performance. These statements reflect the company's current views with respect to future events. These forward-looking statements involve known and unknown risks, uncertainties and other factors, including those discussed under the heading Risk Factors and elsewhere in the company's latest annual report on Form 10-K and quarterly reports on Form 10-Q, that may cause actual results, performance or achievements to be materially different from any future results, performances or achievements anticipated or implied by these forward-looking statements. The company does not undertake any responsibility to revise any forward-looking statements to reflect future events or circumstances.

Also note that during this conference call, we may make reference to adjusted EBITDA, core net income or loss and core net income or loss per share, which are non-GAAP financial measures presented as supplemental measures of a company's performance. A reconciliation of net income or loss to non-GAAP measures is included for your reference in the financial section of the earnings press release and made available on the company's website.

Finally, I would like to remind everyone that a recording of today's call will be available for replay via a link available in the Investors section of the company's website.

Thank you for joining us today for SharpSpring's Fourth Quarter and Full Year 2017 Earnings Conference Call. You may now disconnect.