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SharpSpring Beats 4Q Revenue Estimates; Street Sees 26% Upside

SharpSpring Inc posted better-than-expected 4Q revenue numbers as the cloud-based marketing technology company saw improvements in net revenues retention and net agency client expansion.

SharpSpring’s (SHSP) revenue increased 25% year-over-year to $7.7 million, from $6.1 million in the comparable year-ago period, and beat analysts’ estimates of $7.61 million.

That said, its total monthly recurring revenue (MRR) from new customers in 4Q decreased to $132,000 from $165,000 in the year-ago period. This decrease was a result of delayed new customer adoption amid the COVID-19 pandemic and lower sales and marketing spend in 4Q.

The company’s net loss per share was $0.09 in 4Q, compared to a net loss per share of $0.19 in the year-ago period, coming in lower than analysts’ expectations of a net loss per share of $0.13.

The company’s CEO Rick Carlson said, “We achieved our fifteenth consecutive record revenue performance and are now at the precipice of a $30 million run rate. Within our customer base, we logged diminished attrition and also saw net revenue retention return to pre-COVID levels with a second straight period of net client expansion.”  (See SharpSpring stock analysis on TipRanks)

Carlson further added, “We expect the coming year will be a period of major investment in our business, which will put us on the path to accelerated growth. In 1Q we began the process of ramping spend, which should translate to new customer growth as the year progresses.”

Looking ahead to fiscal 2021, SharpSpring sees total revenue landing between $34 million and $36 million. This guidance incorporates the impact of higher sales and marketing spend, which started in January, and will support associated revenue increases as the year progresses. 

On March 15, Needham analyst Scott Berg reiterated a Buy rating on the stock and maintained a price target of $25 (26% upside potential). Berg commented, “The company intends to accelerate investments in sales and marketing and product development following a recent secondary offering. If the spending does not spur commensurate revenue growth, the company’s losses could widen.”

SharpSpring scores a 4 out of 10 from TipRanks’ Smart Score rating system, indicating that the stock may perform in line with the broader market. Shares have rallied about 159% over the past year.

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