SMTP Issues Letter to Holders: Co. 'Succeeding in Remarkable Transformation'

SMTP, Inc.

, a global provider of cloud-based email marketing technologies, today released the following open letter from its Chief Executive Officer, Jonathan Strimling, to its shareholders. To Our Shareholders: SMTP is succeeding in a remarkable transformation. Since our up-listing to the NASDAQ in 2014, we've closed two major acquisitions and demonstrated strong growth. Our track record of rapid progress has earned us re-investment by both our largest institutional shareholders and by SharpSpring's principals. Following our recent $5M offering, we wanted to summarize the progress we've made and to share our plans as we move forward - for the benefit of both existing shareholders and for other investors who may currently be evaluating the stock. With appreciation to those of you that participated in our 2014 offering, the funding we received allowed us to pursue two critical acquisitions: SharpSpring and GraphicMail. SharpSpring's growth is accelerating as it continues to win customers in head-on competition against Hubspot and Marketo. GraphicMail gave us a complementary product and a global distribution platform from which we are now launching our combined product offering. The early indications of return on these investments are quite favorable. In the aggregate, we've more than doubled revenues and dramatically accelerated growth rates. With SharpSpring, we signed customers representing over $1M in annual recurring revenues (ARR) in Q1 2015 alone. This is more than a doubling of the rate at which SharpSpring was adding new sales six months ago. We believe the customers added in Q1 will provide $2.8M in gross margins over the expected lifetime, which represents an ROI of 7:1 on our investment in sales and marketing for that product line. While we only launched SharpSpring through our international distribution channel in Q1, we have already seen indications of the product's global potential. SharpSpring added 10 international accounts in Q1, representing about $100,000 in ARR. International sales have continued to progress well in Q2 and we are seeing our first SharpSpring sales through country partners in the Netherlands, Mexico, Turkey, Spain and Romania as well as continuing direct sales in England, South Africa, and other markets. We will be launching multilingual interfaces for SharpSpring in Q2, in an effort to further accelerate international sales. Both domestically and internationally, the scalability of our combined product offering is allowing us to target higher value customers. Through April, we reported sales to customers buying combined product solutions that are expected to represent $250,000 in annualized recurring revenues. Notably, these high volume sales average $25,000 in ARR per customer, which is far higher than SMTP's historic average customer ARR of $1,000, GraphicMail's historic average of $150 and SharpSpring's average of $7,000. Turning now to the team, I am pleased to report that we have rounded out a superb leadership team. Rick Carlson continues to drive SharpSpring as its President, bringing an outstanding track record of launching innovative products and driving strong revenue growth. Travis Whitton was SharpSpring's CTO and has built a cutting-edge platform faster than any of the incumbents—and now acts as our company's overarching CTO. Nick Eckert, who joined us through the GraphicMail acquisition, is leveraging his extensive global experience to run international sales for all of our products. With the addition of CFO Ed Lawton, who played a critical role in over 20 acquisitions with Bottomline Technologies representing approximately $200M in revenues, we now have the base of experience across our team to drive successful growth on a global basis. Our leadership team is deeply invested in our business. We recently announced an additional $5M financing, with shares placed with SharpSpring's founders, early investors in SharpSpring and existing institutional investors. This creative financing significantly strengthened our balance sheet while giving key team members an even bigger stake in the company. Both at a shareholder level and at a company level, we are increasing our investments in our business for three simple reasons: Our strategy for customer acquisition is working. Our strategy for international growth is demonstrating traction. Our efforts to gain scale are successfully improving liquidity for our investors. Moving forward, we now have the benefits of a strengthened team, a strong product offering, and a global footprint. In the short term, we intend to continue our focus on capitalizing on the benefits of these recent acquisitions by driving aggressive growth. Our growth will be led by SharpSpring and supported by our ability to land larger customers with SMTP's delivery capabilities. We will build on our existing domestic business and accelerate international growth through the expansive international network that GraphicMail's acquisition has provided. As we move forward, our goal is to become a globally-recognized leader in marketing technology. We have made great progress, but we are still relatively unknown in both the marketing and investment communities - especially when compared with companies like Hubspot or Marketo. But from the platform we have now solidified, we believe we can now take that next step. We appreciate you placing your confidence in our team we look forward to sharing news of our continued progress. Sincerely, Jonathan Strimling Chief Executive Officer SMTP, Inc.