ORLANDO, Fla.--(BUSINESS WIRE)--
IZEA, Inc. (NASDAQ: IZEA), operator of IZEAx, the premier online marketplace connecting brands and publishers with influential content creators, reported results for the second quarter ended June 30, 2017.
Q2 2017 Financial Highlights vs. Same Year-ago Quarter
- Revenue up 1% to $7.0 million vs. $6.9 million.
- Managed Services revenue increased 7% to $5.6 million vs. $5.2 million.
- Content Workflow revenue decreased 15% to $1.4 million vs. $1.6 million.
- Revenue backlog, which includes unbilled bookings and unearned revenue, was $11.4 million at the end of Q2 2017.
- Net bookings decreased 3% to $6.6 million compared to $6.8 million.
- Gross profit increased 1% to $3.5 million, with gross margin of 51%.
Trailing Twelve Months Financial Highlights vs. Same Year-ago TTM
- Revenue up 17% to $28.1 million vs. $24.1 million.
- Managed Services Revenue up 30% to $21.8 million vs. $16.7 million.
- Gross Profit up 29% to $13.8 million vs. $10.7 million.
- Adjusted EBITDA improved 32% to $(4.8) million vs. $(7.1) million.
Management Commentary
“We made solid progress during the most recent quarter towards our goal of reaching profitability in the near future. Our quarterly OPEX was at its lowest point since 2015, while team productivity based on average revenue per employee reached an all-time high,” said Ted Murphy, IZEA’s Chairman and CEO. “While we are not yet where we want to be, quarterly EBITDA loss was the lowest it has been since Q1 2014. We continue to optimize operations with an eye on achieving profitability in the second half of 2018 and we remain on-track to hit that goal.”
“Our sales team delivered impressive results and overcame a meaningful deficit in Q2. While we absorbed a large $1 million cancellation from a 2016 booking this quarter, the team still delivered 7% bookings growth in our Managed Services. Exclusive of that reduction, gross bookings for Managed Services increased 24% year over year and our average deal size reached an all-time high in the quarter. This large cancellation effected both bookings and revenue in the front half of this year and we are happy to have it behind us. The back half of the year has historically been the strongest for IZEA and we are very optimistic about the road ahead.”
Q2 2017 Financial Results
Revenue in the second quarter of 2017 increased 1% to $7.0 million compared to $6.9 million in the same year-ago quarter. The increase in our Q2 2017 revenue is primarily due to organic growth in our Managed Services revenue.
Gross profit in the second quarter of 2017 increased 1% by $43,000, as compared to the second quarter of 2016. The increase in gross profit was primarily attributable to a favorable shift to higher margin Managed Services versus self-service Content Workflow.
Operating expenses in the second quarter of 2017 were $5.0 million compared to $5.1 million in the same year-ago quarter. Cash based Opex in the second quarter of 2017 was approximately $4.4 million, compared to $4.6 million in Q2 2016, a decrease of 5% year over year.
Net loss in the second quarter of 2017 was $(1.4) million, or $(0.25) per share, as compared to a net loss of $(1.6) million, or $(0.30) per share, in the same year-ago quarter. Adjusted EBITDA was a negative $840,000 compared to a negative $1.1 million during the same period last year.
Cash and cash equivalents at June 30, 2017 totaled $3.6 million. The company continues to operate debt free and has an unused $5.0 million credit line.
2017 Outlook
Management believes that spending among IZEA’s newspaper clients will continue to decline moving forward. This will result in significantly reduced revenue from Content Workflow in 2017 compared to 2016.
The company expects annual revenue in 2017 to be approximately $29-$30 million compared to $27.3 million in 2016. Gross margins are expected to range between 48% to 49% compared to 48% in 2016. Adjusted EBITDA is expected to be approximately $(4.0-4.5) million compared to $(5.2) million in 2016.
Conference Call
IZEA will hold a conference call to discuss its second quarter results today at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.
Date: Thursday, August 10, 2017
Time: 5:00 p.m. Eastern time
Toll-free
dial-in number: 1-877-407-4018
International dial-in number:
1-201-689-8471
The conference call will be webcast live and available for replay via the investors section of the company’s website at https://izea.com/.
Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. A replay of the call will be available after 8:00 p.m. Eastern time on the same day through August 17, 2017.
Toll-free replay number: 1-844-512-2921
International replay
number: 1-412-317-6671
Replay ID: 13667830
About IZEA
IZEA operates IZEAx, the premier online marketplace that connects marketers with influential content creators. IZEAx automates influencer marketing and custom content development, allowing brands and agencies to scale their marketing programs. IZEA creators range from leading social media influencers to accredited journalists. Creators are compensated for producing and distributing unique content on behalf of marketers including long form text, videos, photos and status updates. Marketers receive influential consumer content and engaging, shareable stories that drive awareness. For more information about IZEA, visit https://izea.com.
Use of Non-GAAP Financial Measures "EBITDA" is a non-GAAP financial measure under the rules of the Securities and Exchange Commission. IZEA defines EBITDA as earnings or loss before interest, taxes, depreciation and amortization. IZEA defines “Adjusted EBITDA,” also a non-GAAP financial measure, as earnings or loss before interest, taxes, depreciation and amortization, non-cash stock related compensation, gain or loss on asset disposals or impairment, changes in acquisition cost estimates, and all other non-cash income and expense items such as gains or losses on settlement of liabilities and exchanges, and changes in fair value of derivatives, if applicable. We believe that EBITDA and Adjusted EBITDA provide useful information to investors as they exclude transactions not related to the core cash operating business activities including non-cash transactions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.
All companies do not calculate EBITDA and Adjusted EBITDA in the same manner, and EBITDA and Adjusted EBITDA as presented by IZEA may not be comparable to those presented by other companies. Moreover, EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation or as a substitute for an analysis of our results of operations as reported under GAAP. A reconciliation of GAAP to non-GAAP results is included in the financial tables included in this press release.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based largely on IZEA's expectations and are subject to a number of risks and uncertainties, certain of which are beyond IZEA's control. Actual results could differ materially from these forward-looking statements as a result of, among other factors, competitive conditions in the content and social sponsorship segment in which IZEA operates, failure to popularize one or more of the marketplace platforms of IZEA, inability to finance growth initiatives in a timely manner, changing economic conditions that are less favorable than expected, and other risk factors described from time to time in IZEA’s periodic reports filed with the Securities and Exchange Commission. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this press release will in fact occur. We assume no obligation to update any forward-looking statements, except as required by law.
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IZEA, Inc. Unaudited Consolidated Balance Sheets |
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June 30, 2017 |
December 31, 2016 |
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| Assets | |||||||
| Current: | |||||||
| Cash and cash equivalents | $ | 3,563,540 | $ | 5,949,004 | |||
| Accounts receivable, net | 4,124,332 | 3,745,695 | |||||
| Prepaid expenses | 242,535 | 322,377 | |||||
| Other current assets | 28,715 | 11,940 | |||||
| Total current assets | 7,959,122 | 10,029,016 | |||||
| Property and equipment, net | 359,485 | 460,650 | |||||
| Goodwill | 3,604,720 | 3,604,720 | |||||
| Intangible assets, net | 1,162,723 | 1,662,536 | |||||
| Software development costs, net | 1,081,795 | 1,103,959 | |||||
| Security deposits | 156,799 | 161,736 | |||||
| Total assets | $ | 14,324,644 | $ | 17,022,617 | |||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,474,962 | $ | 1,438,389 | ||||
| Accrued expenses | 1,558,386 | 1,242,889 | ||||||
| Unearned revenue | 3,866,077 | 3,315,563 | ||||||
| Current portion of deferred rent | 38,704 | 34,290 | ||||||
| Current portion of acquisition costs payable | 266,173 | 1,252,885 | ||||||
| Total current liabilities | 7,204,302 | 7,284,016 | ||||||
| Deferred rent, less current portion | 40,307 | 62,547 | ||||||
| Acquisition costs payable, less current portion | 897,997 | 688,191 | ||||||
| Warrant liability | — | — | ||||||
| Total liabilities | 8,142,606 | 8,034,754 | ||||||
| Commitments and Contingencies | — | — | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock; $.0001 par value; 10,000,000 shares authorized; | ||||||||
| no shares issued and outstanding | — | — | ||||||
| Common stock, $.0001 par value; 200,000,000 shares authorized; | ||||||||
| 5,689,442 and 5,456,118, respectively, issued and outstanding | 569 | 545 | ||||||
| Additional paid-in capital | 52,157,008 | 50,797,039 | ||||||
| Accumulated deficit | (45,975,539 | ) | (41,809,721 | ) | ||||
| Total stockholders’ equity | 6,182,038 | 8,987,863 | ||||||
| Total liabilities and stockholders’ equity | $ | 14,324,644 | $ | 17,022,617 | ||||
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IZEA, Inc. Unaudited Consolidated Statements of Operations |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 6,980,221 | $ | 6,913,689 | $ | 13,182,727 | $ | 12,379,639 | ||||||||
| Cost of sales | 3,442,181 | 3,418,387 | 6,637,707 | 6,519,756 | ||||||||||||
| Gross profit | 3,538,040 | 3,495,302 | 6,545,020 | 5,859,883 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative | 2,524,630 | 2,524,746 | 5,334,154 | 5,104,747 | ||||||||||||
| Sales and marketing | 2,426,363 | 2,612,714 | 5,324,718 | 4,972,377 | ||||||||||||
| Total operating expenses | 4,950,993 | 5,137,460 | 10,658,872 | 10,077,124 | ||||||||||||
| Loss from operations | (1,412,953 | ) | (1,642,158 | ) | (4,113,852 | ) | (4,217,241 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (13,272 | ) | (11,411 | ) | (30,348 | ) | (32,750 | ) | ||||||||
| Change in fair value of derivatives, net | (8,420 | ) | 26,421 | (9,038 | ) | 29,273 | ||||||||||
| Other income (expense), net | (11,953 | ) | 803 | (12,580 | ) | 1,753 | ||||||||||
| Total other income (expense), net | (33,645 | ) | 15,813 | (51,966 | ) | (1,724 | ) | |||||||||
| Net loss | $ | (1,446,598 | ) | $ | (1,626,345 | ) | $ | (4,165,818 | ) | $ | (4,218,965 | ) | ||||
| Weighted average common shares outstanding – basic and diluted | 5,676,629 | 5,350,128 | 5,637,636 | 5,320,962 | ||||||||||||
| Basic and diluted loss per common share | $ | (0.25 | ) | $ | (0.30 | ) | $ | (0.74 | ) | $ | (0.79 | ) | ||||
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IZEA, Inc. Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA (Unaudited) |
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Three Months Ended June 30, |
Six Months Ended June 30, |
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| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net loss | $ | (1,446,598 | ) | $ | (1,626,345 | ) | $ | (4,165,818 | ) | $ | (4,218,965 | ) | ||||
| Non-cash stock-based compensation | 167,870 | 200,354 | 326,846 | 405,326 | ||||||||||||
| Non-cash stock issued for payment of services | 22,830 | 41,220 | 83,462 | 72,470 | ||||||||||||
| (Gain) loss on disposal of equipment | (1,734 | ) | — | (3,687 | ) | — | ||||||||||
| (Gain) loss on settlement of acquisition costs payable | — | — | (10,491 | ) | — | |||||||||||
| Increase (decrease) in value of acquisition costs payable | 37,986 | — | 141,778 | — | ||||||||||||
| Depreciation and amortization | 358,260 | 299,177 | 720,866 | 595,474 | ||||||||||||
| Interest expense | 13,272 | 11,411 | 30,348 | 32,750 | ||||||||||||
| Change in fair value of derivatives | 8,420 | (26,421 | ) | 9,038 | (29,273 | ) | ||||||||||
| Adjusted EBITDA | $ | (839,694 | ) | $ | (1,100,604 | ) | $ | (2,867,658 | ) | $ | (3,142,218 | ) | ||||
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