IZEA Worldwide, Inc. (NASDAQ: IZEA), the premier provider of
influencer marketing technology, data, and services for the world’s
leading brands, reported its financial and operational results for
the third quarter ended September 30, 2020.
Q3 2020 Financial Summary Compared to Q3
2019
- Total revenue down 9% to $4.0 million, compared to $4.4
million.
- Managed Services unit revenue decreased 1% to $3.5 million,
compared to $3.6 million.
- SaaS Services unit revenue decreased 39% to $522,000, compared
to $853,000.
- Total costs and expenses decreased to $5.3 million, compared to
$5.6 million.
- Net loss was $1.3 million, compared to a net loss of $1.2
million.
- Adjusted EBITDA* improved to $(0.7) million, compared to $(1.3)
million.
Q3 2020 Operational Highlights
- Raised gross proceeds of $10.3 million from sale of securities
through an at-the-market offering. In total, we have raised $25.7
million at an average price of $1.94 per share.
- Opened pre-registration for the Shake Marketplace.
- Announced launch of BrandGraph Pulse with Slack and Microsoft
Teams Integration.
- Formed Influence+United and onboarded multiple global
influencer marketing partners.
* Adjusted EBITDA is a non-GAAP financial measure. Refer to the
definition and reconciliation of this measure under “Use of Key
Metrics and Non-GAAP Financial Measures”.
Management Commentary
“While revenue was down year over year in Q3, we saw a material
improvement in both revenue and Adjusted EBITDA quarter over
quarter. Revenue increased 29% and Adjusted EBITDA improved 43%
compared to the second quarter ended in June 2020,” said Ted
Murphy, IZEA’s Chairman and CEO. “Managed Services revenue in Q3
was close to flat year over year, despite the large gaps in new
business we saw in March and April and the ongoing challenges
associated with COVID-19 and the political environment. There was
no way for IZEA to completely avoid the impacts that COVID-19 has
had on the marketing budgets of some of our existing clients, but I
believe our team has done a fantastic job adjusting our sales
approach and finding new opportunities to bridge the gap.”
“There was a bigger impact in our SaaS Services unit, as we
expected,” continued Murphy. “We were already in the midst of a
change in pricing model for enterprise customers from last year
which would impact 2020 revenue even without the events that have
unfolded since the pandemic was declared. The acquisition of new
enterprise customers has been slow since March, and many of our
existing customers have reduced their marketplace spend. We expect
to see challenges with enterprise SaaS until such time that the
macro environment stabilizes, and marketers feel more comfort in
making long term commitments.”
“Despite the decreases in overall SaaS revenue, our count of
active SaaS customers is growing and hit an all-time high again
this quarter,” said Murphy. “We continue to see growth with IZEAx
Discovery, our $149/mo self-service offering. New customer signups
for IZEAx Discovery hit an all-time high in October and were up
2.6x from October of last year. Monthly revenue for IZEAx Discovery
also hit an all-time high in October and was up more than 25% from
September of this year, which was the previous record. We are
beginning to invest much more aggressively in our marketing efforts
to broaden our customer base and drive more of this self-service
growth. Early indications are that our marketing efforts are
working, and we believe there are ongoing performance optimizations
to make each dollar we spend more effective as we gather more
data.”
“IZEA ended the quarter with $30.6 million in cash, the
strongest our balance sheet has ever been,” said Murphy. “Our team
has been working to prudently make strategic investments in
technology, marketing, and people to best position ourselves for
2021 and beyond. Our primary focus for the year ahead is returning
to revenue growth by broadening our customer base with emphasis on
self-service revenue streams.”
Q3 2020 Financial Results
Total revenue in the third quarter of 2020 was down 9% to $4.0
million, compared to $4.4 million in the third quarter of 2019,
with revenue from Managed Services decreasing by $44,000 or 1% to
$3.5 million in the third quarter of 2020 compared to the third
quarter of 2019 and revenue from SaaS Services decreasing by
$331,000 or 39% in the third quarter of 2020 compared to the third
quarter of 2019.
Revenue from Managed Services decreased slightly due to
marketers canceling or pausing planned advertising campaigns or
events in March and throughout the third quarter of 2020 as a
result of uncertainty or inability to offer their products for sale
as a result of business or event shutdowns due to COVID-19. Despite
the delay in the execution of existing orders from our customers,
we experienced a slight increase in net sales orders in the third
quarter of 2020 compared to the second quarter of 2020, as
marketers who were still advertising shifted more of their spend to
influencer marketing campaigns.
Revenue from SaaS Services decreased primarily as a result of
lower marketplace spend levels (“gross billings,” a key metric as
further defined below) from our SaaS marketers and, as a result of
competitive pricing efforts, our margins on those spends were
reduced. Our gross billings for SaaS Services decreased 35% to $2.0
million in Q3 2020, compared to $3.1 million in Q3 2019. Our SaaS
marketers decreased their spend levels as they transitioned from
the TapInfluence platform to IZEAx and curtailed spending in March
2020 and throughout Q3 2020. The reduction in these gross billings
resulted in the $331,000 decrease in SaaS Services Revenue in the
third quarter of 2020 compared to the third quarter of 2019.
Total costs and expenses decreased 5% in the third quarter of
2020 to $5.3 million compared to $5.6 million in the corresponding
quarter of 2019. This decrease was due to a $203,000 reduction in
cost of revenue as a result of the lower sales, a $61,000 reduction
in amortization costs as assets were fully amortized in the
quarter, and cost reduction efforts affecting personnel, software
subscriptions, hosting costs, rent, travel and marketing
expenditures. The improvement between periods is more than $1
million after removing the effect of a $794,000 gain on the final
settlement of our acquisition cost liabilities recorded in the
prior year quarter. The gain resulted due to the actual closing
market price of our common stock on the date of settlement being
lower than the 30-day volume weighted average price used to
calculate the number of shares used to pay for the acquisition
liability pursuant to the terms of the purchase agreements.
Net loss in the third quarter of 2020 was $1.3 million or
$(0.03) per share, as compared to a net loss of $1.2 million or
$(0.04) per share in the third quarter of 2019, based on 45.8
million and 32.4 million shares outstanding, respectively.
Adjusted EBITDA (a non-GAAP measure management uses as a proxy
for operating cash flow, as defined below) improved 42% or $531,000
to $(0.7) million compared to $(1.3) million in the third quarter
of 2020 and 2019, respectively. Adjusted EBITDA as a percentage of
revenue in the third quarter of 2020 was negative eighteen percent
(18)% compared to negative twenty-eight percent (28)% in the third
quarter of 2019. Despite the decline in revenue, we were able to
improve Adjusted EBITDA through the steps taken to curb spending
during these months of uncertainty.
We raised $10.3 million from sale of securities through our
at-the-market offering (the “ATM”) in Q3 2020. To date, we have
raised total gross proceeds through the ATM of $25.7 million
between June and August 2020. Our cash balance as of
September 30, 2020 was $30.6 million.
Conference Call
IZEA will hold a conference call to discuss its third quarter
2020 results on Thursday, November 12th at 5:00 p.m. Eastern time.
Management will host the call, followed by a question and answer
period.
Date: Thursday, November 12, 2020Time: 5:00 p.m. Eastern
timeToll-free dial-in number: 1-855-327-6837International dial-in
number: 1-631-891-4304
The conference call will be webcast live and available for
replay via the investors section of our 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 November 19,
2020.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 10011744
About IZEA Worldwide, Inc.
IZEA Worldwide, Inc. (“IZEA”) operates online platforms that
connect marketers with content creators. IZEA platforms automate
influencer marketing and custom content development, allowing
brands and agencies to identify social trends and scale their
marketing programs. IZEA influencers include everyday creators, as
well as celebrities and accredited journalists. Creators are
compensated for producing unique content such as long and short
form text, videos, photos, status updates and illustrations for
marketers or distributing such content on behalf of marketers
through their personal websites, blogs and social media channels.
Marketers receive influential content and engaging, shareable
stories that drive awareness. For more information about IZEA,
visit https://izea.com/.
Use of Key Metrics and Non-GAAP Financial
Measures
We define gross billings, a key metric, as the total dollar
value of the amounts earned from our customers for the services we
performed, or the amounts billed to our customers for their
self-service purchase of goods and services on our platforms. Gross
billings for Legacy Workflow and Marketplace Spend (which are
included in SaaS Services) differs from revenue for these services
reported in our consolidated statements of operations. These
services are presented net of the amounts we pay to the third-party
creators providing the content or sponsorship services. Gross
billings for all other revenue types equal the revenue reported in
our consolidated statements of operations.
We consider this metric to be an important indicator of our
performance as it measures the total dollar volume of transactions
generated through our marketplaces. Tracking gross billings allows
us to evaluate our transaction totals on an equal basis in order
for us to see our contribution margins by revenue stream so that we
can better understand where we should be allocating our
resources. Additionally, because we invoice our customers on
a gross basis based on our services or their transactions plus a
fee, tracking gross billings is critical as it pertains to our
credit risk and cash flow.
"Adjusted EBITDA" is a non-GAAP financial measure under the
rules of the Securities and Exchange Commission. EBITDA is commonly
defined as "earnings 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 certain other unusual or non-cash
income and expense items such as gains or losses on settlement of
liabilities and exchanges, and changes in the fair value of
derivatives, if applicable.
We believe that Adjusted EBITDA provides useful information to
investors as it excludes transactions not related to our core
cash-generating operating business activities, and it provides
consistency to facilitate period-to-period comparisons. We believe
that excluding these transactions allows investors to meaningfully
trend and analyze the performance of our core cash-generating
operations.
All companies do not calculate gross billings and Adjusted
EBITDA in the same manner. These metrics as presented by IZEA may
not be comparable to those presented by other companies. Moreover,
these metrics 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 StatementAll statements in this
release that are not based on historical fact are “forward-looking
statements” intended to qualify for the safe harbor from liability
established by the Private Securities Litigation Reform Act of
1995. Forward-looking statements, which are based on certain
assumptions and describe our future plans, strategies and
expectations, can generally be identified by the use of
forward-looking terms such as “may,” “will,” “would,” “could,”
“should,” “expects,” “anticipates,” “estimates,” “believes,”
“intends,” “likely,” “projects,” “plans,” “pursue," “strategy” or
“future,” or the negative of these words or other words or
expressions of similar meaning. Examples of forward-looking
statements include, among others, statements we make regarding
expectations regarding future results and the realization of
revenue from bookings, expectations with respect to operational
efficiency, and expectations concerning IZEA’s business strategy.
Forward-looking statements involve inherent risks and uncertainties
which could cause actual results to differ materially from those in
the forward-looking statements, as a result of various factors
including, among others, the following: our ability to raise
additional funding needed to fund our business operation in the
future, uncertainty relating to the effects of COVID-19,
competitive conditions in the content and social sponsorship
segment in which IZEA operates; failure to popularize the IZEAx
marketplace platform; our ability to satisfy the requirements for
continued listing of our common stock on the Nasdaq Capital Market;
changing economic conditions that are less favorable than expected;
and other risks and uncertainties described in IZEA’s periodic
reports filed with the Securities and Exchange Commission. The
forward-looking statements made in this release speak only as of
the date of this release, and IZEA assumes no obligation to update
any such forward-looking statements to reflect actual results or
changes in expectations, except as otherwise required by law.
Press ContactMartin SmithIZEA Worldwide,
Inc.Phone: 407-674-6911Email: ir@izea.com
|
IZEA Worldwide, Inc.Unaudited Consolidated
Balance Sheets |
|
|
September 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
30,617,921 |
|
|
$ |
5,884,629 |
|
Accounts receivable, net |
3,981,132 |
|
|
5,596,719 |
|
Prepaid expenses |
385,128 |
|
|
400,181 |
|
Other current assets |
140,291 |
|
|
153,031 |
|
Total current assets |
35,124,472 |
|
|
12,034,560 |
|
|
|
|
|
Property and equipment, net |
260,994 |
|
|
309,780 |
|
Goodwill |
4,016,722 |
|
|
8,316,722 |
|
Intangible assets, net |
768,879 |
|
|
1,611,516 |
|
Software development costs, net |
1,480,288 |
|
|
1,519,980 |
|
Security deposits |
— |
|
|
151,803 |
|
Total assets |
$ |
41,651,355 |
|
|
$ |
23,944,361 |
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,333,281 |
|
|
$ |
2,252,536 |
|
Accrued expenses |
1,267,553 |
|
|
1,377,556 |
|
Contract liabilities |
7,028,687 |
|
|
6,466,766 |
|
Current portion of notes payable |
1,157,103 |
|
|
— |
|
Right-of-use liability |
— |
|
|
83,807 |
|
Total current liabilities |
10,786,624 |
|
|
10,180,665 |
|
|
|
|
|
Finance obligation, less
current portion |
65,604 |
|
|
45,673 |
|
Notes payable, less current
portion |
778,092 |
|
|
— |
|
Total liabilities |
11,630,320 |
|
|
10,226,338 |
|
|
|
|
|
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;
48,331,379 and 34,634,172, respectively, issued and
outstanding |
4,833 |
|
|
3,464 |
|
Additional paid-in capital |
99,610,374 |
|
|
74,099,328 |
|
Accumulated deficit |
(69,594,172 |
) |
|
(60,384,769 |
) |
Total stockholders’ equity |
30,021,035 |
|
|
13,718,023 |
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
41,651,355 |
|
|
$ |
23,944,361 |
|
|
IZEA Worldwide, Inc.Unaudited Consolidated
Statements of Operations |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
$ |
4,036,120 |
|
|
$ |
4,411,086 |
|
|
$ |
11,934,827 |
|
|
$ |
13,128,706 |
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of amortization) |
1,701,770 |
|
|
1,904,287 |
|
|
5,256,536 |
|
|
5,821,237 |
|
Sales and marketing |
1,403,037 |
|
|
1,518,165 |
|
|
4,154,871 |
|
|
4,238,074 |
|
General and administrative |
1,827,267 |
|
|
1,752,126 |
|
|
6,165,597 |
|
|
6,596,485 |
|
Impairment of goodwill |
— |
|
|
— |
|
|
4,300,000 |
|
|
— |
|
Depreciation and amortization |
372,483 |
|
|
433,094 |
|
|
1,250,859 |
|
|
1,317,423 |
|
Total costs and expenses |
5,304,557 |
|
|
5,607,672 |
|
|
21,127,863 |
|
|
17,973,219 |
|
|
|
|
|
|
|
|
|
Loss from operations |
(1,268,437 |
) |
|
(1,196,586 |
) |
|
(9,193,036 |
) |
|
(4,844,513 |
) |
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
(16,448 |
) |
|
(27,734 |
) |
|
(42,542 |
) |
|
(242,935 |
) |
Other income, net |
30,085 |
|
|
51,285 |
|
|
26,175 |
|
|
91,447 |
|
Total other income (expense), net |
13,637 |
|
|
23,551 |
|
|
(16,367 |
) |
|
(151,488 |
) |
|
|
|
|
|
|
|
|
Net loss |
$ |
(1,254,800 |
) |
|
$ |
(1,173,035 |
) |
|
$ |
(9,209,403 |
) |
|
$ |
(4,996,001 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – basic and diluted |
45,772,638 |
|
|
32,421,043 |
|
|
38,879,218 |
|
|
22,506,929 |
|
Basic and diluted loss per
common share |
$ |
(0.03 |
) |
|
$ |
(0.04 |
) |
|
$ |
(0.24 |
) |
|
$ |
(0.22 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue Details:
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Managed Services Revenue |
$ |
3,513,806 |
|
|
$ |
3,558,109 |
|
|
$ |
10,129,210 |
|
|
$ |
10,416,912 |
|
|
|
|
|
|
|
|
|
Legacy Workflow Fees |
— |
|
|
44,170 |
|
|
— |
|
|
135,791 |
|
Marketplace Spend Fees |
120,630 |
|
|
266,037 |
|
|
482,817 |
|
|
955,328 |
|
License Fees |
358,879 |
|
|
505,634 |
|
|
1,184,423 |
|
|
1,545,222 |
|
Other Fees |
42,805 |
|
|
37,136 |
|
|
138,377 |
|
|
75,453 |
|
SaaS Services Revenue |
522,314 |
|
|
852,977 |
|
|
1,805,617 |
|
|
2,711,794 |
|
|
|
|
|
|
|
|
|
Total Revenue |
$ |
4,036,120 |
|
|
$ |
4,411,086 |
|
|
$ |
11,934,827 |
|
|
$ |
13,128,706 |
|
|
IZEA Worldwide, Inc.Reconciliation of GAAP
Net loss to Non-GAAP Adjusted
EBITDA(Unaudited) |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net loss |
$ |
(1,254,800 |
) |
|
$ |
(1,173,035 |
) |
|
$ |
(9,209,403 |
) |
|
$ |
(4,996,001 |
) |
Non-cash stock-based compensation |
|
108,568 |
|
|
|
179,866 |
|
|
|
356,846 |
|
|
|
498,071 |
|
Non-cash stock issued for payment of services |
|
31,250 |
|
|
|
37,509 |
|
|
|
93,749 |
|
|
|
112,504 |
|
Gain on settlement of acquisition costs payable |
|
— |
|
|
|
(793,849 |
) |
|
|
— |
|
|
|
(602,410 |
) |
Increase in value of acquisition costs payable |
|
— |
|
|
|
889 |
|
|
|
— |
|
|
|
6,222 |
|
Interest expense |
|
16,448 |
|
|
|
27,734 |
|
|
|
42,542 |
|
|
|
242,935 |
|
Depreciation and amortization |
|
372,483 |
|
|
|
433,094 |
|
|
|
1,250,859 |
|
|
|
1,317,423 |
|
Impairment of goodwill |
|
— |
|
|
|
— |
|
|
|
4,300,000 |
|
|
|
— |
|
Other non-cash items |
|
1,283 |
|
|
|
31,998 |
|
|
|
(22,423 |
) |
|
|
23,903 |
|
Adjusted EBITDA |
$ |
(724,768 |
) |
|
$ |
(1,255,794 |
) |
|
$ |
(3,187,830 |
) |
|
$ |
(3,397,353 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
4,036,120 |
|
|
$ |
4,411,086 |
|
|
$ |
11,934,827 |
|
|
$ |
13,128,706 |
|
Adjusted EBITDA as a % of Revenue |
|
(18 |
)% |
|
|
(28 |
)% |
|
|
(27 |
)% |
|
|
(26 |
)% |
|
IZEA Worldwide, Inc.Gross
Billings(Unaudited) |
|
Gross
billings by revenue type: |
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Managed Services Gross Billings |
$ |
3,513,806 |
|
|
$ |
3,558,109 |
|
|
$ |
10,129,210 |
|
|
$ |
10,416,912 |
|
|
|
|
|
|
|
|
|
Legacy Workflow Fees |
— |
|
|
609,375 |
|
|
— |
|
|
1,871,056 |
|
Marketplace Spend Fees |
1,605,729 |
|
|
1,942,995 |
|
|
4,702,383 |
|
|
7,199,141 |
|
License Fees |
358,879 |
|
|
505,634 |
|
|
1,184,423 |
|
|
1,545,222 |
|
Other Fees |
42,805 |
|
|
37,136 |
|
|
138,377 |
|
|
75,453 |
|
SaaS Services Gross Billings |
2,007,413 |
|
|
3,095,140 |
|
|
6,025,183 |
|
|
10,690,872 |
|
|
|
|
|
|
|
|
|
Total Gross Billings |
$ |
5,521,219 |
|
|
$ |
6,653,249 |
|
|
$ |
16,154,393 |
|
|
$ |
21,107,784 |
|
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