First Adjusted EBITDA Positive Quarter Since
Becoming a Public Company
IZEA, Inc. (NASDAQ: IZEA), operator of IZEAx, the premier online
marketplace connecting brands and publishers with influential
content creators, reported financial results for the third quarter
ended September 30, 2017.
Q3 2017 Financial Highlights Compared to Same Year-ago
Quarter
- Adjusted EBITDA was $221,000, compared
to $(886,000), an improvement of $1.1 million.
- Total revenue up 9% to $8.2 million,
compared to $7.5 million.
- Managed Services revenue increased 20%
to $7.0 million, compared to $5.8 million.
- Content Workflow revenue decreased 28%
to $1.1 million, compared to $1.6 million.
- Revenue backlog, which includes
unbilled bookings and unearned revenue, was $11.0 million at the
end of the quarter.
- Net bookings increased 2% to $7.9
million compared to $7.7 million.
- Gross profit increased 23% to $4.4
million, with gross margin of 54%.
Trailing Twelve Months Ended September 30, 2017 Compared to
Same Year-ago TTM
- Revenue up 10% to $28.8 million,
compared to. $26.1 million.
- Managed Services Revenue up 21% to
$22.9 million, compared to $19.0 million.
- Gross Profit up 21% to $14.6 million,
compared to $12.1 million.
- Adjusted EBITDA improved 46% to $(3.7)
million, compared to $(5.8) million.
Management Commentary
“This was a milestone quarter for the company. We crossed $8M in
quarterly revenue for the first time, and posted our first EBITDA
positive quarter since becoming a public company,” said Ted Murphy,
IZEA’s Chairman and CEO. “We have made meaningful progress towards
our goal of reaching sustainable, profitable growth, and I am
excited by what our team has accomplished to date. Our goal was to
have our first EBITDA positive quarter in the second half of 2018
and we are full year ahead of schedule.”
“Our managed sales team continues to deliver impressive results.
In addition to all-time record revenue, we delivered all-time
record bookings for managed services, the core of our business. Our
focus on managed services and the improved margins on those
services helped propel us to an EBITDA positive quarter. Custom
Content sales were particularly strong, and we are heading into
what we expect to be an even stronger Q4 for Managed Services with
annual renewals for 2018.”
“We continue to invest in technology to benefit our clients and
improve our own operational efficiency. Artificial intelligence and
machine learning are being integrated in areas throughout the
organization. This technology surfaces new insights, automates
processes, and ultimately allows us to accomplish more with less
ongoing expense. Our revenue per employee in Q3 increased from
$197,000 to $267,000 year over year and remains an efficiency
metric we are focused on. Looking forward, we will be announcing
additional innovations that leverage big data and artificial
intelligence to make us even more effective.”
Q3 2017 Financial Results
Revenue in the third quarter of 2017 increased 9% to $8.2
million compared to $7.5 million in the same year-ago quarter. The
increase in our Q3 2017 revenue is primarily due to organic growth
in our Managed Services revenue.
Gross profit in the third quarter of 2017 increased 23% by
approximately $826,000, as compared to the third quarter of 2016.
The increase in gross profit was primarily attributable to a
favorable shift to higher margin Managed Services revenue versus
lower margin self-service Content Workflow revenue.
Operating expenses in the third quarter of 2017 and 2016 were
$5.0 million. Cash-based Opex in the third quarter of 2017 was
approximately $4.2 million, compared to $4.5 million in the third
quarter of 2016, a decrease of 5% year over year.
Net loss in the third quarter of 2017 was approximately
$(559,000), or $(0.10) per share, as compared to a net loss of
$(1.5) million, or $(0.28) per share, in the same year-ago quarter.
Adjusted EBITDA was approximately $221,000 compared to $(886,000)
during the same period of 2016, an improvement of $1.1 million year
over year.
Cash and cash equivalents at September 30, 2017 totaled $3.5
million. Receivables at the end of the quarter were $5.3 million,
up from $4.1 million at the end of Q2 2017. As of September 30,
2017, the company has accessed $810,000 of a $5.0 million credit
line for cash management purposes.
Updated 2017 Outlook
The company expects annual revenue in 2017 will be approximately
$29-$30 million, compared to $27.3 million in 2016. The company has
increased its gross margin guidance by 200 basis points. Gross
margins are now expected to range between 50% to 51% compared to
48% in 2016. Guidance for adjusted EBITDA has improved by $1.0
million and adjusted EBITDA is expected to be approximately
$(3.0-3.25) million compared to $(5.2) million in 2016.
Conference Call
IZEA will hold a conference call to discuss its third-quarter
2017 results today at 5:00 p.m. Eastern time. Management will host
the call, followed by a question and answer period.
Date: Tuesday, November 7, 2017Time: 5:00 p.m. Eastern
timeToll-free dial-in number: 1-877-407-4018International dial-in
number: 1-201-689-8471
The conference call will be webcast live and will be available
for replay via the investors section of the company’s website at
https://izea.com/investors.
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 14, 2017.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 13672388
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
All statements in this release that are not based on historical
fact are “forward-looking statements” within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. 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 "believe," "expect," "may," "will,"
"should," "could," "seek," "intend," "plan," "goal," "estimate,"
"anticipate" or other comparable terms. Examples of forward-looking
statements include, among others, statements we make regarding,
expectations concerning IZEA’s ability to increase bookings for
Managed Services and maintain the margins thereon; anticipated
declines in Content Workflow revenue; 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: 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 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.
IZEA, Inc.
Unaudited Consolidated Balance Sheets
September 30,2017
December 31,2016
Assets Current: Cash and cash equivalents $ 3,447,998 $ 5,949,004
Accounts receivable, net 5,253,423 3,745,695 Prepaid expenses
414,619 322,377 Other current assets 27,606
11,940 Total current assets 9,143,646
10,029,016 Property and equipment, net 310,277 460,650
Goodwill 3,604,720 3,604,720 Intangible assets, net 914,816
1,662,536 Software development costs, net 1,004,905 1,103,959
Security deposits 157,427 161,736 Total assets
$ 15,135,791 $ 17,022,617
Liabilities and Stockholders’ Equity Current liabilities: Accounts
payable $ 1,680,422 $ 1,438,389 Accrued expenses 1,888,985
1,242,889 Unearned revenue 3,750,617 3,315,563 Line of credit
810,376 — Current portion of deferred rent 41,886 34,290 Current
portion of acquisition costs payable 619,834
1,252,885 Total current liabilities 8,792,120
7,284,016 Deferred rent, less current portion
29,187 62,547 Acquisition costs payable, less current portion
477,718 688,191 Warrant liability — —
Total liabilities 9,299,025 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; 5,709,626 and
5,456,118, respectively, issued and outstanding 571 545 Additional
paid-in capital 52,370,539 50,797,039 Accumulated deficit
(46,534,344 ) (41,809,721 ) Total stockholders’ equity
5,836,766 8,987,863 Total
liabilities and stockholders’ equity $ 15,135,791
$ 17,022,617
IZEA, Inc.
Unaudited Consolidated Statements of
Operations
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2017 2016 2017 2016
Revenue $ 8,154,674 $ 7,496,972 $ 21,337,401 $ 19,876,611
Cost of sales 3,758,621 3,927,279
10,396,328 10,447,035 Gross profit
4,396,053 3,569,693 10,941,073
9,429,576 Operating expenses: General
and administrative 2,687,266 2,454,555 8,021,420 7,559,302 Sales
and marketing 2,342,002 2,584,287
7,666,720 7,556,664 Total operating
expenses 5,029,268 5,038,842
15,688,140 15,115,966 Loss from
operations (633,215 ) (1,469,149 ) (4,747,067 ) (5,686,390 )
Other income (expense): Interest expense (15,058 ) (25,511 )
(45,406 ) (58,261 ) Change in fair value of derivatives, net 45,160
(14,705 ) 36,122 14,568 Other income (expense), net 44,308
(2,238 ) 31,728 (485 ) Total
other income (expense), net 74,410 (42,454 )
22,444 (44,178 ) Net loss $
(558,805 ) $ (1,511,603 ) $ (4,724,623 ) $
(5,730,568 ) Weighted average common shares outstanding –
basic and diluted 5,702,297 5,420,020
5,659,423 5,357,119 Basic and diluted
loss per common share $ (0.10 ) $ (0.28 ) $
(0.83 ) $ (1.07 )
IZEA, Inc.
Reconciliation of GAAP Net Loss to
Non-GAAP Adjusted EBITDA
(Unaudited)
Three Months EndedSeptember 30, Nine Months EndedSeptember
30, 2017 2016 2017 2016 Net loss
$ (558,805 ) $ (1,511,603 ) $ (4,724,623 ) $
(5,730,568 ) Non-cash stock-based compensation 182,796 170,818
509,642 576,144 Non-cash stock issued for payment of services
60,074 34,970 143,536 107,440 (Gain) loss on disposal of equipment
(1,775 ) (484 ) (5,462 ) (484 ) (Gain) loss on settlement of
acquisition costs payable — — (10,491 ) — Increase (decrease) in
value of acquisition costs payable 193,708 40,972 335,486 40,972
Depreciation and amortization 374,965 339,589 1,095,831 935,063
Interest expense 15,058 25,511 45,406 58,261 Change in fair value
of derivatives (45,160 ) 14,705 (36,122
) (14,568 ) Adjusted EBITDA $ 220,861 $
(885,522 ) $ (2,646,797 ) $ (4,027,740 )
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version on businesswire.com: http://www.businesswire.com/news/home/20171107005308/en/
IZEA, Inc.Justin Braun, 407-215-6218Manager, Corporate
CommunicationsJustin.braun@izea.com
IZEA Worldwide (NASDAQ:IZEA)
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