IZEA, Inc. (NASDAQ: IZEA), operator of IZEAx, the premier online
marketplace connecting brands and publishers with influential
content creators, entered into a non-binding letter of intent (the
“LOI”) on April 19, 2018 outlining certain general terms for the
proposed purchase by IZEA of all the outstanding shares of a
leading participant in the influencer marketing space (referred to
as the “Influencer Marketing Company”).
The Influencer Marketing Company develops, markets and sells
SaaS software that is complementary with IZEA’s existing influencer
marketing products and services. Subsequent to signing the LOI,
IZEA and the Influencer Marketing Company determined that
shareholders of both companies would be best served by consummating
the transaction through a merger agreement (the “Merger”). The
transaction contemplates that the Influencer Marketing Company will
become a wholly-owned subsidiary of IZEA. Consideration paid to
shareholders of the Influencer Marketing Company will be in the
form of cash and IZEA stock paid or issuable at closing and over
the next 12-month period.
“As the influencer marketing industry has grown, so has the
fragmentation of service providers and channel noise for the
marketers buying services from those companies,” said Ted Murphy,
Chairman and CEO of IZEA. “At the same time, there is material
waste among these competitors who are investing duplicative
resources developing software, marketing their services and
maintaining support infrastructure. We believe that there is an
opportunity for consolidation among the leading providers in both
influencer and content marketing, and our hope is that this
transaction serves as the catalyst to bring more of these companies
together.”
Based upon information provided by the Influencer Marketing
Company to IZEA, the Influencer Marketing Company’s revenues for
the year ended December 31, 2017 were approximately $5.9 million
and its Gross Billings were approximately $18.2 million. Net loss
for the year ended December 31, 2017 was $3.6 million. The
Influencer Marketing Company’s Gross Billings information has not
yet been audited and actual numbers may be materially different
from what was provided and reported herein. In 2017, the combined
annual revenues of IZEA and the Influencer Marketing Company were
approximately $30.3 million, with Gross Billings of approximately
$47.4 million. The Influencer Marketing Company’s revenues are
comprised of SaaS subscription fees, marketplace transaction fees
and professional service fees. Approximately 95% of its revenues
are derived from SaaS and marketplace fees. IZEA believes that the
Company, on a consolidated basis if the Merger is consummated,
could achieve the necessary operational expense reductions to
significantly improve IZEA’s Adjusted EBITDA profile. However, IZEA
cannot provide any assurance that, if the transaction closes, IZEA
will be able to achieve any cost savings and it is possible that
the impact on Adjusted EBITDA and the balance sheet could be
negative.
Consummation of the transaction contemplated by the LOI is
subject to financing and the execution and delivery of a definitive
Merger Agreement along with the satisfaction of the closing
conditions which will be contained therein. It is contemplated that
the Merger transaction will be consummated in July 2018, but there
can be no assurance that a definitive Merger Agreement will be
entered into, or that the Merger will be consummated upon the terms
set forth in the LOI, or otherwise. In the event that the Merger is
consummated, there can be no assurance that it will ultimately
prove to be beneficial to IZEA.
About IZEA
IZEA operates IZEAx, the premier online marketplace that
connects marketers with content creators. IZEAx automates
influencer marketing and custom content development, allowing
brands and agencies to scale their marketing programs. IZEA
creators include 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 Non-GAAP Financial Measures
Gross Billings, a non-GAAP financial measure, is the total
dollar value of the amounts earned from customers for the services
performed where the company is acting as a principal and the
amounts charged to customers for their self-service purchase of
goods and services through the online platforms where the company
is acting as an agent. Gross Billings when the company is acting as
an agent differs from revenue reported in the consolidated
statements of operations, which is presented net of the amounts
paid to third-parties providing the content or sponsorship
services.
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 monitor the percentage of Gross Billings that we are able to
retain after payments to our creators. Because we invoice our
customers on a gross basis, tracking Gross Billings is critical as
it pertains to our credit risk and cash flow.
"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 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 Adjusted EBITDA provides useful information to
investors as it excludes 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 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.
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, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. 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 future financial results, expectations
regarding whether and when the transactions would lose,
expectations concerning IZEA’s ability to increase its revenue and
improve Adjusted EBITDA, expectations with respect to operational
efficiency, expectations regarding financing, 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; our ability to
establish effective disclosure controls and procedures and internal
control over financial reporting; 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180611005121/en/
IZEA, Inc.Justin Braun, 407-215-6218Manager, Corporate
CommunicationsEmail: justin.braun@izea.com
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