ORLANDO, Fla.--(BUSINESS WIRE)--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, 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 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: 1-844-512-2921
International replay
number: 1-412-317-6671
Replay 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, |
December 31, |
||||||
| 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 Ended September 30, |
Nine Months Ended September 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 Ended September 30, |
Nine Months Ended September 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 | ) | |||||
