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 fourth quarter and full year ended December 31, 2016.
Q4 2016 Financial Summary vs. Same Year-ago Quarter
- Revenue up 19% to a Q4 record of $7.4 million vs. $6.3 million.
- Sponsored revenue increased 22% to $4.7 million; Content revenue increased 15% to $2.6 million.
- Revenue backlog, which includes unbilled bookings and unearned revenue, at the end of 2016 was $10.2 million.
- Net bookings increased 11% to $8.1 million vs. $7.3 million.
- Gross profit increased 36% to a Q4 record of $3.6 million, with gross margin up 600 basis points to 49%.
- Adjusted EBITDA was $(1.1) million compared to $(1.8) million
Full Year 2016 Financial Summary vs. 2015
- Revenue up 33% to a record $27.3 million.
- Sponsored revenue increased 37% to $16.7 million; Content revenue increased 28% to $10.2 million.
- Net bookings increased 23% to $30 million.
- Gross profit increased 59% to a record $13.1 million, with gross margin up 800 basis points from 40% to 48%.
- Net loss was $7.6 million or $(1.41) per share, compared to a net loss of $11.3 million or $(3.03) per share.
- Adjusted EBITDA was $(5.2) million compared to $(7.1) million.
2016 Operational Highlights
- Began trading on Nasdaq Capital Market in February, and rang the Nasdaq opening bell in March.
- Established IZEA Canada, Inc., a wholly-owned subsidiary based in Toronto, to expand the company’s footprint in the region.
- Invited to become a member of the Russell Microcap® Index.
- Named one of the 2016 Best Places to Work by the Orlando Business Journal.
- Recognized as a Top 100 Company in Central Florida by Orlando Sentinel.
- Expanded custom content offering with acquisition of ZenContent.
- Launched IZEAx 2.0, including Promoted Posts and ContentAmp®.
“In 2016 we focused our efforts on operational excellence throughout the organization. I am pleased with the progress and improvements we made as our focus turned inward. We were able to significantly impact our gross margins, our revenue per employee and overall efficiency,” said Ted Murphy, IZEA’s Chairman and CEO. “We were inline with our revenue guidance set at the beginning of 2016 and significantly beat our gross profit and EBITDA guidance through tight controls and efficiencies.”
“As we look to 2017 we see growth and opportunity in both custom content and influencer marketing. Marketer dollars are continuing to shift to these areas and we believe we have the right mix of technology and services to meet client needs. We will continue to pursue responsible organic growth as well as evaluate acquisitions.”
Q4 2016 Financial Results
Revenue in the fourth quarter of 2016 increased 19% to $7.4 million compared to $6.3 million in the same year-ago quarter. The increase was due to organic growth in both our Sponsored Social and Content revenue streams.
Gross profit in the fourth quarter of 2016 increased 36% to $3.6 million, or 49% of revenue, compared to $2.7 million, or 43% of revenue, in the fourth quarter of 2015. The increase in gross profit was primarily attributable to a favorable shift to higher margin managed services versus self-service content and sponsored social offerings.
Operating expenses in the fourth quarter of 2016 were $5.4 million compared to $5.1 million in the same year-ago quarter. This increase was primarily due to increased personnel-related costs offset by lower public relations and marketing expenses. Personnel costs increased as a result of a 22% increase in the average number of personnel in the fourth quarter of 2016 as compared to the fourth quarter of 2015. Public relations and marketing costs were lower due to the shift in timing of our annually sponsored IZEAFest event from Q4 2015 to Q1 2017.
Net loss in the fourth quarter of 2016 was $(1.8) million or $(0.34) per share, as compared to a net loss of $(2.4) million or $(0.47) per share in the same year-ago quarter. The improvement was primarily due to increased revenue and profit margins, partially offset by the increase in expenses in the fourth quarter of 2016 compared to the year-ago quarter.
Adjusted EBITDA (a non-GAAP metric management uses as a proxy for operating cash flow, as defined below) in the fourth quarter of 2016 was $(1.1) million compared to $(1.8) million in the same year-ago quarter. The improvement in adjusted EBITDA was primarily due to the increase in revenue and profit margins. Adjusted EBITDA as a percentage of revenue in the fourth quarter of 2016 was (15%) compared to (29%) in the year-ago quarter.
Cash and cash equivalents at December 31, 2016 totaled $5.9 million. The company continues to operate debt free and has an unused $5.0 million credit line.
Full Year 2016 Financial Results
Revenue increased 33% to $27.3 million compared to $20.5 million in 2015. The increase was due to organic growth in all of the company’s revenue streams.
Gross profit in 2016 increased 59% to $13.1 million, or 48% of revenue, compared to $8.2 million, or 40% of revenue, in 2015. The gross profit improvement was primarily attributable to increased use of the company’s managed services by brands and agencies.
Operating expenses were $20.5 million compared to $15.5 million in 2015. The increase was primarily attributable to increased personnel costs and related overhead.
Net loss in 2016 was $(7.6) million or $(1.41) per share, compared to a net loss of $(11.3) million or $(3.03) per share in 2015. The improvement in net loss was primarily due to increased revenue and profit margins, partially offset by the increase in personnel costs and acquisition costs in our operating expenses in 2016.
Adjusted EBITDA was $(5.2) million compared to $(7.1) million in 2015. Adjusted EBITDA as a percentage of revenue was (19%) compared to (35%) in 2015.
The company expects revenue in 2017 to increase to $32-$33 million compared to $27.3 million in 2016. Gross margins are expected to range between 47% to 48% compared to 48% in 2016. Adjusted EBITDA is expected to be approximately $(3.0) million compared to $(5.2) million in 2016 due to company’s the continued investment in sales and operating efficiencies.
IZEA will hold a conference call to discuss its fourth quarter and full year 2016 results today at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.
Date: Tuesday, March 28, 2017
Time: 5:00 p.m. Eastern time
Dial-in number: 1-877-407-4018
International dial-in number: 1-201-689-8471
Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
A replay of the call will be available after 8:00 p.m. Eastern time on the same day through April 4, 2017.
Replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13658373
IZEA operates IZEAx, the premier online marketplace that connects marketers with influential content creators. 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.
Financial Methodology & Related Disclosures
"EBITDA" is a non-GAAP financial measure within the meaning of Regulation G promulgated by the Securities and Exchange Commission. EBITDA is commonly defined as "earnings before interest, taxes, depreciation and amortization." We believe that 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 EBITDA in the same manner, and EBITDA as presented by IZEA may not be comparable to EBITDA presented by other companies. IZEA defines “Adjusted EBITDA” 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 contingent acquisition costs and all other non-cash income and expense items such as loss on exchanges and changes in fair value of derivatives, if applicable.
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, and changing economic conditions that are less favorable than expected. 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.
|Consolidated Balance Sheets|
|December 31,||December 31,|
|Cash and cash equivalents||$||5,949,004||$||11,608,452|
|Accounts receivable, net||3,745,695||3,917,925|
|Other current assets||11,940||16,853|
|Total current assets||10,029,016||15,736,685|
|Property and equipment, net||460,650||596,008|
|Intangible assets, net||1,662,536||1,806,191|
|Software development costs, net||1,103,959||813,932|
|Liabilities and Stockholders’ Equity|
|Current portion of deferred rent||34,290||14,662|
|Current portion of capital lease obligations||—||7,291|
|Current portion of acquisition costs payable||1,252,885||844,931|
|Total current liabilities||7,284,016||6,355,205|
|Deferred rent, less current portion||62,547||102,665|
|Acquisition costs payable, less current portion||688,191||889,080|
|Commitments and Contingencies||—||—|
|Preferred stock; $.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding||—||—|
|Common stock, $.0001 par value; 200,000,000 shares authorized; 5,456,118 and 5,222,951, respectively, issued and outstanding||545||522|
|Additional paid-in capital||50,797,039||48,436,040|
|Total stockholders’ equity||8,987,863||14,187,041|
|Total liabilities and stockholders’ equity||$||17,022,617||$||21,539,051|
|Consolidated Statements of Operations|
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|Cost of sales||3,795,209||3,587,608||14,242,244||12,236,916|
|General and administrative||2,723,490||2,435,748||10,282,792||7,517,115|
|Sales and marketing||2,705,246||2,626,091||10,261,910||7,936,215|
|Total operating expenses||5,428,736||5,061,839||20,544,702||15,453,330|
|Loss from operations||(1,789,954||)||(2,387,214||)||(7,476,344||)||(7,222,320||)|
|Other income (expense):|
|Loss on exchange of warrants||—||—||—||(1,845,810||)|
|Change in fair value of derivatives, net||(5,405||)||5,720||9,163||(2,133,820||)|
|Other income (expense), net||(9,590||)||4,120||(10,075||)||9,640|
|Total other income (expense)||(39,678||)||(19,667||)||(83,856||)||(4,085,851||)|
|Net loss||$||(1,829,632||)||$||(2,406,881||)||$||(7,560,200||)||$||( 11,308,171||)|
|Weighted average common shares outstanding – basic and diluted||5,450,005||5,118,139||5,380,465||3,737,897|
|Basic and diluted loss per common share||$||(0.34||)||$||(0.47||)||$||(1.41||)||$||(3.03||)|
|Reconciliation of GAAP to Non-GAAP Adjusted EBITDA|
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|Non-cash stock-based compensation||171,948||194,264||748,092||705,466|
|Non-cash stock issued for payment of services||26,458||41,250||133,897||177,842|
|Change in the fair value of derivatives||5,405||(5,720||)||(9,163||)||2,133,820|
|Loss on exchange of warrants||—||—||—||1,845,810|
|Loss on disposal of equipment||9,919||—||9,435||595|
|Increase/(decrease) in value of contingent acquisition costs payable||94,000||(100,000||)||94,000||(1,834,300||)|
|Depreciation and amortization||364,788||428,071||1,299,851||1,059,131|