[May 22, 2018] |
|
IZEA Reports First Quarter 2018 Results
IZEA,
Inc. (NASDAQ: IZEA),
operator of IZEAx, the premier online marketplace connecting
brands and publishers with influential content creators, reported its
financial results for the first quarter ended March 31, 2018.
Q1 2018 Financial Highlights Compared to Q1 2017
-
Revenue was $3.9 million in Q1 2018, down 19%, compared to $4.8
million in Q1 2017.
-
Revenue from Managed Services decreased 19% to $3.8 million, compared
to $4.7 million.
-
Bookings from Managed Services decreased 10% to $5.7 million, compared
to $6.4 million.
-
Total costs and expenses were $5.8 million, compared to $7.5 million.
-
Net loss was $(2.0) million, compared to a net loss of $(2.7) million,
an improvement of $674,000 or 25%.
-
Adjusted EBITDA was $(1.8) million, compared to $(2.0) million, an
improvement of $(0.2) million or 9%.
Q1 2018 Operational Highlights
-
Began expansion of IZEA partnership sales team, focused on increasing
adoption of IZEAx
-
A global top ten public relations agency became an IZEAx
licensee
-
Executed campaigns for two of the top five largest internet companies
Management Commentary
"IZEA saw a decrease in fourth-quarter 2017 contractual commitments as
several large customers pushed their annual contracts to the 2018
calendar year. In addition, smaller, faster running campaigns made up
less of the sales pipeline throughout 2017. That in turn had an impact
on first-quarter 2018 revenue and Gross Billings, which were both off in
the quarter," said Ted Murphy, IZEA's Chairman and CEO. "We began to see
a rebound in contractual commitments in first-quarter 2018 as our
bookings for Managed Services increased to $5.7 million compared to $4.0
million in the fourth-quarter of 2017. However, we remain off pace from
last year, when we had $6.4 million in bookings for Managed Services in
the first quarter of 2017. We believe it will take us two to three
quarters to begin to see a meaningful impact from our customer
diversification strategy, which is designed to reduce the effects of
larger customers as a percentage of revenue."
Q1 2018 Financial Results
Revenue in the first quarter of 2018 was $3.9 million, a 19% decrease
compared to $4.8 million in the same year-ago quarter. The Managed
Services portion of our revenue, accounting for 97% of total revenue,
decreased by approximately $887,000. Managed Services decreased
primarily due to slow sales in fourth-quarter 2017, which resulted from
lower initial annual commitments from larger customers, along with a
fewer number of smaller customers running short-term campaigns. Nearly
$200,000 of the decrease in Managed Services revenue is due to the
change in the timing of revenue under the new accounting standard, ASC (News - Alert)
606, which the Company adopted in January 2018. Content Workflow revenue
for self-service transactions on our platforms, accounting for 2% of
total revenue, decreased 38% by approximately $39,000 to $63,000 in Q1
2018, compared to $102,000 in the same year-ago quarter. Self-service
use of our platform for content-only production by the large publishers
and news agencies is continuing to decline year over year, as expected,
due to the ongoing consolidation, cutbacks and operational changes in
the newspaper industry.
Our total Gross Billings (a non-GAAP metric management uses to measure
total transaction volume, as defined below) were down 24% to $4.7
million in Q1 2018 compared to $6.2 million in Q1 2017, due to the
decline in Managed Services commitments and Content Workflow
transactions.
Total costs and expenses in the first quarter of 2018 were $5.8 million
compared to $7.5 million in the same year-ago quarter. This decrease was
primarily due to the decrease in costs of revenue on lower revenue
produced, decreases in sales and public relations expense, and decreases
in labor and non-cash expenses in general and administrative expense.
Net loss in the first quarter of 2018 was $(2.0) million or $(0.35) per
share, as compared to a net loss of $(2.7) million or $(0.49) per share
in the same year-ago quarter. The improvement was primarily due to
decreased expenses.
Adjusted EBITDA (a non-GAAP metric management uses as a proxy for
operating cash flow, as defined below) in the first quarter of 2018 was
$(1.8) million compared to $(2.0) million in the same year-ago quarter.
The improvement in Adjusted EBITDA was primarily due to reduced
expenses. Adjusted EBITDA as a percentage of revenue in the first
quarter of 2018 was (47%) compared to (42%) in the year-ago quarter.
Revenue backlog, which includes unbilled bookings and unearned revenue,
was $10.3 million at the end of the quarter.
Cash and cash equivalents at March 31, 2018 totaled $2.8 million. At the
end of the quarter, the Company had accessed approximately $731,000 of
its $5.0 million credit line.
Conference Call
IZEA will hold a conference call to discuss its first quarter results on
Wednesday, May 23rd at 5:00 p.m. Eastern time. Management will host the
call, followed by a question and answer period.
Date: Wednesday, May 23, 2018 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 available for replay here and
via the investors section of the company's 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 May 30, 2018.
Toll-free replay number: 1-844-512-2921 International replay
number: 1-412-317-6671 Replay ID: 13680424
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
We define Gross Billings, a non-GAAP financial measure, as the total
dollar value of the amounts earned from our customers for the services
we performed, or the amounts charged to our customers for their
self-service purchase of goods and services on our platforms. Gross
Billings for Content Workflow differs from revenue reported in our
consolidated statements of operations, which is presented net of the
amounts we pay to our third-party creators providing the content or
sponsorship services. Gross Billings for all other revenue equals 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 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 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 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 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
expectations concerning IZEA's ability to increase its revenue and sales
pipeline and improve Adjusted EBITDA, 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; 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.
|
IZEA, Inc.
Unaudited Consolidated Balance Sheets
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
Assets
|
|
|
|
|
Current:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
2,760,285
|
|
|
$
|
3,906,797
|
|
Accounts receivable, net
|
|
|
3,288,576
|
|
|
|
3,647,025
|
|
Prepaid expenses
|
|
|
672,273
|
|
|
|
389,104
|
|
Other current assets
|
|
|
39,286
|
|
|
|
9,140
|
|
Total current assets
|
|
|
6,760,420
|
|
|
|
7,952,066
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
369,345
|
|
|
|
286,043
|
|
Goodwill
|
|
|
3,604,720
|
|
|
|
3,604,720
|
|
Intangible assets, net
|
|
|
532,114
|
|
|
|
667,909
|
|
Software development costs, net
|
|
|
1,013,657
|
|
|
|
967,927
|
|
Security deposits
|
|
|
148,330
|
|
|
|
148,638
|
|
Total assets
|
|
$
|
12,428,586
|
|
|
$
|
13,627,303
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
1,260,531
|
|
|
$
|
1,756,841
|
|
Accrued expenses
|
|
|
1,711,105
|
|
|
|
1,592,356
|
|
Contract liabilities
|
|
|
4,014,829
|
|
|
|
-
|
|
Unearned revenue
|
|
|
-
|
|
|
|
3,070,502
|
|
Line of credit
|
|
|
731,179
|
|
|
|
500,550
|
|
Current portion of deferred rent
|
|
|
47,072
|
|
|
|
45,127
|
|
Current portion of acquisition costs payable
|
|
|
530,364
|
|
|
|
741,155
|
|
Total current liabilities
|
|
|
8,295,080
|
|
|
|
7,706,531
|
|
|
|
|
|
|
Deferred rent, less current portion
|
|
|
4,355
|
|
|
|
17,419
|
|
Acquisition costs payable, less current portion
|
|
|
433,312
|
|
|
|
609,768
|
|
Total liabilities
|
|
|
8,732,747
|
|
|
|
8,333,718
|
|
|
|
|
|
|
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;
5,819,246 and 5,733,981, respectively, issued and outstanding
|
|
|
582
|
|
|
|
573
|
|
Additional paid-in capital
|
|
|
53,116,619
|
|
|
|
52,570,432
|
|
Accumulated deficit
|
|
|
(49,421,362
|
)
|
|
|
(47,277,420
|
)
|
Total stockholders' equity
|
|
|
3,695,839
|
|
|
|
5,293,585
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
12,428,586
|
|
|
$
|
13,627,303
|
|
|
|
|
|
|
|
|
|
|
|
IZEA, Inc.
Unaudited Consolidated Statements of Operations
|
|
|
|
Three Months Ended March 31,
|
|
|
2018
|
|
2017
|
Revenue
|
|
$
|
3,896,441
|
|
|
$
|
4,834,505
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
Cost of revenue (exclusive of amortization)
|
|
|
2,163,142
|
|
|
|
2,337,060
|
|
Sales and marketing
|
|
|
1,755,526
|
|
|
|
2,388,820
|
|
General and administrative
|
|
|
1,615,222
|
|
|
|
2,446,918
|
|
Depreciation and amortization
|
|
|
265,455
|
|
|
|
362,606
|
|
Total costs and expenses
|
|
|
5,799,345
|
|
|
|
7,535,404
|
|
|
|
|
|
|
Loss from operations
|
|
|
(1,902,904
|
)
|
|
|
(2,700,899
|
)
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
Interest expense
|
|
|
(21,311
|
)
|
|
|
(17,076
|
)
|
Change in fair value of derivatives, net
|
|
|
(125,595
|
)
|
|
|
(618
|
)
|
Other income (expense), net
|
|
|
4,690
|
|
|
|
(627
|
)
|
Total other income (expense), net
|
|
|
(142,216
|
)
|
|
|
(18,321
|
)
|
|
|
|
|
|
Net loss
|
|
$
|
(2,045,120
|
)
|
|
$
|
(2,719,220
|
)
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted
|
|
|
5,802,099
|
|
|
|
5,598,200
|
|
Basic and diluted loss per common share
|
|
$
|
(0.35
|
)
|
|
$
|
(0.49
|
)
|
|
|
|
|
|
|
|
|
|
|
Revenue stream and the percentage of total revenue by stream:
|
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
March 31, 2017
|
|
$ Change
|
|
% Change
|
Managed Services
|
|
$
|
3,796,665
|
|
97
|
%
|
|
$
|
4,684,123
|
|
97
|
%
|
|
$
|
(887,458
|
)
|
(19
|
)%
|
Content Workflow, net
|
|
|
63,548
|
|
2
|
%
|
|
|
102,263
|
|
2
|
%
|
|
|
(38,715
|
)
|
(38
|
)%
|
Service Fees & Other
|
|
|
36,228
|
|
1
|
%
|
|
|
48,119
|
|
1
|
%
|
|
|
(11,891
|
)
|
(25
|
)%
|
Total Revenue
|
|
$
|
3,896,441
|
|
100
|
%
|
|
$
|
4,834,505
|
|
100
|
%
|
|
$
|
(938,064
|
)
|
(19
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IZEA, Inc.
Non-GAAP Reconciliations
(Unaudited)
|
|
|
|
|
Reconciliation of GAAP Revenue to Non-GAAP Gross Billings:
|
|
|
|
|
|
Three Months Ended
|
|
March 31, 2018
|
|
March 31, 2017
|
Revenue
|
$
|
3,896,441
|
|
$
|
4,834,505
|
Plus transaction costs for third-party creators (1)
|
|
813,919
|
|
|
1,368,001
|
Gross Billings
|
$
|
4,710,360
|
|
$
|
6,202,506
|
(1) Transaction costs related to third-party creators for services
provided for the Content Workflow portion of our revenue reported
on a net basis for GAAP.
|
|
|
Non-GAAP Gross Billings by revenue stream and the percentage of
total Gross Billings by stream:
|
|
|
|
Three Months Ended
|
|
|
March 31, 2018
|
|
March 31, 2017
|
Managed Services
|
|
$
|
3,796,665
|
|
80
|
%
|
|
$
|
4,684,123
|
|
76
|
%
|
Content Workflow
|
|
|
877,467
|
|
19
|
%
|
|
|
1,470,264
|
|
23
|
%
|
Service Fees & Other
|
|
|
36,228
|
|
1
|
%
|
|
|
48,119
|
|
1
|
%
|
Total Gross Billings
|
|
$
|
4,710,360
|
|
100
|
%
|
|
$
|
6,202,506
|
|
100
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP Net Loss to Non-GAAP Adjusted EBITDA:
|
|
|
Three Months Ended
|
|
March 31, 2018
|
|
March 31, 2017
|
Net loss
|
$
|
(2,045,120
|
)
|
|
$
|
(2,719,220
|
)
|
Non-cash stock-based compensation
|
|
146,281
|
|
|
|
158,976
|
|
Non-cash stock issued for payment of services
|
|
28,671
|
|
|
|
60,632
|
|
(Gain) loss on disposal of equipment
|
|
853
|
|
|
|
(1,953
|
)
|
(Gain) loss on settlement of acquisition costs payable
|
|
-
|
|
|
|
(10,491
|
)
|
Increase (decrease) in value of acquisition costs payable
|
|
(393,094
|
)
|
|
|
103,792
|
|
Depreciation and amortization
|
|
265,455
|
|
|
|
362,606
|
|
Interest expense
|
|
21,311
|
|
|
|
17,076
|
|
Change in fair value of derivatives
|
|
125,595
|
|
|
|
618
|
|
Adjusted EBITDA
|
$
|
(1,850,048
|
)
|
|
$
|
(2,027,964
|
)
|
|
|
|
|
Revenue
|
|
3,896,441
|
|
|
|
4,834,505
|
|
Adjusted EBITDA as a % of Revenue
|
|
(47
|
)%
|
|
|
(42
|
)%
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180522005759/en/
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