IZEA Worldwide, Inc. (NASDAQ: IZEA), the premier provider of
influencer marketing technology, data, and services for the world’s
leading brands, reported its financial and operational results for
the second quarter ended June 30, 2020.
Q2 2020 Financial Summary Compared to Q2
2019
- Total revenue down 20% to $3.1 million, compared to $3.9
million.
- Managed Services unit revenue decreased 17% to $2.5 million,
compared to $3.0 million.
- SaaS Services unit revenue decreased 31% to $645,000, compared
to $932,000.
- Total costs and expenses were $4.9 million, compared to $5.9
million.
- Net loss was $1.8 million, compared to a net loss of $2.0
million.
- Adjusted EBITDA* was $(1.3) million in both periods.
1H 2020 Financial Summary Compared to 1H
2019
- Total revenue down 9% to $7.9 million, compared to $8.7
million.
- Managed Services unit revenue decreased 4% to $6.6 million,
compared to $6.9 million.
- SaaS Services unit revenue decreased 31% to $1.3 million,
compared to $1.9 million.
- Total Gross Billings* decreased 26% to $10.6 million, compared
to $14.5 million.
- Total costs and expenses were $15.8 million, compared to $12.4
million.
- Net loss was $8.0 million, compared to a net loss of $3.8
million driven by a $4.3 million impairment of goodwill in Q1
2020.
- Adjusted EBITDA* was $(2.5) million, compared to $(2.1)
million.
Q2 2020 Operational Highlights
- Raised gross proceeds of $15.4 million from sale of securities
through an at-the-market offering
- Achieved 50% increase in bookings for Managed Services in Q2
2020 compared to Q2 2019
- Secured multiple new and existing contracts with Fortune 500
customers
- Executed a TikTok influencer marketing campaign that generated
over 7 billion views
- Launched BrandGraph®, a social media competitive intelligence
platform
- Launched IZEA Shake™, a new platform for marketers to purchase
digital creative services
- Released Twitch workflow support inside of IZEAx
- Regained compliance with NASDAQ Capital Markets minimum bid
price listing requirement
* Adjusted EBITDA is a non-GAAP financial measure. Refer to the
definition and reconciliation of this measure under “Use of
Key Metrics and Non-GAAP Financial Measures”.
Subsequent EventsAfter June 30th, IZEA raised
an additional $10.3 million in Q3 2020 under the at-the-market
offering under which National Securities Corporation serves as a
sales agent. In total, we have raised $25.7 million at an average
price of $1.94 per share.
Management Commentary
“Shortly after the WHO declared COVID-19 a pandemic, we saw
material declines in new business sales, with our 14-day average
run rate trendline for Managed Services bookings quickly impacted
as marketers braced for the worst possible scenario,” said Ted
Murphy, IZEA’s Chairman and CEO. “Our sales run rate started to see
some minor recovery in April, but we were still far below our
pre-COVID-19 averages. This large gap in new business sales in
March and April, combined with customers pausing or cancelling
campaigns booked in prior quarters had an unavoidable impact on
revenues in Q2 despite the meaningful growth in Managed Services
bookings by the end of the quarter.”
“As we entered the midpoint of Q2, our 14-day average bookings
trendline for Managed Services began to trend above our
14-day pre-COVID-19 average run-rate measured from Jan 1st to March
15th,” continued Murphy. “Our momentum in managed services
did not stop through the end of the second quarter, and led us to
50% growth over the prior-year quarter. We continued the positive
Managed Services sales momentum after quarter end, with July
bookings exceeding that of June. Revenue from these bookings should
be recognized over the coming two quarters as the campaigns run,
and many are already in flight.”
“Our strong balance sheet now gives us the ability to expand
investment in the things that will further set us apart from the
competition. While many are pulling back or even closing shop, we
will be strategically pushing forward and intend to capture more
share of the market through incredible new technology, aggressive
marketing, and providing our clients with the highest quality
levels of service. Our team is excited by the growth we saw in
Managed Services bookings in Q2, and believe that our self-service
platforms such as IZEAx Discovery and Shake are particularly well
positioned to take advantage of the changing marketing landscape.
We will also be introducing new enterprise software licensing tiers
and bundling options for IZEAx Unity Suite and BrandGraph customers
in Q3 to offer more flexibility at a time when marketing
organizations are changing rapidly. We intend to provide our
software customers with a solution that meets their needs now, in
order to partner with them well into the future.”
Q2 2020 Financial Results
Total revenue in the second quarter of 2020 was down 20% to $3.1
million, compared to $3.9 million in the second quarter of 2019,
with revenue from Managed Services decreasing 17% to $2.5 million
in the second quarter of 2020 from $3.0 million in the second
quarter of 2019 and revenue from SaaS Services decreasing to
$645,000 in the second quarter of 2020 from $932,000 in the second
quarter of 2019. Revenue from Managed Services decreased due to
marketers canceling or pausing planned advertising campaigns or
events in March and throughout the second quarter of 2020 as a
result of uncertainty or inability to offer their products for sale
as a result of business shutdowns due to COVID-19 or in light of
civil unrest. Despite the delay in the execution of existing orders
from our customers, we experienced a 50% increase in net sales
orders or “bookings” from $2.64 million in the second quarter of
2019 to $3.96 million in the second quarter of 2020, as marketers
who are still advertising shifted more of their spend to influencer
marketing campaigns. Revenue from these bookings are expected to be
realized in the next three to twelve months. Revenue from SaaS
Services decreased primarily as a result of lower spend levels
(“gross billings”) from our SaaS marketers and, as a result of
competitive pricing efforts, our margins on those spends were
reduced. Our gross billings for SaaS Services decreased 44% to $2.0
million in Q2 2020, compared to $3.6 million in Q2 2019. Our SaaS
marketers decreased their spend levels as they transitioned from
the TapInfluence platform to IZEAx and curtailed spending in March
2020 and throughout Q2 2020.
Total costs and expenses decreased 16% in the second quarter of
2020 to $4.9 million compared to $5.9 million in the corresponding
quarter of 2019. This decrease was due to a $403,000 reduction in
cost of revenue as a result of the lower sales, a $71,000 reduction
in amortization costs as assets were fully amortized in the
quarter, and a $526,000 decrease from cost reduction efforts
affecting wages, rent, travel and marketing expenditures to help
mitigate the effects of COVID-19 on our revenue.
Net loss in the second quarter of 2020 was $1.8 million or
$(0.05) per share, as compared to a net loss of $2.0 million or
$(0.09) per share in the second quarter of 2019, based on 36.1
million and 22.3 million shares outstanding, respectively.
Adjusted EBITDA (a non-GAAP measure management uses as a proxy
for operating cash flow, as defined below) was $(1.3) million in
the second quarter of both 2020 and 2019. Adjusted EBITDA as a
percentage of revenue in the second quarter of 2020 was negative
forty percent (40)% compared to negative thirty-two percent (32)%
in the second quarter of 2019 primarily due to the decline in
revenue discussed above.
Given our low stock price, small market cap, and uncertainty in
the financial markets, coupled with expected reductions in future
receivables upon which funding from our line of credit is
dependent, we applied for and on April 23, 2020 received a loan
from Western Alliance Bank in the principal amount of $1.9 million
under the Paycheck Protection Program, in order to retain our
employees during this time of uncertainty.
We subsequently filed a shelf registration statement with the
U.S. Securities and Exchange Commission and raised gross proceeds
of $15.4 million in June 2020 through an at-the-market equity
offering program and continue to opportunistically raise capital in
this manner. Our cash balance as of June 30, 2020 was $20.8
million.
Conference Call
IZEA will hold a conference call to discuss its second quarter
2020 results on Thursday, August 13th at 5:00 p.m. Eastern time.
Management will host the call, followed by a question and answer
period.
Date: Thursday, August 13, 2020Time: 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 available for
replay via the investors section of our 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 August 20, 2020.
Toll-free replay number: 1-844-512-2921International replay
number: 1-412-317-6671Replay ID: 13707369
About IZEA Worldwide, Inc.
IZEA Worldwide, Inc. (“IZEA”) operates online platforms that
connect marketers with content creators. IZEA platforms automate
influencer marketing and custom content development, allowing
brands and agencies to identify social trends and scale their
marketing programs. IZEA influencers include everyday creators, as
well as 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 Key Metrics and Non-GAAP Financial
Measures
We define gross billings, a key metric, as the total dollar
value of the amounts earned from our customers for the services we
performed, or the amounts billed to our customers for their
self-service purchase of goods and services on our platforms. Gross
billings for Legacy Workflow and Marketplace Spend (which are
included in SaaS Services) differs from revenue for these services
reported in our consolidated statements of operations. These
services are presented net of the amounts we pay to the third-party
creators providing the content or sponsorship services. Gross
billings for all other revenue types equal 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 evaluate our transaction totals on an equal basis in order
for us to see our contribution margins by revenue stream so that we
can better understand where we should be allocating our resources.
Additionally, because we invoice our customers on a gross basis
based on our services or their transactions plus a fee, 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 certain other unusual or non-cash income and expense
items such as gains or losses on settlement of liabilities and
exchanges, and changes in the fair value of derivatives, if
applicable.
We believe that Adjusted EBITDA provides useful information to
investors as it excludes transactions not related to our core
cash-generating operating business activities, and it provides
consistency to facilitate period-to-period comparisons. We believe
that excluding these transactions allows investors to meaningfully
trend and analyze the performance of our core cash-generating
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” intended to qualify for the
safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. 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 “may,” “will,” “would,” “could,”
“should,” “expects,” “anticipates,” “estimates,” “believes,”
“intends,” “likely,” “projects,” “plans,” “pursue," “strategy” or
“future,” or the negative of these words or other words or
expressions of similar meaning. Examples of forward-looking
statements include, among others, statements we make regarding
expectations regarding future results and the realization of
revenue from bookings, 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: our ability to raise
additional funding needed to fund our business operation in the
future, uncertainty relating to the effects of COVID-19,
competitive conditions in the content and social sponsorship
segment in which IZEA operates; failure to popularize the IZEAx
marketplace platform; 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.
Press ContactMartin SmithIZEA Worldwide,
Inc.Phone: 407-674-6911Email: ir@izea.com
IZEA Worldwide,
Inc.Unaudited Consolidated Balance
Sheets
|
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
20,820,273 |
|
|
|
$ |
5,884,629 |
|
|
Accounts receivable, net |
3,053,135 |
|
|
|
5,596,719 |
|
|
Prepaid expenses |
368,697 |
|
|
|
400,181 |
|
|
Other current assets |
130,656 |
|
|
|
153,031 |
|
|
Total current assets |
24,372,761 |
|
|
|
12,034,560 |
|
|
|
|
|
|
Property and equipment, net |
282,082 |
|
|
|
309,780 |
|
|
Goodwill |
4,016,722 |
|
|
|
8,316,722 |
|
|
Intangible assets, net |
1,006,536 |
|
|
|
1,611,516 |
|
|
Software development costs, net |
1,413,920 |
|
|
|
1,519,980 |
|
|
Security deposits |
40,382 |
|
|
|
151,803 |
|
|
Total assets |
$ |
31,132,403 |
|
|
|
$ |
23,944,361 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
1,022,960 |
|
|
|
$ |
2,252,536 |
|
|
Accrued expenses |
1,287,652 |
|
|
|
1,377,556 |
|
|
Contract liabilities |
5,841,264 |
|
|
|
6,466,766 |
|
|
Current portion of notes payable |
837,865 |
|
|
|
— |
|
|
Right-of-use liability |
— |
|
|
|
83,807 |
|
|
Total current liabilities |
8,989,741 |
|
|
|
10,180,665 |
|
|
|
|
|
|
Finance obligation, less
current portion |
65,609 |
|
|
|
45,673 |
|
|
Notes payable, less current
portion |
1,096,722 |
|
|
|
— |
|
|
Total liabilities |
10,152,072 |
|
|
|
10,226,338 |
|
|
|
|
|
|
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;
41,784,601 and 34,634,172, respectively, issued and
outstanding |
4,178 |
|
|
|
3,464 |
|
|
Additional paid-in capital |
89,315,525 |
|
|
|
74,099,328 |
|
|
Accumulated deficit |
(68,339,372 |
) |
|
|
(60,384,769 |
) |
|
Total stockholders’ equity |
20,980,331 |
|
|
|
13,718,023 |
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
$ |
31,132,403 |
|
|
|
$ |
23,944,361 |
|
|
IZEA Worldwide,
Inc.Unaudited Consolidated Statements of
Operations
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenue |
$ |
3,135,039 |
|
|
|
$ |
3,923,864 |
|
|
|
$ |
7,898,707 |
|
|
|
$ |
8,717,620 |
|
|
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
|
Cost of revenue (exclusive of amortization) |
1,414,249 |
|
|
|
1,817,659 |
|
|
|
3,554,766 |
|
|
|
3,916,950 |
|
|
Sales and marketing |
1,228,691 |
|
|
|
1,362,242 |
|
|
|
2,751,834 |
|
|
|
2,719,909 |
|
|
General and administrative |
1,920,492 |
|
|
|
2,232,305 |
|
|
|
4,338,330 |
|
|
|
4,844,359 |
|
|
Impairment of goodwill |
— |
|
|
|
— |
|
|
|
4,300,000 |
|
|
|
— |
|
|
Depreciation and amortization |
377,107 |
|
|
|
448,105 |
|
|
|
878,376 |
|
|
|
884,329 |
|
|
Total costs and expenses |
4,940,539 |
|
|
|
5,860,311 |
|
|
|
15,823,306 |
|
|
|
12,365,547 |
|
|
|
|
|
|
|
|
|
|
Loss from operations |
(1,805,500 |
) |
|
|
(1,936,447 |
) |
|
|
(7,924,599 |
) |
|
|
(3,647,927 |
) |
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
Interest expense |
(19,476 |
) |
|
|
(86,737 |
) |
|
|
(26,094 |
) |
|
|
(215,201 |
) |
|
Other income (expense), net |
33,834 |
|
|
|
30,798 |
|
|
|
(3,910 |
) |
|
|
40,162 |
|
|
Total other income (expense), net |
14,358 |
|
|
|
(55,939 |
) |
|
|
(30,004 |
) |
|
|
(175,039 |
) |
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(1,791,142 |
) |
|
|
$ |
(1,992,386 |
) |
|
|
$ |
(7,954,603 |
) |
|
|
$ |
(3,822,966 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares
outstanding – basic and diluted |
36,108,073 |
|
|
|
22,277,677 |
|
|
|
35,394,639 |
|
|
|
17,466,784 |
|
|
Basic and diluted loss per
common share |
$ |
(0.05 |
) |
|
|
$ |
(0.09 |
) |
|
|
$ |
(0.22 |
) |
|
|
$ |
(0.22 |
) |
|
Revenue Details:
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Managed Services Revenue |
$ |
2,490,343 |
|
|
$ |
2,991,571 |
|
|
$ |
6,615,404 |
|
|
$ |
6,858,803 |
|
|
|
|
|
|
|
|
|
Legacy Workflow Fees |
— |
|
|
44,291 |
|
|
— |
|
|
91,621 |
|
Marketplace Spend Fees |
195,894 |
|
|
314,638 |
|
|
362,187 |
|
|
689,291 |
|
License Fees |
408,728 |
|
|
548,494 |
|
|
825,544 |
|
|
1,039,588 |
|
Other Fees |
40,074 |
|
|
24,870 |
|
|
95,572 |
|
|
38,317 |
|
SaaS Services Revenue |
644,696 |
|
|
932,293 |
|
|
1,283,303 |
|
|
1,858,817 |
|
|
|
|
|
|
|
|
|
Total Revenue |
$ |
3,135,039 |
|
|
$ |
3,923,864 |
|
|
$ |
7,898,707 |
|
|
$ |
8,717,620 |
|
IZEA Worldwide,
Inc.Reconciliation of GAAP Net loss to Non-GAAP
Adjusted EBITDA(Unaudited)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Net loss |
$ |
(1,791,142 |
) |
|
$ |
(1,992,386 |
) |
|
$ |
(7,954,603 |
) |
|
$ |
(3,822,966 |
) |
Non-cash stock-based compensation |
118,707 |
|
|
157,328 |
|
|
248,278 |
|
|
318,205 |
|
Non-cash stock issued for payment of services |
31,249 |
|
|
37,497 |
|
|
62,499 |
|
|
74,995 |
|
Loss on settlement of acquisition costs payable |
— |
|
|
— |
|
|
— |
|
|
191,439 |
|
Increase in value of acquisition costs payable |
— |
|
|
2,669 |
|
|
— |
|
|
5,333 |
|
Interest expense |
19,476 |
|
|
86,737 |
|
|
26,094 |
|
|
215,201 |
|
Depreciation and amortization |
377,107 |
|
|
448,105 |
|
|
878,376 |
|
|
884,329 |
|
Impairment on intangible assets |
— |
|
|
— |
|
|
4,300,000 |
|
|
— |
|
Other non-cash items |
(23,706 |
) |
|
(7,580 |
) |
|
(23,706 |
) |
|
(8,095 |
) |
Adjusted EBITDA |
$ |
(1,268,309 |
) |
|
$ |
(1,267,630 |
) |
|
$ |
(2,463,062 |
) |
|
$ |
(2,141,559 |
) |
|
|
|
|
|
|
|
|
Revenue |
$ |
3,135,039 |
|
|
$ |
3,923,864 |
|
|
$ |
7,898,707 |
|
|
$ |
8,717,620 |
|
Adjusted EBITDA as a % of Revenue |
|
(40)% |
|
|
|
(32)% |
|
|
|
(31)% |
|
|
|
(25)% |
|
IZEA Worldwide,
Inc.Gross
Billings(Unaudited)
Gross billings by revenue type:
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Managed Services Gross Billings |
$ |
2,490,343 |
|
|
$ |
2,991,571 |
|
|
$ |
6,615,404 |
|
|
$ |
6,858,803 |
|
|
|
|
|
|
|
|
|
Legacy Workflow Fees |
— |
|
|
606,756 |
|
|
— |
|
|
1,261,681 |
|
Marketplace Spend Fees |
1,596,880 |
|
|
2,453,625 |
|
|
3,096,654 |
|
|
5,256,146 |
|
License Fees |
408,728 |
|
|
548,494 |
|
|
825,544 |
|
|
1,039,588 |
|
Other Fees |
40,074 |
|
|
24,870 |
|
|
95,572 |
|
|
38,317 |
|
SaaS Services Gross Billings |
2,045,682 |
|
|
3,633,745 |
|
|
4,017,770 |
|
|
7,595,732 |
|
|
|
|
|
|
|
|
|
Total Gross Billings |
$ |
4,536,025 |
|
|
$ |
6,625,316 |
|
|
$ |
10,633,174 |
|
|
$ |
14,454,535 |
|
IZEA Worldwide (NASDAQ:IZEA)
Historical Stock Chart
From Sep 2024 to Oct 2024
IZEA Worldwide (NASDAQ:IZEA)
Historical Stock Chart
From Oct 2023 to Oct 2024