SOURCE: IZEA, Inc.

IZEA, Inc.

May 14, 2014 16:01 ET

IZEA Announces Record Q1 Revenue, up 41% Year Over Year

Record Gross Profit, up 62% Year Over Year

ORLANDO, FL--(Marketwired - May 14, 2014) - IZEA, Inc. (OTCQB: IZEA), the leader in Social Sponsorship, today announced record results for its first quarter ending March 31, 2014.

First Quarter 2014 Financial Highlights:

  • Revenue increased 41% to a record $1.96 million during Q1 2014 compared Q1 2013
  • Bookings reached a record $1.70 million in Q1 2014, the highest amount of Q1 net bookings in the history of the company.
  • Gross profit margin for the quarter was 67%, up from 58% during the same period in 2013.
  • In February 2014, the Company completed a $12 million financing. The company currently has no long-term debt.

First Quarter Operational Highlights:

  • 58 full time team members, added 8 in sales and 2 engineers.
  • IZEAx, our next generation social sponsorship platform, launched into beta March 17th. Q1 growth driven entirely by legacy platforms.
  • 50 thousand Registered Users in IZEAx, reaching an aggregate audience of 392 million fans and followers.
  • 9 signed IZEAx white label partners, 2 signed IZEAx certified resellers.

"We are pleased with our strong first quarter of 2014 and continue to see record revenue growth fueled by increased awareness of our company, repeat customers and progression of our industry," said Ted Murphy, IZEA's Chairman and Chief Executive Officer. "I remain very optimistic for 2014 and believe we will continue to see strong growth moving forward."

"While we experienced some delays in expected Q1 bookings due to the unprecedented severe weather in the Northeast and Midwest throughout the quarter, those sales opportunities were quickly recognized in April," said Ryan Schram, Chief Operating Officer. "The result was net bookings of nearly $1M for the month, up 230% from April 2013."

First Quarter 2014 Results
Revenue for the first quarter of 2014 was $1,957,040 compared to $1,385,275 for the first quarter of 2013, an increase of 41%. Gross profit for the quarter was $1,307,507, up from $809,173 during the same period in 2013, an increase of 62%. Operating expenses for the quarter ended March 31, 2014 were $2.00 million, compared to $1.67 million in the same period in 2013, an increase of 20% due to investments in sales, marketing and investor relations, and an increase in non-cash stock compensation expense..

Net loss for the quarter was $(1,714,488) compared to $(883,830) during the same period last year, primarily due to a $1,009,576 loss on the change in the fair value of derivatives. Adjusted EBITDA was $(504,330) for the quarter compared to $(756,184) during the same period of last year, an improvement of 33%, primarily due to the higher revenue and improved margins.

Basic and diluted earnings per share were $(.05) for the first quarter of 2014, compared to basic and diluted earnings per share of $(.13) for the first quarter of 2013.

Investor Conference Call
The Company will host a conference call today at 5:00pm ET, during which IZEA management will discuss the financial results and be available to answer any questions from the investment community.

Toll-Free (Domestic): (877) 941-4775
International (Toll): (480) 629-9761
Webcast Link: http://public.viavid.com/index.php?id=109193

Electronic replay of the conference call will be available through June 1, 2014 by dialing (877) 870-5176 and entering PIN number 4682954. IZEA will also post a downloadable file onto the Investor Relations area of http://corp.izea.com.

About IZEA
Founded in 2006, IZEA is the pioneer of Social Sponsorship. The company builds cloud-based marketplaces that connect brands with creators who blog, tweet, pin, and post on their behalf. Brands receive influential consumer content and engaging shareable stories that drive awareness. Creators are compensated for their participation and partnership. For more information about IZEA, visit http://corp.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 EBITDA as earnings or loss before interest, taxes, depreciation and amortization, non-cash stock related compensation, gain or loss on asset disposals or impairment and all other 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. Statements in this press release that are forward-looking include the company's estimated levels of revenues, gross profit margin and net operating loss for the 2014 fiscal year. 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 social sponsorship segment in which IZEA operates, failure to popularize one or more of the marketplace platforms of IZEA, inability to obtain additional capital, 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 respect will in fact occur. Please read the full statement and disclosures here: http://corp.izea.com/safe-harbor-statement.

   
IZEA, Inc.  
Consolidated Balance Sheets  
   
    March 31,
2014
    December 31,
2013
 
    (Unaudited)        
Assets                
Current:                
  Cash and cash equivalents   $ 11,249,931     $ 530,052  
  Accounts receivable     929,754       1,659,802  
  Prepaid expenses     97,469       109,960  
  Deferred finance costs, net of accumulated amortization of $31,926 and $53,884     6,875       5,217  
  Other current assets     74,670       78,269  
    Total current assets     12,358,699       2,383,300  
                 
Property and equipment, net     189,517       156,482  
Software development costs     568,875       362,346  
Security deposits     50,816       46,574  
      Total assets   $ 13,167,907     $ 2,948,702  
                 
Liabilities and Stockholders' Deficit                
Current liabilities:                
  Accounts payable   $ 807,508     $ 817,057  
  Accrued expenses     342,334       365,454  
  Unearned revenue     1,049,867       1,292,228  
  Current portion of capital lease obligations     59,783       43,852  
    Total current liabilities     2,259,492       2,518,591  
                 
Capital lease obligations, less current portion     47,076       34,013  
Deferred rent     56,715       14,179  
Warrant liability     14,061,667       1,832,945  
    Total liabilities     16,424,950       4,399,728  
                 
Stockholders' deficit:                
  Series A convertible preferred stock; $.0001 par value; 240 shares authorized; no shares issued and outstanding     --       --  
  Common stock, $.0001 par value; 100,000,000 shares authorized; 56,946,381 and 22,560,653 issued and outstanding     5,695       2,256  
  Additional paid-in capital     24,577,164       24,672,132  
  Accumulated deficit     (27,839,902 )     (26,125,414 )
    Total stockholders' deficit     (3,257,043 )     (1,451,026 )
                 
      Total liabilities and stockholders' deficit   $ 13,167,907     $ 2,948,702  
                     
                     
                     
IZEA, Inc.  
Consolidated Statements of Operations  
(Unaudited)  
   
    Three Months Ended
March 31,
 
    2014     2013  
                 
Revenue   $ 1,957,040     $ 1,385,275  
Cost of sales     649,533       576,102  
    Gross profit     1,307,507       809,173  
                 
Operating expenses:                
  General and administrative     1,844,140       1,574,592  
  Sales and marketing     160,867       94,169  
    Total operating expenses     2,005,007       1,668,761  
                 
Loss from operations     (697,500 )     (859,588 )
                 
Other income (expense):                
  Interest expense     (9,017 )     (15,466 )
  Loss on exchange of warrants and debt     --       (732 )
  Change in fair value of derivatives and notes payable carried at fair value, net     (1,009,576 )     (8,124 )
  Other income (expense), net     1,605       80  
    Total other income (expense)     (1,016,988 )     (24,242 )
                 
Net loss   $ (1,714,488 )   $ (883,830 )
                 
Weighted average common shares outstanding - basic and diluted     37,135,738       6,811,654  
                 
Loss per common share - basic and diluted   $ (0.05 )   $ (0.13 )
                 
                 
                 
IZEA, Inc.  
Consolidated Statements of Cash Flows  
(Unaudited)  
   
    Three Months Ended
March 31,
 
    2014     2013  
Cash flows from operating activities:                
  Net loss   $ (1,714,488 )   $ (883,830 )
  Adjustments to reconcile net loss to net cash used for operating activities:                
    Depreciation     17,867       12,579  
    Amortization of intangible assets and loan costs     5,842       8,985  
    Stock-based compensation     115,338       39,460  
    Stock issued for payment of services     58,360       46,785  
    Loss on exchange of warrants and debt     --       732  
    Change in fair value of derivatives and notes payable carried at fair value, net     1,009,576       8,124  
    Bad debt expense     --       --  
    Cash provided by (used for):                
      Accounts receivable     730,048       (173,962 )
      Prepaid expenses and other current assets     6,590       74,760  
      Accounts payable     (9,549 )     227,609  
      Accrued expenses     (41,870 )     59,024  
      Unearned revenue     (242,361 )     (117,538 )
      Deferred rent     42,536       --  
Net cash used for operating activities     (22,111 )     (697,272 )
                 
Cash flows from investing activities:                
  Purchase of equipment     (9,563 )     --  
  Increase in software development costs     (206,529 )     --  
  Security deposits     (4,242 )     3,870  
Net cash provided by (used for) investing activities     (220,334 )     3,870  
                 
Cash flows from financing activities:                
  Proceeds from issuance of notes payable, net     --       169,798  
  Proceeds from issuance of common stock and warrants, net     10,982,169       --  
  Payments on notes payable and capital leases     (19,845 )     (4,090 )
Net cash provided by financing activities     10,962,324       165,708  
                 
Net increase (decrease) in cash and cash equivalents     10,719,879       (527,694 )
Cash and cash equivalents, beginning of year     530,052       657,946  
                 
Cash and cash equivalents, end of period   $ 11,249,931     $ 130,252  
                 
Supplemental cash flow information:                
  Cash paid during period for interest   $ 3,175     $ 1,856  
                 
Non-cash financing and investing activities:                
  Fair value of compound embedded derivative in promissory notes   $ --     $ 27,776  
  Fair value of common stock issued for future services   $ --     $ 10,688  
  Fair value of warrants issued   $ 11,219,146     $ 49,170  
  Conversion of notes payable into common stock   $ --     $ 521,513  
  Acquisition of assets through capital lease   $ 41,339     $ --  
                   
                   
                   
IZEA, Inc.  
Reconciliation of GAAP to Non-GAAP Financials  
(Unaudited)  
             
    Three Months Ended  
March 31,  
    2014     2013  
                 
Net loss   $ (1,714,488 )   $ (883,830 )
                 
  Non-cash stock-based compensation     115,338       39,460  
  Non-cash stock issued for payment of services     58,360       46,785  
  Change in the fair value of derivatives     1,009,576       8,124  
  Loss on exchange of warrants     -       732  
  Interest expense     9,017       15,466  
  Depreciation     17,867       12,579  
  Amortization of intangible assets     -       4,500  
Adjusted EBITDA   $ (504,330 )   $ (756,184 )