SOURCE: IZEA, Inc.

IZEA, Inc.

August 13, 2014 16:01 ET

IZEA Announces Record Q2 Bookings, up 40% Year Over Year

Record Gross Profit, up 39% Year Over Year

ORLANDO, FL--(Marketwired - Aug 13, 2014) - IZEA, Inc. (OTCQB: IZEA), the leader in Social Sponsorship, today announced record results for its second quarter ending June 30, 2014.

Second Quarter 2014 Financial Highlights:

  • Bookings reached a record $2.57 million in Q2 2014, up from $1.84 million in Q2 2013 -- the highest amount in the history of the company.
  • Revenue increased 14.8% to a record $1.97 million during Q2 2014 compared to Q2 2013.
  • Gross profit margin for the quarter was 67%, up from 55% during the same period in 2013.
  • Gross profit for the quarter grew 39% to $1.31 million, up from $0.94 in Q2 2013.
  • New opportunity pipeline, a representation of new client proposals generated within the quarter, grew to $12.8 million, up from $8.9 million in Q2 2013, an increase of 44%.

Second Quarter Operational Highlights:

  • 68 full time team members; added 8 net new staff in client services and 2 in engineering in Q2.
  • 66,000 registered users in IZEAx -- up from 50,000 in Q1 2014, an increase of 32%.
  • IZEAx aggregate network reach grew from 392 million to 530 million during the quarter, an increase of 35%.
  • Four new IZEAx partners, including one of the top 10 global media companies and Fullscreen.

"We had record bookings and gross profit in Q2, largely fueled by the tenured members of our sales team generating more repeat business and receiving larger campaign budgets from our managed clients," said Ted Murphy, IZEA's Chairman and Chief Executive Officer. "I am enthusiastic about our prospects for the second half of this year and beyond. We are actively onboarding and training our new IZEAx partners, growing our internal sales and development team and transitioning our business operations to the IZEAx technology platform."

During the quarter, the Company initiated campaigns on behalf of brands such as Bacardi, Unilever, Walmart, ConAgra Foods, Bloomin' Brands, adidas, Clorox, Hollister, Kimberly Clark and Scott's, as well as the world's leading agencies including Starcom MediaVest, Ketchum, MEC, Crispin Porter + Bogusky and Horizon Media. IZEA also gained preferred vendor status with one of the world's top-five consumer package goods companies along with preferred partner status at one of the nation's top media buying agencies.

"IZEA is growing our relationships with the world's leading brands and the agencies that support them," said Murphy. "We are pleased to see Social Sponsorship adoption and awareness increasing, with IZEA at the very center of the industry we created in 2006."

Second Quarter 2014 Results
Revenue for the second quarter of 2014 was $1,969,235 compared to $1,715,273 for the first quarter of 2013, an increase of 14.8%. Gross profit for the quarter was $1,312,579, up from $944,372 during the same period in 2013, an increase of 39.0%. Operating expenses for the quarter ended June 30, 2014 were $2,519,797, compared to $1,479,659 in the same period in 2013, due to investments in sales, marketing and engineering.

Net income for the quarter was $2,029,135 compared to a net loss of $(893,470) during the same period last year, primarily due to a $3,239,610 gain on the change in the fair value of derivatives. Operating EBITDA was $(932,344) for the quarter compared to $(321,344) during the same period of last year, primarily due to investments in marketing and new hires.

Basic and diluted income per common share were $.04 and $.03 for the first quarter of 2014, respectively, compared to basic and diluted loss per common share of $(.12) for the second quarter of 2013.

Investor Conference Call
The Company will host a conference call today at 4:30pm ET, during which IZEA management will discuss the financial results and be available to answer any questions from the investment community.

Toll-Free (Domestic): (888) 364-3109
International (Toll): (719) 457-1512

Webcast Link: http://public.viavid.com/index.php?id=110559

Electronic replay of the conference call will be available through August 20, 2014 by dialing (877) 870-5176 and entering PIN number 9783185. 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
"Operating 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 Operating 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 Operating EBITDA as presented by IZEA may not be comparable to EBITDA presented by other companies. IZEA defines Operating 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  
   
    June 30,
 2014
    December 31,
 2013
 
    (Unaudited)        
Assets                
Current:                
  Cash and cash equivalents   $ 9,753,049     $ 530,052  
  Accounts receivable     1,342,510       1,659,802  
  Prepaid expenses     197,067       109,960  
  Other current assets     70,340       83,486  
    Total current assets     11,362,966       2,383,300  
                 
Property and equipment, net of accumulated depreciation of $245,850 and $205,070     243,346       156,482  
Software development costs, net of accumulated amortization of $47,406 and $0     521,469       362,346  
Security deposits     52,391       46,574  
    Total assets   $ 12,180,172     $ 2,948,702  
                 
Liabilities and Stockholders' Deficit            
Current liabilities:                
  Accounts payable   $ 719,128     $ 817,057  
  Accrued expenses     457,506       365,454  
  Unearned revenue     1,102,015       1,292,228  
  Current portion of capital lease obligations     57,114       43,852  
    Total current liabilities     2,335,763       2,518,591  
                 
Capital lease obligations, less current portion     31,798       34,013  
Deferred rent     71,587       14,179  
Warrant liability     10,839,950       1,832,945  
    Total liabilities     13,279,098       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; 200,000,000 shares authorized; 57,046,381 and 22,560,653 issued and outstanding     5,705       2,256  
  Additional paid-in capital     23,560,959       24,672,132  
  Accumulated deficit     (24,665,590 )     (26,125,414 )
    Total stockholders' deficit     (1,098,926 )     (1,451,026 )
                 
      Total liabilities and stockholders' deficit   $ 12,180,172     $ 2,948,702  
                       
                       
 
IZEA, Inc.
Consolidated Statements of Operations
(Unaudited)
 
    Three Months Ended
 June 30,
  Six Months Ended
June 30,
    2014   2013   2014   2013
                                 
Revenue   $ 1,969,235     $ 1,715,273     $ 3,926,275     $ 3,100,548  
Cost of sales     656,656       770,901       1,306,189       1,347,003  
    Gross profit     1,312,579       944,372       2,620,086       1,753,545  
                                 
Operating expenses:                                
  General and administrative     2,176,514       1,364,569       4,020,654       2,939,161  
  Sales and marketing     343,283       115,090       504,150       209,259  
    Total operating expenses     2,519,797       1,479,659       4,524,804       3,148,420  
                                 
Loss from operations     (1,207,218 )     (535,287 )     (1,904,718 )     (1,394,875 )
                                 
Other income (expense):                                
  Interest expense     (6,051 )     (22,530 )     (15,068 )     (37,996 )
  Loss on exchange of warrants and debt     --       --       --       (732 )
  Change in fair value of derivatives and notes payable carried at fair value, net     3,239,610       (335,653 )     3,375,211       (343,777 )
  Other income (expense), net     2,794       --       4,399       80  
    Total other income (expense)     3,236,353       (358,183 )     3,364,542       (382,425 )
                                 
Net income (loss)   $ 2,029,135     $ (893,470 )   $ 1,459,824     $ (1,777,300 )
                                 
Weighted average common shares outstanding - basic     57,045,282       7,226,745       47,145,510       7,020,347  
Basic income (loss) per common share   $ 0.04     $ (0.12 )   $ 0.03     $ (0.25 )
                                 
Weighted average common shares outstanding - diluted     72,962,524       7,226,745       62,035,915       7,020,347  
Diluted income (loss) per common share   $ 0.03     $ (0.12 )   $ 0.02     $ (0.25 )
                                 
                                 
 
IZEA, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
 
    Six Months Ended
June 30,
    2014   2013
Cash flows from operating activities:                
  Net income (loss)   $ 1,459,824     $ (1,777,300 )
  Adjustments to reconcile net income (loss) to net cash used for operating activities:                
    Depreciation     40,780       24,928  
    Amortization of software development costs and other assets     54,623       21,310  
    Stock-based compensation     246,750       168,374  
    Stock issued or to be issued for payment of services     129,110       114,965  
    Loss on exchange of warrants and debt     --       732  
    Change in fair value of derivatives and notes payable carried at fair value, net     (3,375,211 )     343,777  
    Cash provided by (used for):                
      Accounts receivable     317,292       (543,485 )
      Prepaid expenses and other current assets     (84,678 )     (147,326 )
      Accounts payable     (97,929 )     137,983  
      Accrued expenses     54,552       260,247  
      Unearned revenue     (190,213 )     45,114  
      Deferred rent     57,408       --  
Net cash used for operating activities     (1,387,692 )     (1,350,681 )
                 
Cash flows from investing activities:                
  Purchase of equipment     (86,305 )     (9,767 )
  Increase in software development costs     (206,529 )     (98,847 )
  Security deposits     (5,817 )     3,870  
Net cash used for investing activities     (298,651 )     (104,744 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of notes payable, net     --       1,089,798  
  Proceeds from issuance of common stock and warrants, net     10,945,632       --  
  Payments on notes payable and capital leases     (36,292 )     (202,277 )
Net cash provided by financing activities     10,909,340       887,521  
                 
Net increase (decrease) in cash and cash equivalents     9,222,997       (567,904 )
Cash and cash equivalents, beginning of year     530,052       657,946  
                 
Cash and cash equivalents, end of period   $ 9,753,049     $ 90,042  
                 
Supplemental cash flow information:                
  Cash paid during period for interest   $ 7,851     $ 7,286  
                 
Non-cash financing and investing activities:                
  Fair value of common stock issued for future services   $ --     $ 47,220  
  Fair value of warrants issued   $ 12,382,216     $ 95,209  
  Conversion of notes payable into common stock   $ --     $ 124,611  
  Acquisition of assets through capital lease   $ 41,339     $ --  
                   
                   
 
IZEA, Inc.
Reconciliation of GAAP to Non-GAAP Operating EBITDA
(Unaudited)
 
    Three Months Ended
 June 30,
  Six Months Ended
June 30,
    2014   2013   2014   2013
                                 
Net income (loss)   $ 2,029,135     $ (893,470 )   $ 1,459,824     $ (1,777,300 )
Non-cash stock-based compensation     131,412       128,914       246,750       168,374  
Non-cash stock issued for payment of services     70,750       68,180       129,110       114,965  
Change in the fair value of derivatives     (3,239,610 )     335,653       (3,375,211 )     343,777  
Loss on exchange of warrants     --       --       --       732  
Gain on disposal of equipment     (401 )     --       (401 )     --  
Interest expense     6,051       22,530       15,068       37,996  
Depreciation     22,913       12,349       40,780       24,928  
Amortization of software development costs and other assets     47,406       4,500       47,406       9,000  
  Operating EBITDA     (932,344 )     (321,344 )     (1,436,674 )     (1,077,528 )