SOURCE: IZEA, Inc.

IZEA, Inc.

November 13, 2014 08:00 ET

IZEA Announces Record Q3 Revenue, up 23% Year Over Year

Company Completes Sunset of Legacy Platforms

ORLANDO, FL--(Marketwired - Nov 13, 2014) - IZEA, Inc. (OTCQB: IZEA), the leader in Social Sponsorship, today announced record results for its third quarter ended September 30, 2014.

Third Quarter 2014 Financial Highlights:

  • Revenue increased 23.4% year-over-year to a record $1.93 million.
  • Bookings reached a record $2.02 million, up from $1.87 million in Q3 2013 -- the highest bookings in the third quarter in the history of the company.
  • Gross profit for the quarter rose 16.2% year-over-year to $1.24 million.
  • New opportunity pipeline increased 74% year-over-year to $16.4 million. New opportunity pipeline represents the amount of new client proposals generated within the quarter.

Third Quarter Operational Highlights:

  • IZEAx aggregate network reach increased 82% to 965 million fans and followers at the end of the quarter, compared with Q2 2014.
  • IZEAx registered users increased 45% to 96,000 compared with Q2 2014.
  • 83 full time team members; added 13 net new staff in client services and 4 in engineering in Q3.
  • Eight new IZEAx partners, including Meredith, Allison Partners and SoundAmp.
  • Completed the expansion and renovation of the company's global headquarters.

"The third quarter was transformational for IZEA. We completed the bulk of our hiring for 2014, creating the foundation for 2015. We made a significant investment in client services and engineering over the past two quarters, and are beginning to see the benefits of those resources. The increase in new opportunity pipeline has been outstanding and we have been able to reach a much wider array of potential buyers. We had our first $1.0 million+ bookings month in September, and I believe we will see more months of this caliber as our new hires gain experience and build relationships with clients," commented Ted Murphy, IZEA's Chairman and Chief Executive Officer.

"One of our top priorities this year was to sunset our legacy platforms and transition our sponsored social transactions to IZEAx. We are pleased to share that we have now completed that process, freeing our engineering team to focus all of our efforts on IZEA's future. In Q3, we added 41 features to IZEAx, including support for Twitter photos, Facebook Pages and further mobile optimization."

"In the second quarter we added client service team members to focus on capturing governmental and political dollars," continued Murphy. "We saw our first win in this arena in Q3 and believe that there is opportunity to grow this line of business as we look ahead to the next election cycle."

Third Quarter 2014 Results:
Revenue for the third quarter of 2014 was $1,931,671 compared to $1,565,851 for the third quarter of 2013, an increase of 23.4%. Gross profit for the quarter was $1,239,454, up from $1,066,724 during the same period in 2013, an increase of 16.2%. Operating expenses for the quarter ended September 30, 2014 were $2,320,142, compared to $1,655,727 for the same period in 2013, due to investments in sales, marketing and engineering.

Net income for the quarter was $685,370 compared to a net loss of $(975,302) during the same period last year, primarily due to a $2,250,344 gain on the change in the fair value of derivatives. Operating EBITDA was $(1,309,551) for the quarter compared to $(143,660) during the same period last year, primarily due to investments in marketing and new hires.

Basic and diluted income per common share for the quarter was $.01, compared to basic and diluted loss per common share of $(.08) for the third quarter of 2013.

Investor Conference Call:
The Company will host a conference call today at 9:00 am ET, during which IZEA management will discuss the financial results and be available to answer any questions from the investment community.

Dial-In Numbers:
Toll-Free (Domestic): 877-407-4018
International (Toll): 201-689-8471
Webcast Link: http://public.viavid.com/index.php?id=111936

Electronic replay of the conference call will be available through November 20, 2014 by dialing (877) 870-5176 and entering PIN number 13595357. The company will also post a downloadable file onto the IZEA Investor Relations portal: http://corp.izea.com/investors/

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 bookings and its new opportunity pipeline, neither of which represent actual revenue at this time. 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
             
    September 30,
 2014
    December 31,
 2013
 
    (Unaudited)        
Assets                
Current:                
  Cash and cash equivalents   $ 7,879,918     $ 530,052  
  Accounts receivable     1,475,834       1,659,802  
  Prepaid expenses     485,176       109,960  
  Other current assets     150,892       83,486  
    Total current assets     9,991,820       2,383,300  
                 
Property and equipment, net of accumulated depreciation of $220,319 and $205,070     275,920       156,482  
Software development costs, net of accumulated amortization of $94,812 and $0     474,063       362,346  
Security deposits     57,641       46,574  
      Total assets   $ 10,799,444     $ 2,948,702  
                 
Liabilities and Stockholders' Equity (Deficit)            
Current liabilities:                
  Accounts payable   $ 642,671     $ 817,057  
  Accrued expenses     452,030       365,454  
  Unearned revenue     1,136,072       1,292,228  
  Current portion of capital lease obligations     60,001       43,852  
    Total current liabilities     2,290,774       2,518,591  
                 
Capital lease obligations, less current portion     15,601       34,013  
Deferred rent     74,687       14,179  
Warrant liability     5,423,124       1,832,945  
    Total liabilities     7,804,186       4,399,728  
                 
Stockholders' equity (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; 57,497,631 and 22,560,653 issued and outstanding     5,750       2,256  
  Additional paid-in capital     26,969,728       24,672,132  
  Accumulated deficit     (23,980,220 )     (26,125,414 )
    Total stockholders' equity (deficit)     2,995,258       (1,451,026 )
                 
      Total liabilities and stockholders' equity (deficit)   $ 10,799,444     $ 2,948,702  
                       
 
IZEA, Inc.
Consolidated Statements of Operations
(Unaudited)
 
    Three Months Ended
 September 30,
    Nine Months Ended
September 30,
 
    2014     2013     2014     2013  
                                 
Revenue   $ 1,931,671     $ 1,565,851     $ 5,857,946     $ 4,666,399  
Cost of sales     692,217       499,127       1,998,406       1,846,130  
  Gross profit     1,239,454       1,066,724       3,859,540       2,820,269  
                                 
Operating expenses:                                
  General and administrative     2,320,142       1,655,727       6,340,796       4,594,888  
  Sales and marketing     482,045       63,436       986,195       272,695  
    Total operating expenses     2,802,187       1,719,163       7,326,991       4,867,583  
                                 
Loss from operations     (1,562,733 )     (652,439 )     (3,467,451 )     (2,047,314 )
                                 
Other income (expense):                                
  Interest expense     (5,519 )     (14,439 )     (20,587 )     (52,435 )
  Loss on exchange of warrants and debt     --       (93,482 )     --       (94,214 )
  Change in fair value of derivatives and notes payable carried at fair value, net     2,250,344       (215,092 )     5,625,555       (558,869 )
  Other income (expense), net     3,278       150       7,677       230  
    Total other income (expense)     2,248,103       (322,863 )     5,612,645       (705,288 )
                                 
Net income (loss)   $ 685,370     $ (975,302 )   $ 2,145,194     $ (2,752,602 )
                                 
Weighted average common shares outstanding - basic     57,350,743       12,996,717       50,584,635       9,034,361  
Basic income (loss) per common share   $ 0.01     $ (0.08 )   $ 0.04     $ (0.30 )
                                 
Weighted average common shares outstanding - diluted     69,428,993       12,996,717       63,663,192       9,034,361  
Diluted income (loss) per common share   $ 0.01     $ (0.08 )   $ 0.03     $ (0.30 )
                                 
   
IZEA, Inc.  
Consolidated Statements of Cash Flows  
(Unaudited)  
   
    Nine Months Ended
September 30,
 
    2014     2013  
Cash flows from operating activities:                
  Net income (loss)   $ 2,145,194     $ (2,752,602 )
  Adjustments to reconcile net income (loss) to net cash used for operating activities:                
    Depreciation     65,683       36,377  
    Amortization of software development costs and other assets     103,529       33,636  
    Loss on sale of furniture and equipment     16,192       --  
    Bad debt expense     --       24,018  
    Stock-based compensation     389,002       359,251  
    Stock issued or to be issued for payment of services     147,860       416,768  
    Loss on exchange of warrants and debt     --       94,214  
    Change in fair value of derivatives and notes payable carried at fair value, net     (5,625,555 )     558,869  
    Cash provided by (used for):                
      Accounts receivable     183,968       (760,864 )
      Prepaid expenses and other current assets     (454,839 )     17,716  
      Accounts payable     (174,386 )     (421,790 )
      Accrued expenses     30,326       273,061  
      Unearned revenue     (156,156 )     120,779  
      Deferred rent     60,508       --  
Net cash used for operating activities     (3,268,674 )     (2,000,567 )
                 
Cash flows from investing activities:                
  Purchase of equipment     (159,974 )     (15,064 )
  Increase in software development costs     (206,529 )     (244,878 )
  Security deposits     (11,067 )     1,097  
Net cash used for investing activities     (377,570 )     (258,845 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of notes payable, net     --       1,439,798  
  Proceeds from issuance of common stock and warrants, net     10,932,912       2,032,145  
  Proceeds from exercise of stock options & warrants     112,800       --  
  Payments on notes payable and capital leases     (49,602 )     (206,789 )
Net cash provided by financing activities     10,996,110       3,265,154  
                 
Net increase in cash and cash equivalents     7,349,866       1,005,742  
Cash and cash equivalents, beginning of year     530,052       657,946  
                 
Cash and cash equivalents, end of period   $ 7,879,918     $ 1,663,688  
                 
Supplemental cash flow information:                
  Cash paid during period for interest   $ 11,870     $ 9,902  
                 
Non-cash financing and investing activities:                
  Fair value of 2013 PPM warrants reclassified from liability to equity   $ 3,166,482     $ --  
  Fair value of warrants issued   $ 12,382,216     $ 2,352,108  
  Conversion of notes payable into common stock   $ --     $ 1,501,229  
  Acquisition of assets through capital lease   $ 41,339     $ 55,369  
                   
 
IZEA, Inc.
Reconciliation of GAAP to Non-GAAP Operating EBITDA
(Unaudited)
 
    Three Months Ended
 September 30,
  Nine Months Ended
September 30,
    2014   2013   2014   2013
                                 
Net income (loss)   $ 685,370     $ (975,302 )   $ 2,145,194     $ (2,752,602 )
Non-cash stock-based compensation     142,252       190,877       389,002       359,251  
Non-cash stock issued for payment of services     18,750       301,803       147,860       416,768  
Change in the fair value of derivatives     (2,250,344 )     215,092       (5,625,555 )     558,869  
Loss on exchange of warrants and debt     --       93,482       --       94,214  
Loss on disposal of equipment     16,593       --       16,192       --  
Interest expense     5,519       14,439       20,587       52,435  
Depreciation     24,903       11,449       65,683       36,377  
Amortization of software development costs and other assets     47,406       4,500       94,812       13,500  
  Operating EBITDA     (1,309,551 )     (143,660 )     (2,746,225 )     (1,221,188 )