SOURCE: IZEA, Inc.

IZEA, Inc.

March 19, 2015 16:01 ET

IZEA Announces Record Q4 Revenue, up 26% Year Over Year

Reports Highest Annual Revenue in Company History of $8.3 Million

ORLANDO, FL--(Marketwired - Mar 19, 2015) -  IZEA, Inc. (OTCQB: IZEA), operator of the premiere online marketplace that connects brands with influential content creators, today announced record results for its fourth quarter ended December 31, 2014.

Financial Highlights include:

  • Revenue for the quarter increased 26% to a record $2.5 million compared to Q4 2013.
  • Gross profit margin for the quarter was 65.6%, up from 56.5% during the same period in 2013.
  • Bookings for the quarter grew 40% year over year to a record $2.7 million.
  • New opportunity pipeline for the quarter increased 76% year-over-year to $16 million.
  • Revenue for the 2014 fiscal year was $8.3 million, an increase of 26% over 2013.
  • Annual bookings reached $9.0 million, an increase of 24% over 2013.

Fourth Quarter Operational Highlights:

  • Completed user migration from legacy systems to IZEAx.
  • IZEAx aggregate network reach increased 138% to 2.3 billion fans and followers at the end of the quarter, compared with Q3 2014.
  • IZEAx registered users increased 153% to 243,000 compared with Q3 2014.
  • Three new IZEAx partners, including Bent Pixels and Frederator.

"IZEA made significant investments in client services and engineering ahead of revenue last year, and that investment is beginning to be reflected in our organic growth momentum," said Ted Murphy, IZEA's Chairman and Chief Executive Officer. "I am proud of what our team accomplished in 2014 and have never been more optimistic about our future. The investments we made last year, combined with our acquisition of Ebyline, Inc. in January 2015, have set the stage for a transformational year ahead for the company. We project 177% bookings growth in 2015, with $25 million in bookings driving an estimated $23 million in revenue."

2014 Annual Results

Revenue for 2014 was $8,322,274 compared to $6,626,943 in 2013, an increase of 26%. Gross profit for the year was $5,476,441, up from $3,928,579 in 2013, an increase of 39%. Operating expenses for the year were $10,122,644, compared to $6,841,635 in 2013, due to investments in sales, marketing and engineering.

Net income for the year was $3,184,064 compared to a net loss of $(3,321,992) during the same period last year, primarily due to a $7,845,214 gain on the change in the fair value of derivatives. Operating EBITDA was $(3,719,556) compared to $(1,682,155) in 2013, primarily due to investments in marketing and new hires.

Basic and diluted income per common share for the year was $.06 and $.05, respectively, compared to basic and diluted loss per common share of $(.27) for 2013.

Investor Conference Call
The Company will host a conference call today at 4:00p.m. ET, during which IZEA management will discuss the financial results and be available to answer any questions from investors.

Conference Date: 03/19/15
Conference Start Time: 4:00 pm Eastern
Dial-In Number : 1-201-689-8471

Electronic replay of the conference call will be available through March 26, 2015 by dialing 1-858-384-5517 and entering PIN number 13602917. IZEA will also post a downloadable file onto the Investor Relations area of http://corp.izea.com.

About IZEA
IZEA operates the premiere online marketplace that connects brands with influential content creators. IZEA creators range from leading bloggers and social media personalities to A-List celebrities and professional journalists. Creators are compensated for developing and distributing unique content on behalf of brands including long form text, videos, photos and status updates. Brands receive influential consumer content and engaging, shareable stories that drive awareness. 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  
   
    December 31,     December 31,  
    2014     2013  
Assets            
Current:                
  Cash and cash equivalents   $ 6,521,930     $ 530,052  
  Accounts receivable     2,156,378       1,659,802  
  Prepaid expenses     190,604       109,960  
  Other current assets     61,424       83,486  
    Total current assets     8,930,336       2,383,300  
                 
Property and equipment, net of accumulated depreciation of $239,521 and $205,070     588,919       156,482  
Software development costs, net of accumulated amortization of $85,331 and $0     483,544       362,346  
Security deposits     100,641       46,574  
      Total assets   $ 10,103,440     $ 2,948,702  
                 
Liabilities and Stockholders' Equity (Deficit)                
Current liabilities:                
  Accounts payable   $ 310,611     $ 817,057  
  Accrued expenses     394,617       365,454  
  Unearned revenue     1,767,074       1,292,228  
  Current portion of capital lease obligations     54,376       43,852  
    Total current liabilities     2,526,678       2,518,591  
                 
Capital lease obligations, less current portion     7,291       34,013  
Deferred rent     106,531       14,179  
Warrant liability     3,203,465       1,832,945  
    Total liabilities     5,843,965       4,399,728  
                 
Stockholders' equity (deficit):                
  Common stock, $.0001 par value; 200,000,000 shares authorized; 57,697,666 and 22,560,653 issued and outstanding     5,770       2,256  
  Additional paid-in capital     27,195,055       24,672,132  
  Accumulated deficit     (22,941,350 )     (26,125,414 )
    Total stockholders' equity (deficit)     4,259,475       (1,451,026 )
                     
      Total liabilities and stockholders' equity (deficit)   $ 10,103,440     $ 2,948,702  
                       
                       
                       
IZEA, Inc.  
Consolidated Statements of Operations  
   
    Three Months Ended December 31,     Twelve Months Ended December 31,  
    2014     2013     2014     2013  
                                 
Revenue   $ 2,464,328     $ 1,960,544     $ 8,322,274     $ 6,626,943  
Cost of sales     847,427       852,234       2,845,833       2,698,364  
    Gross profit     1,616,901       1,108,310       5,476,441       3,928,579  
                                 
Operating expenses:                                
  General and administrative     2,472,495       1,865,912       8,813,291       6,460,800  
  Sales and marketing     323,158       108,140       1,309,353       380,835  
    Total operating expenses     2,795,653       1,974,052       10,122,644       6,841,635  
                                 
Loss from operations     (1,178,752 )     (865,742 )     (4,646,203 )     (2,913,056 )
                                 
Other income (expense):                                
  Interest expense     (4,788 )     (10,969 )     (25,375 )     (63,404 )
  Loss on exchange of warrants and debt     --       --       --       (94,214 )
  Change in fair value of derivatives and notes payable carried at fair value, net     2,219,659       307,022       7,845,214       (251,847 )
  Other income (expense), net     2,751       299       10,428       529  
    Total other income (expense)     2,217,622       296,352       7,830,267       (408,936 )
                                 
Net income (loss)   $ 1,038,870     $ (569,390 )   $ 3,184,064     $ (3,321,992 )
                                 
Weighted average common shares outstanding - basic     57,497,631       22,388,623       52,327,088       12,400,366  
Basic income (loss) per common share   $ 0.02     $ (0.03 )   $ 0.06     $ (0.27 )
                                 
Weighted average common shares outstanding - diluted     61,179,808       22,388,623       63,400,080       12,400,366  
Diluted income (loss) per common share   $ 0.02     $ (0.03 )   $ 0.05     $ (0.27 )
                                 
                                 
                                 
IZEA, Inc.  
Consolidated Statements of Cash Flows  
   
    Twelve Months Ended
December 31,
 
    2014     2013  
Cash flows from operating activities:                
  Net income (loss)   $ 3,184,064     $ (3,321,992 )
  Adjustments to reconcile net income (loss) to net cash used for operating activities:                
    Depreciation     109,823       51,229  
    Amortization of software development costs and other assets     95,548       45,961  
    Loss on sale of furniture and equipment     16,192       (2,879 )
    Bad debt expense     --       26,389  
    Stock-based compensation     538,263       725,254  
    Stock issued or to be issued for payment of services     166,610       443,588  
    Loss on exchange of warrants and debt     --       94,214  
    Change in fair value of derivatives and notes payable carried at fair value, net     (7,845,214 )     251,847  
    Cash provided by (used for):                
      Accounts receivable     (496,576 )     (1,259,373 )
      Prepaid expenses and other current assets     (72,299 )     (15,226 )
      Accounts payable     (506,446 )     (346,250 )
      Accrued expenses     29,163       203,990  
      Unearned revenue     474,846       152,088  
      Deferred rent     92,352       14,179  
Net cash used for operating activities     (4,213,674 )     (2,936,981 )
                 
Cash flows from investing activities:                
  Purchase of equipment     (517,113 )     (17,586 )
  Increase in software development costs     (206,529 )     (362,346 )
  Security deposits     (54,067 )     (37,526 )
Net cash used for investing activities     (777,709 )     (417,458 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of notes payable, net     --       1,439,798  
  Proceeds from issuance of common stock and warrants, net     10,933,998       2,004,111  
  Proceeds from exercise of stock options & warrants     112,800       --  
  Payments on notes payable and capital leases     (63,537 )     (217,364 )
Net cash provided by financing activities     10,983,261       3,226,545  
Net increase (decrease) in cash and cash equivalents     5,991,878       (127,894 )
Cash and cash equivalents, beginning of year     530,052       657,946  
Cash and cash equivalents, end of period   $ 6,521,930     $ 530,052  
                 
Supplemental cash flow information:                
  Cash paid during period for interest   $ 15,158     $ 13,045  
                 
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     $ 73,489  
                 
                 
                 
Reconciliation of Net Income (Loss) to Operating EBITDA:  
   
  Three Months Ended     Twelve Months Ended  
  December 31,
 2014
    December 31,
 2013
    December 31,
 2014
    December 31,
 2013
 
Net income (loss) $ 1,038,870     $ (569,390 )   $ 3,184,064     $ (3,321,992 )
  Non-cash stock-based compensation   149,261       366,003       538,263       725,254  
  Non-cash stock issued for payment of services   18,750       22,000       166,610       438,768  
  Change in the fair value of derivatives   (2,219,659 )     (307,022 )     (7,845,214 )     251,847  
  Loss on exchange of warrants   --       --       --       94,214  
  Loss/(Gain) on disposal of equipment   --       (2,879 )     16,192       (2,879 )
  Interest expense   4,788       10,969       25,375       63,404  
  Depreciation & amortization   34,659       19,352       195,154       69,229  
Operating EBITDA $ (973,331 )   $ (460,967 )   $ (3,719,556 )   $ (1,682,155 )