SOURCE: IZEA, Inc.

IZEA, Inc.

March 29, 2016 16:01 ET

IZEA Reports Record Fourth Quarter and Full Year 2015 Results

Q4 Revenue up 154% to $6.3 Million; Full Year Revenue up 146% to $20.5 Million

ORLANDO, FL--(Marketwired - March 29, 2016) -  IZEA, Inc. (NASDAQ: IZEA), operators of IZEAx, the premier online marketplace connecting brands and publishers with influential content creators, reported record results for the fourth quarter and year ended December 31, 2015.

Fourth Quarter Financial Highlights vs. the Year-Ago Quarter

  • Revenue increased 154% to a record $6.3 million, driven by Sponsored Social revenue up 84% to $4.0 million and Content revenue of $2.3 million.
  • Bookings up 167% to a record $7.3 million, with the majority of bookings representing repeat customers.
  • New opportunity pipeline, a representation of new client proposals generated within the quarter, increased 55% to $24.8 million.

2015 Financial Highlights

  • Revenue increased 146% to a record $20.5 million compared to 2014.
  • Organic growth of Sponsored Social revenue increased 92% to a record $12.3 million vs. 2014.
  • Content revenue of $8.0 million added in 2015 as a result of the Ebyline acquisition.
  • Bookings increased 171% to a record $24.5 million compared to 2014.
  • Completed a $12.9 million warrant conversion with 81.5% participation.
  • Cash at December 31, 2015 was $11.6 million, receivables totaled $3.9 million and unused credit line of $5.0 million.

2015 Operational Highlights

  • Acquired Ebyline, a virtual newsroom platform for freelance journalists and news publishers, adding a network of more than 12,000 professional writers and journalists to the IZEA ecosystem.
  • Began sales operations in Canada in September. In March of 2016, IZEA formed IZEA Canada, Inc, a wholly owned subsidiary based in Toronto, to expand the company's footprint in the region.
  • Grew the IZEA staff from 94 to 121 full time team members. Added senior team members in sales and leadership including Chris Staymates, VP of Engineering and Sandra Carbone, General Counsel.
  • Secured IZEAx licensing agreements with partners including a global top-10 media company and a multinational advertising agency in the fourth quarter.
  • Launched IZEA Score Suite Beta, Content Profiles, IZEA for iOS, and SocialLinks Beta with eBay partnership and technology integration.
  • Grew IZEAx network to 629,000 user connections, reaching 3.5 billion aggregate fans and followers.
  • Began the Nasdaq uplisting process. The company began trading on Nasdaq in February 2016.
  • Signed first individual customer contract in excess of $1 million.

Management Commentary
"2015 was a transformational year with record topline revenue driven by strong organic growth of Sponsored Social revenue, the acquisition of Ebyline, continued technology innovation and increased efficiency throughout the organization," said Ted Murphy, IZEA's Chairman and CEO. "These operational and financial developments strengthened our position as a market leader."

"Looking ahead, we will continue to invest in growing our sales organization and augmenting our engineering team. In addition, we are actively pursuing accretive acquisition opportunities that can both grow revenue and increase our penetration in niche markets. We remain on track to achieve $100 million in annual bookings by the end of 2018."

2015 Financial Results
Revenue in 2015 increased 146% to $20.5 million compared to $8.3 million in 2014. The increase is primarily attributable to organic growth of Sponsored Social revenue, up 92% to $12.3 million.

Gross profit in 2015 increased 50% to $8.2 million versus $5.5 million in 2014. The increase in gross profit is due to the increase in revenue. 

Operating expenses in 2015 were $15.5 million, compared to $10.1 million in 2014. The increase in operating expenses were due to increased investments in sales, marketing and engineering, as well as increased expenses associated with the acquisition of Ebyline.

Net loss in 2015 was $11.3 million or $3.03 per diluted share, as compared to a net income of $3.2 million or $1.00 per diluted share in 2014. The net loss is primarily due to the difference in the change in fair value of derivatives of $11.8 million between 2014 and 2015.

Adjusted EBITDA (a non-GAAP metric defined below) was a loss of $7.1 million compared to adjusted EBITDA loss of $3.7 million in 2014. The change in adjusted EBITDA was primarily due to investments in incremental human capital and marketing, as well as legal fees and settlement costs. Adjusted EBITDA as a percentage of revenue in 2015 improved to negative 35% from negative 45% in 2014.

Cash and cash equivalents at December 31, 2015 totaled $11.6 million compared to $6.5 million at December 31, 2014. The increase in cash was primarily due to warrant conversions, with net proceeds to the company of $12.9 million, completed in the third quarter of 2015.

Conference Call
IZEA will hold a conference call to discuss its fourth quarter and full year results today at 5:00 p.m. Eastern time. Management will host the presentation, followed by a question and answer period.

Date: Tuesday, March 29, 2016
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Dial-in number: 1-201-689-8471
Conference ID: 13633328
Webcast: http://public.viavid.com/index.php?id=118768

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

A replay of the call will be available after 8:00 p.m. Eastern time on the same day through April 5, 2016.

Replay number: 1-858-384-5517
Replay ID: 13633328

About IZEA
IZEA operates the premier 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 2015 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 content and 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,
 2015
    December 31,
 2014
 
             
Assets            
Current:                
  Cash and cash equivalents   $ 11,608,452     $ 6,521,930  
  Accounts receivable, net of allowance for doubtful accounts of $139,000 and $0     3,917,925       2,156,378  
  Prepaid expenses     193,455       190,604  
  Other current assets     16,853       61,424  
    Total current assets     15,736,685       8,930,336  
                 
Property and equipment, net of accumulated depreciation of $445,971 and $239,521     596,008       588,919  
Goodwill     2,468,289       -  
Intangible assets, net of accumulated amortization of $730,278 and $0     1,806,191       -  
Software development costs, net of accumulated amortization of $207,514 and $85,331     813,932       483,544  
Security deposits     117,946       100,641  
    Total assets   $ 21,539,051     $ 10,103,440  
Liabilities and Stockholders' Equity            
Current liabilities:                
  Accounts payable   $ 995,275     $ 310,611  
  Accrued expenses     908,519       394,617  
  Unearned revenue     3,584,527       1,767,074  
  Current portion of deferred rent     14,662       -  
  Current portion of capital lease obligations     7,291       54,376  
  Current portion of acquisition costs payable     844,931       -  
    Total current liabilities     6,355,205       2,526,678  
                 
                 
Deferred rent, less current portion     102,665       106,531  
Capital lease obligations, less current portion     -       7,291  
Acquisition costs payable, less current portion     889,080       -  
Warrant liability     5,060       3,203,465  
    Total liabilities     7,352,010       5,843,965  
                 
Stockholders' equity:                
  Common stock, $.0001 par value; 200,000,000 shares authorized; 5,222,951 and 2,885,424, respectively, issued and outstanding     522       289  
  Additional paid-in capital     48,436,040       27,200,536  
  Accumulated deficit     (34,249,521 )     (22,941,350 )
    Total stockholders' equity     14,187,041       4,259,475  
                     
    Total liabilities and stockholders' equity   $ 21,539,051     $ 10,103,440  
                     
                     
 
IZEA, Inc.
Consolidated Statements of Operations
             
    Three Months Ended
December 31,
    Twelve Months Ended
December 31,
 
    2015     2014     2015     2014  
                                 
Revenue   $ 6,262,233     $ 2,464,328     $ 20,467,926     $ 8,322,274  
Cost of sales     3,587,608       847,427       12,236,916       2,845,833  
    Gross profit     2,674,625       1,616,901       8,231,010       5,476,441  
                                 
Operating expenses:                                
  General and administrative     2,435,748       1,317,576       7,517,115       4,918,197  
  Sales and marketing     2,626,091       1,478,077       7,936,215       5,204,447  
    Total operating expenses     5,061,839       2,795,653       15,453,330       10,122,644  
                                 
Loss from operations     (2,387,214 )     (1,178,752 )     (7,222,320 )     (4,646,203 )
                                 
Other income (expense):                                
  Interest expense     (29,507 )     (4,788 )     (115,861 )     (25,375 )
  Loss on exchange of warrants     -       -       (1,845,810 )     -  
  Change in fair value of derivatives, net     5,720       2,219,659       (2,133,820 )     7,845,214  
  Other income, net     4,120       2,751       9,640       10,428  
    Total other income (expense)     (19,667 )     2,217,622       (4,085,851 )     7,830,267  
                                 
Net income (loss)   $ (2,406,881 )   $ 1,038,870     $ (11,308,171 )   $ 3,184,064  
                                 
Weighted average common shares outstanding - basic     5,118,139       2,874,882       3,737,897       2,616,354  
Basic income (loss) per common share   $ (0.47 )   $ 0.36     $ (3.03 )   $ 1.22  
                                 
Weighted average common shares outstanding - diluted     5,118,139       3,058,992       3,737,897       3,170,003  
Diluted income (loss) per common share   $ (0.47 )   $ 0.34     $ (3.03 )   $ 1.00  
                                 
                                 

 
IZEA, Inc.
Consolidated Statements of Cash Flows
     
  Twelve Months Ended
December 31,
 
  2015     2014  
Cash flows from operating activities:              
  Net income (loss) $ (11,308,171 )   $ 3,184,064  
Adjustments to reconcile net income (loss) to net cash used for operating activities:              
    Depreciation   206,670       109,823  
    Amortization of software development costs and other intangible assets   852,461       95,548  
    Loss on disposal of equipment   595       16,192  
    Provision for losses on accounts receivable   163,535       -  
    Stock-based compensation   705,466       538,263  
    Value of stock and warrants issued or to be issued for payment of services   177,842       166,610  
    Gain on change in value of contingent acquisition costs payable   (1,834,300 )     -  
    Loss on exchange of warrants   1,845,810       -  
    Change in fair value of derivatives, net   2,133,820       (7,845,214 )
Changes in operating assets and liabilities, net of effects of business acquired:              
    Accounts receivable   (1,608,561 )     (496,576 )
    Prepaid expenses and other current assets   83,244       (72,299 )
    Accounts payable   141,325       (506,446 )
    Accrued expenses   582,851       29,163  
    Unearned revenue   1,783,559       474,846  
    Deferred rent   896       92,352  
Net cash used for operating activities   (6,072,958 )     (4,213,674 )
               
Cash flows from investing activities:              
  Purchase of equipment   (187,160 )     (517,113 )
  Increase in software development costs   (452,571 )     (206,529 )
  Acquisition, net of cash acquired   (1,072,055 )     -  
  Security deposits   1,248       (54,067 )
Net cash used for investing activities   (1,710,538 )     (777,709 )
               
Cash flows from financing activities:              
  Proceeds from issuance of common stock and warrants, net   -       12,001,810  
  Proceeds from exercise of options & warrants   12,937,327       112,800  
  Stock issuance costs   (12,933 )     (1,067,812 )
  Payments on notes payable and capital leases   (54,376 )     (63,537 )
Net cash provided by financing activities   12,870,018       10,983,261  
               
Net increase in cash and cash equivalents   5,086,522       5,991,878  
Cash and cash equivalents, beginning of year   6,521,930       530,052  
               
Cash and cash equivalents, end of year $ 11,608,452     $ 6,521,930  
               
               

 
IZEA, Inc.
Reconciliation of GAAP to Non-GAAP Adjusted EBITDA
(Unaudited)
             
    Three Months Ended
 December 31,
    Twelve Months Ended
December 31,
 
    2015     2014     2015     2014  
                                 
Net income (loss)   $ (2,406,881 )   $ 1,038,870     $ (11,308,171 )   $ 3,184,064  
Non-cash stock-based compensation     194,264       149,261       705,466       538,263  
Non-cash stock issued for payment of services     41,250       18,750       177,842       166,610  
Change in the fair value of derivatives     (5,720 )     (2,219,659 )     2,133,820       (7,845,214 )
Loss on exchange of warrants     -       -       1,845,810       -  
Loss on disposal of equipment     -       -       595       16,192  
Gain on change in value of contingent acquisition costs payable     (100,000 )     -       (1,834,300 )     -  
Interest expense     29,507       4,788       115,861       25,375  
Depreciation & amortization     428,071       34,659       1,059,131       195,154  
Adjusted EBITDA     (1,819,509 )     (973,331 )     (7,103,946 )     (3,719,556 )
                                 
                                 

Contact Information

  • Investor Relations for IZEA:
    Ronald A. Both
    Liolios Investor Relations
    (949) 574-3860
    Email contact


    Media Relations for IZEA:
    Brent Diggins
    Allison+Partners
    (623) 201-5554
    Email contact