SOURCE: IZEA, Inc.

IZEA, Inc.

August 12, 2015 16:00 ET

IZEA Reports Record Second Quarter Revenue, Up 135%

First Half Bookings of $10.5 Million, Up 146%

ORLANDO, FL--(Marketwired - Aug 12, 2015) - IZEA, Inc. (OTCQB: IZEA), operator of the premier online marketplace that connects brands and publishers with influential content creators, today announced record results for its second quarter ended June 30, 2015.

Second Quarter Financial Highlights:

  • Bookings for the quarter grew 141% year-over-year to a record $6.2 million, up from $2.6 million in Q2 2014.
  • Sponsored Social bookings for the quarter grew 50% year over year to $3.8 million, up from $2.6 million.
  • Revenue for the quarter increased 135% to a record $4.6 million compared to Q2 2014.
  • Sponsored Social represented $2.4 million in Q2 revenue; Content represented $2.2 million in revenue.
  • New opportunity pipeline, a representation of new client proposals generated within the quarter, grew to $32.3 million, up from $12.8 million in Q2 2014, an increase of 159%.
  • Gross profit margin for Content increased from 9% in Q2 2014 under Ebyline, Inc. to 11% in Q2 2015 operating under IZEA.

Second Quarter Operational Highlights:

  • IZEAx aggregate network reach increased to 2.97 billion fans and followers at the end of the quarter, up 9.6% compared with Q1 2015 and 460% year-over-year.
  • IZEAx registered users increased 15% to 514,000 from Q1 2015 to Q2 2015 and increased 679% from 66,000 in Q2 2014.
  • Launched new IZEA corporate website and revamped marketing materials with expanded offering.
  • Signed two new IZEAx partners and expanded into Australia via WeConnect partnership.
  • Established a new client development presence in Canada and booked a first sale within the first 90 days.
  • Announced content platform partnership with Percolate, a leading marketing platform provider.
  • Appointment of Chris Staymates as VP of Engineering and Jill Golder, CFO of Ruby Tuesday, as a Board Member.

IZEA ended the quarter with cash and cash equivalents of $2.5 million, receivables of $3.3 million and an untapped $5 million credit facility with Bridge Bank. In July, the company announced a warrant conversion offer to existing warrant holders. The company has received signed commitments in excess of $12 million from over 80% of the warrant holders. The transaction is scheduled to close on August 14, 2015. In conjunction with the warrant conversion, the company has officially applied for an up-listing to the NASDAQ capital market.

"In the second quarter, we built off the momentum from the $19.4 million sales pipeline we had generated in Q1. We saw continued growth in both our Sponsored Social and Virtual Newsroom content offerings and have already exceeded IZEA's 2014 total annual revenue by the end of Q2 2015. In June 2015, we delivered our first month in excess of $2.5 million in bookings, another milestone for our growing sales team," commented Ted Murphy, IZEA's Chairman and Chief Executive Officer.

"While revenue was up 135% for Q2, the concentration of sales towards the end of the quarter did impact revenue recognition within the term. At the end of the quarter, the company had unearned revenue of $2.7 million, with an additional $2.5 million of booked business not yet billed. We expect much of this to be recognized in the coming months," said Murphy. "Our annualized run-rate based on Q2 bookings is $24.8 million and our team remains confident in our ability to achieve $25 million in bookings for the 2015 fiscal year."

"In addition to strong overall sales, IZEA continues to see impressive growth of average deal size. The company's average deal size for the first half of 2015 climbed 67% over the first half of 2014. We also had a major product cross-selling win with a global top 20 website and secured the biggest individual contract in our history with a leading international hotel chain. IZEA is becoming a more integral component of our client's marketing strategy, leading to larger individual contracts and longer engagements. All of this is positively impacting our ability to scale and driving the significantly increased revenue per employee," said Ryan Schram, IZEA's Chief Operating Officer.

Second Quarter 2015 Results:
Revenue for the second quarter of 2015 was $4,627,742 compared to $1,969,235 for the second quarter of 2014, an increase of 135% due to the increase in our Sponsored Social and Content sales. Gross profit for the quarter was $1,710,382, up from $1,312,579 during the same period in 2014 -- an increase of 30.3%.

Operating expenses for the second quarter of 2015 were $3,910,929, compared to $2,519,797 during the same period in 2014, primarily due to investments in additional sales and engineering staff along with the assumption of Ebyline's operating expenses as well as increased legal expenses.

Operating EBITDA was $(1,722,490) for the quarter compared to $(932,344) during the same period last year, primarily due to investments in new hires and technology along with the assumption of Ebyline overhead. Net loss for the quarter was $(1,985,291) compared to net income of $2,029,135 during the same period last year, primarily due to a $2,989,103 difference in the gain on the change in the fair value of derivatives between periods and the increase in operating expenses in 2015. Cash used for operating activities was $1,484,723 during the three months ended June 30, 2015.

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

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

Conference Date: 08/12/15
Conference Start Time: 5:00 pm Eastern
Dial-In Number: (201) 689-8471

Electronic replay of the conference call will be available through August 19, 2015 by dialing 1-858-384-5517 and entering PIN number 13617395. IZEA will also post a downloadable file onto the Investor Relations area of http://corp.izea.com.

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 bookings and revenues for the 2015 fiscal year. These forward-looking statements are based largely on IZEA's current 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 on a timely basis, difficulties in integrating Ebyline's platforms and operations and achieving the expected benefits from the acquisition, 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 press release 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,
2015
  December 31,
2014
  (Unaudited)    
Assets          
Current:          
  Cash and cash equivalents $ 2,525,809   $ 6,521,930
  Accounts receivable   3,305,225     2,156,378
  Prepaid expenses   530,239     190,604
  Other current assets   21,412     61,424
    Total current assets   6,382,685     8,930,336
           
Property and equipment, net of accumulated depreciation of $336,057 and $239,521   592,873     588,919
Goodwill   2,843,989     -
Intangible assets, net of accumulated amortization of $247,083 and $0   2,122,917     -
Software development costs, net of accumulated amortization of $142,219 and $85,331   426,656     483,544
Security deposits   123,594     100,641
    Total assets $ 12,492,714   $ 10,103,440
Liabilities and Stockholders' Equity (Deficit)          
Current liabilities:              
  Accounts payable $ 1,063,370     $ 310,611  
  Accrued expenses   577,385       394,617  
  Unearned revenue   2,680,566       1,767,074  
  Deferred rent   6,883       -  
  Current portion of capital lease obligations   31,798       54,376  
  Current portion of acquisition costs payable   1,070,471       -  
    Total current liabilities   5,430,473       2,526,678  
               
               
Deferred rent   110,644       106,531  
Capital lease obligations, less current portion   -       7,291  
Acquisition costs payable, less current portion   3,076,257       -  
Warrant liability   5,458,909       3,203,465  
    Total liabilities   14,076,283       5,843,965  
               
Stockholders' equity (deficit):              
  Common stock, $.0001 par value; 200,000,000 shares authorized; 57,847,712 and 57,697,666, respectively, issued and outstanding   5,785       5,770  
  Additional paid-in capital   27,608,199       27,195,055  
  Accumulated deficit   (29,197,553 )     (22,941,350 )
    Total stockholders' equity (deficit)   (1,583,569 )     4,259,475  
               
      Total liabilities and stockholders' equity (deficit) $ 12,492,714     $ 10,103,440  
                     
                     
                     
IZEA, Inc.  
Unaudited Consolidated Statements of Operations  
   
    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2015     2014     2015     2014  
                                 
Revenue   $ 4,627,742     $ 1,969,235     $ 8,763,236     $ 3,926,275  
Cost of sales     2,917,360       656,656       5,358,851       1,306,189  
    Gross profit     1,710,382       1,312,579       3,404,385       2,620,086  
                                 
Operating expenses:                                
  General and administrative     2,164,380       1,221,352       4,024,894       2,313,573  
  Sales and marketing     1,746,549       1,298,445       3,328,036       2,211,231  
    Total operating expenses     3,910,929       2,519,797       7,352,930       4,524,804  
                                 
Loss from operations     (2,200,547 )     (1,207,218 )     (3,948,545 )     (1,904,718 )
                                 
Other income (expense):                                
  Interest expense     (36,393 )     (6,051 )     (55,163 )     (15,068 )
  Change in fair value of derivatives, net     250,507       3,239,610       (2,255,444 )     3,375,211  
  Other income, net     1,142       2,794       2,949       4,399  
    Total other income (expense)     215,256       3,236,353       (2,307,658 )     3,364,542  
                                 
Net income (loss)   $ (1,985,291 )   $ 2,029,135     $ (6,256,203 )   $ 1,459,824  
                                 
Weighted average common shares outstanding - basic     57,714,424       57,045,282       57,706,091       47,145,510  
Basic income (loss) per common share   $ (0.03 )   $ 0.04     $ (0.11 )   $ 0.03  
                                 
Weighted average common shares outstanding - diluted     57,714,424       72,962,524       57,706,091       62,035,915  
Diluted income (loss) per common share   $ (0.03 )   $ 0.03     $ (0.11 )   $ 0.02  
                                 
                                 
                                 
IZEA, Inc.  
Unaudited Consolidated Statements of Cash Flows  
   
    Six Months Ended
June 30,
 
    2015     2014  
Cash flows from operating activities:                
  Net income (loss)   $ (6,256,203 )   $ 1,459,824  
  Adjustments to reconcile net income (loss) to net cash used for operating activities:                
    Depreciation     96,536       40,780  
    Amortization of software development costs and other intangible assets     303,971       54,623  
    Stock-based compensation     322,744       246,750  
    Value of stock and warrants issued or to be issued for payment of services     105,341       129,110  
    Change in fair value of derivatives, net     2,255,444       (3,375,211 )
    Cash provided by (used for):                
      Accounts receivable     (832,326 )     317,292  
      Prepaid expenses and other current assets     (258,099 )     (84,678 )
      Accounts payable     209,420       (97,929 )
      Accrued expenses     159,643       54,552  
      Unearned revenue     879,598       (190,213 )
      Deferred rent     1,096       57,408  
Net cash used for operating activities     (3,012,835 )     (1,387,692 )
                 
Cash flows from investing activities:                
  Purchase of equipment     (73,296 )     (86,305 )
  Increase in software development costs     -       (206,529 )
  Acquisition, net of cash acquired     (905,586 )     -  
  Security deposits     (4,400 )     (5,817 )
Net cash used for investing activities     (983,282 )     (298,651 )
                 
Cash flows from financing activities:                
  Proceeds from issuance of common stock and warrants, net     -       10,945,632  
  Proceeds from stock purchase plan subscriptions & issuance of warrants     29,865       -  
  Payments on notes payable and capital leases     (29,869 )     (36,292 )
Net cash provided by (used for) financing activities     (4 )     10,909,340  
                 
Net increase (decrease) in cash and cash equivalents     (3,996,121 )     9,222,997  
Cash and cash equivalents, beginning of year     6,521,930       530,052  
                 
Cash and cash equivalents, end of period   $ 2,525,809     $ 9,753,049  
                 
Supplemental cash flow information:                
  Cash paid during period for interest   $ 4,578     $ 7,851  
                 
Non-cash financing and investing activities:                
  Fair value of warrants issued   $ 51,950     $ 12,382,216  
  Acquisition costs payable for assets acquired   $ 4,192,639     $ -  
  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,
 
    2015     2014     2015     2014  
                                 
Net income (loss)   $ (1,985,291 )   $ 2,029,135     $ (6,256,203 )   $ 1,459,824  
Non-cash stock-based compensation     180,413       131,412       322,744       246,750  
Non-cash stock issued for payment of services     70,291       70,750       105,341       129,110  
Change in the fair value of derivatives     (250,507 )     (3,239,610 )     2,255,444       (3,375,211 )
Loss on exchange of warrants     -       -       -       -  
Gain on disposal of equipment     -       (401 )     -       (401 )
Interest expense     36,393       6,051       55,163       15,068  
Depreciation & amortization     226,211       70,319       400,507       88,186  
    Operating EBITDA     (1,722,490 )     (932,344 )     (3,117,004 )     (1,436,674 )
                                 

Contact Information

  • IZEA Investor Relations

    Budd Zuckerman
    Genesis Select
    (303) 415-0200
    Email Contact

    IZEA Media Relations

    Brent Diggins
    Allison+Partners
    (623) 201-5554
    Email Contact