Record Revenue Up 49% to $6.9M; Record Gross Profit Up 104% to $3.5M
ORLANDO, FL (August 11, 2016) – IZEA, Inc. (NASDAQ: IZEA), operator of IZEAx, the premier online marketplace connecting brands and publishers with influential content creators, reported record results for the second quarter ended June 30, 2016.
Q2 2016 Financial Highlights vs. Same Year-ago Quarter
- Revenue up 49% to a record $6.9 million.
- Sponsored Social revenue increased 86% to $4.5 million, Content revenue increased 9% to $2.3 million.
- Revenue backlog at the end of the quarter was $8.9 million, including unbilled bookings of $5.1 million and unearned revenue of $3.8 million.
- Net bookings increased 10% to $6.8 million. The increase in bookings included Sponsored Social bookings up 16% to $4.5 million and Content bookings up 1% to $2.3 million.
- Gross profit increased 104% to a record $3.5 million.
- Gross margin was 51%, up from 37% in Q2 2015. Sponsored Social gross margin was 63%, up from 58% in Q2 2015. Gross margin for Content was 24%, up from 11% in Q2 2015.
- New opportunity pipeline, a representation of new client proposals generated within the quarter, increased 13% to a record $37.6 million.
- At the end of the quarter, cash and cash equivalents totaled $8.0 million, accounts receivable, net of allowance for doubtful accounts, was $4.7 million and the company had an unused credit line of $5.0 million.
H1 2016 Financial Highlights vs. Same Year-ago Period
- Revenue up 41% to $12.4 million.
- Bookings up 36% to $14.3 million.
- Gross profit up 72% to $5.9 million, gross margin up from 39% to 47%.
Q2 2016 Operational Highlights
- Integrated a top 10 U.S. retailer into the SocialLinks™ program.
- Added 10 sales team members, bringing total sales rep to 50 at the end of the quarter.
- Released 51 updates to IZEAx, including expanded support for video opportunities, enhanced Creator search features and new list curation tools.
- Named one of the 2016 Best Places to Work by the Orlando Business Journal.
- Selected by Hashtag Social Media Agency to power influencer marketing in the Middle East and North Africa.
- Invited to become a member of the Russell Microcap® Index.
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“In Q2, our record topline and strong margin improvement was primarily driven by organic growth of higher margin Sponsored Social revenue and increased use of managed services,” said Ted Murphy, IZEA’s Chairman and CEO. “During the quarter, we also increased the sales of Content to brand customers and expect to see continued improvement in the Content revenue margins.”
“Our recently announced ZenContent acquisition further broadens our content client base with higher margin e-commerce companies and online publishers. This accretive acquisition is part of our ongoing plan to aggregate best-in-class providers in the content and influencer marketing spaces. Looking ahead, we continue to actively pursue accretive acquisition opportunities that can both grow revenue and increase our penetration in niche markets. In addition, we will continue to invest in growing our sales and engineering organizations to support continued growth.”
Q2 2016 Financial Results
Revenue in the second quarter of 2016 increased 49% to a record $6.9 million, compared to $4.6 million in the same year-ago quarter. The increase is primarily due to organic growth in all of the company’s revenue streams, including Sponsored Social revenue, Content revenue, and, to a lesser extent, Service Fee revenue.
Gross profit in the second quarter of 2016 increased 104% to a record $3.5 million or 51% of revenue. This compares to $1.7 million, or 37% of revenue, in the second quarter of 2015. The increase in gross profit was primarily attributable to increased use of the company’s managed services versus self-service content and sponsored social offerings.
Operating expenses in the second quarter of 2016 were $5.1 million, compared to $3.9 million in the same year-ago quarter. The increase in operating expenses were primarily due to increased personnel costs and additional overhead. These costs increased as a result of a 44% increase in the average number of the company’s administrative and engineering personnel and a 20% increase in the number of its sales and marketing personnel compared to the second quarter of 2015.
Net loss in the second quarter of 2016 was $1.6 million or $(0.30) per share, as compared to a net loss of $2.0 million or $(0.69) per share in the same year-ago quarter. The improvement in net loss is primarily due to increased revenue and profit margins partially offset by the increase in operating expenses and reduced gain from change in the fair value of derivative financial instruments in the second quarter of 2016 compared to the same year-ago quarter.
Adjusted EBITDA (a non-GAAP metric management uses as a proxy for operating cash flow, as defined below) in the second quarter of 2016 was negative $1.1 million, compared to negative $1.7 million in the same year-ago quarter. The change in adjusted EBITDA was primarily due to the reduction in net loss and change in the fair value of derivatives. Adjusted EBITDA as a percentage of revenue in the second quarter of 2016 was negative 16% as compared to negative 37% in the same year-ago quarter.
Cash and cash equivalents at June 30, 2016 totaled $8.0 million, compared to $10.1 million at March 31, 2016.
Trailing twelve-month revenue is up 83% to $24.1M, compared to the second quarter of 2015. IZEA expects 2016 organic bookings to range between $33 million to $35 million, which would represent growth of 35% to 43% versus 2015. The company expects 2016 revenue to range between $27 million to $30 million, which would represent growth of 61% to 71% versus prior year.
IZEA will hold a conference call to discuss its second quarter results today at 5:00 p.m. Eastern time. Management will host the presentation, followed by a question and answer period.
Date: Thursday, August 11, 2016
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Dial-in number: 1-877-407-4018
The conference call will be webcast live and available for replay via the Investors section of the company’s website at http://corp.izea.com
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 August 18, 2016.
Replay number: 1-877-870-5176
Replay ID: 13642828