Orlando, FL (April 18, 2018) – IZEA, Inc. (NASDAQ: IZEA), operator of IZEAx, the premier online marketplace connecting brands and publishers with influential content creators, reported its financial and operational results for the fourth quarter and full year ended December 31, 2017.
The financial information presented here and in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 reflects restated financial information relating to our prior period information. All comparisons are on an as-adjusted basis. We determined that there were errors in our previously issued financial statements related to our presentation of revenue related to the self-service Content Workflow portion of our revenue and our classification of cost of revenue related to our Managed Services. The restatement had no impact on our previously reported loss from operations, net loss, loss per share, or on any of the consolidated balance sheets, statements of cash flows, and statements of stockholders’ equity.
For discussions of the restatement adjustments, see Item 1A. “Risk Factors” and Item 8, “Financial Statements,” including Notes 2 and 14 of the Notes to the Consolidated Financial Statements in our 10-K.
Q4 2017 Financial Summary Compared to Q4 2016
- Total revenue up 16% to $6.8 million, compared to $5.9 million.
- Managed Services revenue increased 16% to $6.6 million, compared to $5.7 million.
- Content Workflow revenue decreased 33% to $77,000, compared to $116,000.
- Gross billings up 6% to $7.8 million, compared to $7.4 million.
- Total costs and expenses were $7.5 million, compared to $7.7 million.
- Net loss was $(743,000), compared to a net loss of $(1.83 million), an improvement of $1.1 million or 59%.
- Adjusted EBITDA was $103,000, compared to $(1.1) million, an improvement of $1.2 million.
FY2017 Financial Summary Compared to FY2016
- Total revenue up 15% to $24.4 million, compared to $21.2 million.
- Managed Services revenue increased 17% to $23.8 million, compared to $20.4 million.
- Content Workflow revenue decreased 25% to $351,000, compared to $465,000.
- Gross billings up 7% to $29.2 million, compared to $27.3 million.
- Total costs and expenses were $29.9 million, compared to $28.7 million.
- Net loss was $(5.5) million, compared to $(7.6) million, an improvement of $2.1 million.
- Adjusted EBITDA was $(2.5) million, compared to $(5.1) million, an improvement of $2.6 million.
FY2017 Operational Highlights
- Launched IZEAx 2.0, including Promoted Posts and IZEA Pay.
- Released ContentMine™ and CurationEngine™ with integrated artificial intelligence.
- Partnered with CORT to launch first Augmented Sponsorship™ campaign.
- Recognized as a 2017 Top 100 Company in Central Florida by Orlando Sentinel.
Management Commentary
“IZEA has demonstrated meaningful improvement across the board in 2017. We released an impressive array of new technologies, delivered record revenue, record gross billings, and achieved our goal of getting to our first Adjusted EBITDA positive quarter a full year ahead of schedule,” said Ted Murphy, IZEA’s Chairman and CEO. “The improvements we made throughout the year had a significant impact on our efficiency and overall strength as an organization.”
“Custom Content in particular played a meaningful role in our growth last year. Revenue from Custom Content grew 47%, or $1.7 million over 2016, and the success is a reflection of our investment in building out the infrastructure to support that line of business. We continue to see great opportunity for Custom Content, particularly when paired together with our Influencer Marketing services.”
“As we look to 2018, a primary goal is the expansion of our sales organization to provide the foundation for topline re-acceleration in 2019 and beyond. We are expanding our recruiting efforts with an emphasis on sales, and will continue to enhance our technology platform. The company will add sales resources to our core Managed Services team, as well as our newer SMB and Partnership teams. Management continues to balance investment in growth with expense management and an eye on profitability.”
Q4 2017 Financial Results
Revenue in the fourth quarter of 2017 increased 16% to $6.8 million compared to $5.9 million in the same year-ago quarter. The increase was due to organic growth in both our Sponsored Social and Custom Content Managed Service offerings. Cost of revenue (exclusive of amortization) as a percentage of revenue decreased from 49.1% to 47.5%, an improvement of 1.6%.
Total costs and expenses in the fourth quarter of 2017 were $7.5 million compared to $7.7 million in the same year-ago quarter. This decrease was primarily due to decreased personnel-related costs as well as lower public relations and marketing expenses.
Net loss in the fourth quarter of 2017 was $(743,000) or $(0.13) per share, as compared to a net loss of $(1.8) million or $(0.34) per share in the same year-ago quarter. The improvement was primarily due to increased revenue as well as decreased expenses.
Adjusted EBITDA (a non-GAAP metric management used as a proxy for operating cash flow, as defined below) in the fourth quarter of 2017 was $103,000 compared to $(1.1) million in the same year-ago quarter. The improvement in adjusted EBITDA was primarily due to the increase in revenue as well as reduced expenses. Adjusted EBITDA as a percentage of revenue in the fourth quarter of 2017 was 2% compared to (18%) in the year-ago quarter.
Revenue backlog, which includes unbilled bookings and unearned revenue, was $8.2 million at the end of the quarter.
Cash and cash equivalents at December 31, 2017 totaled $3.9 million. At the end of the quarter the Company had accessed approximately $500,000 of its $5.0 million credit line.
Full Year 2017 Financial Results
Revenue for the year increased 15% to $24.4 million compared to $21.2 million in 2016. The increase was due to organic growth in Managed Services. Cost of revenue (exclusive of amortization) as a percentage of revenue decreased from 49.3% to 47.4%, an improvement of 1.9%.
Total costs and expenses were $29.9 million in 2017 and 28.7 million in 2016. The decrease was primarily attributable to decreased personnel costs and related overhead, as well as reduced marketing spend.
Net loss in 2017 was $(5.5) million or $(0.96) per share, compared to a net loss of $(7.6) million or $(1.41) per share in 2016. The improvement in net loss was primarily due to increased revenue and profit margins, along with reduced operating expenses.
Adjusted EBITDA was $(2.5) million compared to $(5.1) million in 2016. Adjusted EBITDA as a percentage of revenue was (10%) compared to (24%) in 2016.
Conference Call
IZEA will hold a conference call to discuss its fourth quarter and full year 2017 results on Thursday, April 19 at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.
Date: Thursday, April 19, 2018
Time: 5:00 p.m. Eastern time
Toll-free dial-in number: 1-877-407-4018
International dial-in number: 1-201-689-8471
The conference call will be webcast live and available for replay via the investors section of the company’s website at https://izea.com/. Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. A replay of the call will be available after 8:00 p.m. Eastern time on the same day through April 26, 2018.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13679060
