ORLANDO, FL (March 28, 2019) – IZEA Worldwide, 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, 2018.
Q4 2018 Financial Summary Compared to Q4 2017
- Total revenue down 7% to $6.3 million, compared to $6.8 million.
- Managed Services revenue decreased 25% to $4.9 million, compared to $6.6 million.
- SaaS Services revenue increased 1,588% to $1.4 million, compared to $80,000.
- Gross billings* up 42% to $11.1 million, compared to $7.8 million.
- Bookings increased 115% to $11.2 million, compared to $5.2 million.
- Total costs and expenses were $6.8 million, compared to $7.5 million.
- Net loss was $693,000, compared to a net loss of $743,000, an improvement of $50,000, or 7%.
- Adjusted EBITDA* was $23,000, compared to $103,000.
FY2018 Financial Summary Compared to FY2017
- Total revenue down 18% to $20.1 million, compared to $24.4 million.
- Managed Services revenue decreased 26% to $17.6 million, compared to $23.8 million.
- SaaS Services revenue increased 486% to $2.4 million, compared to $418,000.
- Gross billings* up 3% to $30.0 million, compared to $29.2 million.
- Bookings increased 12% to $30.9 million, compared to $27.5 million.
- Total costs and expenses were $25.5 million, compared to $29.9 million.
- Net loss was $5.7 million, compared to $5.5 million.
- Adjusted EBITDA* was $(3.6) million, compared to $(2.5) million.
FY2018 Operational Highlights
- Completed acquisition of TapInfluence, Inc.
- Launched VizSearch Discovery Tool, UnityRank, and Discovered Demographics.
- Released IZEAx Discovery self-service influencer discovery platform.
- Completed brand refresh and launch of SaaS-focused marketing initiatives.
- Recognized as a Top 100 Employer in by Orlando Sentinel for the 3rd year running.
* – Gross billings and Adjusted EBITDA are non-GAAP financial measures. Refer to the definitions and reconciliations of these measures under “Use of Non-GAAP Financial Measures”.
Management Commentary
“2018 marked the beginning of a fundamental transformation for our organization,” said Ted Murphy, IZEA’s Chairman and CEO. “IZEA’s business model has historically been driven by offering managed services to agencies and brands, with marketing campaigns executed by IZEA employees using IZEA’s technology platforms. It is our goal to derive the majority of our revenue from SaaS Services in the future, which includes both software licensing and fees from marketplace spend. Early last year we began building out our SaaS sales team, which sells licenses of IZEAx to marketers that use the platform themselves. In the back half of the year we acquired TapInfluence, which added SaaS customers and bolstered our team with additional domain experience. These investments have already shown great promise, as evidenced by the fact that 61% of our fourth quarter gross billings were related to SaaS services.”
“In order to pursue this transformation we had to rebalance the organization and make some strategic resourcing decisions during 2018. Our Managed services sales and campaign management headcount was gradually reduced by approximately 25% from December 2017 to December 2018. This reduction in managed services investment was directly reflected in the 26% decrease in revenue associated with that part of our business, but helped free the financial resources necessary to properly staff the organization to service and sell our software. We believe our investments in SaaS will ultimately provide the underlying financial model required for profitable, sustainable growth through higher margin recurring revenue streams with less customer concentration.”
“There is a large addressable market for both segments of our business and we intend to support both segments long term. We expect SaaS Services revenue to grow year over year each quarter given our emphasis and investment on that business segment. We expect Managed Services bookings to be down year over year through Q1 of this year, returning to year over year growth again in Q2. We expect year over year bookings to increase in every quarter of 2019 with SaaS services representing a greater proportion of bookings as the year moves forward.”
Q4 2018 Financial Results
Revenue in the fourth quarter of 2018 decreased 7% to $6.3 million compared to $6.8 million in the corresponding quarter of 2017. The decrease was due to the reductions of Managed Service offerings, which were partially offset by revenue growth in our license fees and marketplace spend, both of which stem from our 2018 acquisition of TapInfluence.
Total costs and expenses in the fourth quarter of 2018 were $6.8 million compared to $7.5 million in the corresponding quarter of 2017. 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 2018 was $693,000 or $(0.06) per share, as compared to a net loss of $743,000 million or $(0.13) per share in the corresponding quarter of 2017.
Adjusted EBITDA (a non-GAAP measure management uses as a proxy for operating cash flow, as defined below) in the fourth quarter of 2018 was $23,000 compared to $103,000 in the corresponding quarter of 2017. Adjusted EBITDA as a percentage of revenue in the fourth quarter of 2018 was just above break-even, compared to 2% in the corresponding quarter of 2017.
Cash and cash equivalents at December 31, 2018 totaled $2.0 million. At the end of the quarter the Company had accessed approximately $1.5 million of its $5.0 million credit line.
Full Year 2018 Financial Results
Revenue for the twelve months ended December 31, 2018 decreased by $4.3 million, or approximately 18%, compared to the same period in 2017. This is due to the decline in Managed Services, which was partially offset by the increase in our license fees and Marketplace Spend revenues.
Total costs and expenses were $25.5 million in 2018 and $29.9 million in 2017. The decrease was primarily attributable to decreased personnel costs and related overhead, as well as reduced marketing spend.
Net loss in 2018 was $5.7 million or $(0.67) per share, compared to a net loss of $5.4 million or $(0.96) per share in 2017. The increase in net loss was impacted by the factors discussed previously, as well as an increase in our interest paid to finance our operations.
Adjusted EBITDA was $(2.5) million in 2018 compared to $(5.1) million in 2017. Adjusted EBITDA as a percentage of revenue was (13%) in 2018 compared to (21%) in 2017.
View IZEA Q4 2018 Financials (PDF)Conference Call
IZEA will hold a conference call to discuss its fourth quarter and full year 2018 results on Thursday, March 28 at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.
Date: Thursday, March 28, 2019
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 4, 2019.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 3688676
