IZEA Reports Q3 2019 Financial Results

ORLANDO, FL (November 14, 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 third quarter ended September 30, 2019.

Q3 2019 Financial Summary Compared to Q3 2018

• Total revenue down 23.7% to $4.4 million, compared to $5.8 million.
• Gross billings* down 27.8% to $6.7 million, compared to $9.2 million.
• SaaS unit revenue decreased 10.6% to $816,000, compared to $913,000.
• Managed Service unit revenue decreased 26.8% to $3.6 million, compared to $4.9 million.
• Total costs and expenses were $5.6 million, compared to $7.0 million.
• Net loss was $1.2 million compared to a net loss of $1.3 million.
• Adjusted EBITDA* was $(1.3 million), compared to $(300,000).

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

• Total revenue down 4.9% to $13.1 million, compared to $13.8 million.
• Gross billings* up 12.1% to $21.1 million, compared to $18.8 million.
• SaaS unit revenue increased 141.5% to $2.6 million, compared to $1.1 million.
• Managed Service unit revenue decreased 17.7% to $10.4 million, compared to $12.7 million.
• Total costs and expenses were $18.0 million, compared to $18.7 million.
• Net loss was $5 million compared to the same net loss of $5 million in the prior period.
• Adjusted EBITDA* was $(3.4 million), compared to $(3.7 million), an improvement of 7.1%.

Q3 2019 Operational Highlights

• Joined forces with IRI to launch InfluenceImpact.
• Awarded seven-figure contract from top 500 public company.
• Recognized as an Orlando Sentinel Top 100 Company for 4th consecutive year.

* – 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” below.

Management Commentary

“In May we completed a round of financing to enable us to invest in sales, marketing, and engineering. In Q3 2019, we began making investments in those areas to support our growth initiatives,” said Ted Murphy, IZEA’s Chairman and CEO. “Those investments take some time to contribute to revenue, but the infrastructure is being put in place to enable growth in 2020 and beyond. We expect to end the year with our biggest sales team since 2016, and believe that team will fuel growth in both SaaS Licensing and Managed Services in the new year. Managed Services bookings are already up year over year in Q3 despite having a much smaller sales team than last year at this time, and October 2019 was our strongest October in the history of the company in terms of Managed Services bookings. We expect revenue from those bookings will be recognized over future quarters.”

“During the quarter we have also made some adjustments to our SaaS pricing and packages based on demand, market opportunities, and our experience with customers that joined us through the TapInfluence acquisition,” continued Murphy. “We are proactively rightsizing our Tap customer contracts to provide them with the proper SaaS license based on their needs and influencer marketing investment levels. Those adjustments had an impact in Q3 and will impact Q4 in terms of SaaS revenue, but will allow us to create a more stable customer foundation moving forward. We want to enable our sales and success teams to focus on delivering the right solution for the customer. Our total number of SaaS customers hit a record high in Q3 and our focus is on expanding that customer base with happy customers.”

“Finally, we are executing on plans to discontinue the Ebyline and TapInfluence platforms by grafting their desired qualities onto IZEAx. We plan to maintain the Ebyline and TapInfluence brands and marketing websites, but believe consolidating these platforms will result in a more streamlined customer experience and enable a more efficient allocation of the company’s resources.”

Q3 2019 Financial Results

Revenue in the third quarter of 2019 was $4.4 million compared to $5.8 million in the corresponding quarter of 2018. Revenue from managed services and Software-as-a-Service (SaaS) declined due to continued decreases in the size of the sales team. 

Total costs and expenses in the third quarter of 2019 were $5.6 million compared to $7 million in the corresponding quarter of 2018. This comparison includes one-time, non-operating items, which contributed to the comparative decrease. Primarily, in Q3 2019, we recorded a gain of approximately $753 thousand associated with the settlement of the final installment payment to TapInfluence stockholders relating to the July 2018 merger and a gain of $41,000 associated with the settlement of the final installment payment to ZenContent stockholders relating to the July 2016 merger, as a result of the difference between the closing market price of common stock on the settlement date and the thirty-day weighted average. Excluding these one-time items, our total costs and expenses decreased primarily due to lower personnel related costs, which were partially offset by increased depreciation and amortization expense.

Net loss in the third quarter of 2019 was $1.2 million or $(0.04) per share, as compared to a net loss of $1.3 million or $(0.13) per share in the corresponding quarter of 2018, based on 32,421,043 and 10,365,750 weighted-average shares outstanding, respectively.

Adjusted EBITDA (a non-GAAP measure management uses as a proxy for operating cash flow, as defined below) in the third quarter of 2019 was $(1.3 million) compared to $(300,000) in the corresponding quarter of 2018.

Cash and cash equivalents at September 30, 2019 totaled $6.8 million. At the end of the quarter the Company had a balance of $0 on its $5.0 million credit line.

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