IZEA Reports Q4 and FY2019 Financial Results

ORLANDO, FL (March 30, 2020) – 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, 2019.

Q4 2019 Financial Summary Compared to Q4 2018

• Total revenue down 8% to $5.8 million, compared to $6.3 million.
• Managed Services revenue increased 2% to $5.0 million, compared to $4.9 million.
• SaaS Services revenue decreased 43% to $777,000, compared to $1.4 million.
• Total Gross Billings* decreased 30% to $7.8 million, compared to $11.1 million.
• Total costs and expenses were $8.1 million, compared to $6.8 million.
• Net loss was $2.3 million, compared to a net loss of $693,000.
• Adjusted EBITDA* was $(1.3) million, compared to $23,000.

FY2019 Financial Summary Compared to FY2018

• Total revenue down 6% to $18.9 million, compared to $20.1 million.
• Managed Services revenue decreased 12% to $15.4 million, compared to $17.6 million.
• SaaS Services revenue increased 39% to $3.4 million, compared to $2.4 million.
• Total Gross Billings* decreased 3% to $29.0 million, compared to $30.0 million.
• Total costs and expenses were $26.1 million, compared to $25.5 million.
• Net loss was $7.3 million, compared to $5.7 million.
• Adjusted EBITDA* was $(4.7) million, compared to $(3.6) million.

FY2019 Operational Highlights

• Completed $10M Public Offering.
• Launched IZEAx Discovery Self-Service.
• Launched IZEAx 3.0 Unity Suite.
• Released Pinterest and YouTube support in VizSearch^®.
• Joined Forces with IRI to Launch InfluenceImpact.
• Beta Launch of BrandGraph^® Social Intelligence Platform.
• Recognized as a Top 100 Employer by the Orlando Sentinel for the 4^th year running.

* Total 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

“2019 was a transitional year for our company as we integrated TapInfluence and shuttered the eByline technology platform,” said Ted Murphy, IZEA’s Chairman and CEO. “Following our capital raise in Q2 2019, we began making investments in sales, marketing, and engineering to support our growth initiatives. Those investments translated to the start of a topline rebound in Q4 of last year, with Managed Services bookings up 22% year over year and revenue up 17% in the second half of 2019 as compared to the first half of 2019. In addition to the strong Q4 Managed Services bookings growth, we also saw meaningful increases in efficiency. Our revenue per Managed Services salesperson increased approximately 25% for the fiscal year 2019 compared to fiscal year 2018.”

“While churn of certain TapInfluence customers and our SaaS pricing model revisions did have an impact on overall SaaS revenue, our total number of SaaS customers licensing our IZEAx technology hit another record high in December 2019. With TapInfluence completely integrated into IZEAx and shuttered in Q1 2020, and all customer transitions complete, we can focus our efforts on IZEAx and BrandGraph. We are cautiously bullish on IZEAx licensing in 2020 despite the current challenges surrounding COVID-19. Total fees under contract by licensees of IZEAx in 2020 are already 40% greater than all IZEAx license fees collected in 2019, partly due to the transition of TapInfluence customers into IZEAx as their contracts renewed.”

“We are still digging out from the overall decline in SaaS licensing and marketplace revenue related to TapInfluence customer churn and lower marketplace spend levels from remaining customers, but our software customer foundation built upon IZEAx appears to be strong,” continued Murphy. “Customers have been renewing their licenses the past two weeks, even after the Coronavirus outbreak started to more broadly impact the world. Monthly recurring revenue, or revenue from multi-period licenses, for IZEAx, hit a new all-time high in March 2020. We view these renewals as strong evidence of the underlying value of IZEAx. In a time of global panic akin to wartime – when spending is greatly reduced and marketing budgets are receding – a number of our customers are renewing 12 month commitments for our software. The total count of new IZEAx Unity Suite customers added in Q1 2020 is up 85% from Q4 2019.”

Coronavirus Impacts

IZEA’s leadership is currently assessing the landscape for our company following the global Coronavirus pandemic and the issuance of “Stay-at-Home” orders by state and local governments. The health and safety of our employees is our number one concern. On March 13^th, we took proactive measures to protect our workforce by instituting an immediate work-from-home policy for all employees, in advance of government directives. Team IZEA was already geographically dispersed and accustomed to virtual interaction with customers and co-workers. Our infrastructure has been designed to allow IZEAns to work from anywhere with an Internet connection, and our business continuity plan has been tested through multiple natural disasters over the past few years.

Management believes there will be near term implications for IZEA’s top line revenue, which could decline if the macroeconomic climate worsens over time. We are seeing delays across most industries in new contractual commitments as legal, finance, and marketing teams at large organizations scramble to regain their footing and develop plans for the road ahead.

We must assume a slowdown in both bookings and revenue recognition for the foreseeable future and we are taking measures to lessen the impact on IZEA. IZEA was already in a process of optimizing our operating expenses prior to the COVID-19 outbreak. We have seen a material decrease in hosting costs through IZEAx platform refactoring and the TapInfluence platform shutdown, and we consolidated some departments and managerial positions to streamline operations, in Q1 2020. However, the current pandemic will necessitate accelerating more rigid cost control initiatives.

Some of the immediate measures we have already taken include:

• Hiring freeze and employee reductions
• Reduction or elimination of contractors and vendors
• Freeze on all travel and entertainment expenses
• Reduction and shift in marketing spend

Given the uncertainty related to stay-at-home orders and our ability to work and collaborate remotely, we are looking at multiple options we have available to us when the lease for our headquarters in Orlando expires at the end of April 2020, including extended work-from-home initiatives and short-term flexible office space. We have also made the decision to vacate and cancel the various co-working facilities our team members use around the country as our short-term leases for these facilities expire in the next one to six months. We will use this opportunity to re-evaluate our structure and negotiate lower cost contractual commitments for our locations, as needed, moving forward.

In addition to cost control measures, we have proactively bolstered our available cash by tapping a portion of our credit line. We will likely take advantage of additional draws from the line in the future to maintain a strong cash position. IZEA will also be exploring eligibility for government-provided small business disruption loans under the CARES Act and we intend to take advantage of these programs, if approved, to strengthen our cash position to be able to retain the employees needed to sustain our operations and provide quality service to our customers.

Q4 2019 Financial Results

Revenue in the fourth quarter of 2019 decreased 8% to $5.8 million compared to $6.3 million in the corresponding quarter of 2018. The decrease was due to the decrease in SaaS licensing and marketplace revenue related to TapInfluence customer churn and lower spend levels from the remaining customers.

Total costs and expenses in the fourth quarter of 2019 were $8.1 million compared to $6.8 million in the corresponding quarter of 2018. This increase was primarily due to our investment of over $536,000 in sales personnel and marketing spend to generate future revenue.  We also incurred a $418,000 impairment loss on certain software technology intangible assets due to the phase out of the TapInfluence and Ebyline technology platforms after migration into IZEAx.

Net loss in the fourth quarter of 2019 was $2.3 million or $(0.07) per share, as compared to a net loss of $693,000 or $(0.06) per share in the corresponding quarter of 2018.

Adjusted EBITDA (a non-GAAP measure management uses as a proxy for operating cash flow, as defined below) in the fourth quarter of 2019 was $(1.3) million compared to $23,000 in the corresponding quarter of 2018. Adjusted EBITDA as a percentage of revenue in the fourth quarter of 2019 was (22%) compared to just above break-even in the corresponding quarter of 2018.

Cash and cash equivalents at December 31, 2019 totaled $5.9 million. At the end of the quarter the Company was not using any of its $5.0 million credit line.

Full Year 2019 Financial Results

Revenue for the twelve months ended December 31, 2019 decreased by $1.2 million, or approximately 6%, compared to the same period in 2018. The decrease was due to a 22% decrease in our front-line sales personnel as a result of attrition and cash constraints at the end of 2018 through our capital raise in May 2019.  The decrease in salesperson headcount resulted in lower bookings and revenue in the first three quarters of 2019.

Total costs and expenses were $26.1 million in 2019 and $25.5 million in 2018. The increase was primarily attributable to the impairment charge and increases in consulting costs and marketing spend.

Net loss in 2019 was $7.3 million or $(0.29) per share, compared to a net loss of $5.7 million or $(0.67) per share in 2018. The increase in net loss was impacted by the factors discussed previously.

Adjusted EBITDA was $(4.7) million in 2019 compared to $(3.6) million in 2018. Adjusted EBITDA as a percentage of revenue was (25%) in 2019 compared to (18%) in 2018.

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View Q4 & FY2019 Financials (PDF)