ORLANDO, FL (August 13, 2020) – – IZEA Worldwide, Inc. (NASDAQ: IZEA), the premier provider of influencer marketing technology, data, and services for the world’s leading brands, reported its financial and operational results for the second quarter ended June 30, 2020.
Q2 2020 Financial Summary Compared to Q2 2019
- Total revenue down 20% to $3.1 million, compared to $3.9 million.
- Managed Services unit revenue decreased 17% to $2.5 million, compared to $3.0 million.
- SaaS Services unit revenue decreased 31% to $645,000, compared to $932,000.
- Total costs and expenses were $4.9 million, compared to $5.9 million.
- Net loss was $1.8 million, compared to a net loss of $2.0 million.
- Adjusted EBITDA* was $(1.3) million in both periods.
1H 2020 Financial Summary Compared to 1H 2019
- Total revenue down 9% to $7.9 million, compared to $8.7 million.
- Managed Services unit revenue decreased 4% to $6.6 million, compared to $6.9 million.
- SaaS Services unit revenue decreased 31% to $1.3 million, compared to $1.9 million.
- Total Gross Billings* decreased 26% to $10.6 million, compared to $14.5 million.
- Total costs and expenses were $15.8 million, compared to $12.4 million.
- Net loss was $8.0 million, compared to a net loss of $3.8 million driven by a $4.3 million impairment of goodwill in Q1 2020.
- Adjusted EBITDA* was $(2.5) million, compared to $(2.1) million.
Q2 2020 Operational Highlights
- Raised gross proceeds of $15.4 million from sale of securities through an at-the-market offering
- Achieved 50% increase in bookings for Managed Services in Q2 2020 compared to Q2 2019
- Secured multiple new and existing contracts with Fortune 500 customers
- Executed a TikTok influencer marketing campaign that generated over 7 billion views
- Launched BrandGraph®, a social media competitive intelligence platform
- Launched IZEA Shake™, a new platform for marketers to purchase digital creative services
- Released Twitch workflow support inside of IZEAx
- Regained compliance with NASDAQ Capital Markets minimum bid price listing requirement
* Adjusted EBITDA is a non-GAAP financial measure. Refer to the definition and reconciliation of this measure under “Use of Key Metrics and Non-GAAP Financial Measures”.
After June 30th, IZEA raised an additional $10.3 million in Q3 2020 under the at-the-market offering under which National Securities Corporation serves as a sales agent. In total, we have raised $25.7 million at an average price of $1.94 per share.
“Shortly after the WHO declared COVID-19 a pandemic, we saw material declines in new business sales, with our 14-day average run rate trendline for Managed Services bookings quickly impacted as marketers braced for the worst possible scenario,” said Ted Murphy, IZEA’s Chairman and CEO. “Our sales run rate started to see some minor recovery in April, but we were still far below our pre-COVID-19 averages. This large gap in new business sales in March and April, combined with customers pausing or cancelling campaigns booked in prior quarters had an unavoidable impact on revenues in Q2 despite the meaningful growth in Managed Services bookings by the end of the quarter.”
“As we entered the midpoint of Q2, our 14-day average bookings trendline for Managed Services began to trend above our 14-day pre-COVID-19 average run-rate measured from Jan 1st to March 15th,” continued Murphy. “Our momentum in managed services did not stop through the end of the second quarter, and led us to 50% growth over the prior-year quarter. We continued the positive Managed Services sales momentum after quarter end, with July bookings exceeding that of June. Revenue from these bookings should be recognized over the coming two quarters as the campaigns run, and many are already in flight.”
“Our strong balance sheet now gives us the ability to expand investment in the things that will further set us apart from the competition. While many are pulling back or even closing shop, we will be strategically pushing forward and intend to capture more share of the market through incredible new technology, aggressive marketing, and providing our clients with the highest quality levels of service. Our team is excited by the growth we saw in Managed Services bookings in Q2, and believe that our self-service platforms such as IZEAx Discovery and Shake are particularly well positioned to take advantage of the changing marketing landscape. We will also be introducing new enterprise software licensing tiers and bundling options for IZEAx Unity Suite and BrandGraph customers in Q3 to offer more flexibility at a time when marketing organizations are changing rapidly. We intend to provide our software customers with a solution that meets their needs now, in order to partner with them well into the future.”
Q2 2020 Financial Results
Total revenue in the second quarter of 2020 was down 20% to $3.1 million, compared to $3.9 million in the second quarter of 2019, with revenue from Managed Services decreasing 17% to $2.5 million in the second quarter of 2020 from $3.0 million in the second quarter of 2019 and revenue from SaaS Services decreasing to $645,000 in the second quarter of 2020 from $932,000 in the second quarter of 2019. Revenue from Managed Services decreased due to marketers canceling or pausing planned advertising campaigns or events in March and throughout the second quarter of 2020 as a result of uncertainty or inability to offer their products for sale as a result of business shutdowns due to COVID-19 or in light of civil unrest. Despite the delay in the execution of existing orders from our customers, we experienced a 50% increase in net sales orders or “bookings” from $2.64 million in the second quarter of 2019 to $3.96 million in the second quarter of 2020, as marketers who are still advertising shifted more of their spend to influencer marketing campaigns. Revenue from these bookings are expected to be realized in the next three to twelve months. Revenue from SaaS Services decreased primarily as a result of lower spend levels (“gross billings”) from our SaaS marketers and, as a result of competitive pricing efforts, our margins on those spends were reduced. Our gross billings for SaaS Services decreased 44% to $2.0 million in Q2 2020, compared to $3.6 million in Q2 2019. Our SaaS marketers decreased their spend levels as they transitioned from the TapInfluence platform to IZEAx and curtailed spending in March 2020 and throughout Q2 2020.
Total costs and expenses decreased 16% in the second quarter of 2020 to $4.9 million compared to $5.9 million in the corresponding quarter of 2019. This decrease was due to a $403,000 reduction in cost of revenue as a result of the lower sales, a $71,000 reduction in amortization costs as assets were fully amortized in the quarter, and a $526,000 decrease from cost reduction efforts affecting wages, rent, travel and marketing expenditures to help mitigate the effects of COVID-19 on our revenue.
Net loss in the second quarter of 2020 was $1.8 million or $(0.05) per share, as compared to a net loss of $2.0 million or $(0.09) per share in the second quarter of 2019, based on 36.1 million and 22.3 million shares outstanding, respectively.
Adjusted EBITDA (a non-GAAP measure management uses as a proxy for operating cash flow, as defined below) was $(1.3) million in the second quarter of both 2020 and 2019. Adjusted EBITDA as a percentage of revenue in the second quarter of 2020 was negative forty percent (40)% compared to negative thirty-two percent (32)% in the second quarter of 2019 primarily due to the decline in revenue discussed above.
Given our low stock price, small market cap, and uncertainty in the financial markets, coupled with expected reductions in future receivables upon which funding from our line of credit is dependent, we applied for and on April 23, 2020 received a loan from Western Alliance Bank in the principal amount of $1.9 million under the Paycheck Protection Program, in order to retain our employees during this time of uncertainty.
We subsequently filed a shelf registration statement with the U.S. Securities and Exchange Commission and raised gross proceeds of $15.4 million in June 2020 through an at-the-market equity offering program and continue to opportunistically raise capital in this manner. Our cash balance as of June 30, 2020 was $20.8 million.
IZEA will hold a conference call to discuss its second quarter 2020 results on Thursday, August 13th at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.
Date: Thursday, August 13, 2020
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 our 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 August 20, 2020.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13707369