First Adjusted EBITDA Positive Quarter Since Becoming a Public Company
ORLANDO, FL (November 7, 2017) – IZEA, Inc. (NASDAQ: IZEA), operator of IZEAx, the premier online marketplace connecting brands and publishers with influential content creators, reported financial results for the third quarter ended September 30, 2017.
Q3 2017 Financial Highlights Compared to Same Year-ago Quarter
- Adjusted EBITDA was $221,000, compared to $(886,000), an improvement of $1.1 million.
- Total revenue up 9% to $8.2 million, compared to $7.5 million.
- Managed Services revenue increased 20% to $7.0 million, compared to $5.8 million.
- Content Workflow revenue decreased 28% to $1.1 million, compared to $1.6 million.
- Revenue backlog, which includes unbilled bookings and unearned revenue, was $11.0 million at the end of the quarter.
- Net bookings increased 2% to $7.9 million compared to $7.7 million.
- Gross profit increased 23% to $4.4 million, with gross margin of 54%.
Trailing Twelve Months Ended September 30, 2017 Compared to Same Year-ago TTM
- Revenue up 10% to $28.8 million, compared to. $26.1 million.
- Managed Services Revenue up 21% to $22.9 million, compared to $19.0 million.
- Gross Profit up 21% to $14.6 million, compared to $12.1 million.
- Adjusted EBITDA improved 46% to $(3.7) million, compared to $(5.8) million.
Management Commentary
“This was a milestone quarter for the company. We crossed $8M in quarterly revenue for the first time, and posted our first EBITDA positive quarter since becoming a public company.” said Ted Murphy, IZEA’s Chairman and CEO. “We have made meaningful progress towards our goal of reaching sustainable, profitable growth, and I am excited by what our team has accomplished to date. Our goal was to have our first EBDITA positive quarter in the second half of 2018 and we are full year ahead of schedule. ”
“Our managed sales team continues to deliver impressive results. In addition to all-time record revenue, we delivered all-time record bookings for managed services, the core of our business. Our focus on managed services and the improved margins on those services helped propel us to an EBITDA positive quarter. Custom Content sales were particularly strong, and we are heading into what we expect to be an even stronger Q4 for Managed Services with annual renewals for 2018.”
“We continue to invest in technology to benefit our clients and improve our own operational efficiency. Artificial intelligence and machine learning are being integrated in areas throughout the organization. This technology surfaces new insights, automates processes, and ultimately allows us to accomplish more with less ongoing expense. Our revenue per employee in Q3 increased from $197,000 to $267,000 year over year and remains an efficiency metric we are focused on. Looking forward, we will be announcing additional innovations that leverage big data and artificial intelligence to make us even more effective.”
Q3 2017 Financial Results
Revenue in the third quarter of 2017 increased 9% to $8.2 million compared to $7.5 million in the same year-ago quarter. The increase in our Q3 2017 revenue is primarily due to organic growth in our Managed Services revenue.
Gross profit in the third quarter of 2017 increased 23% by approximately $826,000, as compared to the third quarter of 2016. The increase in gross profit was primarily attributable to a favorable shift to higher margin Managed Services revenue versus lower margin self-service Content Workflow revenue.
Operating expenses in the third quarter of 2017 and 2016 were $5.0 million. Cash-based Opex in the third quarter of 2017 was approximately $4.2 million, compared to $4.5 million in the third quarter of 2016, a decrease of 5% year over year.
Net loss in the third quarter of 2017 was approximately $(559,000), or $(0.10) per share, as compared to a net loss of $(1.5) million, or $(0.28) per share, in the same year-ago quarter. Adjusted EBITDA was approximately $221,000 compared to $(886,000) during the same period of 2016, an improvement of $1.1 million year over year.
Cash and cash equivalents at September 30, 2017 totaled $3.5 million. Receivables at the end of the quarter were $5.3 million, up from $4.1 million at the end of Q2 2017. As of September 30, 2017, the company has accessed $810,000 of a $5.0 million credit line for cash management purposes.
Updated 2017 Outlook
The company expects annual revenue in 2017 will be approximately $29-$30 million, compared to $27.3 million in 2016. The company has increased its gross margin guidance by 200 basis points. Gross margins are now expected to range between 50% to 51% compared to 48% in 2016. Guidance for adjusted EBITDA has improved by $1.0 million and adjusted EBITDA is expected to be approximately $(3.0-3.25) million compared to $(5.2) million in 2016.
Conference Call
IZEA will hold a conference call to discuss its third-quarter 2017 results today at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.
Date: Tuesday, November 7, 2017
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 will be available for replay via the investors section of the company’s website at https://izea.com/investors.
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 November 14, 2017.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13672388
