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Press release content from Globe Newswire. The AP news staff was not involved in its creation.

IZEA Reports Q3 2019 Financial Results

November 14, 2019 GMT

ORLANDO, Fla., Nov. 14, 2019 (GLOBE NEWSWIRE) -- 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.

Conference Call

IZEA will hold a conference call to discuss its third quarter 2019 results on Thursday, November 14 at 5:00 p.m. Eastern time. Management will host the call, followed by a question and answer period.

Date: Thursday, November 14, 2019Time: 5:00 p.m. Eastern timeToll-free dial-in number: 1-877-407-4018International 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 November 21, 2019.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671 Replay ID: 13696638

About IZEA Worldwide, Inc.

IZEA Worldwide, Inc. (“IZEA”) operates online platforms that connect marketers with content creators. IZEA platforms automate influencer marketing and custom content development, allowing brands and agencies to scale their marketing programs. IZEA influencers include everyday creators, as well as celebrities and accredited journalists. Creators are compensated for producing unique content such as long and short form text, videos, photos, status updates and illustrations for marketers or distributing such content on behalf of marketers through their personal websites, blogs and social media channels. Marketers receive influential content and engaging, shareable stories that drive awareness. For more information about IZEA, visit https://izea.com/.

Use of Non-GAAP Financial Measures

We define gross billings, a non-GAAP financial measure, as the total dollar value of the amounts earned from our customers for the services we performed, or the amounts charged to our customers for their self-service purchase of goods and services on our platforms. Gross billings for Legacy Workflow Fees differ from revenue reported in our consolidated statements of operations, which is presented net of the amounts we pay to our third-party creators providing the content or sponsorship services. Gross billings for all other revenue equal the revenue reported in our consolidated statements of operations.

We consider this metric to be an important indicator of our performance as it measures the total dollar volume of transactions generated through our marketplaces. Tracking gross billings allows us to monitor the percentage of gross billings that we are able to retain after payments to our creators. Because we invoice our customers on a gross basis, tracking gross billings is critical as it pertains to our credit risk and cash flow.

“EBITDA” is a non-GAAP financial measure under the rules of the Securities and Exchange Commission. EBITDA is commonly defined as “earnings before interest, taxes, depreciation and amortization.” IZEA defines “Adjusted EBITDA,” also a non-GAAP financial measure, as earnings or loss before interest, taxes, depreciation and amortization, non-cash stock related compensation, gain or loss on asset disposals or impairment, changes in acquisition cost estimates, and certain other non-cash income and expense items such as gains or losses on settlement of liabilities and exchanges, and changes in fair value of derivatives, if applicable.

We believe that Adjusted EBITDA provides useful information to investors as they exclude transactions not related to the core cash operating business activities including non-cash transactions. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations.

All companies do not calculate gross billings and Adjusted EBITDA in the same manner. These metrics as presented by IZEA may not be comparable to those presented by other companies. Moreover, these metrics have limitations as analytical tools, and you should not consider them in isolation or as a substitute for an analysis of our results of operations as reported under GAAP. A reconciliation of non-GAAP to GAAP results is included in the financial tables included in this press release.

Safe Harbor Statement

All statements in this release that are not based on historical fact are “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “may,” “will,” “would,” “could,” “should,” “expects,” “anticipates,” “anticipates,” “estimates,” “believes,” “intends,” “likely,” “projects,” “plans,” “pursue,” “strategy” or “future,” or the negative of these words or other words or expressions of similar meaning. Examples of forward-looking statements include, among others, statements we make regarding expectations concerning IZEA’s ability to increase revenue and improve Adjusted EBITDA, the use of proceeds of IZEA’s stock offering, expectations with respect to operational efficiency, and expectations concerning IZEA’s business strategy. Forward-looking statements involve inherent risks and uncertainties which could cause actual results to differ materially from those in the forward-looking statements, as a result of various factors including, among others, the following: competitive conditions in the content and social sponsorship segment in which IZEA operates; failure to popularize one or more of the marketplace platforms of IZEA; inability to finance growth initiatives in a timely manner; our ability to establish effective disclosure controls and procedures and internal control over financial reporting; our ability to satisfy the requirements for continued listing of our common stock on the Nasdaq Capital Market; changing economic conditions that are less favorable than expected; and other risks and uncertainties described in IZEA’s periodic reports filed with the Securities and Exchange Commission. The forward-looking statements made in this release speak only as of the date of this release, and IZEA assumes no obligation to update any such forward-looking statements to reflect actual results or changes in expectations, except as otherwise required by law.

Press Contact Martin Smith IZEA Worldwide, Inc. Phone: 407-674-6911 Email: ir@izea.com

IZEA Worldwide, Inc. Consolidated Statements of Operations (Unaudited) Three Months Ended September Nine Months Ended September 30, 30, 2019 2018 2019 2018 -------------- -------------- -------------- -------------- Revenue $ 4,411,086 $ 5,780,941 $ 13,128,706 $ 13,798,342 Costs and expenses: Cost of revenue (exclusive of amortization) 1,904,287 2,397,466 5,821,237 6,490,906 Sales and marketing 1,518,165 1,574,335 4,238,074 5,065,457 General and administrative 1,752,126 2,699,978 6,596,485 6,285,810 Depreciation and amortization 433,094 370,674 1,317,423 846,820 Total costs and expenses 5,607,672 7,042,453 17,973,219 18,688,993 ------------ - ------------ - ------------ - ------------ - Loss from operations (1,196,586 ) (1,261,512 ) (4,844,513 ) (4,890,651 ) Other income (expense): Interest expense (27,734 ) (90,452 ) (242,935 ) (147,166 ) Change in fair value of derivatives, net — — — (11,794 ) Other income, net 51,285 19,135 91,447 23,907 Total other income (expense), net 23,551 (71,317 ) (151,488 ) (135,053 ) ------------ - ------------ - ------------ - ------------ - Net loss $ (1,173,035 ) $ (1,332,829 ) $ (4,996,001 ) $ (5,025,704 ) - ---------- - - ---------- - - ---------- - - ---------- - Weighted average common shares outstanding – 32,421,043 10,365,750 22,506,929 7,351,827 basic and diluted Basic and diluted loss per common share $ (0.04 ) $ (0.13 ) $ (0.22 ) $ (0.68 )

IZEA Worldwide, Inc. Total Revenue (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 ------------ ------------ ----- ------------- ---------------- Managed Services Revenue $ 3,558,109 $ 4,859,434 $ 10,416,912 $ 12,660,949 Legacy Workflow Fees 44,170 48,409 135,791 164,994 Marketplace Spend Fees 266,037 378,768 955,328 388,492 License Fees 505,634 485,651 1,545,222 538,262 ----------- ----------- ------------ ------------ --- SaaS Services Revenue 815,841 912,828 2,636,341 1,091,748 ----------- ----------- ------------ ------------ --- Other Revenue 37,136 8,679 75,453 45,645 Total Revenue $ 4,411,086 $ 5,780,941 $ 13,128,706 $ 13,798,342 - --------- - --------- - ---------- - ---------- ---

IZEA Worldwide, Inc. Consolidated Balance Sheets (Unaudited) September 30, December 31, 2019 2018 -------------- -------------- Assets Current assets: Cash and cash equivalents $ 6,808,553 $ 1,968,403 Accounts receivable, net 4,497,659 7,071,815 Prepaid expenses 622,956 527,968 Other current assets 56,191 39,203 Total current assets 11,985,359 9,607,389 ------------ - ------------ - Property and equipment, net 232,432 272,239 Right-of-use asset 192,967 — Goodwill 8,316,722 8,316,722 Intangible assets, net 2,206,506 3,149,949 Software development costs, net 1,653,801 1,428,604 Security deposits 142,335 143,174 Total assets $ 24,730,122 $ 22,918,077 - ---------- - - ---------- - Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,691,475 $ 2,618,103 Accrued expenses 1,438,834 1,968,589 Contract liabilities 5,440,367 4,957,869 Line of credit — 1,526,288 Right-of-use liability 166,819 — Deferred rent — 17,420 Acquisition costs payable 45,000 4,611,493 ------------ - ------------ - Total current liabilities 8,782,495 15,699,762 ------------ - ------------ - Commitments and Contingencies (Note 6) — — Stockholders’ equity: Preferred stock; $.0001 par value; 10,000,000 shares authorized; no shares — — issued and outstanding Common stock; $.0001 par value; 200,000,000 shares authorized; 34,506,600 and 3,451 1,208 12,075,708, respectively, issued and outstanding Additional paid-in capital 74,034,826 60,311,756 Accumulated deficit (58,090,650 ) (53,094,649 ) Total stockholders’ equity 15,947,627 7,218,315 ------------ - ------------ - Total liabilities and stockholders’ equity $ 24,730,122 $ 22,918,077 - ---------- - - ---------- -

IZEA Worldwide, Inc. Non-GAAP Reconciliations (Unaudited) Reconciliation of GAAP revenue to Non-GAAP gross billings: Three Months Ended Sept 30, Nine Months Ended Sept 30, 2019 2018 2019 2018 ------------ ------------- ------------- ------------- Revenue $ 4,411,086 $ 5,780,941 $ 13,128,706 $ 13,798,342 Plus payments made to third-party creators (1) 2,242,163 3,437,372 7,979,078 5,031,875 Gross billings $ 6,653,249 $ 9,218,313 $ 21,107,784 $ 18,830,217 - --------- - --------- - - ---------- - ---------- (1)Payments made to third-party creators for the Legacy Workflow and Marketplace Spend components of our revenue reported on a net basis for GAAP.

Gross billings by revenue type: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 ------------ ------------ ----- ------------- ---------------- Managed Services Revenue $ 3,558,109 $ 4,859,434 $ 10,416,912 $ 12,660,949 Legacy Workflow Fees 609,375 673,065 1,871,056 2,335,834 Marketplace Spend Fees 1,942,995 3,191,484 7,199,141 3,249,527 License Fees 505,634 485,651 1,545,222 538,262 ----------- ----------- ------------ ------------ --- SaaS Services Gross Billings 3,058,004 4,350,200 10,615,419 6,123,623 ----------- ------------ ------------ --- Other Revenue 37,136 8,679 75,453 45,645 ----------- ----------- ------------ ------------ --- Total Gross Billings $ 6,653,249 $ 9,218,313 $ 21,107,784 $ 18,830,217 - --------- - --------- - ---------- - ---------- ---

Reconciliation of GAAP Net loss to Non-GAAP Adjusted EBITDA: Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 ------------- -- ------------- -- ------------- -- ------------- -- Net loss $ (1,173,035 ) $ (1,332,829 ) $ (4,996,001 ) $ (5,025,704 ) Non-cash stock-based compensation 179,866 118,410 498,071 468,042 Non-cash stock issued for payment of 37,509 31,244 112,504 93,734 services Change in fair value of derivatives — — — 11,794 Gain on settlement of acquisition costs (793,850 ) (84,938 ) (602,411 ) (84,938 ) payable Increase (decrease) in value of 889 6,084 6,222 (618,512 ) acquisition costs payable Legal expense accrual — 500,000 — 500,000 Interest expense 27,734 90,452 242,935 147,166 Depreciation and amortization 433,094 370,674 1,317,423 846,820 Other non-cash items 31,998 6,642 23,903 5,242 Adjusted EBITDA $ (1,255,795 ) $ (294,261 ) $ (3,397,354 ) $ (3,656,356 ) - ---------- --- - ---------- --- - ---------- --- - ---------- --- Revenue $ 4,411,086 $ 5,780,941 $ 13,128,706 $ 13,798,342 Adjusted EBITDA as a % of Revenue (28 )% (5 )% (26 )% (26 )%