IZEA Reports Q3 2023 Revenue of $7.9 million
IZEA Worldwide, Inc. (NASDAQ: IZEA) reported Q3 2023 financial results, with total revenue decreasing 27.1% to $7.9 million. Despite a net loss of $2.0 million, the company has $62.7 million in cash and investments with no long-term debt. Operational highlights include being named 'Best Influencer Marketing Company' and expanding sales into the South Korea market.
Positive
Positive trend in new business pipeline compared to the same timeframe last year.
Migration to Flex and the IZEA Marketplace finalized, influencing SaaS revenues.
Anticipated future growth after reaching the lowest point in Q3.
Strength in core business reflected in Managed Services bookings growth.
Negative
Total revenue decreased by 27.1% compared to Q3 2022.
Net loss of $2.0 million in Q3 2023, compared to a net loss of $0.9 million in Q3 2022.
Adjusted EBITDA for the quarter was $(1.5) million, compared to $(0.6) million in Q3 2022.
11/14/2023 - 04:01 PM
ORLANDO, Fla., Nov. 14, 2023 (GLOBE NEWSWIRE) -- IZEA Worldwide , Inc. (NASDAQ: IZEA ), a premier provider of influencer marketing technology, data, and services for the world’s leading brands, reported its financial and operational results for the third quarter ended September 30, 2023.
Q3 2023 Financial Summary Compared to Q3 2022
Total revenue decreased 27.1% to $7.9 million , compared to $10.8 million Total costs and expenses decreased 13.3% to $10.5 million , compared to $12.2 million Net loss was $2.0 million , compared to a net loss of $0.9 million Adjusted EBITDA* for the quarter was $(1.5) million , compared to $(0.6) million Cash, cash equivalents and investments on September 30, 2023 totaled $62.7 million with no long-term debt Q3 2023 Operational Highlights
IZEA named "Best Influencer Marketing Company" in 2023 MarTech Breakthrough Awards Program Expanded sales presences into the South Korea market Launched Offers, Creator Experience, and Offer Negotiation in IZEA Flex Launched GPT-4 and AI Video Generation Tool in FormAI in IZEA's Creator Marketplace * 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.”
Management Commentary
"Throughout 2023, we've been navigating through a transformative era for IZEA, setting the stage for an upcoming era of expansion," commented Ted Murphy, Founder and CEO of IZEA. "During the earlier months, we made a calculated choice, accepting some trade-offs in immediate earnings and client numbers, to prioritize a growth trajectory that's not only sustainable and diverse but also profitable in the long run. Given the significant uptick in new business pipeline compared to the same timeframe last year, we're confident that the adjustments we're making will yield positive outcomes."
"Previously in the year, we brought forward the shift to Flex and the IZEA Marketplace for our clientele and our Managed Services division, a move initially planned for late 2023. The migration from IZEAx to Flex was finalized by the second quarter's close, which notably influenced our SaaS revenues during this period. We anticipate that SaaS revenues have reached their lowest point in Q3, setting the stage for future growth. While the fees from our Flex and IZEA Marketplace customer segments are considerably reduced, the upside is a noticeable decrease in both churn rates and customer acquisition expenses when compared to IZEAx. It will require some time to rebuild the SaaS revenue to its former levels, but we're convinced that this customer segment will prove to be more enduring and lucrative over time."
Q3 2023 Financial Results 27.1% to $7.9 million , compared to $10.8 million in the third quarter of 2022. Revenue from Managed Services declined by 25.2% to $7.8 million in the third quarter of 2023, from $10.5 million in the same period in 2022. In January 2023, we announced that we began to part ways with one large customer (the "non-recurring customer"). Managed Services revenue from this non-recurring customer totaled $0.9 million during the three months ended September 30, 2023, and explains 90% of the decline in Managed Services revenue from the same period in 2022. Managed Services revenue from our ongoing customer base, including new and existing customers (our "on-going customers"), totaled $6.9 million in the third quarter, or 3.9% lower than in 2022, primarily due to weaker bookings from these ongoing customers in the fourth quarter of 2022 and the first quarter of 2023.
Managed Services bookings decreased to $7.1 million during the quarter compared to $8.2 million during the same period in 2022, which included $0.3 million in reversed bookings from the non-recurring customer. Managed Services bookings for ongoing customers grew by 18.2% over the same period in 2022, reflecting strength in our core business.
Revenue from SaaS Services decreased by $0.3 million , or 83.7% , in the third quarter of 2023 compared to the third quarter of 2022. The transition from our legacy IZEAx platform was completed during the prior quarter as we pivoted our subscription business model to Flex and The Creator Marketplace.
Cost of revenue decreased to $4.7 million in the third quarter of 2023, or 59.3% of revenue, compared to $6.6 million , or 60.9% , in the prior-year quarter, primarily due to fewer contract deliveries to our non-recurring customer. The percentage cost of revenue on ongoing customer deliveries was in range with recent historical averages.
Costs and expenses other than the cost of revenue totaled $5.9 million for the third quarter of 2023, 5.3% above the prior-year quarter. Sales and marketing costs were $2.7 million during the third quarter of 2023, 7.9% higher than the prior-year quarter, primarily due to increased spend on tradeshows and brand awareness efforts. General and administrative costs totaled $3.0 million during the quarter, $0.1 million or 3.6% higher than the prior-year quarter, due primarily to increased web hosting fees and fees paid to consultants partially offset by lower overall compensation costs and professional fees.
Net loss in the third quarter of 2023 was $2.0 million , or $(0.13) per share, as compared to a net loss of $0.9 million , or $(0.06) per share in the third quarter of 2022, based on 15.5 million and 15.6 million average shares outstanding, respectively, as adjusted for the four-for-one reverse split effected in June 2023.
Adjusted EBITDA (as defined below, a non-GAAP measure management uses as a proxy for operating cash flow) totaled a loss of $1.5 million in the third quarter of 2023, compared with a loss of $0.6 million in the comparative period, decreasing $1.0 million due primarily to lower revenues, which declined 27.1% in the current period. Adjusted EBITDA as a percentage of revenue in the third quarter of 2023 was a loss of 19.6% compared to a loss of 5.5% in the third quarter of 2022.
As of September 30, 2023, our cash and investments totaled $62.7 million . The company has no long-term debt borrowings outstanding.
Conference Call
Date: Tuesday, November 14, 2023
Please call the conference telephone number five (5) minutes prior to the start time. An operator will register your name and organization. A call replay will be available after 9:00 p.m. ET on the same day until Tuesday, November 21, 2023, at 11:59 p.m. ET.
Toll-free replay number: 1-844-512-2921
About IZEA Worldwide, Inc.
Use of Key Metrics and Non-GAAP Financial Measures
Managed Services bookings is a useful metric as it reflects the amount of orders received in one period, even though revenue may be reflected over time. Management uses the Managed Services bookings metric to plan its operating staff, identify key customer group trends, enlighten go-to-market activities, and inform its product development efforts.
EBITDA is a non-GAAP financial measure under the Securities and Exchange Commission rules commonly defined as earnings before interest, taxes, depreciation, and amortization. IZEA defines “Adjusted EBITDA” as earnings or loss before interest, taxes, depreciation and amortization, non-cash stock-based compensation, gain or loss on asset disposals or impairment, and certain other unusual or non-cash income and expense items such as gains or losses on settlement of liabilities and exchanges, and changes in the fair value of derivatives, if applicable.
We believe that Adjusted EBITDA provides useful information to investors as it primarily excludes non-cash transactions and provides consistency to facilitate period-to-period comparisons.
All companies do not calculate bookings, and Adjusted EBITDA in the same manner. These metrics and financial measures, as presented by IZEA, may be different from those presented by other companies. Moreover, these metrics and financial measures have limitations as analytical tools. You should not consider them in isolation or as a substitute for an analysis of our results of operations as reported under GAAP. The financial tables included in this press release present a reconciliation of adjusted EBITDA to the most directly comparable GAAP measure.
Safe Harbor Statement
Press Contact ir@izea.com
IZEA Worldwide, Inc. Unaudited Consolidated Balance Sheets
September 30, 2023 December 31, 2022 Assets Current assets: Cash and cash equivalents $ 35,196,198 $ 24,600,960 Accounts receivable, net 6,684,958 5,664,727 Prepaid expenses 1,084,289 3,927,453 Short term investments 14,842,420 16,106,758 Other current assets 62,396 66,441 Total current assets 57,870,261 50,366,339 Property and equipment, net of accumulated depreciation 216,272 156,774 Goodwill 4,016,722 4,016,722 Intangible assets, net 64,953 64,953 Software development costs, net 1,944,377 1,774,033 Long term investments 12,670,494 29,296,069 Total assets $ 76,783,079 $ 85,674,890 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable 1,461,732 1,968,322 Accrued expenses 2,070,747 2,130,702 Contract liabilities 8,704,332 11,247,746 Total current liabilities 12,236,811 15,346,770 Finance obligation, less current portion 78,266 62,173 Total liabilities 12,315,077 15,408,943 Commitments and Contingencies — — Stockholders’ equity: Preferred stock; $.0001 par value; 2,500,000 shares authorized; no shares issued and outstanding — — Common stock; $0.00 01 par value; 50,000,000 shares authorized; shares issued: 15,797,724 and 15,603,508, respectively; shares outstanding: 15,431,869 and 15,603,435, respectively 1,580 1,560 Treasury stock at cost: 365,855 and 0 shares at September 30, 2023 and December 31, 2022, respectively (1,019,997) — Additional paid-in capital 149,925,505 149,148,248 Accumulated deficit (83,925,769) (78,103,066) Accumulated other comprehensive income (loss) (513,317) (780,795) Total stockholders’ equity 64,468,002 70,265,947 Total liabilities and stockholders’ equity $ 76,783,079 $ 85,674,890
IZEA Worldwide, Inc. Unaudited Consolidated Statements of Operations
Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ 7,894,901 $ 10,826,335 $ 27,321,682 $ 32,293,682 Costs and expenses: Cost of revenue 4,685,437 6,597,430 16,900,116 18,989,076 Sales and marketing 2,700,301 2,502,128 7,936,801 7,312,240 General and administrative 3,032,759 2,928,679 9,604,308 9,810,102 Depreciation and amortization 117,544 127,535 574,238 404,856 Total costs and expenses 10,536,041 12,155,772 35,015,463 36,516,274 Loss from operations (2,641,140) (1,329,437) (7,693,781) (4,222,592) Other income (expense): Interest expense (1,654) (814) (6,373) (2,594) Other income (expense), net 659,856 424,019 1,877,451 672,821 Total other income (expense), net 658,202 423,205 1,871,078 670,227 Total other income (expense), net $ (1,982,938) $ (906,232) $ (5,822,703) $ (3,552,365) Weighted average common shares outstanding – basic and diluted 15,463,334 15,568,356 15,525,636 15,540,627 Basic and diluted loss per common share $ (0.13) $ (0.06) $ (0.38) $ (0.23)
IZEA Worldwide, Inc. Unaudited Consolidated Statements of Comprehensive Loss
Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (1,982,938) $ (906,232) $ (5,822,703) $ (3,552,365) Other comprehensive income Unrealized gain (loss) on securities held 131,198 (597,113) 267,478 (864,595) Total other comprehensive income 131,198 (597,113) 267,478 (864,595) Total comprehensive income (loss) $ (1,851,740) $ (1,503,345) $ (5,555,225) $ (4,416,960)
IZEA Worldwide, Inc. Revenue Details
Revenue details by type:
Three Months Ended September 30, 2023 2022 $ Change % Change Managed Services Revenue $ 7,837,725 99.3% $ 10,476,278 96.8% $ (2,638,553) (25.2)% Marketplace Spend Fees 2,385 —% 16,019 0.1% (13,634) (85.1)% License Fees 55,331 0.7% 320,349 3.0% (265,018) (82.7)% Other Fees (540) —% 13,689 0.1% (14,229) (103.9)% SaaS Services Revenue 57,176 0.7% 350,057 3.2% (292,881) (83.7)% Total Revenue $ 7,894,901 100.0% $ 10,826,335 100.0% $ (2,931,434) (27.1)%
Nine Months Ended September 30, 2023 2022 $ Change % Change Managed Services Revenue $ 26,958,860 98.7% $ 31,025,350 96.1% $ (4,066,490) (13.1)% Marketplace Spend Fees 40,173 0.1% 122,243 0.4% (82,070) (67.1)% License Fees 304,938 1.1% 1,030,718 3.2% (725,780) (70.4)% Other Fees 17,711 0.1% 115,371 0.4% (97,660) (84.6)% SaaS Services Revenue 362,822 1.3% 1,268,332 3.9% (905,510) (71.4)% Total Revenue $ 27,321,682 100.0% $ 32,293,682 100.0% $ (4,972,000) (15.4)%
IZEA Worldwide, Inc. Reconciliation of GAAP Net loss to Non-GAAP Adjusted EBITDA
Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ (1,982,938) $ (906,232) $ (5,822,703) $ (3,552,365) Write down of digital assets — 1,081 — 141,808 Non-cash stock-based compensation 239,353 154,115 642,752 428,013 Non-cash stock issued for payment of services 75,003 31,260 225,012 93,742 Interest expense 1,654 814 6,373 2,594 Depreciation and amortization 117,544 127,535 574,238 404,856 Other non-cash items 304 — 304 18,555 Adjusted EBITDA $ (1,549,080) $ (591,427) $ (4,374,024) $ (2,462,797) Revenue $ 7,894,901 $ 10,826,335 $ 27,321,682 $ 32,293,682 Adjusted EBITDA as a % of Revenue (19.6)% (5.5)% (16.0)% (7.6)%
Total revenue decreased 27.1% to $7.9 million compared to Q3 2022.
Net loss was $2.0 million.
Operational highlights include being named 'Best Influencer Marketing Company' and expanding sales into the South Korea market.
The company has $62.7 million in cash and investments with no long-term debt.
IZEA will hold a conference call on Tuesday, November 14, 2023, at 5:00 p.m. ET. The call will be hosted by IZEA's Chairman and CEO Ted Murphy, CFO Peter Biere, and COO Ryan Schram.
