IZEA Worldwide Inc.
05/15/2023 | Press release | Archived content
Earnings Press Release (Period Ending March 31, 2023)
ORLANDO, FL (May 15, 2023) - 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 first quarter ended March 31, 2023.
Q1 2023 Financial Summary Compared to Q1 2022
Total revenue decreased 2% to $8.7 million, compared to $8.9 million
Managed Services revenue increased 2% to $8.5 million, compared to $8.4 million
SaaS Services revenue decreased 55% to $0.2 million, compared to $0.5 million
Total costs and expenses increased 7% to $12.1 million compared to $11.3 million
Net loss was $2.8 million compared to a net loss of $2.5 million
Adjusted EBITDA* for the quarter was $(2.2) million, compared to $(2.1) million
Cash, cash equivalents and investments at March 31, 2023 totaled $67.5 million with no long-term debt
Q1 2023 Operational Highlights
Officially launched IZEA Flex influencer marketing platform
Launched two new Flex modules, generative A.I. Storyboards and cloud storage
Awarded best company outlook by Comparably based on employee feedback
Began transition from IZEAx legacy platform to IZEA Flex and The 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
"Team IZEA delivered relatively strong revenue this quarter despite the persistent macroeconomic challenges," said Ted Murphy, IZEA's Chairman and CEO. "Revenue in Q1 was bolstered by a large revenue backlog that has carried over from 2022, and that backlog will continue to have a positive impact on revenue as it is recognized over the coming quarters. While Q1 bookings were light year over year, the revenue backlog will dampen the effects on revenue in the front half of this year, affording us some time to rebuild our bookings while revenue catches up."
"We continue the transition process from our legacy platform, IZEAx, to IZEA Flex and from Shake to The Creator Marketplace. We are on track to shutter IZEAx for customer use by the end of this quarter. The transition has impacted SaaS revenue and customer counts this quarter and likely will not stabilize until Q3, when we are optimistic that we can return to quarterly sequential growth. Early indications are that Marketplace and Flex both enjoy lower churn rates and acquisition costs than we saw with IZEAx."
"Our Managed Services team has delivered the beginnings of a bookings rebound in the past few months, with April bookings the best we have seen so far this year," continued Murphy. "We have also seen a meaningful increase in inbound leads and RFP's from both brands and agencies, which is a leading indicator of new business opportunities. We remain optimistic that the back half of this year will outperform the front half and remain focused on diversifying our client base."
$1M Share Repurchase Authorization
On March 30, 2023, the Company announced that its Board of Directors had authorized a $1 million share repurchase of the company's common stock. IZEA may repurchase shares of common stock from time to time through open market purchases, in privately negotiated transactions, or by other means including through the use of trading plans intended to qualify under Rule 10b-18 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program will have a term of eighteen (18) months and may be suspended or discontinued at any time and does not obligate the company to acquire any amount of common stock.
Q1 2023 Financial Results
Total revenue in the first quarter of 2023 decreased 2% to $8.7 million, compared to $8.9 million in the first quarter of 2022, with revenue from Managed Services increasing by 2% to $8.5 million in the first quarter of 2023, and revenue from SaaS Services decreasing by 55% to $234,968 in the first quarter of 2023 compared to the first quarter of 2022.
Managed Services bookings decreased to $6.1 million compared to $12.1 million during the quarter, as we saw the contracting process slow down. March 2023 bookings were amongst the best of the fiscal year and IZEA ended the quarter with solid pipeline creation of new opportunities that ought to benefit future periods.
Revenue from SaaS Services decreased by $0.3 million, or 55%, in the first quarter of 2023 compared to the first quarter of 2022. Average licensee counts on all platforms declined in the first quarter of 2023 over the prior year as we transition to new platforms and licensing arrangements. License fee revenue was 49% lower than the prior-year quarter, while Marketplace Spend fees decreased 33% to $36,474 in the first quarter of 2023, compared to $54,100 in the first quarter of 2022.
Cost of revenue increased to $6.0 million in the first quarter of 2023, or 68% of revenue, compared to $5.2 million, or 58%, in the prior-year quarter, primarily due to higher cost deliveries on one large customer contract. The percentage cost of revenue on other customer deliveries was in range with recent historical averages.
Costs and expenses other than the cost of revenue totaled $6.2 million for the first quarter of 2023, 0.1% below the prior-year quarter. Sales and marketing costs were $2.4 million during the first quarter of 2023, 4.6% lower than the prior-year quarter, primarily due to reduced payroll costs based on performance. General and administrative costs totaled $3.4 million during the quarter, $0.1 million or 3% below the prior-year quarter, due primarily to lower overall compensation costs, partly offset by an increase in audit-related fees.
Net loss in the first quarter of 2023 was $2.8 million, or $(0.04) per share, as compared to a net loss of $2.5 million, or $(0.04) per share in the first quarter of 2022, based on 62.4 million and 62.1 million average shares outstanding, respectively.
Adjusted EBITDA (as defined below, a non-GAAP measure management uses as a proxy for operating cash flow) totaled a loss of $2.2 million in the first quarter of 2023, compared with a loss of $2.1 million in the comparative period, decreasing $0.1 million due primarily to lower net income and higher depreciation expense in the latter period. Adjusted EBITDA as a percentage of revenue in the first quarter of 2023, was a loss of 25.0% compared to a loss of 23.9% in the first quarter of 2022.
As of March 31, 2023, our cash and investments totaled $67.5 million. The company has no long-term debt borrowings outstanding.
Conference Call
IZEA will hold a conference call to discuss its first quarter 2023 results on Monday, May 15, 2023, at 5:00 p.m. EDT. IZEA's Chairman and CEO Ted Murphy, CFO Peter Biere, and COO Ryan Schram will host the call, followed by a question and answer period.
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