IZEA Worldwide Inc.
08/14/2023 | Press release | Archived content
Earnings Press Release (Period Ending June 30, 2023)
ORLANDO, FL (August 14, 2023) - 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 second quarter ended June 30, 2023.
Q2 2023 Financial Summary Compared to Q2 2022
Total revenue decreased 15% to $10.7 million, compared to $12.6 million
Total costs and expenses decreased 5.0% to $12.4 million, compared to $13.0 million
Net loss was $1.0 million, compared to a net loss of $0.2 million
Adjusted EBITDA* for the quarter was $(0.6) million, compared to $0.3 million
Cash, cash equivalents and investments at June 30, 2023, totaled $65.1 million with no long-term debt
Q2 2023 Operational Highlights
Launched FormAI in the IZEA Marketplace and completed the transition of creators from IZEAx to izea.com
Launched Contracts Module, AI Briefs, AI Brainstorms, and CoPilot in Flex
Announced the industry's first AI disclosure automation tool
Took home multiple awards for influencer campaigns from the U.S. Partnership Awards, Vega Awards, and TITAN Business Awards
Won Comparably's 2023 Best Leadership Teams award
Appointed Lisa Feldberg as Global Head of Growth
* 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."
$1M Share Repurchase
On March 30, 2023, the Company announced that its Board of Directors had authorized a $1.0 million repurchase program. The Company has since completed the purchase of 365,855 shares, or approximately 2.3 percent of shares outstanding before our repurchase program, for an approximately $1.0 million, excluding commission. The total number of purchased shares reflected has been adjusted for the reverse stock split. The Company intends to keep these shares in its Treasury for use in potential future acquisitions and for other corporate purposes.
Management Commentary
"2023 continues to be a period of transition on multiple fronts as we lay the foundation for our next growth phase," said Ted Murphy. "In the first half of this half of this year we made a strategic decision involving trade-offs regarding near term revenue and customer counts in order to focus on more sustainable, diversified, and profitable growth long-term. We are early into the back half of the year but have growing optimism that our changes will bear fruit given our growing pipeline of new business opportunities, which increased substantially versus the same period last year."
"Earlier this year, we decided to accelerate the transition to Flex and the IZEA Marketplace for all our customers and Managed Services team, which was originally slated for the end of 2023. The customer transition from IZEAx to Flex was completed at the end of Q2 and had a material impact on SaaS revenue this quarter. We believe that SaaS revenue will hit bottom in Q3, after which we expect to grow. Our Flex and the IZEA Marketplace customer bases are paying significantly lower monthly fees, but we have also seen dramatically lower churn rates and acquisition costs compared to IZEAx. It will take some time to grow this SaaS revenue base back up to previous levels, but we believe this customer base will be more sustainable and valuable in the long run."
"In mid-June, we launched FormAI on izea.com, and it has had a positive impact on user sign ups and overall traffic, with a halo effect impacting Managed Services leads as well," continued Murphy. "Traffic to izea.com increased 30% in July vs. May, and user sign-ups for izea.com increased 360% during the same period. We are seeing record site traffic - with more organic search traffic, direct traffic, and lower acquisition costs for paid traffic. The large majority of these new users are on free plans accessing FormAI, but we are rolling out new features designed to increase both paid-plan conversion rates and AI functionality moving forward."
"As we look to the remainder of 2023 and peek into 2024, we see organic and inorganic growth opportunities that could contribute positively to revenue and EBITDA. We are assembling our team to execute against a bold vision of the future that will combine our award-winning service with next-generation technology at greater scale in more geographies, with better underlying economics."
Q2 2023 Financial Results
Total revenue in the second quarter of 2023 decreased 15% to $10.7 million, compared to $12.6 million in the second quarter of 2022. Revenue from Managed Services declined by 13% to $10.6 million in the second quarter of 2023, from $12.2 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"). During the second quarter of 2023, approximately $3.3 million in Managed Services revenue came from the non-recurring customer, 37% lower than the revenue received from this customer during the same period in 2022. Managed Services revenue from our ongoing customer base, including new and existing customers (our "on-going customers"), totaled approximately $7.2 million in the second quarter, or 6% higher than in 2022, primarily due to stronger bookings from these ongoing customers in recent quarters.
Managed Services bookings decreased to $7.3 million during the quarter compared to $9.3 million during the same period in 2022, which included $3.5 million in bookings from the non-recurring customer. Managed Services bookings for ongoing customers grew by 24% over the same period in 2022, reflecting strength in our core business.
Revenue from SaaS Services decreased by $0.3 million, or 82%, in the second quarter of 2023 compared to the second quarter of 2022. The transition from our legacy IZEAx platform was completed during the quarter as we pivoted our subscription business model to Flex and The Creator Marketplace.
Cost of revenue decreased to $6.3 million in the second quarter of 2023, or 59% of revenue, compared to $7.2 million, or 57%, in the prior-year quarter, primarily due to higher cost 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 $6.1 million for the second quarter of 2023, 5.2% above the prior-year quarter. Sales and marketing costs were $2.8 million during the second quarter of 2023, 23.7% higher than the prior-year quarter, primarily due to increased advertising and brand awareness efforts. General and administrative costs totaled $3.2 million during the quarter, $0.2 million or 6% below the prior-year quarter, due primarily to lower overall compensation costs, partly offset by an increase in professional fees.
Net loss in the second quarter of 2023 was $1.0 million, or $(0.07) per share, as compared to a net loss of $0.2 million, or $(0.01) per share in the first 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 $0.6 million in the second quarter of 2023, compared with a gain of $0.3 million in the comparative period, decreasing $0.9 million due primarily to lower net margin on revenues, which declined 15% in the current period. Adjusted EBITDA as a percentage of revenue in the second quarter of 2023, was a loss of 6.0% compared to a gain of 2.0% in the second quarter of 2022.
As of June 30, 2023, our cash and investments totaled $65.1 million. The company has no long-term debt borrowings outstanding.
Conference Call
IZEA will hold a conference call to discuss its second quarter 2023 results on Monday, August 14, 2023, at 5:00 p.m. ET. 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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