IZEA Reports Record First Quarter 2016 Results

Q1 Bookings up 71% to a Record $7.4 Million; Company Reiterates 2016 Revenue Guidance of $27 Million to $30 Million

ORLANDO, FL (May 11, 2016) – IZEA, Inc. (NASDAQ: IZEA), operators of IZEAx, the premier online marketplace connecting brands and publishers with influential content creators, reported record results for the first quarter ended March 31, 2016.

Q1 2016 Financial Highlights vs. Same Year-ago Quarter

• Revenue up 32% to $5.5 million, a record for the first quarter.
• Organic growth of Sponsored Social revenue increased 6% to $2.9 million, and Content revenue increased 82% to $2.5 million.
• Revenue backlog at the end of the quarter was $9.0 million, including unbilled bookings of $5.6 million and unearned revenue of $3.4 million.
• Bookings increased 71% to a record $7.4 million. This is the sixth consecutive quarter of record bookings. The increase in bookings included Sponsored Social bookings up 78% to $5.2 million and Content bookings up 57% to $2.2 million.
• Gross margin increased 200 basis points to 43%. Sponsored Social gross margin was 62%, up from 56% in Q1 2015. Gross margin for Content increased 900 basis points to 19%.
• New opportunity pipeline, a representation of new client proposals generated within the quarter, increased 79% to $34.7 million.
• At the end of the quarter, cash and cash equivalents totaled $10.1 million, accounts receivable was $3.0 million and the company had an unused credit line of $5.0 million.

Q1 2016 Operational Highlights

• Awarded Frost & Sullivan’s 2015 North American Social Media Marketing Customer Value Leadership Award.
• Began trading on Nasdaq Capital Market in February, and rang the Nasdaq opening bell in March.
• Established IZEA Canada, Inc, a wholly owned subsidiary based in Toronto, to expand the company’s footprint in the region.
• Launched world’s first virtual reality influencer network.
• Grew IZEAx network to 683,000 user connections, reaching 3.9 billion aggregate fans and followers.

Management Commentary

“Q1 marked our 12th consecutive quarter of year-over-year double-digit revenue growth,” said Ted Murphy, IZEA’s Chairman and CEO. “Our top-line growth was primarily driven by organic growth of Sponsored Social revenue and our focus on larger opportunities with brands and agencies. In fact, our average deal size grew 68% from Q1 2015 as client budgets continued to increase and we became a more integral part of their marketing efforts. The larger deal sizes extend over longer periods of time, which impacted our near-term revenue recognition and underscores our long-term growth trend. During the quarter, we began reporting revenue backlog to give better visibility into this trend.”

“For the remainder of 2016, we will continue to invest in growing our sales and engineering organizations to support our growth trajectory. In addition, we continue to actively pursue accretive acquisition opportunities that can both grow revenue and increase our penetration in niche markets.”

Q1 2016 Financial Results

Revenue in the first quarter of 2016 increased 32% to $5.5 million compared to $4.1 million in the same year-ago quarter. The increase is primarily due to organic growth of Sponsored Social revenue and growth of Content revenue, and, to a lesser extent, Service Fee revenue.

Gross profit in the first quarter of 2016 increased 40% to $2.4 million compared to $1.7 million in the same year-ago quarter. The increase in gross profit is due to the increase in revenue and improved margins on that revenue. 

Operating expenses in the first quarter of 2016 were $4.9 million, compared to $3.4 million in the same year-ago quarter. The increase in operating expenses were primarily due to increased personnel costs and additional overhead. These costs increased as a result of a 33% increase in the average number of the company’s administrative and engineering personnel and a 20% increase in the number of its sales and marketing personnel compared to the first quarter of 2015.

Net loss in the first quarter of 2016 was $2.6 million or $(0.49) per share, as compared to a net loss of $4.3 million or $(1.48) per share in the same year-ago quarter. The improvement in net loss is primarily due to income recognized from the change in fair value of derivatives in the first quarter of 2016 compared to expense in the same year-ago quarter.

Adjusted EBITDA (a non-GAAP metric defined below) in the first quarter of 2016 was negative $2.0 million compared to negative $1.4 million in the same year-ago quarter. The change in adjusted EBITDA was primarily due to the reduction in net loss. Adjusted EBITDA as a percentage of revenue in the first quarter of 2016 was negative 37% as compared to negative 34% in the same year-ago quarter.

Cash and cash equivalents at March 31, 2016 totaled $10.1 million compared to $11.6 million at December 31, 2015.

Business Outlook

IZEA expects 2016 organic bookings to range between $33 million to $35 million, which would represent growth of 35% to 43% versus 2015. The company expects 2016 revenue to range between $27 million to $30 million, which would represent growth of 61% to 71%.

Safe Harbor