IZEA(IZEA) - 2024 Q2 - Quarterly Results

Q2 2024 Performance Overview IZEA's Q2 2024 performance reflects a revenue decrease driven by Managed Services, strong SaaS growth, and notable operational advancements including new AI product launches Financial Summary IZEA's second quarter 2024 revenue decreased 14.9% year-over-year to $9.1 million, primarily due to a 16.6% decline in Managed Services, while SaaS Services revenue surged 244.3%, and net loss widened to $2.2 million from $1.0 million, despite a strong balance sheet with $56.5 million in cash and investments and no long-term debt Q2 2024 Financial Summary vs. Q2 2023 | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $9.1 million | $10.7 million | -14.9% | | Managed Services Revenue | $8.9 million | $10.6 million | -16.6% | | SaaS Services Revenue | $0.2 million | $0.1 million | +244.3% | | Net Loss | $2.2 million | $1.0 million | +120.0% | | Adjusted EBITDA | $(1.6) million | $(0.6) million | -166.7% | - The company reported a strong liquidity position with $56.5 million in cash, cash equivalents, and investments as of June 30, 2024, and carries no long-term debt[2] Operational Highlights During the second quarter, IZEA achieved significant operational milestones, including winning multiple Viddy Awards for its "Barbie" movie campaign, recognition for its technology, and the unveiling of IZZY, a new AI assistant for influencer marketing - Key operational achievements in Q2 2024 include: - Won multiple Viddy Awards for the "Barbie" movie campaign - IZEA Flex and FormAI were featured on PR Daily's 2024 PR Tech Hot List - Unveiled and launched IZZY, an AI assistant for influencer marketing, in a private beta - Recognized as a Top Place to Work and a Great Place to Work[2] Management Commentary CEO Ted Murphy reported a record quarter for Managed Services bookings, anticipating a return to year-over-year revenue growth, and highlighted a promising resurgence in the SaaS business with an all-time record number of active SaaS customers - Excluding revenue from a non-recurring customer parted with in 2023, Managed Services revenue demonstrated strong underlying growth of 22% year-over-year[3] - The company achieved a record quarter for Managed Services bookings, leading to a $1.1 million sequential increase in revenue backlog, which now stands at $15.6 million[3] - The SaaS business is showing a promising resurgence, concluding Q2 with a new all-time record number of active SaaS customers, a positive trend that has continued into Q3[3] Detailed Financial Analysis This section provides a detailed analysis of IZEA's Q2 2024 financial performance, focusing on revenue trends, cost structures, and overall profitability Revenue Analysis Total revenue for Q2 2024 was $9.1 million, a 14.9% decrease from Q2 2023, primarily due to a 16.6% decline in Managed Services revenue, while SaaS Services revenue showed significant growth, increasing 244.3% to $243,353, and Managed Services bookings grew robustly to $10.3 million Revenue by Service Type (Three Months Ended June 30) | Service Type | 2024 Revenue | 2023 Revenue | % Change | | :--- | :--- | :--- | :--- | | Managed Services | $8,850,463 | $10,618,381 | (16.6)% | | SaaS Services | $243,353 | $70,678 | 244.3% | | Total Revenue | $9,093,816 | $10,689,059 | (14.9)% | - Excluding the impact of a non-recurring customer from 2023, Managed Services revenue increased by $1.6 million, or 21.7%, over the prior-year quarter[4] - Managed Services bookings increased to $10.3 million compared to $7.3 million in the prior-year quarter, with organic growth accounting for over 90% of the bookings[4] Costs, Expenses, and Profitability Total costs and expenses decreased slightly by 3.1% to $12.0 million, and while cost of revenue improved to 56.9% of revenue, increased spending on sales & marketing and general & administrative expenses, combined with lower revenue, resulted in a wider net loss of $2.2 million, or $(0.13) per share Profitability Metrics (Q2 2024 vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net Loss | $2.2 million | $1.0 million | | Loss Per Share | $(0.13) | $(0.07) | | Adjusted EBITDA | $(1.6) million | $(0.6) million | - Cost of revenue decreased to $5.2 million (56.9% of revenue) from $6.3 million (58.5% of revenue) in the prior-year quarter, indicating improved margins[5] - Operating expenses increased, with Sales and marketing costs rising 13.2% to $3.2 million and General and administrative costs rising 6.5% to $3.4 million, primarily due to investments in demand generation and increased human capital costs[6] Financial Statements This section presents IZEA's consolidated financial statements, including balance sheets, statements of operations, and statements of comprehensive loss for the reporting period Consolidated Balance Sheets As of June 30, 2024, IZEA reported total assets of $72.7 million, a decrease from $79.4 million at the end of 2023, while maintaining a strong liquidity position with cash and cash equivalents of $44.3 million, and total liabilities decreased to $12.0 million from $14.1 million, with total stockholders' equity at $60.8 million Selected Balance Sheet Data (Unaudited) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $44,301,866 | $37,446,728 | | Total current assets | $62,295,193 | $60,351,403 | | Total assets | $72,739,351 | $79,425,466 | | Total current liabilities | $11,644,789 | $13,593,413 | | Total liabilities | $11,965,518 | $14,112,078 | | Total stockholders' equity | $60,773,833 | $65,313,388 | Consolidated Statements of Operations For the three months ended June 30, 2024, IZEA's revenue was $9.1 million with total costs and expenses of $12.0 million, resulting in a loss from operations of $2.9 million, and a net loss for the quarter of $2.2 million, compared to a net loss of $1.0 million in the same period of 2023 Statement of Operations Summary (Three Months Ended June 30) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $9,093,816 | $10,689,059 | | Total costs and expenses | $11,983,124 | $12,364,839 | | Loss from operations | $(2,889,308) | $(1,675,780) | | Net loss | $(2,194,828) | $(1,033,426) | | Basic and diluted loss per share | $(0.13) | $(0.07) | Consolidated Statements of Comprehensive Loss For the second quarter of 2024, the total comprehensive loss was $2.1 million, including a net loss of $2.2 million partially offset by other comprehensive income, which compares to a total comprehensive loss of $1.0 million in the prior-year quarter Comprehensive Loss Summary (Three Months Ended June 30) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Net loss | $(2,194,828) | $(1,033,426) | | Total other comprehensive income (loss) | $(76,158) | $(10,100) | | Total comprehensive loss | $(2,118,670) | $(1,023,326) | Appendix The appendix clarifies the use of key financial metrics, provides a reconciliation of GAAP to non-GAAP measures, and includes a standard safe harbor statement Use of Key Metrics and Non-GAAP Financial Measures The company explains its use of Managed Services bookings as a measure of business health and Adjusted EBITDA as a non-GAAP measure for consistent period-to-period comparisons - Managed Services bookings are a key metric reflecting sales orders in a period, used by management to plan staffing and go-to-market activities, but may not be used to predict quarterly revenues due to timing differences in revenue recognition[9] - Adjusted EBITDA is a non-GAAP measure defined as earnings or loss adjusted for interest, taxes, depreciation, amortization, stock-based compensation, and other specific non-cash or unusual items, used to facilitate period-to-period comparisons[10] Reconciliation of GAAP Net loss to Non-GAAP Adjusted EBITDA This section provides a detailed reconciliation from GAAP Net Loss to non-GAAP Adjusted EBITDA, showing that for Q2 2024, a net loss of $2.2 million was adjusted for non-cash items, resulting in an Adjusted EBITDA loss of $1.6 million, compared to $0.6 million in Q2 2023 Adjusted EBITDA Reconciliation (Three Months Ended June 30) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Net loss (GAAP) | $(2,194,828) | $(1,033,426) | | Non-cash stock-based compensation | $394,931 | $207,875 | | Depreciation and amortization | $225,748 | $110,432 | | Other adjustments | $14,223 | $81,319 | | Adjusted EBITDA (Non-GAAP) | $(1,559,968) | $(636,955) | Safe Harbor Statement This is a standard legal disclaimer that classifies forward-looking statements within the release under the Private Securities Litigation Reform Act of 1995, cautioning that these statements involve inherent risks and uncertainties that could cause actual results to differ materially from expectations - The release contains forward-looking statements regarding future financial performance, product development, and business strategy, which are subject to risks and uncertainties, and the company assumes no obligation to update them[11]