IZEA(US:IZEA)2023-11-14 21:19PART I. FINANCIAL INFORMATION Financial Statements The unaudited consolidated financial statements detail the company's financial position, operations, and cash flows for the period ended September 30, 2023 Unaudited Consolidated Balance Sheets Total assets decreased to $76.8 million, primarily due to reduced long-term investments, while cash and cash equivalents increased Consolidated Balance Sheet Summary (Unaudited) | Balance Sheet Items | Sep 30, 2023 ($) | Dec 31, 2022 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | 35,196,198 | 24,600,960 | | Total current assets | 57,870,261 | 50,366,339 | | Long term investments | 12,670,494 | 29,296,069 | | Total assets | 76,783,079 | 85,674,890 | | Liabilities & Equity | | | | Contract liabilities | 8,704,332 | 11,247,746 | | Total current liabilities | 12,236,811 | 15,346,770 | | Total liabilities | 12,315,077 | 15,408,943 | | Total stockholders' equity | 64,468,002 | 70,265,947 | Unaudited Consolidated Statements of Operations Q3 2023 revenue decreased by 27% to $7.9 million, with the net loss widening to $2.0 million and a loss per share of ($0.13) Consolidated Statements of Operations Summary (Unaudited) | Metric | Three Months Ended Sep 30, 2023 ($) | Three Months Ended Sep 30, 2022 ($) | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 7,894,901 | 10,826,335 | 27,321,682 | 32,293,682 | | Loss from operations | (2,641,140) | (1,329,437) | (7,693,781) | (4,222,592) | | Net loss | (1,982,938) | (906,232) | (5,822,703) | (3,552,365) | | Basic and diluted loss per share | (0.13) | (0.06) | (0.38) | (0.23) | Unaudited Consolidated Statement of Cash Flows Net cash used in operating activities was $5.7 million, with a net increase in cash and cash equivalents of $10.6 million Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | | Net cash used for operating activities | (5,679,905) | (6,916,555) | | Net cash provided by/(used for) investing activities | 17,385,627 | (48,439,579) | | Net cash provided by financing activities | (1,110,484) | (50,684) | | Net increase (decrease) in cash | 10,595,238 | (55,406,818) | | Cash and cash equivalents, end of period | 35,196,198 | 20,026,477 | Notes to the Unaudited Consolidated Financial Statements The notes detail business, accounting policies, and financial statement line items, including the IZEA Flex platform transition - The company connects marketers with content creators via technology platforms, with primary revenue from Managed Services2628 - In 2023, the company sunset its legacy IZEAx platform and launched its new flagship platform, IZEA Flex, in January 2023293032 - In June 2023, the company executed a four-for-one reverse stock split, adjusting all share and per-share amounts105107 - The company completed a $1.0 million share repurchase program in August 2023, repurchasing 365,855 shares at $1.23 per share109110 Revenue by Service Type (Three Months Ended Sep 30) | Revenue Type | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Managed Services Revenue | 7,837,725 | 10,476,278 | | SaaS Services Revenue | 57,176 | 350,057 | | Total Revenue | 7,894,901 | 10,826,335 | Revenue by Service Type (Nine Months Ended Sep 30) | Revenue Type | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Managed Services Revenue | 26,958,860 | 31,025,350 | | SaaS Services Revenue | 362,822 | 1,268,332 | | Total Revenue | 27,321,682 | 32,293,682 | Management's Discussion and Analysis of Financial Condition and Results of Operation (MD&A) Management discusses financial results, highlighting a 27% Q3 revenue decrease, a wider net loss, and a strong liquidity position Results of Operations Q3 2023 revenue fell 27% to $7.9 million, driven by declines in Managed Services and SaaS revenue, resulting in a wider net loss - Managed Services revenue decreased by 25.2% in Q3 2023, with 90% of the decline from a large customer disengagement168 - SaaS Services revenue declined 83.7% in Q3 2023, linked to sunsetting legacy platforms and transitioning to the new Flex platform169 - Sales and marketing expenses increased by 7.9% in Q3 2023 due to higher spending on tradeshows, promotions, and new global market development170 Q3 2023 vs Q3 2022 Operations Summary | Metric | Q3 2023 ($) | Q3 2022 ($) | % Change | | :--- | :--- | :--- | :--- | | Revenue | 7,894,901 | 10,826,335 | (27)% | | Cost of revenue | 4,685,437 | 6,597,430 | (29)% | | Loss from operations | (2,641,140) | (1,329,437) | 99% | | Net Loss | (1,982,938) | (906,232) | 119% | Key Metrics Managed Services Bookings decreased to $7.1 million in Q3 2023, significantly impacted by the disengagement from a large customer Managed Services Bookings | Period | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Three Months Ended Sep 30 | 7.1 million | 8.2 million | | Nine Months Ended Sep 30 | 20.5 million | 29.7 million | - A large, non-recurring customer accounted for $8.2 million in 2022 Managed Services Bookings, but only $0.03 million in 2023, explaining the decline190 Non-GAAP Financial Measure Adjusted EBITDA, a non-GAAP measure, showed a loss of $1.5 million in Q3 2023, reflecting lower revenue and higher operating expenses Adjusted EBITDA Reconciliation Summary | Metric | Three Months Ended Sep 30, 2023 ($) | Three Months Ended Sep 30, 2022 ($) | Nine Months Ended Sep 30, 2023 ($) | Nine Months Ended Sep 30, 2022 ($) | | :--- | :--- | :--- | :--- | :--- | | Net loss | (1,982,938) | (906,232) | (5,822,703) | (3,552,365) | | Adjusted EBITDA | (1,549,080) | (591,427) | (4,374,024) | (2,462,797) | Liquidity and Capital Resources The company held $35.2 million in cash and cash equivalents, with management believing resources are sufficient for the next twelve months - Cash and cash equivalents stood at $35.2 million as of September 30, 2023202 - Management believes current cash and invested resources are adequate to fund business growth initiatives for at least the next twelve months201204 - The company notes softness in bookings but sees evidence of improving demand for influencer marketing services in its pipeline205 Quantitative and Qualitative Disclosures About Market Risk This section is not applicable as the company is a smaller reporting company - Not applicable to smaller reporting companies208 Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2023, with no material changes in internal control - Management concluded that disclosure controls and procedures were effective as of September 30, 2023211 - There were no material changes in internal control over financial reporting during the quarter214 PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any legal proceedings that would have a material adverse effect on its business - As of November 6, 2023, the company is unaware of any legal proceedings or claims that would have a material adverse effect216 Risk Factors The company highlights customer concentration risk, with a small number of customers accounting for a significant portion of gross billings - A significant portion of gross billings and accounts receivable are attributable to a small number of customers218 - In January 2023, the company began parting ways with its largest customer from 2022, emphasizing customer concentration risk218 Issuer Purchases of Equity Securities The company completed its $1.0 million share repurchase program in August 2023, repurchasing 365,855 shares - On March 30, 2023, the Board authorized a $1.0 million share repurchase program, completed in August 2023219220 Share Repurchases in Q3 2023 | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | July 1 - July 31, 2023 | 101,095 | 2.6574 | | August 1 - August 31, 2023 | 19,482 | 2.3600 | Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications