IZEA(IZEA) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The unaudited statements show decreased revenue and a wider net loss for H1 2023 compared to the prior year Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $31,223,220 | $24,600,960 | | Total current assets | $53,151,514 | $50,366,339 | | Total assets | $79,023,106 | $85,674,890 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $12,574,969 | $15,346,770 | | Total liabilities | $12,668,081 | $15,408,943 | | Total stockholders' equity | $66,355,025 | $70,265,947 | Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $10,689,059 | $12,577,011 | $19,426,781 | $21,467,347 | | Loss from operations | ($1,675,780) | ($442,160) | ($5,052,641) | ($2,893,155) | | Net loss | ($1,033,426) | ($169,890) | ($3,839,765) | ($2,646,133) | | Basic and diluted loss per share | ($0.07) | ($0.01) | ($0.25) | ($0.17) | Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used for operating activities | ($3,813,842) | ($4,566,772) | | Net cash provided by (used for) investing activities | $11,196,947 | ($59,489,551) | | Net cash used for financing activities | ($760,845) | ($29,902) | | Net increase (decrease) in cash | $6,622,260 | ($64,086,225) | Notes to the Unaudited Consolidated Financial Statements Key disclosures include the new IZEA Flex platform, a share repurchase program, and a reverse stock split - The company operates online marketplaces connecting marketers with content creators and launched IZEA Flex in January 2023[28][31] - In June 2023, the company effected a 4-for-1 reverse stock split, with all share and per-share amounts adjusted accordingly[107][109] - The Board authorized a $1 million share repurchase program in March 2023, repurchasing 245,283 shares for $705,403 by June 30, 2023[111][112] Revenue by Service Type (Six Months Ended June 30) | Revenue Type | 2023 | 2022 | | :--- | :--- | :--- | | Managed Services Revenue | $19,121,135 | $20,549,072 | | SaaS Services Revenue | $305,646 | $918,275 | | Total Revenue | $19,426,781 | $21,467,347 | Management's Discussion and Analysis of Financial Condition and Results of Operation Revenue and bookings declined due to a large customer's departure, though the company maintains strong liquidity Results of Operations for the Three Months Ended June 30, 2023 and 2022 Q2 2023 revenue fell 15% to $10.7 million, driven by a large customer decline and SaaS platform transition Q2 2023 vs. Q2 2022 Financial Summary | Metric | Q2 2023 | Q2 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $10,689,059 | $12,577,011 | ($1,887,952) | (15)% | | Loss from operations | ($1,675,780) | ($442,160) | ($1,233,620) | 279% | | Net Loss | ($1,033,426) | ($169,890) | ($863,536) | 508% | - Managed Services revenue from the 'core customer' base grew 6% to $7.2 million, offset by a 37% decline from a large, non-recurring customer[165] - SaaS Services revenue fell 82% due to lower licensee counts while transitioning to the new Flex platform[166][177] Results of Operations for the Six Months Ended June 30, 2023 and 2022 H1 2023 revenue decreased 10% to $19.4 million, widening the net loss to $3.8 million H1 2023 vs. H1 2022 Financial Summary | Metric | H1 2023 | H1 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $19,426,781 | $21,467,347 | ($2,040,566) | (10)% | | Loss from operations | ($5,052,641) | ($2,893,155) | ($2,159,486) | 75% | | Net Loss | ($3,839,765) | ($2,646,133) | ($1,193,632) | 45% | - Managed Services revenue decreased by 7% YoY, primarily due to a decline from one large customer contract set to conclude in 2023[179] Key Metrics Key metrics like Bookings and Gross Billings declined significantly due to a major customer's departure Managed Services Bookings | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $7.3 million | $9.3 million | | Six Months Ended June 30 | $13.4 million | $21.5 million | - Bookings from a large departing customer totaled only $312,000 in H1 2023, compared to $6.2 million in H1 2022, causing most of the decline[191] Total Gross Billings | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended June 30 | $10.9 million | $13.4 million | | Six Months Ended June 30 | $20.6 million | $22.9 million | Non-GAAP Financial Measure (Adjusted EBITDA) Adjusted EBITDA turned negative in Q2 and H1 2023, declining from positive figures in the prior year Reconciliation of Net Loss to Adjusted EBITDA | Period | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Net loss | ($1,033,426) | ($169,890) | ($3,839,765) | ($2,646,133) | | Adjusted EBITDA | ($636,953) | $254,351 | ($2,824,944) | ($1,871,370) | Liquidity and Capital Resources The company holds $31.2 million in cash and believes it has sufficient resources for the next twelve months - Cash and cash equivalents were $31.2 million as of June 30, 2023, compared to $24.6 million as of December 31, 2022[204] - Net cash used for operating activities was $3.8 million for H1 2023, while investing activities provided $11.2 million[205] - Management believes it has adequate cash and invested resources to fund its business growth for the next twelve months[206] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, this disclosure is not required - This disclosure is not applicable to smaller reporting companies[210] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023 - Based on an evaluation as of June 30, 2023, management concluded that the company's disclosure controls and procedures were effective[213][214] - There were no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2023[217] PART II. OTHER INFORMATION Legal Proceedings The company is not involved in any material legal proceedings - As of August 7, 2023, the company is not aware of any legal proceedings that could have a material adverse effect[220] Risk Factors The company faces significant risk from customer concentration, highlighted by the departure of a major client - A significant portion of gross billings and accounts receivable are attributable to a small number of customers, creating dependency[222] - At June 30, 2023, one customer accounted for 30% of gross billings for the quarter, and the company is parting ways with this customer[222] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchasers of Equity Securities The company repurchased 245,283 shares for approximately $705,403 during Q2 2023 Share Repurchases in Q2 2023 | Period | Total Shares Purchased | Average Price Paid per Share | Dollar Value Available for Repurchase | | :--- | :--- | :--- | :--- | | May 1 - May 31, 2023 | 63,486 | $2.9401 | $813,345 | | June 1 - June 30, 2023 | 181,797 | $2.8534 | $294,597 | Defaults Upon Senior Securities This section is not applicable - Not applicable[225] Mine Safety Disclosures This section is not applicable - Not applicable[226] Other Information This section is not applicable - Not applicable[227] Exhibits This section lists filed exhibits, including Sarbanes-Oxley certifications and XBRL financial data - The report includes certifications from the Principal Executive Officer and Principal Financial Officer pursuant to the Sarbanes-Oxley Act of 2002[229] - Financial statements and notes are provided in XBRL format as Exhibit 101[229]