[June 11, 2018] |
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IZEA Announces Letter of Intent
IZEA,
Inc. (NASDAQ: IZEA),
operator of IZEAx, the premier online marketplace connecting
brands and publishers with influential content creators, entered into a
non-binding letter of intent (the "LOI") on April 19, 2018 outlining
certain general terms for the proposed purchase by IZEA of all the
outstanding shares of a leading participant in the influencer marketing
space (referred to as the "Influencer Marketing Company").
The Influencer Marketing Company develops, markets and sells SaaS (News - Alert)
software that is complementary with IZEA's existing influencer marketing
products and services. Subsequent to signing the LOI, IZEA and the
Influencer Marketing Company determined that shareholders of both
companies would be best served by consummating the transaction through a
merger agreement (the "Merger"). The transaction contemplates that the
Influencer Marketing Company will become a wholly-owned subsidiary of
IZEA. Consideration paid to shareholders of the Influencer Marketing
Company will be in the form of cash and IZEA stock paid or issuable at
closing and over the next 12-month period.
"As the influencer marketing industry has grown, so has the
fragmentation of service providers and channel noise for the marketers
buying services from those companies," said Ted Murphy, Chairman and CEO
of IZEA. "At the same time, there is material waste among these
competitors who are investing duplicative resources developing software,
marketing their services and maintaining support infrastructure. We
believe that there is an opportunity for consolidation among the leading
providers in both influencer and content marketing, and our hope is that
this transaction serves as the catalyst to bring more of these companies
together."
Based upon information provided by the Influencer Marketing Company to
IZEA, the Influencer Marketing Company's revenues for the year ended
December 31, 2017 were approximately $5.9 million and its Gross Billings
were approximately $18.2 million. Net loss for the year ended December
31, 2017 was $3.6 million. The Influencer Marketing Company's Gross
Billings information has not yet been audited and actual numbers may be
materially different from what was provided and reported herein. In
2017, the combined annual revenues of IZEA and the Influencer Marketing
Company were approximately $30.3 million, with Gross Billings of
approximately $47.4 million. The Influencer Marketing Company's revenues
are comprised of SaaS subscription fees, marketplace transaction fees
and professional service fees. Approximately 95% of its revenues are
derived from SaaS and marketplace fees. IZEA believes that the Company,
on a consolidated basis if the Merger is consummated, could achieve the
necessary operational expense reductions to significantly improve IZEA's
Adjusted EBITDA profile. However, IZEA cannot provide any assurance
that, if the transactioncloses, IZEA will be able to achieve any cost
savings and it is possible that the impact on Adjusted EBITDA and the
balance sheet could be negative.
Consummation of the transaction contemplated by the LOI is subject to
financing and the execution and delivery of a definitive Merger
Agreement along with the satisfaction of the closing conditions which
will be contained therein. It is contemplated that the Merger
transaction will be consummated in July 2018, but there can be no
assurance that a definitive Merger Agreement will be entered into, or
that the Merger will be consummated upon the terms set forth in the LOI,
or otherwise. In the event that the Merger is consummated, there can be
no assurance that it will ultimately prove to be beneficial to IZEA.
About IZEA
IZEA operates IZEAx, the premier online marketplace that connects
marketers with content creators. IZEAx automates influencer
marketing and custom content development, allowing brands and agencies
to scale their marketing programs. IZEA creators include celebrities and
accredited journalists. Creators are compensated for producing unique
content such as long and short form text, videos, photos, status
updates, and illustrations for marketers or distributing such content on
behalf of marketers through their personal websites, blogs, and social
media channels. Marketers receive influential content and engaging,
shareable stories that drive awareness. For more information about IZEA,
visit https://izea.com/.
Use of Non-GAAP Financial Measures
Gross Billings, a non-GAAP financial measure, is the total dollar value
of the amounts earned from customers for the services performed where
the company is acting as a principal and the amounts charged to
customers for their self-service purchase of goods and services through
the online platforms where the company is acting as an agent. Gross
Billings when the company is acting as an agent differs from revenue
reported in the consolidated statements of operations, which is
presented net of the amounts paid to third-parties providing the content
or sponsorship services.
We consider this metric to be an important indicator of our performance
as it measures the total dollar volume of transactions generated through
our marketplaces. Tracking Gross Billings allows us to monitor the
percentage of Gross Billings that we are able to retain after payments
to our creators. Because we invoice our customers on a gross basis,
tracking Gross Billings is critical as it pertains to our credit risk
and cash flow.
"EBITDA" is a non-GAAP financial measure under the rules of the
Securities and Exchange Commission. EBITDA is commonly defined as
"earnings before interest, taxes, depreciation and amortization." IZEA
defines "Adjusted EBITDA," also a non-GAAP financial measure, as
earnings or loss before interest, taxes, depreciation and amortization,
non-cash stock related compensation, gain or loss on asset disposals or
impairment, changes in acquisition cost estimates, and all other
non-cash income and expense items such as gains or losses on settlement
of liabilities and exchanges, and changes in fair value of derivatives,
if applicable.
We believe that Adjusted EBITDA provides useful information to investors
as it excludes transactions not related to the core cash operating
business activities including non-cash transactions. We believe that
excluding these transactions allows investors to meaningfully trend and
analyze the performance of our core cash operations.
All companies do not calculate Gross Billings and Adjusted EBITDA in the
same manner. These metrics as presented by IZEA may not be comparable to
those presented by other companies. Moreover, these metrics have
limitations as analytical tools, and you should not consider them in
isolation or as a substitute for an analysis of our results of
operations as reported under GAAP.
Safe Harbor Statement
All statements in this release that are not based on historical fact are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking statements, which are
based on certain assumptions and describe our future plans, strategies
and expectations, can generally be identified by the use of
forward-looking terms such as "believe," "expect," "may," "will,"
"should," "could," "seek," "intend," "plan," "goal," "estimate,"
"anticipate" or other comparable terms. Examples of forward-looking
statements include, among others, statements we make regarding future
financial results, expectations regarding whether and when the
transactions would lose, expectations concerning IZEA's ability to
increase its revenue and improve Adjusted EBITDA, expectations with
respect to operational efficiency, expectations regarding financing, and
expectations concerning IZEA's business strategy. Forward-looking
statements involve inherent risks and uncertainties which could cause
actual results to differ materially from those in the forward-looking
statements, as a result of various factors including, among others, the
following: competitive conditions in the content and social sponsorship
segment in which IZEA operates; failure to popularize one or more of the
marketplace platforms of IZEA; inability to finance growth initiatives
in a timely manner; our ability to establish effective disclosure
controls and procedures and internal control over financial reporting;
our ability to satisfy the requirements for continued listing of our
common stock on the Nasdaq Capital Market; changing economic conditions
that are less favorable than expected; and other risks and uncertainties
described in IZEA's periodic reports filed with the Securities and
Exchange Commission. The forward-looking statements made in this release
speak only as of the date of this release, and IZEA assumes no
obligation to update any such forward-looking statements to reflect
actual results or changes in expectations, except as otherwise required
by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180611005121/en/
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