Business

Izea Inc (NASDAQ:IZEA) Revenue Takes A Hit

Izea Inc (NASDAQ:IZEA)

Izea Inc (NASDAQ:IZEA)

Shares of Izea Inc (NASDAQ:IZEA) shed 12.71% in market value after the company reported a 3% reduction in booking revenue for the second quarter. The stock ended the day at $1.66 a share after bookings came in at $6.6 million compared to $6.8 million reported in Q2 2016. Revenues in the first quarter were up by 14% to $6.2 million from $5.5 million a year ago.

Izea Inc (NASDAQ:IZEA)
Bar graph for $IZEA

 

Declining Revenue

Izea Inc (NASDAQ:IZEA) is an operator of online marketplaces that facilitates transactions between brands and influential content creators. Some of the company’s content creators include social media influencers as well as accredited journalists. The company compensates these creators for producing and distributing unique content on behalf of its marketers.

A reduction in revenue in the second quarter is a point of concern given that it comes on the reduction of booking accounts and a $1 million client budget reduction. The company uses bookings to ascertain future revenue recognition.

Cancellation of bookings by clients is turning out to be a big problem. However Ted Murphy, Chief Executive Officer, has sought to quash the concerns by reiterating that excluding the large booking cancellation, the company continues to experience strength in managed services segments.

“Exclusive of the $1 million reduction due to the client’s budget cuts, gross bookings for managed services increased 24% year over year. In addition to strong sales, we have seen a meaningful improvement in operational efficiency and expect to report an improved EBITDA vs. Q2 last year,” said Mr. Murphy.

2017 Guidance

Izea Inc (NASDAQ:IZEA) has since reiterated its 2017 revenue guidance of between $29 million and $30 million. Gross margins, on the other hand, should range between 47% and 48%. Izea will report full financial results for the second quarter on August 10, 2017.

Rubicon Partnership

Separately, Izea Inc (NASDAQ:IZEA) has inked a partnership with Rubicon Project to extend its influencer marketing services to thousands of potential advertisers. Under the terms of the agreement, the company is to use Rubicon’s Project technology to extend its IZEAx platform footprint. Izea will provide influencer marketing campaigns as part of the partnership.

The partnership should make it easy for customers scale programmatic influencer marketing campaigns further diversifying Izea Inc (NASDAQ:IZEA) marketing channels. The partnership should also help creators monetize their content.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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