• Brett Schafer

Deep Dive: Izea Worldwide

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  1. What do they do? Izea Worldwide creates and operates online marketplaces for marketers to connect with content creators (think Instagram or Tik Tok stars).

  2. History? The original corporation was founded in 2006 and was called PayPerPost. It went public in 2011 but was a busted IPO. They have bought a number of companies over the years including TapInfluence in 2018, which inspired their recent SaaS solution. The company is now headquartered in Orlando, Florida.

  3. Industry? The company operates in the “influencer” marketing industry, which is growing rapidly. An estimated $8 billion was spent on Instagram influencers in 2020.

  4. Management? Ted Murphy is the founder and CEO of Izea. he is a bit of a wildcard, and actually had the company get into cryptocurrency in 2018, which was a bit of a red flag for us.

  5. Valuation? The company is not profitable or cash flow positive, but has a market cap of $214 million and trades at an LTM EV/sales of 12.

  6. Earnings? In the first nine months of 2020 sales were down 9% YoY.

  7. Balance Sheet? $30 million in cash, the company just did an equity raise. No big liabilities.

  8. Potential Competitive Advantages? We had industry focus and the network effects of an online marketplace.

  9. Potential Future Growth Opportunities? Shake, IZEAx Discovery, and the continued emergence of influencer-focused social media. We go into depth on the show on what these two products are.

  10. Highlights? Sound business model and the Shake product (again, listen to show for more details).

  11. Lowlights? Management was a red flag, and the company has had trouble during the pandemic even though social advertising has done well.

Disclosure: The authors and podcast guests are not financial advisors. Brett Schafer and Ryan Henderson are portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this podcast.

#IZEA #IzeaWorldwide

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