IZEA Buys Hoozu and Zuberance, Gets Influencer Agency and More

December 21, 2023 by  Chris Erwin

RockWater Roundup

RockWater analysis to make you a better investor and operator. Today we discuss IZEA’s acquisition of Hoozu and Zuberance

 


IZEA Buys Hoozu and Zuberance, Gets Influencer Agency, and More

 

2 weeks ago IZEA acquired an influencer marketing agency and management company.

As well as a customer advocate marketing platform.

Below is breakout deal info, and what else I find interesting…

 

🎯TARGET #1: Hoozu

  • Influencer mktg agency

  • AUS-based

  • Has talent mgmt division for AUS creators (Huume)

  • Founded 2015 by Nathan Ruff and “footballer” Lote Tuqiri

  • < 15 team members (per LinkedIn)

  • Acquired Remarkables Group in 2021, made founder Natalie Giddings CEO

  • Profitable for past 2 yrs

 

🎯TARGET #2: Zuberance

  • Advocate mktg platform – turns customer satisfaction into UGC to drive sales

  • Enables customer referrals, reviews, stories, answers, social sharing, analytics

  • Founded 2007 by Rob Fuggetta

  • < 10 team members (per LinkedIn)

 

💰BUYER: IZEA

  • Provides influencer mktg tech, data, and services

  • Public company

  • Founded 2006 by Ted Murphy

  • Has done influencer programs for half of Fortune 50

  • 1M users on influencer mktg platforms

  • 150 team members in 13 countries

  • Clients incl retail, DTC, restaurants, SAAS, entertainment, travel

 

🤝DEAL RATIONALE: IZEA / Hoozu

  • APAC expansion + beachhead in Oceania

  • Hoozu execs to lead growth via M&A in APAC

  • Adds talent mgmt to IZEA portfolio

  • Grow sales team to acquire new clients

  • IZEA adds tech, data, and best practices to improve campaign quality, performance

 

🤝DEAL RATIONALE: IZEA / Zuberance

  • Incorporate platform into IZEA software product suite

  • Leverage IZEA’s tech, and infrastructure to better service Zuberance clients

  • Adds services for brand clients of new acquisitions like Hoozu

 

🔎DEAL DETAILS: Izea / Hoozu

  • Mix of cash / stock

  • Price undisclosed

  • Earnout against KPI performance

  • Hoozu will be standalone, wholly-owned sub of IZEA

 

🔎DEAL DETAILS: Izea / Zuberance

  • None provided!

 

🤔 What I find interesting…

IZEA has a $33M market cap on NASDAQ. Stock is down 47% over the past 5 yrs, down 17% LTM.

For 3Q 2023, revenues down 27% YoY, net loss of $2M vs $0.9M the prior year. Cash from operations was -$5.7M.

I knew nothing about IZEA before I wrote this analysis, but these high level figures make me concerned about biz viability.

Mgmt highlighted IZEA is going through transformation in 2023. Making moves to reduce churn and UA, and improve LT health of SAAS and managed services biz.

I see $35M of C&CE, and no LT debt, so there’s some cushion. But there are cash swings around ST and LT investments, will have to dig into that later.

Net net, highlights how much the brand marketer world is becoming more competitive. Wins will go to ad agencies with diverse capabilities and scale. Hence all the M&A, and explains these 2 acquisitions.

Likely these deals didn’t have much of a cash component and are not big exit wins. But instead, the chance for founders and teams to keep building and make their combined companies more resilient in a new paradigm.

Rooting for them, hope it works out.

 

————

 

I’m the founder of RockWater Industries. We do financial and strategy advisory for media, tech, and commerce. From M&A and fundraising to consumer research and go-to-market planning.

✉️ DM me on LinkedIn or email me chris @ wearerockwater dot com

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