Blockbuster Earnings Prove These 2 Stocks Have 10X Upside Potential  | | Luke Lango | Hello, readers. I'm writing you today to give you a quick update on two core stocks in our model portfolio – IZEA Worldwide (IZEA) and Butterfly Network (BFLY) – as both companies recently reported strong fourth-quarter earnings, reiterating exactly what we wanted to hear. We have increased confidence in both companies' long-term potential – IZEA as the future Amazon of the Influencer Economy and Butterfly Network as the future of the medical imaging technology globally – and are optimistic both stocks can multiple 10X from their current perch. IZEA Sprints Into Hypergrowth Mode With respect to IZEA, the numbers were awesome: Bookings in the quarter rose 47% year-over-year, paced by some massive contract wins and record sign-ups for the company's SaaS offering. That momentum has accelerated into Q1, with bookings up more than 100% year-over-year. Meanwhile, gross margins are expanding significantly, and operating losses are narrowing. More importantly, management sounded a hypergrowth tone on the conference call. CEO Ted Murphy plans to go "all in" over the next year, investing a ton of money into data science, engineering, and marketing to simultaneously improve the effectiveness of its IZEAx and BrandGraph solutions, while also growing awareness and reach of its newly launched Shake marketplace. While expenses will surge in 2021/22, this is exactly what management needed to do. By going all-in, IZEA can capitalize on the huge opportunity in front of it, turning its series of promising, relatively unknown Influencer Marketing software platforms into must-have tools for the modern marketing enterprise. We suspect this is exactly what will happen. And so, while expenses will soar over the next 12 to 24 months, we fully expect this surge in expenses will trigger larger revenue growth. If so, it paves the way for IZEA to burst onto the scene as one of the marketing technology world's favorite software platforms… and as one of Wall Street's favorite small-cap technology stocks. In other words, IZEA's long-term upside potential has always been enormous. However, management is finally ready to invest the necessary resources to unlock that potential. The future has never been brighter for this potential 10X winner. Butterfly Network Gets Ready to Take the Medical World by Storm Butterfly Network's earnings numbers were also awesome, shipping 61% more handheld ultrasound iQ devices in 2020 than in 2019. That led to 53% growth in hardware revenues. Perhaps more importantly, Butterfly Network sold a lot of accompanying software services with those devices, and the company's subscription software business reported a 216% rise in revenues in 2020. Overall, revenues rose 68%, while gross margins excluding loss on purchase commitments climbed from negative 41% to negative 2%. Adjusted operating expenses rose just 13%, on a 68% revenue surge, leading to adjusted EBITDA loss dollars narrowing year-over-year. From a financial perspective, everything is trending in the right direction. Units are soaring, revenues are growing, gross margins are expanding, and losses are narrowing. Of equal importance, the company now has about $600 million in cash on the balance sheet (versus cash burn of $82 million in 2020), so Butterfly Network has more than enough resources to absorb losses for the near future and invest comfortably in improving its technology, product, and platform. That's exactly what Butterfly Network is doing. According to management's comments on the conference call, Butterfly Network is committed to three things. - Hiring more talented engineers to help improve its product.
- Expanding the core technological capabilities of its iQ devices to be much more than handheld ultrasound devices.
- Securing global partnerships to help the company scale manufacturing capability and expand customer awareness.
That's a winning growth strategy for an early-stage, disruptive innovator with a breakthrough technology. So, Butterfly's earnings report leaves us just as confident as ever that this company has the DNA to fundamentally redefine the medical imaging world. By the end of the decade, most medical professionals around the world will have an iQ device in their scrubs. A Final Thought The market has turned sour on early stage, small-cap growth stocks over the past month. But a recent wave of strong earnings reports from these companies – including blockbuster reports from IZEA and Butterfly Network – prove the fundamentals underlying these world-changers have not changed at all. If anything, they're getting stronger. All you have to do as an investor, then, is work through this near-term pain, stay focused on the innovation, and let patience guide you to huge long-term returns. We are as confident as we've ever been that many of the stocks in our portfolio will rise 10X over the next few years. Sincerely, 
Luke Lango
Editor, Exponential Growth Report New to Exponential Growth Report? Small-cap stocks that can rise 10X over the long run are often volatile. If you are interested in these stocks, understand the risks and buy them like a professional. Learn more about the risks of nano- to small-cap stocks and how to buy them here. | 
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