IZEA Worldwide, Inc.

Good afternoon and welcome to IZEA's Q4 2020 earnings call. I'm Ryan Schramm, President and Chief Operating Officer at IZEA. And joining me today is IZEA Interim Chief Financial Officer Leanne Hitchcock and IZEA Chairman and CEO Ted Murphy. Thanks for being with us this afternoon. Earlier today, the company issued a press release with details pertaining to our fourth quarter performance for 2020. If you'd like to review those details, all of our investor information can be found on our investor relations website at IZEA.com forward slash investors. Before we begin, please take note of the Safe Harbor paragraph that appears at the end of the press release covering the company's financial results and be advised that during the course of today's earnings call, our management team will discuss IZEA's business outlook and make forward-looking statements. These statements are predictions based on our team's expectations as of today that are subject to inherent risks and uncertainties and should not be unduly relied upon. Actual events, results, or trends could differ materially from our forecast due to a number of factors, including those mentioned in our most recently filed periodic reports with the SEC. The company and our management team assume no obligations to update any forward-looking statements made in today's call. In addition, our update today will also refer to the key metrics of gross billings and the non-GAAP financial measure adjusted EBITDA. A detailed explanation of these measures is disclosed in our earnings release and in our most recent Form 10-K available under SEC filings in the Investors section of IZEA.com. With the appropriate disclosures out of the way, I'm pleased to introduce my colleague and IZEA's Interim Chief Financial Officer, Leanne Hitchcock. Leanne.

Thank you, Ryan, and good afternoon, everyone. For the three months ended December 31, 2020, IZEA's total revenue was $6.4 million, a 10% increase compared to Q4 2019, with $5.9 million coming from our managed service business and $537,000 coming from our SaaS offerings. we saw a 17% increase totaling $842,000 in our managed service revenue and a $274,000 decline in our SaaS service revenue in Q4 2020 as compared to Q4 2019. As we have previously announced, our bookings of managed services increased approximately 48% in Q4 2020 compared to Q4 2019. As a result, our revenue for managed services not only increased by 17% compared to the comparable quarterly period in 2019, it also increased by $2.3 million or nearly 67% compared to our managed service revenue in Q3 2020. Larger customers are increasing their marketing spend with us, and more brands are shifting more of their marketing dollars to influencer marketing campaigns. For Q4 2020, our gross billings increased $8 million compared to $7.8 million in Q4 2019. This 2% increase in gross billings was primarily due to the $842,000 increase in managed service revenue, offset by the decline in marketplace spend and license fees from SaaS customers. The reduction in SaaS gross billings due partially to customer churn, lower fees, and changed spending habits due to COVID uncertainties and other factors resulted in the $274,000 decrease in SaaS services revenue in Q4 2020 as compared to Q4 2019. Our cost of revenue exclusive of amortization was approximately $2.7 million in both quarterly periods, but as a percentage of revenue, our cost of revenue exclusive of amortization has improved from 46% in Q4 2019 to 43% in Q4 2020, primarily due to the reduction in personnel and travel-related costs on the fulfillment of our customer marketing campaigns. Our total costs and expenses were $7.4 million for Q4 2020 compared to $8.2 million for Q4 2019. If we exclude the non-cash $418,000 impairment of intangible assets recorded in Q4 2019, the improvement between periods is approximately $300,000, primarily as a result of cost reduction efforts affecting personnel, rent, and travel expenditures that were cut due to COVID operating changes. As a result of the notable improvements in our operating results, our net loss was $1 million or $0.02 per share in Q4 2020 compared to our net loss of $2.3 million or $0.07 per share for Q4 2019. With the increase in overall revenues, we were able to improve adjusted EBITDA by $825,000 or 64% to only negative $467,000 in Q4 2020 compared to negative 1.3 million in Q4 2019. This was achieved through the steps taken to increase revenue and maintain a virtual work environment during this quarter. Although our team is working remotely, our internal business operations are fully functional. We have observed changes in advertising decisions, timing, and spending priorities from our customers, which initially had a negative impact on our revenue. However, we found ways to reduce expenses and gain efficiencies in our internal operations to minimize the initial effects and focused our team to meet the needs of our customers throughout this year. Bookings is one of our key metrics that is our measure of all sales orders minus any known or expected cancellations or refunds within a period. However, bookings is not always an indicator of revenue for the quarter and could be subject to future adjustment. Revenue from managed service bookings is typically recognized over a six-month period on average. Based on the increase in bookings in Q4 2020, we are entering 2021 with a revenue backlog of approximately $10.6 million, and we are expecting to see continued increases in revenues in 2021 compared to 2020, which will be used to further invest in our own marketing and engineering spends. While we anticipate increased revenues, there is still a high level of uncertainty around the duration and total economic impact of the COVID pandemic on our industry in the future. As of December 31, 2020, we had cash on hand of $33 million and we subsequently raised $34.3 million under our ATM offering in the first quarter of 2021. From June 2020 to date, we have raised total gross proceeds through the ATM offering of $62.8 million. These funds put us in a position of strength with capital for our future growth. With that, I will turn the call back over to Ryan.

Thank you, Leanne. It's hard to reconcile the last year of our lives, both personally and professionally at times. In late March 2020, there was unprecedented uncertainty, not just within our business and the greater creator economy, but of course, the world at large. When we sent our team members across North America to work from home on Friday, March 13th, we thought it would be 15 days to flatten the curve. A minor distraction to end our fiscal quarter, perhaps. It's almost laughable now looking back to see how naive we all were as a society, as we faced what may likely be the largest global challenge of our generation. What transpired after the week of March 13th was horrifying. Our clients canceled our froze campaigns, all new business activity was stopped in its tracks, and suddenly the realization that IZEA could be highly vulnerable amidst all the broader chaos became a very real fear for us. But where other companies panicked and suffered as a result, we put our heads down and got to work. We focused on controlling the things that we could control within the dynamics of a once-in-a-lifetime pandemic. Creating content, sharing thought leadership, developing new products, and inspiring brand investment through a stable hand. I personally can say I've never worked so hard while at the same time being so terrified about the unknown. And much of our staff, of course, felt the same. And along the way, it hasn't been easy. In fact, nothing about the last 54 weeks has been easy on any of us. Our team members all took temporary pay cuts so we could avoid laying off full-time team members who needed health insurance and income during the height of the pandemic. Some of us got sick, but thankfully recovered. Some of us lost beloved family members who passed away while alone in a hospital. Many of us were and still are lonely due to extended social distancing. But through it all, the conviction of our team was unwilling to waver. We, Team IZEA, found a way forward to not just survive, but thrive by adapting quickly. For example, thanks to our cloud-first infrastructure approach originally designed years ago to help us navigate being headquartered in a hurricane zone, our team members were able to move from offices to home without missing a beat. And while we all prefer to see a few less Zoom meetings in 2021 as immunization rates increase and it becomes safer to be together again, Having the ability to collaborate in real time seamlessly during the workday provided many of us solace in an otherwise physically disconnected world. As society settled into the COVID economy last summer, we quickly realized that amidst the tectonic shifts in advertising and marketing that occurred due to the pandemic, that influencer marketing mattered more than ever. We committed to aggressively invest in our future, building a complete ecosystem of solutions anchored by proprietary technology. We weren't satisfied with the idea of shifting from quote unquote brace for impact to just recovery mode. No, we shifted from recovery mode to a high growth posture with confidence. In our managed service unit, we keyed in on the fact that more than ever in the COVID economy, brands wanted and needed a partner like IZEA who could provide agile, campaign-focused, flat-fee relationships with world-class execution instead of burdensome, expensive multi-year retainers. Paired with the strong relationship basis our client-facing team members have built over the years allowed IZEA to deliver its highest Q4 managed service bookings ever in 2020. In our enterprise SaaS work group, the macroeconomic impacts on the greater MarTech sector opened up a window of opportunity for us to overhaul our entire go-to-market approach via best-in-class cost-to-value pricing, improved term flexibility, and a relentless focus on reducing the time to impact for new customers onboarding, all of which drove a record number of SaaS customers signing up to ISEA X. And we did it all with a smaller workforce than we've historically had in place, fueled by increases in individual contribution productivity that was enabled by the technology investments we've made in our platforms. We have fewer people delivering more revenue per person. However, to be truly successful on a global basis, we cannot just go it alone. You have to link arms with like-minded companies who share IZEA's worldview and complement what we cannot do solely by ourselves. Through our partnerships workgroup, IZEA formed a multitude of industry-first working relationships during 2020 and into early 2021. First, with the formation of Influence United last September, which has brought a cohesive, multi-continent concepting, integrated strategy, and investment strategy to the industry. Our fellow Charter Alliance members give reciprocal capability presence across North America, LATAM, the EU, Southeast Asia, India, Australia, the continent of Africa, and across the Middle East. Never before in the influencer marketing industry has a partnership structure enabled global brands the opportunity to streamline their end-to-end investments, achieving scale through localized execution while saving time and money. More recently, IZEA announced the creation of an entire partner program ecosystem. The newly established roster of invitation-only companies brings together best-in-class solution providers and top representation agencies that strategically integrate with IZEA's consultative managed service offering and across our various software platforms, including Shake, IZEAx Unity Suite, and IZEAx Discovery. By leveraging members of the partner program, ISEA clients and customers can take their influencer marketing initiatives to new heights, igniting exclusive executional possibilities across a wide array of prominent talent and innovative technologies. Looking to the future, our goal is to not just partner with these companies, but provide a basis for even deeper relationship with our clients and customers as a result, leading to increased spend while providing the highest quality of service paired with revolutionary technology. Now, to provide some more details on the road ahead and to share some exciting announcements on the other aspects of our progress, I'd like to turn the call over to my colleague and IZEA's founder, chairman, and CEO, Ted Murphy. Ted. Thank you, Ryan.