IZEA Worldwide, Inc.

Good afternoon, everyone, and welcome to IZEA's earnings call covering the fourth quarter of 2023. I'm Ryan Schramm, President and Chief Operating Officer at IZEA. And joining me on the call are IZEA Chief Financial Officer Peter Beery and IZEA Founder, Chairman and Chief Executive Officer Ted Murphy. Thanks for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q4 2023. If you would like to review those details, all of our investor information can be found online on our investor relations website at IZEA.com forward slash investors. Before we begin, please take note of the Safe Harbor paragraph included in today's press release covering IZEA's financial results, and be advised that some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non-GAAP financial measure of adjusted EBITDA. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today and in our publicly available filings. With that, I would now like to introduce and turn the call over to Isaiah's Chief Financial Officer, Peter Beery. Peter.

Thank you, Ryan, and good afternoon, everyone. I'll review operating results for the quarter ended December 31st, 2023, compared to the prior year's quarter and discuss certain balance sheet highlights. Total revenue for the fourth quarter of 2023 was $8.9 million, 1% higher than the prior year quarter. Managed services revenue totaled 8.8 million during the fourth quarter of 2023, which was 0.4 million or 4.2% higher than the fourth quarter of 2022. Revenue from our non-recurring customer totaled 0.4 million in the current quarter and 1.7 million in the prior year's fourth quarter. Revenue from our ongoing customers totaled 8.4 million during the quarter, 25.1% higher than the previous year's fourth quarter, which totaled 6.7 million. This increase came from comparatively stronger bookings from our ongoing customers in the second and third quarters of 2023. Managed services bookings for the fourth quarter totaled 7.6 million compared to 7.9 million for the prior year's fourth quarter, a 2.8% decline. This decline was primarily due to lower bookings in the current quarter from our non-recurring customer. Our transition away from this major customer, which we announced in early 2023, is now complete. The average delivery time between bookings and revenues stands at about seven and a half months, which has shortened from approximately nine months previously. Our managed services backlog, which represents the total of unrecognized revenue for contracts that are underway, as well as recent bookings that we haven't started to invoice, totaled $11.9 million on December 31, 2023. SAS services revenue totaled $0.1 million in the fourth quarter of 2023, down 70% from $0.4 million in the prior year quarter. We successfully transitioned away from our IZEA X platform in the second quarter of 2023. Our new platforms, Flex and IZEA.com, offer enhanced features and lower per user revenue models designed to drive subscriber expansion. We're beginning to see initial signs of growth in the current quarter, with revenue growing sequentially from the third quarter of 2023. Our total cost of revenue was $4.7 million in the fourth quarter of 2023, or 53.1% of revenue compared to 5.7 million or 65.3% of revenue in the prior year quarter. Our blended gross margin excluding labor costs improved in the fourth quarter. Expenses other than the cost of revenue totaled 6.4 million in the fourth quarter of 2023, up 42.5% from 4.5 million in the prior year quarter. Sales and marketing costs totaled 2.6 million during the fourth quarter, up 18% compared to the prior year quarter, due primarily to higher spending on brand awareness and demand generation activities to drive bookings growth. General and administrative costs totaled 3.6 million during the fourth quarter, up 97.6 from the prior year quarter, due primarily to higher human capital and contractor costs, and non-cash stock-based compensation costs. Our net loss in the current quarter totaled 1.5 million or negative nine cents per share on 16.4 million shares compared to a loss of 0.9 million or negative six cents per share on 15.5 million shares. These share counts are adjusted for the four for one reverse split effective on June 23rd, 2023. Adjusted EBITDA was negative 1.1 million for the fourth quarter of 2023, compared to negative 3 million for the prior year quarter. As of December 31st, 2023, we had 64.2 million in cash and investments, an increase of 1.5 million from the beginning of the quarter, due primarily to strong accounts receivable collection and higher year-end accrued contract liabilities. We earned $662,000 in interest on our investments during the fourth quarter, up about 35% over the prior year, reflecting improved interest rates. Lastly, we do not have any debt on our balance sheet. With cash on hand and liquidity from our investment portfolio as required, we believe we're in a solid position to execute on organic business growth and acquisition opportunities that lie ahead. With that, I'll turn the call back over to Ryan.

Thanks, Peter. Over the past year, our team at IZEA has been focused on implementing a series of strategic changes within our operations aimed at enhancing our business performance and driving long-term value creation. These improvements span across areas such as process optimization, organizational structures, technology integration, customer diversification, and go-to-market pricing modifications. We're now beginning to see measurable benefits to the business, reflecting positively in our overall outlook for 2024 and beyond. These changes are not just about short-term gains. They are part of a larger vision to ensure sustained growth, profitability, and value generation for our shareholders. Today, Ted and I are eager to delve into these advancements, detailing the tangible impact they're having and discussing how they're positioning us for a stronger future. First, let's talk about globalization and diversification. Throughout 2023, we made investments in team members and markets outside of North America. Members of Team Isaiah now operate in 95 cities on five continents, servicing clients, building technology, and pushing Isaiah forward. We actively optimize the costs and capabilities of talent with the needs of both our internal organization and our client base, enabling us to become more efficient over time. As Ted will detail later, this has led to large productivity gains over the past few years, and it has also unlocked new opportunities with corporate giants around the world, including Tencent, ByteDance, and Techno in China, and most recently Kia from our new local presence in South Korea. We intend to continue our efforts to expand our footprint in strategic locations around the globe where we see Greenfield to provide a differentiated and credible solution for brand leaders. Another priority for IZEA has been customer diversification by expanding the types of software-based solutions we bring to market to accompany our award-winning full service team of professionals. We kicked off the year on January 18th with the unveiling of IZEA Flex, our next generation influencer marketing platform built for brands and agencies of all sizes. In Flex, IZEA introduced some of the industry's most affordable and innovative solutions to disrupt an overpriced legacy set of competitors that we observed in the market. At the same time, we believe that there was notable potential in the advancements around artificial intelligence to evolve our product set for the better. Beyond the buzzword bingo often thrown around just to sound relevant, IZEA's team studied practical use cases and announced the release of a whole new offering named Form AI at the Cannes Lion International Festival of Creativity in late June 2023. Form.ai has been a driving force in the growth of registered users on IZEA.com, which crossed the 1 million mark during the fourth quarter of 2023. These tools are fueling increased usage of IZEA.com with a growing number of customers opting for paid subscriptions. Globalization and continuous innovation underpin our organic growth strategy, but also play important roles in our acquisition strategy as well. Many of our acquisition targets reside outside of the United States and will expand IZEA's geographic footprint, providing access to new ideas, new talent, and new customers. Other targets serve as a catalyst for broadening our creator economy-centric offerings and capabilities. On December 3rd, we announced our acquisition of Huzoo, Australia's leading influencer marketing company, headquartered in Sydney. The company serves a roster of the region's most innovative brands, including Bunnings, Emma Sleep, Super Cheap Auto, and Ryobi. As a respected leader in its home market, Huzoo will operate as a standalone, wholly-owned subsidiary of IZEA. The acquisition not only expands and diversifies the company's existing geographic footprint, but it also adds new capabilities in other areas of the growing creator economy, such as creator talent representation. Early on into our working relationship post-close, the Australian Influencer Marketing Council, or AIMCO, named Huzoo Best Boutique Influencer Marketing Agency at its annual awards ceremony, which portends great things ahead for our growth strategy in the region. Another key theme you've heard us refer to in recent calls is our approach to reshape the modern definition of how creators can deliver value to leading brands. As the creator economy has evolved and matured, so too have the strategic needs that marketers are seeking creators to solve. While influencer marketing remains one of the hottest areas of global growth, the narrative has expanded to include a range of approaches that drive highly measurable results, including creator-generated content or CGC, advocacy marketing, and even precision paid creator amplification. Knowing that these are hot buttons on the top of mind to chief marketing officers, it informed our second acquisition of 2023, that of San Francisco-based Zuberance, the pioneering advocate marketing company. Zuberance provides services and software that enables marketers to transform their static CRM databases into vibrant communities of their top customers, engaging these communities to serve as advocates for brands, all of which leads to low-cost content creation and meaningful business outcomes. The practice of advocate marketing leverages the authentic voices of a brand's most satisfied customers, transforming their organic enthusiasm into an influential social campaign. This approach, rooted in genuine customer experiences and satisfaction, perfectly complements influencer marketing by adding both depth and scalability. Isaiah's acquisition of Zubrin signals a strategic move towards harnessing the combined power of influencer presence and authentic customer advocacy within the integrated marketing ecosystem to redefine what a creator is and can be both now and into the future. Before I turn the call over to Ted for his remarks, I also want to highlight the wide range of industry honors, awards, and recognitions ISEA received over the last 12 months. This is a particularly prideful point for our leadership team. as the company's proverbial trophy case differentiates IZEA amidst the hyper-fragmented and noisy trader economy, while demonstrating credibility, not just capability, to leading brands selecting whom they wish to award their business to. In all, 2023 was a record-setting year for IZEA, winning nearly 20 industry honors for our campaign work and being named Best Influencer Marketing Company at the Martech Breakthrough Awards. We're particularly proud of our work on the launch of Barbie for Warner Brothers, which received four Platinum 2023 VEDA Digital Awards, including Best Influencer Endorsement. This as part of our broader corporate mission to champion creators and serve leading brands is a critical aspect, not only to our long-term corporate strategy, but a key driver to our lasting success. We were also humbled to earn top recognitions for who we are as an employer and what we've built as a workplace culture, including best company leadership, best company outlook, and best CEO from comparably, to honors from the Stevie Awards, and being a certified great place to work. We're proud of these culture awards in 2023 in particular because it was a year of great change and a time where our team had to extend well outside of their comfort zone. Leadership comes easy in times of smooth seas, but our team navigated a particularly difficult year while maintaining the respect and admiration of our team, clients, and industry at large. I'd now like to welcome our founder, chairman, and chief executive Ted Murphy to the call to share his thoughts on our 2023 performance and a look at the road ahead. Ted.