IZEA Worldwide, Inc.

Good afternoon everyone and welcome to IZEA's earnings call covering the first quarter of 2025. I'm Matt Gray, VP Marketing at IZEA, and joining me on the call are IZEA's Chief Financial Officer, Peter Beery, and IZEA's Chief Executive Officer, Patrick Benatucci. Thank you for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q1 2025. If you'd like to review those details, all 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 these 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. Reconciliation 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. And with that, I would like to now introduce and turn the call over to IZEA's Chief Financial Officer, Peter Beary. Peter?

Thank you, Matt, and good afternoon, everyone. Earlier this afternoon, we released our results for the first quarter and filed a quarterly report on Form 10Q with the SEC. Additionally, we issued an informational press release announcing our intention to initiate a tender offer to repurchase the remaining $8.7 million of our previously announced $10 million stock buyback. Today, I'll review operating results for the quarter, which ended March 31, 2025, compared to the first quarter of 2024, and discuss certain balance sheet highlights as well as our proposed tender offer. Total revenue for the first quarter of 2025 was approximately $8 million, or .6% above the prior year quarter. Revenue from managed services totaled $7.9 million in the current quarter, growing .1% over the prior quarter. Managed services revenue from continuing operations, excluding a half a million from HUSU in the prior year quarter, rose .6% in the first quarter over the prior year period. Managed services bookings, a non-GAAP measure of demand for our services, declined to $7.5 million in the first quarter of 2025, compared to $9.3 million in the prior year's first quarter. One of our largest customers front-loaded their 2024 contract commitments, which resulted in contract timing differences. As of March 31, 2025, our managed services backlog representing unrecognized revenue from ongoing contracts and recent bookings not yet invoiced totaled $14.9 million. It's important to note that IZEA's contract bookings typically require an average of six to seven and a half months to complete the revenue cycle. SAS revenue totaled $60,953 in the first quarter of 2025, compared to $256,341 in the same quarter of the prior year. The -over-year decline reflects our strategic decision to reduce marketing support for our SAS offerings, while we evaluate the most effective capital allocation plan to drive long-term profitability. Our total cost of revenue was $4.4 million or .2% of revenue in the first quarter of 2025, compared to $4 million or .1% of revenue for the prior year quarter, reflecting lower margin Hoosier revenue in the prior year quarter. Expenses other than the cost of revenue totaled $4.2 million in the first quarter 2025, a 40% decline from $7 million in the prior year's quarter. Sales and marketing costs totaled $1.1 million during the first quarter of 2025, representing a .3% decline compared to the prior year's $3.1 million total. The decrease was largely due to reduced costs related to our targeted workforce reduction, as well as a temporary pause in advertising spend and lower general contractor fees. General and administrative costs totaled $2.9 million during the first quarter, a .3% decline over the prior year quarter, primarily due to lower employee-related costs, reduced use of external contractors, and lower spending on professional services and software license fees. Our net loss in the first quarter totaled $142,800 or negative one cent per share on 16.9 million shares, compared to a net loss of $3.3 million or negative 20 cents per share on 16.3 million shares for the first quarter of 2024. In the first quarter of 2025, adjusted EBITDA was negative $76,850 compared to negative $3.4 million for the prior year quarter. As a reminder, we updated our non-GAAP measure of adjusted EBITDA in the fourth quarter of 2024 to exclude non-operating items, primarily interest income, from our investment portfolio. The prior year comparison was restated for comparability. You can find a reconciliation of adjusted EBITDA to net income at the bottom of our earnings release. As of March 31, 2025, we had $52.2 million in cash and investments, an increase of $1.1 million from the beginning of the quarter. The higher cash balance reflects net reductions in working capital, primarily driven by collections of accounts receivable and positive cash flow from operations. We earned $500,000 in interest income on our investments during the recent quarter. Lastly, we did not have any debt on our balance sheet. We previously announced our commitment to repurchase up to $10 million of our stock in the open market, which was subject to certain restrictions. Through May 9, 2025, we purchased 469,211 shares, investing about $1.2 million from September 2024. Despite consistent daily buying since November 2024, low trading volumes and purchase restrictions have limited our buyback. Late this afternoon, we announced our intention to conduct a modified Dutch auction tender offer for up to $8.7 million of our shares, which, if fully subscribed, will complete our current buyback program. The tender is planned to commence on Friday, May 16, 2025, and will be priced from a low of $2.30 and a high of $2.80 per share based on a percentage of our 90-day volume average price. With cash on hand and liquidity from our investment portfolio as required, we are well positioned to execute organic business growth and capitalize on future acquisition opportunities. With that, I'll turn the call over to Patrick Venitucci, our Chief Executive Officer.

Thank you, Peter, and good afternoon, everyone. When I stepped into the CEO role in September 2024, the leadership team and I made a commitment to accelerate our path to profitability. We reset the strategic direction of the company and identified opportunities to fortify, simplify, and focus. In Q4 2024, we activated the first phase of our plan and took several bold and decisive actions that made a positive impact on Q1 2025. Geographically, we exited international markets in favor of fortifying in the U.S. By focusing on America first, we significantly reduced our international exposure and insulated our business from geopolitical risks, tariff risks, and currency risks. Organizationally, we designed a new and more efficient structure that aligned with our new strategy. This enabled us to simplify our organization and make targeted workforce reductions in December, which significantly improved our overall cost structure moving forward. We transformed our -to-market model by focusing on high-growth market segments and our extensive client list for which we have opportunities to do more. We are obsessed with serving our top clients even better. We've long had a strength in managed services and began embracing it more so than in the past. We're leaning into our ability to provide creator economy services with a better articulated service offering menu and a roadmap of areas where we intend to build capabilities both organically and via M&A. Technologically, we began simplifying our product offerings by focusing on fewer products, consolidating features, and delivering a more intuitive customer experience. There are a few other operational activities in Q1 worth highlighting. We won business from Nestle, Acer, Jeep, and more. Our sales pipeline is trending up with larger opportunities from higher quality clients. We produced exciting new work for Clorox, Carnation Breakfast Essentials, Matin Kim, Academy Sports, and Coursera to name a few. We advanced our tech product by releasing enhancements that improve campaign management efficiency. Finally, we hired our first EVP of sales and marketing, Frank Cavallo, who brings with him not only influencer marketing specific experience, but experience in selling broader marketing services and enterprise account management. In summary, Q1 was an exceptional quarter and a giant step towards making good on our promise to accelerate our path to profitability. We grew revenue by double digits, nearly broke even, and generated cash all in one quarter. This is strong evidence that the transformational changes we made in Q4 2024 are working. Our new -to-market model, cost structure, and technologies are aligning and beginning to bear fruit. We have confidence that there are even more value creation opportunities ahead of us. Because we continue to believe that IZEA's shares are undervalued, we're continuing our $10 million share repurchase program, and we plan to initiate a tender offer on Friday, May 16, 2025, to encourage completion of our repurchase goal. We are optimistic about the future of this company and our ability to deliver additional values to all of our stakeholders, shareholders, clients, and employees alike. Thank you for your time today. I will now open the call for Q&A from the analyst community.