IZEA - NASDAQ

Greetings. Welcome to I

Good afternoon, everyone, and thanks for joining us for I

Thank you, Ryan, and good afternoon, everyone. I'd like to review operating results and highlight our financial accomplishments for the second quarter. Revenue for the second quarter of 2022 totaled $12.6 million, which was 96% higher than Q2 of 2021. Managed Services revenue totaled $12.2 million during the second quarter of 2022, a record for I

Thanks, Peter. The advertising industry continues to shift rapidly and is currently facing another cycle of unpredictability, given the macroeconomic climate of the last several months. To not just survive but thrive amidst change, our team has taken proactive steps to optimize our core operations, launch new products, sign new partnerships and align our resources internally accordingly. We're fortunate that our organization is filled with seasoned industry veterans who, for better or worse, have now navigated through numerous financial cycles across their careers. They understand the importance of being as in-tune as possible to the benefits change can bring to an industry if you're actually prepared to meet the moment. With regard to expenses, we continue to execute against a disciplined and prudent approach to cost management in light of the financial climate in the world around us. That's why we elected to implement proactive measures across the second quarter and into the present period, including, but not limited to, achieving OpEx savings by select personnel attrition, vendor and contractor expense reduction, pausing certain marketing efforts and lowering recurring software purchasing outlay. At the same time, the company also believes that the macroeconomic environment accentuates how important it is for us to continue to thoroughly invest in key growth platforms, as they serve to increase the absolute number of clients we interact with, differentiating I

Thank you, Ryan. Before we look to the future, I would like to take a moment to reflect on the past. In 2016, when our company was the largest it has ever been, measured by employee count, our full year revenue was $21 million. Here in 2022, we are the largest we have ever been by a different measure: revenue. We have achieved $21.5 million in revenue in the first half of the year and done so with about 15% less full-time employees compared to our peak. I am proud of the efficiencies we have gained over the past 2 years, in particular. The advent of COVID-19 forced our team to reimagine our business, and the net effect of the operational changes we have made have been remarkably positive for our company. Our revenue per FTE hit an all-time high this quarter, driven by a combination of strong management and advances in our technology that make our people more productive. While we have certainly come a long way, we know we are still far from our full potential. If we are to get to a place of sustainable, profitable growth, we must be willing to continue to make investments amid an ever-changing and challenging industry landscape. In a time of record inflation, talent shortages and increasing labor costs, it is my belief that meaningful revenue growth is the only path to long-term success. From software licenses to accounting fees, we must expect that the baseline cost of ongoing operations will continue to increase for the foreseeable future. It is incumbent on us to actively control these costs the best we can, and I want to commend our team for their efforts. But it is clear that the water line will continue to rise at a pace we haven't seen in the history of our company, and we must outpace it. As my father is fond of saying, "When you are green, you grow. When you are ripe, you rot." We can't expect to do the same things in the same ways and deliver substantially better outcomes. We must continue to evolve and make strategic investments in people and products when and where we see opportunities, and that is what we will continue to do. I would like to address our current reality regarding stock price and enterprise value. We recognize that our shares are trading at a discount to cash. I believe, as do many of you who have written or called me, that I

[Operator Instructions]. Our first question is from Jon Hickman, with Ladenburg Thalmann.

Okay. First of all, can I just go over this large customer and the $2 million that was kind of catch-up revenue? Theoretically, that revenue would have been recognized maybe in Q4 and Q1?

Yes, spread over those quarters.

Okay. But you got it all -- okay. And then -- and so that's not recurring. But are revenues from this large customer recurring in Q3?

Yes, that customer continues to spend with us. It's just a question of how that revenue is recognized. So a lot of that is based on when influencers are actually activated, and that can change from time to time depending on the influencers and the initiatives of [indiscernible] customer.

Okay. And the fact that you recognized this extra $2 million or this catch-up [indiscernible] money, that in and of itself did not affect the margins? It was just the campaign, in general?

That does -- go ahead, Peter.

Sorry. Jon, the only thing that affected the margin was the concentration. So we had more lower-margin revenue from this customer then because of the catch-up adjustment, but that's the only reason.

Okay. Then let's see. So from your comments, Ted, I'm trying to -- it sounds like your -- Ryan said you're going to be to judicious with your OpEx, but then you just indicated that you've recently hired some seasoned sales guys. Can you tell us how many?

We're not giving specific numbers there. It's lower than 10. We're not talking about a huge increase necessarily in overall headcount, but where we are talking about is continuing to invest in sales personnel, in particular. So when we look at other parts of the organization, we're at a point now where we will likely be backfilling if there's attrition, but not really aggressively hiring too many more people in those roles.

Okay. And then you've talked in the past about the new I

Yes, there are two platforms that are going to be launching prior to year-end. You will have to wait and see for the announcement on those in terms of what they do, but we expect both of those to be launched here prior to the year-end.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Ryan for closing remarks.

Thanks, Sherry, and thank you, everyone, for joining us this afternoon. And as a friendly reminder, all of I