IZEA - NASDAQ

Greetings, and welcome to the I

Good afternoon, everyone, and thank you for joining us for I

Thank you, Ryan, and good afternoon, everyone. I'll review our operating results for the quarter ended March 31, 2023, compared to the prior year's quarter, and I'll breakdown results for our Managed Services and SaaS license businesses, and then provide some balance sheet highlights. Total revenue for the first quarter of 2023 was $8.7 million, 1.7% or $153,000 lower than the prior-year quarter. Our net cash loss, or EBITDA, was $2.2 million for the quarter, 3% below the prior-year quarter. Our net loss in the current quarter totaled $2.8 million or $0.04 per share on 62.4 million shares compared to a loss of $2.5 million or $0.04 per share on 62.1 million. Turning to our Managed Services business, given our announcement on January 12 of this year regarding the unwinding of business with a particular Managed Services customer, it's useful to understand our bookings and revenue trends from our core customer base apart from the impact related to this large customer. I'll use references to the non-recurring customer and our core customers to make these distinctions. This past April 10, we announced that our Managed Services bookings for the first quarter of 2023 totaled $6.1 million compared to $12.1 million for the prior year's first quarter, a 50% decline. Core customer bookings, which totaled $5.8 million for the first quarter of 2023 and which represented 96% of total bookings for Q1, declined 39% compared to the prior year's first quarter. Our order count was on par with the prior-year quarter and the average order size fell by about half, showing relative strength in demand, quantity and a pullback in spending commitments. Bookings from the non-recurring customer was approximately $250,000 in the quarter, down 91% from the first quarter of 2022. Managed Services revenue totaled $8.5 million during the first quarter of 2023, which was about 1.6% or $130,000 above the prior year's quarter. Approximately $3.5 million of the quarter's revenue is related to the non-recurring customer, which was 95% greater than this customer's revenue for the prior year's first quarter. Managed Services revenue from our core customers totaled $5 million during the quarter, which is 22% lower than the prior year's first quarter. The decline in these core customer revenues is primarily related to softer bookings in the second half of 2022. The delivery time between bookings and revenues averaged over nine months during the past six quarters, compared to an average between six months and seven months prior to our business with this non-recurring customer. We expect that our time to revenue should decline to historic levels over the course of this year. Gross margins for this non-recurring customer have averaged between 30% and 35% of our historical average margins. So, while we expect our comparative Managed Services bookings to decline in the short run during the unwinding process with this non-recurring customer, we anticipate our blended average gross margin will gradually return to historical levels. Our Managed Services backlog, which represents the total of unrecognized revenue for contracts that are underway, as well as recent bookings that have yet to begin invoicing, totaled $16.1 million on March 31, 2023. Over $4 million of this backlog is related to our non-recurring customer and we expect to recognize this amount as revenue in the following two quarters. This non-recurring revenue will somewhat mute the top-line impact of this customer loss while we continue to add new higher margin customers. SaaS Service revenue, consisting of license fees, self-service, marketplace spend fees and other fees, declined by $283,000 in the quarter or by about 55% compared to the prior-year quarter. Revenue from license fees declined by 49% from the prior-year quarter, while net marketplace spend fees declined 33%. The transition away from our legacy I

Thanks, Peter, and hello again, everyone. Since our last call roughly six weeks ago, our management team has continued to execute against our 2023 operating plan in line with the strategies shared in previous updates. While it's likely no surprise to anyone that the overall economic climate remains turbulent, there were a number of company highlights from our first quarter that I wanted to share. First, on January 19, we kicked off the new year with the official launch of I

Thank you, Ryan. I'll be concise in my remarks this quarter given our most recent call was just six weeks ago. We continue the transition process from our legacy platform, I

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] First question, Jon Hickman with Ladenburg. Please go ahead.

Hi. Ted, can you hear me okay?

I sure can.

Okay. Just two questions. I was wondering, I just want to make sure the significant customer that shall not be named, their -- that relationship will be over basically in the next two quarters. Is that what...

Yes.

[indiscernible]

Yes, we're winding it down. There's still some small bookings that are coming in, but the intent is to have that completely wound down in the next two quarters.

So, do you expect to do business with them in the future on a different more in line with your other customers, or are you just parting ways?

Right now, we are just parting ways.

Okay. And then my second question is, so you seem to indicate that April -- well, the business has gotten better as the year has moved on and April was the best month of the year. You said it was the best month or the second best month in the last year and a half, is that also what you said?

I don't believe I said that. It was the best month so far this year.

But Ryan said something about it too or maybe...

Yes, Jon, it's me. On number of opportunities basis, yes, it was one of our best of two months over the last year and a half.

Okay.

Yes, that's count -- the count of opportunities.

The count of opportunities, okay. So -- okay. One follow-up, I guess, is can you say anything about possible acquisition targets? Are you looking still? Are you intrigued with anything?

I think that the market has definitely shifted from the past couple of years. There are a variety of targets out there that are at varying size, but we're not in a position to comment on anything right now. I will say that the economics have made M&A more attractive, but we still have to find the right fit for the company.

Okay. Thanks. That's it for me.

Thank you.

Thank you. We've reached the end of the Q&A session. I would like to turn the call over to Ryan for closing remarks.

Thank you, Stacy, and thank you everyone for joining us this afternoon. As a reminder, all of I