IZEA - NASDAQ

Greetings, and welcome to the I

Good afternoon, everyone, and welcome to I

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 10-Q 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 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 14.6% above the prior year quarter. Revenue from managed services totaled $7.9 million in the current quarter, growing 18.1% over the prior year quarter. Managed services revenue from continuing operations, excluding a $0.5 million from Hoozu in the prior year quarter, rose 27.6% 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 I

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 go-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 greater 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 improved campaign management efficiency. Finally, we hired our first EVP of sales and marketing, Frank Carvalho, 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 several 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 go-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 I

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

Hi, Peter. Could you give us a little bit of or elaborate on a little bit what you think gross margins might be for kind of the remainder of the year?

Well, as you know, we're not giving guidance. But with that said, I think our margins are fairly steady. They go up and down a little bit within a band, depending on how things mix. You saw margins in the fourth quarter drop a bit. We're back up. And of course, we've cleared out some of the really low margin stuff. So, I would imagine that you could say margins will be stable through the rest of the year.

And your cost-cutting measures, are they essentially over? Like, is this a good level for going forward?

Well, so first of all, some of the costs are structural, and they'll be that way going forward. We trend quite a bit of a headcount, and that's obviously the biggest expense item on our statement. That doesn't mean we're not going to hire more people. What it means is we brought our costs down to a level that our business could afford. Our goal is to make money, so we still have to get more top-line synergy and grow costs slower. And we're in a good position to manage ourselves that way. But I would say for this year, the cost structure you're looking at is probably pretty good. We'll probably add people going into the summer and early fall, but you should also see the business rise a bit to pay for that. So, we're trying to be really tight and make our objectives.

Okay. And then, any comments on the economy's been kind of early? I don't know. Maybe it's more Wall Street than anything. But with fears of, like, a slowdown, your pipeline, are you seeing any evidence that people are pulling back on their advertising dollars?

I'll jump in here, Peter. Hey, Jon. It's Patrick. Yes, we're I think just as with everyone else, there is a lot of uncertainty in the world. But with that said, our pipeline is actually growing. And more importantly, the quality of the clients that we're speaking with, are increasing. We're reaching higher-end organizations. We're having more substantial conversations with our enterprise customers. The deal sizes we're talking about are bigger. So, I think it's more a question of short-term versus long-term. There's a lot of good signs on the long-term. And while some clients are pausing, on the other hand, some of the clients are looking at this category as a better place to place their advertising and media investments because it doesn't require the upfront commitments that some of the competing marketing choices do. This is more controllable. It's marketing spend that you can turn on and off more readily. It's something you can shift around on a tactical basis in a more agile way. So, I think we're like everyone else. We don't have a crystal ball, but we're seeing a lot of good signs and some signs that may even offset the risks that are out there.

Okay. And then, can you elaborate any more on your M&A opportunities? Like, is it a target-rich environment of valuations? Are they in your comfort zone, that kind of thing?

Yes. So, we have not aggressively pursued it yet because we wanted to get the organization to a point of readiness. We want to make sure we're organizationally ready so that we can integrate with the right partner. With that said, we have been looking at some opportunities opportunistically as we have had a number of unsolicited inbounds. We are ramping up our relationships with investment bankers and more aggressively looking ahead now that we've gotten through some of these structural changes. And as you can see, we've got a good cost structure to build off of. And in terms of valuations right now, it really depends, which areas we go into. There are some areas where I think it's reasonable. There are other areas that are a little hot right now. The trader economy is hot, and quite frankly, I mean, it's part of the reason we're doing the share buyback. We think we're very much undervalued right now. But all in all, I would say whatever we do moving forward, we're going to be reasonable about it, and we're not going to overpay in the market.

Okay. Thank you. That's it for me. I appreciate it.

Thanks, Jon.

Thank you. I would like to turn the floor over to Matt Gray for closing remarks.

Thanks so much, Stacey. And thank you everyone for joining us this afternoon. As a reminder, you can find all of I