Greetings, and welcome to the IZEA Worldwide, Inc. Fourth Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Matt Gray, Vice President of Marketing. Matt, please go ahead..

Good afternoon, everyone, and welcome to IZEA's earnings call covering the fourth quarter and full year of 2024. I'm Matt Gray, VP of Marketing at IZEA. And joining me on the call are IZEA's Chief Financial Officer, Peter Biere, and IZEA's Chief Executive Officer, Patrick Venetucci. Thank you for being with us today.

Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q4 2024. If you would like to review those details, all our investor information can be found online on our Investor Relations website at izea.com/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 reported results can also be found in our earnings release issued earlier today and in our publicly available filings. And with that, I would now like to introduce and turn the call over to IZEA's Chief Financial Officer, Peter Biere.

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a $4.1 million non-cash goodwill write-off in our third quarter related to older acquisitions, a $1.9 million Q4 non-cash loss from divesting Hoozu; $1.3 million in severance and contract cancellation charges, $1 million of which tied to a leadership change in our third quarter and $0.3 million for targeted workforce reductions enacted in our fourth quarter; and finally, $0.4 million fourth quarter write-down of abandoned capitalized software.

Despite the current period's impact on our financial results, these strategic measures strengthen our balance sheet and position us for significantly lower cash burn and improved profitability moving forward. For a more detailed discussion of full year results, please refer to our Form 10-K. I'll turn now to results for the fourth quarter of 2024.

Total revenue for the fourth quarter of 2024 was approximately $11 million or 23.7% above the prior year quarter. Revenue from Managed Services totaled $10.9 million in the current quarter, also growing 24% over the prior year quarter.

Excluding revenues from Hoozu, which were $1.1 million in the recent quarter, and the non-recurring customer from the 2023 comparison, Managed Services revenue grew 21.9% in the fourth quarter over the prior year period.

Managed Services bookings, a non-GAAP measure of demand for our services, grew about 45% to $11 million in the fourth quarter of 2024 compared to $7.6 million in the prior year's fourth quarter excluding Hoozu in both periods.

As of December 31, 2024, our Managed Services backlog, representing unrecognized revenue from ongoing contracts and recent bookings not yet invoiced, totaled $14.2 million. It's important to note that IZEA's contract bookings typically require an average of 6 to 7.5 months to complete the revenue cycle.

We expect to recognize a significant portion of this backlog in the first half of 2025. SaaS Services revenue totaled $117,000 in the fourth quarter of 2024 compared to $111,000 in the prior year quarter. Most of these customers are actively using IZEA's AI tools.

Our total cost of revenue was $6.8 million or 62% of revenue in the fourth quarter of 2024, compared to $4.7 million or 53.1% of revenue for the prior year quarter, due primarily to a greater mix of higher cost deliveries in the current quarter.

Expenses other than the cost of revenue totaled $7.3 million in the fourth quarter of 2024, up 15.3% from $6.4 million in the prior year quarter, approximately $0.7 million related to one-time adjustments I discussed earlier.

Sales and marketing costs totaled $3 million during the fourth quarter, up 14.2% compared to the prior year quarter total of $2.6 million.

The increase was largely due to higher compensation costs, including severance costs related to our targeted workforce reduction, as well as increased spending on general contractors and contract cancellation costs, partially offset by reduced advertising expenses.

General and administrative costs totaled $3.7 million during the fourth quarter, up 3.8% from the prior year quarter, due mostly to higher payroll, non-cash stock compensation costs and severance costs associated with our targeted workforce reduction, partly offset by several declining cost categories.

Our net loss in the fourth quarter totaled $4.6 million or negative $0.27 per share on 17 million shares, compared to a net loss of $1.5 million or negative $0.09 per share on 16.4 million shares for the fourth quarter of 2023.

For our non-GAAP measure of adjusted EBITDA, we're making a calculation change to exclude any non-operating items, mostly interest income on our investment portfolio. You can find a reconciliation of adjusted EBITDA to net income at the bottom of our earnings release.

We believe this will give investors a better overall picture of operating cash flows. In the fourth quarter of 2024, adjusted EBITDA was negative $1.5 million compared to negative $1.1 million for the prior year quarter.

As of December 31, 2024, we had $51.1 million in cash and investments, a decrease of $3.3 million compared to the prior year quarter, about half of which funded negative operating cash flow and the other half funded higher levels of working capital and our stock buyback.

We previously announced our commitment to repurchase up to $10 million of our stock in the open market, subject to certain restrictions. In September 2024, we adopted a safe harbor 10b5-1 plan, which will remain in place through May 15, 2025, allowing us to purchase shares without the limitations of our periodic insider trading window.

As of December 31, 2024, we have purchased 220,994 shares at an average share price of $2.70 under our program for an aggregate investment of $602,069. Through March 25, 2025, we purchased 385,947 shares at an average share price of $2.60, investing $1 million under the program.

We earned $0.5 million in interest on our investments during the recent quarter. And lastly, we do not have any debt on our balance sheet. With cash on hand and liquidity from our investment portfolio as required, 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 over to Patrick Venetucci, our Chief Executive Officer..

Thank you, Peter, and good afternoon, everyone. As a reminder, last September, we made several important changes both to management and the Board. I stepped into the CEO role and we changed the composition and committee structure of the Board.

We also increased our share buyback commitment from $5 million to $10 million as a demonstration of the Board's belief that IZEA shares are undervalued as well as confidence in the company's ability to create more value. In Q4, after spending time listening to employees, clients and shareholders, I reset the strategic direction of the company.

Our mission is to make greater economy solutions for marketers. These solutions range from services to technologies to a marketplace. Coming out of our business planning process, we identified opportunities to fortify, simplify and focus.

Geographically, we are focusing on America-first and reducing our international exposure to insulate our business from geopolitical risks, tariff risks and currency risks. Technologically, we are simplifying our product to deliver a more intuitive customer experience.

We are shifting our go-to-market model to focus on high-growth market segments, building on our extensive client list, for which we have opportunities to do more. As a result of this new strategic direction, we redesigned our organizational structure and made targeted workforce reductions in December.

While these reductions increased our personnel expenses in the short-term, it significantly improves our cost structure and accelerates our goal to breakeven on a cash basis moving forward. This, combined with the underlying revenue growth that Peter referenced, emboldens our financial outlook.

There are a few other operational activities in Q4 worth highlighting. We won new business from Nestlé, Academy Sports, National Highway Traffic Safety Association, Navy Federal Credit Union and more. We produced new work for Warner Bros.' Superman reboot, Vital Proteins and Danone that surpassed performance goals.

Our vibrant work launching the Barbie movie continued to win awards. We released several proprietary industry insight studies, including the 2025 Trust and Influencer Marketing Report. We advanced our tech product by releasing enhancements that improve campaign management efficiency.

Finally, we hired our first Chief People Officer, Kerry Griffin, charged with professionalizing our talent programs to enable us to attract and develop the best talents in the industry. In conclusion, a transformational change happened at IZEA in 2024.

Our path to the profitability is accelerating as a result of the bold and decisive actions taken in Q4. The Board and management are optimistic about the future of this company and our ability to deliver additional value 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..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] We've reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments..

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Thanks so much, Kevin, and thank you everyone for joining us this afternoon. As a reminder, you can find IZEA's Investor Relations information on our Investor Relations website found at izea.com/investors. Thanks for joining us and have a nice evening..

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today..