Izea Worldwide Q1 2025 Earnings Report

Izea Worldwide EPS Results

• Actual EPS: -$0.01
• Consensus EPS: -$0.17
• Beat/Miss: Beat by +$0.16
• One Year Ago EPS: N/A

Izea Worldwide Revenue Results

• Actual Revenue: $7.97 million
• Expected Revenue: $9.00 million
• Beat/Miss: Missed by -$1.03 million
• YoY Revenue Growth: N/A

Izea Worldwide Announcement Details

• Quarter: Q1 2025
• Date: 5/13/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 13, 2025
• Conference Call Time: 5:00PM ET

Izea Worldwide (NASDAQ:IZEA), together with its subsidiaries, offers software and professional services to connect brands and content creators in North America, the Asia Pacific, and internationally. The company offers IZEA Flex, its flagship platform for managing enterprise influencer marketing; and comprehensive expense management service to track and manage off-platform expenses related to influencer marketing campaigns. It also operates The Creator Marketplace on IZEA.com that provides creators tools to present their work to marketers. In addition, the company provides management of content workflow, creator search and targeting, bidding, analytics, and payment processing services. It primarily sells influencer marketing and custom content campaigns through client development team and platforms. The company was formerly known as IZEA, Inc. and changed its name to IZEA Worldwide, Inc. in August 2018. IZEA Worldwide, Inc. was founded in 2006 and is headquartered in Orlando, Florida.

Izea Worldwide Q1 2025 Earnings Call Transcript

Key Takeaways

• Total revenue for Q1 2025 rose 14.6% year-over-year to $8.0 million, driven by strength in managed services.
• Managed services bookings fell to $7.5 million from $9.3 million in Q1 2024, signaling potential future revenue timing headwinds despite 27.6% growth ex-HUSU.
• SaaS revenue dropped sharply to $60,953 from $256,341, reflecting a strategic pullback in marketing support as the company refocuses on long-term profitability.
• Operating expenses outside cost of revenue declined by 40%, narrowing the adjusted EBITDA loss to $76,850 from $3.4 million and reducing the net loss to $142,800.
• IZEA will launch a modified Dutch auction tender offer on May 16, 2025, to repurchase up to 8.7 million shares at $2.30–$2.80, completing its $10 million buyback and underscoring management’s confidence in undervaluation.

Presentation

[Operator]

Greetings, and welcome to the IZEA Worldwide First Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Matt Gray, Vice President of Marketing. Please go ahead.

[Matt Gray, Vice President of Marketing at IZEA Worldwide]

Good afternoon, everyone, and welcome to IZEA's earnings call covering the first quarter of twenty twenty five. I'm Matt Gray, VP marketing at IZEA. And joining me on the call are IZEA's chief financial officer, Peter Berry, and IZEA's chief executive officer, Patrick Benetucci. Thank you for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA's performance during q one twenty twenty five.

[Matt Gray, Vice President of Marketing at IZEA Worldwide]

If you'd 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 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. Reconciliations 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.

[Matt Gray, Vice President of Marketing at IZEA Worldwide]

And with that, I would like to now introduce and turn the call over to IZEA's Chief Financial Officer, Peter Beery. Peter?

[Peter Biere, CFO at IZEA Worldwide]

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 8,700,000 of our previously announced $10,000,000 stock buyback. Today, I'll review operating results for the quarter ended 03/31/2025, compared to the first quarter of twenty twenty four and discuss certain balance sheet highlights as well as our proposed tender offer. Total revenue for the first quarter of twenty twenty five was approximately $8,000,000 or 14.6% above the prior year quarter.

[Peter Biere, CFO at IZEA Worldwide]

Revenue from managed services totaled $7,900,000 in the current quarter, growing 18.1% over the prior year quarter. Managed services revenue from continuing operations, excluding $500,000 from HUSU 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 7,500,000 in the first quarter of twenty twenty five compared to $9,300,000 in the prior year's first quarter. '1 of our largest customers front loaded their 2024 contract commitments, which resulted in contract timing differences. As of 03/31/2025, our managed services backlog, representing unrecognized revenue from ongoing contracts and recent bookings not yet invoiced, totaled 14,900,000.0 It's important to note that IZEA's contract bookings typically require an average of six to seven point five months to complete the revenue cycle.

[Peter Biere, CFO at IZEA Worldwide]

SaaS revenue totaled $60,953 in the first quarter of twenty twenty five compared to $256,341 in the same quarter of the prior year. The year over year decline reflects our strategic decision to reduce marketing support for our SaaS offerings, while we evaluate the most effective capital allocation plan to drive long term profitability. Our total cost of revenue was $4,400,000 or 55.2% of revenue in the first quarter of twenty twenty five compared to $4,000,000 or 57.1% 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 $4,200,000 in the first quarter of twenty twenty five, a 40% decline from $7,000,000 in the prior year's quarter. Sales and marketing costs totaled $1,100,000 during the first quarter of twenty twenty five, representing a 63.3% decline compared to the prior year's $3,100,000 total.

[Peter Biere, CFO at IZEA Worldwide]

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 $2,900,000 during the first quarter, a 22.3% 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 0 1 dollars per share on 16,900,000.0 shares compared to a net loss of $3,300,000 or negative 0 2 0 dollars per share on 16,300,000.0 shares for the first quarter of twenty twenty four. In the first quarter of twenty twenty five, adjusted EBITDA was negative $76,850 compared to negative $3,400,000 for the prior year quarter. As a reminder, we updated our non GAAP measure adjusted EBITDA in the fourth quarter of twenty twenty four to exclude nonoperating items, primarily interest income from our investment portfolio.

[Peter Biere, CFO at IZEA Worldwide]

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 03/31/2025, we had $52,200,000 in cash and investments, an increase of $1,100,000 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 $05,000,000 in interest income on our investments during the recent quarter.

[Peter Biere, CFO at IZEA Worldwide]

Lastly, we do not have any debt on our balance sheet. We previously announced our commitment to repurchase up to $10,000,000 of our stock in the open market, which was subject to certain restrictions. Through 05/09/2025, we purchased 469,211 shares, investing about $1,200,000 from September 2024, Despite consistent daily buying since November of twenty twenty four, 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 8,700,000 of our shares, which if fully subscribed, will complete our current buyback program. The tender is planned to commence on Friday, 05/16/2025, and will be priced from a low of $2.3 and a high of $2.8 per share based on the percentage of our ninety day volume weighted average price.

[Peter Biere, CFO at IZEA Worldwide]

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 Panettiucci, our Chief Executive Officer.

[Patrick Venetucci, CEO at IZEA Worldwide]

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 q four twenty twenty four, we activated the first phase of our plan and took several bold and decisive actions that made a positive impact in Q1 twenty twenty five. 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.

[Patrick Venetucci, CEO at IZEA Worldwide]

This enabled us to simplify our organization and make targeted workforce reductions in December, which significantly improves 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 road map of areas where we intend to build capabilities both organically and via m and a.

[Patrick Venetucci, CEO at IZEA Worldwide]

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 q one 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, Matinee Kim, Academy Sports, and Coursera to name a few.

[Patrick Venetucci, CEO at IZEA Worldwide]

We advanced our tech products by releasing enhancements that improve campaign management efficiency. Finally, we hired our first EVP of sales and marketing, Frank Pavalo, who breathes with not only influencer marketing specific experience, but experience in selling broader marketing services and enterprise account management. In summary, q one 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 q four twenty twenty four are working.

[Patrick Venetucci, CEO at IZEA Worldwide]

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 IZEA shares are undervalued, we're continuing our $10,000,000 share repurchase program, and we plan to initiate a tender offer on Friday, 05/16/2025 to encourage completion of our repurchase goal. We 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.

[Patrick Venetucci, CEO at IZEA Worldwide]

I will now open the call for Q and A from the analyst community.

[Operator]

Thank you. We will now be conducting a question and answer session. First question comes from John Hickman with Ladenburg Thalmann. Please go ahead.

[Jon Hickman, MD - Equity Research at Ladenburg Thalmann]

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 remaining of the year or remainder of the year?

[Peter Biere, CFO at IZEA Worldwide]

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.

[Peter Biere, CFO at IZEA Worldwide]

And, of course, we've 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.

[Jon Hickman, MD - Equity Research at Ladenburg Thalmann]

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

[Peter Biere, CFO at IZEA Worldwide]

Well so first of all, some of the costs are structural, and they'll be that way going forward. You know, we trend quite a bit of headcount, and that's the biggest, obviously, the biggest expense item on our statement. That doesn't mean we're not gonna 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.

[Peter Biere, CFO at IZEA Worldwide]

And we're in a good position to manage ourselves that way. But, you know, I would say for this year, the cost structure you're looking at is probably pretty good. We'll we'll probably add people, going into the summer and early fall, but you all you should also see the business rise a bit to pay for that. So we're we're trying to be really tight and make our objectives.

[Jon Hickman, MD - Equity Research at Ladenburg Thalmann]

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

[Patrick Venetucci, CEO at IZEA Worldwide]

I'll I'll jump in here, Peter. Hey, John. It's Patrick. Yeah.

[Patrick Venetucci, CEO at IZEA Worldwide]

We're you know, I 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 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.

[Patrick Venetucci, CEO at IZEA Worldwide]

The deal sizes we're talking about are are bigger. So, you know, I think it's more a question of short term versus long term. There's there's a lot of good signs on the long term. And while some clients are 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.

[Patrick Venetucci, CEO at IZEA Worldwide]

It's it's marketing spend that you can turn on and off more readily. It's something you can shift around on a tactical basis more in a more agile way. So I think, you know, we're we're like everyone else, we don't have a crystal ball, but we're seeing a lot of good signs and sometimes that may even offset the risks that are out there.

[Jon Hickman, MD - Equity Research at Ladenburg Thalmann]

Okay. And then do you can you elaborate more on your, like, m and a opportunities? Like, is it target rich and large environment, evaluations? Are they in your comfort zone? That kind of thing.

[Patrick Venetucci, CEO at IZEA Worldwide]

Yeah. So we have not aggressively pursued it yet because we wanted to get the organization to a point of of readiness. You know, we wanna make sure we're organizationally ready so that we can integrate with the right 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 and more aggressively looking ahead now that we've gotten through some of these structural changes.

[Patrick Venetucci, CEO at IZEA Worldwide]

And, you know, as you can you can see, we've gotta get cost structure to build off of. And in terms of of valuations right now, it really depends which areas we go into. You know, there are some areas where I think it's it's reasonable. There are other areas that are a little hot right now. The creator economy is hot, and quite frankly, we I mean, it's part of the reason we're doing the share buyback.

[Patrick Venetucci, CEO at IZEA Worldwide]

We think we're we're very much, you know, undervalued right now. But all in all, I would say, you know, what whatever we do moving forward, we're be reasonable about it, and we're not gonna, you know, overpay in the market.

[Jon Hickman, MD - Equity Research at Ladenburg Thalmann]

Okay. Thank you. That's it for me. Appreciate it.

[Matt Gray, Vice President of Marketing at IZEA Worldwide]

Thanks, John.

[Operator]

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

[Matt Gray, Vice President of Marketing at IZEA Worldwide]

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

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

Participants

Analysts

• Matt Gray, Vice President of Marketing at IZEA Worldwide
• Peter Biere, CFO at IZEA Worldwide
• Patrick Venetucci, CEO at IZEA Worldwide
• Jon Hickman, MD - Equity Research at Ladenburg Thalmann