IZEA WORLDWIDE Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 12, 2025

Key Takeaways

  • Positive Sentiment: IZEA reported its first-ever profitable quarter, earning $1.2 million in net income ($0.07 per share) compared to a $2.2 million loss in Q2 2024.
  • Positive Sentiment: Q2 revenue totaled $9.1 million, a 0.4% increase year-over-year, and managed services revenue grew 12.9% when excluding the divested Hozu business.
  • Negative Sentiment: Managed services bookings declined due to a timing shift by a major client, a strategic focus on larger accounts over smaller projects, and some customers pausing budgets amid macroeconomic and tariff uncertainties.
  • Positive Sentiment: The company reduced its cost structure, lowering cost of revenue to 48% of sales (from 57%) and cutting sales, marketing, and G&A expenses by over 40%, driving adjusted EBITDA to $1.3 million.
  • Positive Sentiment: With $50.6 million in cash and investments, no debt, and 523,268 shares repurchased (≈$1.3 million) since program inception, IZEA maintains strong liquidity to fund growth and M&A.
AI Generated. May Contain Errors.
Earnings Conference Call
IZEA WORLDWIDE Q2 2025
00:00 / 00:00

There are 6 speakers on the call.

Operator

Day, and welcome to the EYLEA Worldwide Second Quarter twenty twenty five Earnings Call. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I would now like to turn the conference over to Matt Gray, Vice President of Marketing.

Operator

Please go ahead.

Speaker 1

Good afternoon, and welcome to IZEA's earnings call covering the 2025. I'm Matt Gray, VP of Marketing at IZEA. And joining me on the call are IZEA's Chief Financial Officer, Peter Beery 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 Q2 twenty twenty five.

Speaker 1

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 the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non GAAP financial measures of adjusted EBITDA and revenues excluding divested operations. Reconciliations between GAAP and non GAAP metrics for reported results can also be found in our earnings release issued today and in our publicly available filings.

Speaker 1

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

Speaker 2

Thank you, Matt, and good afternoon, everyone. This afternoon, we released our results for the second quarter and filed our quarterly report on Form 10 Q with the Securities and Exchange Commission. Today it's my pleasure to review our operating results for the quarter ended 06/30/2025, compared to the 2024, including some year to date comparisons, to discuss certain balance sheet highlights, and to update you on our stock buyback initiatives. Revenue during the three months ended 06/30/2025, nearly all of which was managed services, totaled approximately 9,100,000.0 increasing 0.4% over the prior year quarter. The prior year quarter included $800,000 in revenue from Hozu, which we divested in December 2024.

Speaker 2

Excluding Hozu, managed services revenue increased 12.9% in the current quarter compared to the same period last year. Managed services bookings is a key metric that reflects current period demand for our managed services. On average, booked amounts convert to recognized revenue over approximately six to seven and a half months. However, in some cases, the timing of revenue conversion may extend up to twelve months depending on certain factors such as customer marketing fund allocation and campaign execution. During the 2025, managed services bookings totaled $5,600,000 bringing the total bookings for the 2025 to $13,100,000 This compares to $9,600,000 in the 2024 and $18,300,000 for the 2024, excluding HUSU in all periods.

Speaker 2

The decline in the first half twenty twenty five bookings was attributable to three primary factors. Roughly one third of the year over year decline reflects a timing difference as one of our largest customers front loaded a portion of their 2024 spend in March year, whereas a comparable commitment was made in the 2024. We also undertook a strategic shift towards larger, more profitable and recurring accounts, intentionally reducing our emphasis on smaller, less profitable projects. As a result, fewer internal resources were allocated to these lower value engagements. Finally, a number of customers have paused on a meaningful portion of their marketing budgets in response to macroeconomic pressures, including some tariff related uncertainties affecting certain industries.

Speaker 2

As of 06/30/2025, our managed services backlog, representing unrecognized revenue from ongoing contracts and recent bookings not yet invoiced, totaled 11,500,000.0 Our total cost of revenue, including both external creative and internal labor costs, totaled $4,400,000 or 48% of revenue in the 2025, compared to $5,200,000 or 57% of revenue in the same quarter of the prior year. Removing Hozu, our cost of revenue increased by approximately 1% in the 2025 compared to the prior period. Expenses other than the cost of revenue totaled $4,000,000 in the 2025, down from $6,800,000 or 41.4% compared with the prior year quarter. Sales and marketing costs totaled $1,000,000 during the second quarter, a 70% decrease from $3,200,000 in the prior year period. This decrease reflects cost savings from our targeted workforce reduction and a temporary pause in certain marketing initiatives.

Speaker 2

General and administrative costs were $2,900,000 in the second quarter, down 14.1% from the same period last year. The decrease was primarily driven by lower employee related costs, reduced reliance on external contractors, and decreased spending on professional services, software licenses, and data storage fees. We were profitable in the second quarter, generating $1,200,000 in net income or $07 per share on 17,800,000.0 shares, compared to a net loss of $2,200,000 or negative $0.13 per share on 16,400,000.0 shares for the 2024. Our results are particularly significant in that this is the first quarter in IZEA's history where profitability was driven by operating results. In the 2025, adjusted EBITDA was 1,300,000.0 compared to a negative $2,200,000 for the prior year quarter.

Speaker 2

As a reminder, we updated our non GAAP measure of adjusted EBITDA in the 2024 to exclude non operating items, primarily interest income, from our investment portfolio. 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 06/30/2025, we had $50,600,000 in cash and investments, a modest decrease of $400,000 from the beginning of the year. Operating cash flow is positive for the year to date period, inclusive of normal working capital timing variances, and covered approximately half of the continued investment in our stock repurchase programs.

Speaker 2

We previously announced our commitment to repurchase up to $10,000,000 of our stock in the open market subject to certain restrictions. During the 2025, we purchased a total of 121,788 shares at an average price per share of $2.29 under our programs, for an aggregate investment of $300,000 Through 08/08/2025, we've purchased 523,268 shares, investing $1,300,000 since the beginning of our current programs in 09/20/2024. We earned $500,000 of interest on our investments during the recent quarter. 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 well positioned to execute organic business growth and capitalize on future acquisition opportunities.

Speaker 2

With that, I'll turn the call over to Patrick Venetucci, our Chief Executive Officer.

Speaker 3

Thank you, Peter, and good afternoon, everyone. Less than a year ago, the leadership team and I made a commitment to accelerate our path to profitability. Today, I'm proud to announce that we have delivered on that commitment. For the first time in the history of this company, we are profitable. In our effort to fortify, simplify and focus, we successfully reduced the cost structure back in Q4 twenty twenty four without sacrificing growth in the 2025.

Speaker 3

This demonstrates that we have designed and activated a better business model, a model that puts America first and limits our international exposure, A model built for higher growth and more profitable market segments. A model that serves our top customers even better powered by our proprietary technology. A model that's attracting capable talents and M and A opportunities. A model that we believe to be sustainable. In addition to the financial accomplishments, there are a number of operational activities in Q2 worth highlighting.

Speaker 3

We won new business from Jeep, Nestle, Kellogg's and more. Our sales pipeline is full of leads with larger opportunities and higher quality clients. We produced exciting new work for Jeep, F1, the movie, Superman and Owens Corning to name a few. We kicked off a new tech initiative that will enhance our campaign management product and inject even more AI into our business processes. Finally, we hired our first VP Talent Acquisition, Cecilia Peralta to attract more leaders and elevate our brand among talent in the industry.

Speaker 3

In summary, Q2 was another exceptional quarter in which we achieved our financial commitments. We continued to grow revenue by double digits, achieved profitability and generated cash from operations. This is strong evidence that our new model works and positions us to continue to deliver results. We see and are pursuing a number of additional value creation opportunities ahead of us. For this reason, 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.

Speaker 3

Thank you for your time today. I will now open the call for Q and A from the analyst community.

Operator

We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster. And your first question today will come from John Hickman with Ladenburg Thalmann.

Operator

Please go ahead.

Speaker 4

Hi. Nice quarter. Can you hear me okay?

Speaker 5

Yes, we can. Hi, Jon.

Speaker 4

Okay. Hi. So I have three questions.

Speaker 1

First of all, you mentioned M and A activity. Could you like elaborate?

Speaker 5

Are you actively

Speaker 4

talking to people?

Speaker 5

We are. We're actively talking to people. And as I said in the past, this is definitely part of our ambition, but we're being strategic about it. We're being choiceful about what our strategy is. And we're also making sure that that we have integration readiness as well.

Speaker 5

So the first half of the year, as you know, we put a number of processes and so forth in place, just trying to make sure that we have a platform that is ready to integrate. So we're basically. Both ready from a financial capital perspective and from an operational perspective. And we're actively out there talking with folks.

Speaker 4

Okay. What about valuations? I mean, Ted used to talk about that they were the private markets valuations were very expensive compared to your valuation.

Speaker 5

Well, we're going to be reasonable. We're not going to overpay and we want to be fair on both ends of it, but we're certainly not going to chase deals and try to overpay. I mean, we're going be very responsible about how we use our capital. And I think we're in a position to work out deals that can be accretive and be a win win for all parties.

Speaker 4

Okay. So my next question has to do with your bookings for q one or q two. So how are we can you elaborate or talk about kind of the down sequential bookings versus growth going forward in revenues?

Speaker 5

Yeah, as Peter said, there's really three issues that were driving the decline. One was simply a timing issue on significant client and that booking, if you equalize it for timing is actually up. So, and then if you strip that out and look at the other two issues, the second issue does have to do with our intentional shift away from these unprofitable accounts. So some of this was It's just very much a matter of the change in model, as we move from. A model that was more transactional to a model that's more enterprise and relationship oriented with a lot more upside and certainly profitable going to the higher end of the market.

Speaker 5

The quantity over quality changing. And so we believe in the long term success of this model and the impact it's going to have on revenue. And then the third is the economic macroeconomic environment right now. As we all know, just with tariffs and government, things like that, We did see some pausing and some uncertainty of some of our clients. But on the other hand, we have a number of industries, different verticals that we are in that are up not just double digits, but even triple digits.

Speaker 5

So it's a portfolio.

Speaker 4

Okay. And then lastly, maybe this is for Peter. But operating expenses going forward, are they should the Q2 numbers kind of do you expect much growth in the next couple quarters?

Speaker 2

Well, I think Or should

Speaker 4

they be about flat?

Speaker 2

Yeah, what I think is we've said that we cut costs that we don't expect to repeat until they need to fuel growth. The exception, there might be marketing costs, which previously we spent marketing costs to drive demand going forward. We'll continue to do that at a low rate, but we're pausing on that for now. My guess is that quarter two costs look about like they're going to look. And also we have some efficiencies and there's some headroom for us to grow without growing costs.

Speaker 2

So we're going to be judicious about that and keep our eye on the bottom line.

Speaker 5

Yeah, I would just add to that, that I really want to underscore that the change in our business model, we permanently lowered our cost structure and we're proving out that we can be profitable. And we intend to scale this efficiently. As revenues grow, obviously, expenses will grow, but we're being disciplined in making sure that there's a relationship to it and that it grows in parallel.

Speaker 4

Is there any way I can get any revenue guidance from you for the remainder of the year? Just thought I'd ask.

Speaker 2

You don't get it if you don't ask. We're not gonna give guidance. I think the public statement that we made both in the earnings release and liquidity section of the 10 Q of the MD and A is that we have a good pipeline, relationships are strengthening and we're adding large customers. We think that's going to support our growth going forward, But it could be uneven. So with that in mind, that further emphasizes our eye on our cost to make sure that they stay with a healthy relationship.

Speaker 4

Okay. Just one more question. The VP of talent acquisition, that person works fully for you? I mean, she's full time for IZEA?

Speaker 5

Yes. And Yes. We're in that community. Is after

Operator

she

Speaker 4

marketing talent?

Speaker 5

Or No. All all sorts of talent. Yeah, as we've been, yeah, we believe that this is not just a technology driven industry, but a talent driven industry as well. And so this is more about positioning ourselves for future growth to make sure that we're out in the market, establishing relationships with talent so that as we grow, we're able to do that seamlessly. And we'll be making announcements in the future about new talents that are joining us.

Speaker 4

Okay. Well, thank you. That's it for me.

Speaker 5

Thanks, John.

Operator

This will conclude our question and answer session. I would like to turn the conference back over to Matt Gray for any closing remarks.

Speaker 1

Thanks so much, Nick, and thank you everyone for joining us this afternoon. As a reminder, IZEA's Investor Relations information is available at izea dot com slash investors. Have a great evening.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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