Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• IZEA Worldwide Inc (NASDAQ:IZEA) reported a 12% increase in total revenue for Q3 2024 compared to the prior year.
• Excluding a large non-recurring customer, revenues grew by 27% from the prior year quarter.
• Managed services revenue increased by 25% from the same period in 2023, indicating strong demand.
• The company has a robust tech product innovation pipeline, including the launch of Izzy, an AI assistant for marketers.
• IZEA Worldwide Inc (NASDAQ:IZEA) has no debt on its balance sheet, providing a solid position for future growth and acquisitions.

Negative Points

• The company reported a net loss of $8.8 million for the current quarter, significantly higher than the $2 million loss in the prior year.
• Adjusted EBITDA was negative $2.8 million for Q3 2024, compared to negative $1.5 million in the prior quarter.
• There was a decrease of $1 million in the managed services backlog compared to the second quarter of 2024.
• General administrative costs increased by 93% from the prior quarter, mainly due to accrued severance and non-cash compensation expenses.
• The goodwill related to the 2019 acquisition of TapInfluence was impaired, leading to a $4 million non-cash charge.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with IZEA.

Q: Can you provide more details on the revenue growth and the impact of the non-recurring customer? A: Peter Barry, CFO: Total revenue for Q3 2024 was approximately $8.8 million, a 12% increase from the prior year. Excluding the large non-recurring customer from 2023, revenues grew by 27%. Managed services demand grew by 11% to $7.9 million, although slightly lower than the first half of 2024 due to timing and reduced marketing budgets in emerging markets.

Q: What were the main reasons for the increase in expenses other than the cost of revenue? A: Peter Barry, CFO: Expenses totaled $13 million for Q3 2024, up 122% from the prior year. This increase was mainly due to accrued severance and non-cash compensation expenses from the departure of two executives, as well as increased professional fees.

Q: How is the company addressing the impairment of goodwill related to the 2019 acquisition of TapInfluence? A: Peter Barry, CFO: We determined that the goodwill related to our 2019 acquisition of TapInfluence was impaired, leading to a $4 million non-cash charge in the current quarter. We are focusing on strategic adjustments to optimize our asset utilization.

Q: What strategic changes have been made since the new CEO took over? A: Patrick Vitucci, CEO: Since taking over, we have made several management and board changes, including separating the Chairman and CEO roles. We increased our share buyback commitment to $10 million and hired our first Chief Talent Officer. We are focusing on growth and efficiencies, with a robust tech product innovation pipeline, including AI.

Q: What are the company's future strategic directions and initiatives? A: Patrick Vitucci, CEO: We are focused on driving top-line growth and accelerating profitability. We aim to shift resources to segments with profitable growth and simplify our operations. Our 2025 business plan is underway, and we will share more about our strategic direction at the next investor meeting.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.