IZEA - Earnings call transcript Q4 2017

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Operator

Greetings and welcome to the IZEA’s Incorporated Q4 and Annual 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference to your host Mr. Officer. Operating Chief Schram, Ryan

Ryan Schram

release our Hello and fiscal Operating earnings and and call QX at and LeAnn IZEA's Founder, to recap. I IZEA's Chairman to our of is the us with today. today quarter year me Wednesday, Chief Executive AprilXX, On Officer, And team, fiscal XXXX appreciate you Ted Financial am behalf year Murphy. from your Officer, IZEA. have we issued Hitchcock; call Chief joining with a and XXXX press company entire fourth our welcome time, highlights Chief Ryan Officer we’re pleased performance. Schram, On

those Relations you like found izea.com/investors. be If of our at details information to can IZEA’s Investor review online would all

the reports company events team to no in our a the obligations Before differ to update due discuss we and martially of forward-looking Harbor Actual securities filings or The management the the on as course made of statements team our trends risks provided business earnings IZEA's company team's to forecast are federal recent period expectations including predictions most call. statements SEC. begin forward-looking number will those any results our and uncertainties, management mentioned call that today’s pleased today's our be statements during from Safe and by today. that of make outlook pursuant regarding our with These are advised laws. ore based to assume by in

most investor comparable SEC to Form will discussion directly izea.com. under GAAP filings reconciliation gross and A billings In most of refer and in is available in certain presented XX-Q specifically measures, measures these adjusted addition, to the our measure our update section non-GAAP recent today financial of EBITDA. the

turn Now with Ted? of Founder, CEO, Chairman like out and disclosures way, call Ted to the Murphy. the to would over the IZEA's I appropriate

Ted Murphy

revenue errors that were issued is XXXX in the like error our financials. there would but unfortunate determined portion content by ASC restatement to adoption managed our result discovery today's took in of financials revenue good-faith Nonetheless, errors. I services. financial of for assist related the call our of prepared the in in of discovery to and in XXX Upon of swift were for The workflow and engaging financials addressing our practices of self-service the standard of preparation the situation, address Ryan. restatement cost and and financial our the and and We an previously independent third-party start revenue you, gap during line classification Thank our by our believe including issues complex. to action to the of in further of additional review. Accounting accounting related audit the are with our verification an committee be upon of further to XXXX. statements. our our associated correction errors a to nuanced of We statements our carefully previous These analyze our standards diligent new historical with reporting Standards. presentation revenue review

these as of have accordingly, on matters taking previously loss along LLP USA, correct balance operations, from loss possible. auditors at most and equity. The with consolidated reported and errors no as now financials matters to loss, steps IZEA had our share restated our of flows, are on seriously independent stockholder's our We The restatement statements those diligently per to our and net impact XXK. the or in sheets, team Board of take quickly and statements address have very cash worked recent I these BDO any

summary Officer, strengthen committee turn moving Financial company's like provide LeAnn it now over performance our partners XXXX. to to quarter the audit of We a our are to procedures fourth further working Chief from the would accounting forward. of Hitchcock, and our to with I

LeAnn Hitchcock

annual everyone, form Ted, call information All afternoon further and presented adjustments details for the ended related on our XXK. period on under comparisons in prior and you, today's restated XXXX notes the and our as an in good to adjusted in our XXK X are consolidated information on our keynote December for to financial information. XXst X report financial basis, reflects restatement item Thank financial XX fiscal statements the regarding form year

is XX, fiscal is with revenue comprised all-time primarily million increase for compared of due social was services. an our of record company. upXX% overview 'XX managed to growth year XX.X was XXXX. service will This content results organic our and December sponsored to this to million begin for annual fiscal annual for fiscal We in XXXX, ended the XX.X an Revenues which revenue in custom

our content for services their revenues in XX.X for the to managed year. in XX% XX% accounting to to million, revenue accounting of of Our XXXX. total in XXXX revenue the compared XXX,XXX million XX.X platforms increased to total marketers workflow, our by workflow of XXXX in compared X% to handle XXXX XX% our self-service from in use decreased revenue XXX,XXX Content

primarily and effort to loss our as XXXX the in These staff pass of up was compared targeted million, promotional of XXXX, any the X.X and associated With is performed in for from to container financial which project. continued X%. compared or the loss XX%. the expenses a loss decreased X.X revenue important to less billings Adjusted services amount growth they on that measure and XX.X to our by XXXX, This value more result of improved same net XX% per services in cost our an Gross the XXX% common of percentage total to of XXXX, million, both year, were to prior speed year that expenses change associated of includes year-over-year. compared with Net of XXX% content services efficiently we of XXXX is to early to platforms negative our X.X the customers million Total in compared of XXXX, near is an X.X to during million year flow. billings is million and $X.XX began cost as we paid term and transactions our for our million for of the to also to to XXXX improvement compared to an our for million our personnel the XX.X we to in as tradeshow decreased of in as approximately share Total a marketing an the a X.X in reductions report XX% revenue to amount were and as provide an well decreased our of XXXX. marketers fulfillment XX%. in XXXX a part we the X.X profitability revenue Cost spending. XX.X was cost of improvement in was period with platform. our in visibility believe costs provide increase important cost cash the increase last creators it XX.X share million costs per EBITDA revenue. in a approximately reduced was in million an and from the X.X margins percentage services, on working personnel earned XXXX provide XXXX negative presentation common sponsorship a of information $X.XX improvement it million gross of reported million of as billed through XX% in this revenue is from XXXX in for and or Loss indicator revenue the of improvement critical

to Now X.X turning social in increase is our managed for million service attention IZEA which quarter to comprised in compared the custom up million, X.X organic to our revenue, fourth reported primarily is to quarter the XXXX. fourth revenue quarterly results XX% content due of services. of and QX, XXXX growth This

built of XXXX QX. Revenue of million in million well consists in X.X increased X.X for Our million unbilled QX, was in clients XXXX revenue. we Revenue have able QX. million at million XXXX are X% compared that manage for backlog XX% cost in of more XXXX, revenues not from of the costs with X.X X.X Total increased for and XX% to were on end QX of X.X unearned revenue yet campaigns due XXX,XXX XX% for total XXXX QX QX campaigns workflow XX,XXX Cost to Content the quarter to in to have as campaign. complete. been that in of percentage QX XXXX decreased started of revenues yet quarter. but of lower decreased We X.X revenue and in related fewer with the to the our to in not in million. managed services as XX% backlog lower accounting which is to revenue X.X expenses to accounting in quarter. compared of XXXX a XX% compared in to primarily total personal. million bookings as fulfillment costs This spend XXXX. QX. experience technology, we believe advances

negative net margins same and per cost the cost in positive an result quarter fourth share share as year, XXXX and were to XXX% positive Net a XXXX of million reduce year-over-year QX, an EBITDA compared XXXX XXXX, $X.XX quarter spending. improved compared XXX,XXX common the $X.XX approximately our was result. common XXXX fourth in a in prior to is a to $XXX,XXX decreased As as second quarter services, in fourth expenses XX%. and marketing the cost loss on consecutive of our quarter this of promotional of during loss period of X.X loss for for the tradeshow year of Loss and million an per quarter personnel QX, to was for a percentage last the improvement of a million fourth reduce on total from XXX% we revenue of the Adjusted the of XX%. EBITDA improvement improvement quarter X.X of our X.X a compared

the and XX, of to additional approximately X.X $X X.X will to As it X.X now a in have million cash of some end stock access and on bank holders' hand million. pass balance. million we cash at credit equity the of million we December I strong were provide Receivables to XXX,XXX over quarter Ted, facility our maintain XXXX, of had with commentary.

Ted Murphy

you, Thank LeAnn.

offer company like In start review XXXX. offer announced acquisition Waller partners. process over reviewed board In last previously announced strategic the received of and update went with into announced capital an alternatives that We a would initiatives. provide run The year. the process. to we strategic to XXXX, I a XXXX course XXXX to unsolicited the First, review to of strategic some that board had on number July engage

has While Waller with relationship continue Capital we time, review from with various to process parties January now ended concluded in formal that will XXXX. our we discussions have time to strategic and of

efforts can primary our our connection review a result the crypto crypto we our made operations. year strengthening announced this currency the process, mining and decision focus the Earlier on of pool operations growth we software resources limited have that on to computing of As mind development networks in commencing currency. are we to that with were business

functional work a and infrastructure. and Our engineering was able that CPU quick create team software to minor make goal against supporting

However, Facebook, banned Twitter and environment were months. even despite over how apps. we three move our related to Since we Google the past have changed currency crypto announcement, able the crypto made fast faster crypto

steps market Our email global risks challenges, the our the regarding email These associated and crypto with similar original on altered increase has subsequent combined and scrutiny impact fundamentally in provider regulatory steps with Mailchimp opportunities the crypto taken strategy. have sent.

too developed works forward muddied clear we the original landscape software mining for plan. become us our a path to has the with have While

regulatory have the As in the We release we public software future, pending time. mining our to initiative and decided clarity. this to financial, revisit may such, legal not the at

our we small we While release will for future. the our mining GPU software, to not internal foreseeable will operate cluster continue

for investors We positive a some an was the play point were got We EBITDA XXXX We our EBITDA to We potential role follow a at contracting, by run future. deals optimization. interest quarter in as In to that positive letter, rate is reality. blockchain commitment adjusting QX. IZEAx. to a technologies, our to company would that achieve a and positive with our achieve XXXX commend million early. to they XX% belief team EBITDA at We It months get helping and adjusted year in $XX payments have made that currencies positive and relate half applications approximately operates goal. able can first I demonstrate past full streamlining an there as about our online to of making XX June were to of $XX on uses these these that governance want at The my an shareholder second long a crypto able to adjusted member IZEA XXXX. QX I team We technologies buyers contributed and sellers. term EBITDA positive. to be marketplace revenue and adjusted per EBITDA annualized see annual the Every while IZEA were and year. revenue delivering company the growth. this a all us this IZEA across between of

wanted team adjusted EBITDA to as as responsibly Our we to soon get positive could.

across We significantly have us the team sales revenue team with output increased per employee. member campaign XXXX per efficiency board. member, record provides and per fulfillment

ongoing. campaign doubled XXXX, in than average factor to duration our in member. content allowed Since more engine team to less. artificial intelligence the in is have gain our ability us per do investment was that fulfillment efficiency. driving technology revenue more From has a we Our with tech evolution mined, And to the

personnel personnel. the In team growth. replacing to marketing and with knew became the and That and expense the XXXX fast spend repetitive as top tasks spending through growth XXXX late and those tools and spent team Our in that robots in internal objective. tasks faster our wherever with automating we We aggressively human when grew engineering of fuel responsive profitability, using on to processes, May our line reduction to XXXX, XXXX would. focus the possible. primary reduced end and growth other continues From through perform more at to significantly acquisitions clearly near-term we make marketing primary slower came it we of goal

As at look beyond. we and XXXX

with duty those we possible. to business model. marketing believe capture of does content and as shareholders new team influencer The as continue have markets to our so in vigor Our and affirmation our much and to industries we a grow

team be as We years, incremental a reduction As down will nearly the for of of IZEA team XX months. also XXXX, XX% heavily some peak investment decisions that trend as in difficult members ago our two we our this with reinvesting in past particular. XXXX operations five In of that members, with in in IZEA were in Those started but a the organization. sales to team concentration to as XXXX team XX the of XXX such not members only needed XXXX, sales team X% conservatively quarters. we necessary in expect on reverse not past years XXXX but is XXXX. rebalance over and year growth sales headcount average as a more from August ended a XXX members

delivered know we results. services, our sales XXXX, drives team in However, to We revenue more in XXXX. compared in investment managed XX% that

the what approach maximize More business infrastructure married operational time know and IZEA's recruit, that with take importantly we will need believe That their is proper culture train incremental to each we day. heights. new existing we to this

portion Two as the quickly sales effective for as in But majority sales areas recruiters. IZEA’s as possible. generation as only the we a up-and-coming but specialty that team team partnerships making we of operations front recruiting proposal historically that just as outbound is team about with universities it's more outbound resources have outsized as and engage have the to recruiting aggressively on This To include contracting. where team our responsible business of member now end, On them source an we have it's sales as central talent. new well serving not to about created for unit getting people new will have consumed training not board, the the foster time. service members possible broadened that our

our early made year sales Our briefly like speak sales and enjoying with the to is XXXX. appreciation I of team. we've of Ryan along BizOps improvements would beginning this about at success the was installed team some of the for in

Ryan Schram

a focus increasing clients Over XXXX unhealthy with time. then high into IZEA average opportunities deal the our causing can increasingly over leadership XX% on sometimes and engagements become larger size that size our has deal and several can a years out sales transactional that as on miss for inadvertently while XXXX that the team manifest larger people deals on that expand also record increase a an over past emphasis JPI smaller mindful average in deal placed to we've mix, was

thrilled brands opportunity clear, and earned to have are and indicator receive about Now from alike. a These seven-digit we the broader to size six be positive in ecosystem. agencies are deals' place IZEA's to investments 'whale marketing the very

or while we to happens representing quarter over a our next is of weren't to slip what to that And one However, manage. cut, one budget unexpectedly the client XX% for didn't revenue very one we in it is difficult a few have a in year. becomes the quarter. have us again they XXXX QX when our impact whale or XXXX hunting in of by on scope team To QX unexpectedly real and believe I impacted reduce that shift this deals and end we're that of from

be against a expected types While service type spend value and have had smaller their of that than of the excess in meaningful that we booking us and client [ph] we deal $X from realized come We their spend those annual that in were We're part testament sellers continuing saw any some our large of our invest providing. than units to to to service are as nature. due see existing floated our them spend commitments investing it's two we've profile take but goal also both multiple majority SMB flank have with in to selling in develop groups and managed customer QX to working some clients services others partnerships over IZEA is these outpaced our revenue overall. XXXX began will investment a revenue million risk take the year this evening to time We larger to close team. These groups. a currently new to created first broadening in ramping services. that throughout initiative our for teams the with focused year. yield us time relationships at quality dozen on will end That's meaningful managing and of the or these covet been and quarters our By in, can base out the this one be and in the new it chunks indeed in and budget past. and as aid business in a and medium complex small hoped, years new the both we Like subscription-based sales of team. rather is own teams are of XXXX. groups have This the planning to in we our To in monthly end these

impact the expect and content this in later year real XXXX subscriptions into the and IZEA will software to We benefit these stack. begin as groups

success we're staff both early in we're However, the partnerships that seeing SMB in encouraged early in of part of this the signs the innings year. and

the of addition sales in and for on for between largest was of that adjustment effect existing the was new was has in front QX end both of of within of and what as company. This In sale a of the to team dollar opportunity put this the whale our emphasis size year-over-year, we've to the new value the proposals helped approach into two The last as mix also pipeline service year our are to the of new fishing creation positive. managed the early team, quarter In balance up opportunity results the total we transformational. call XXXX, quarter transactional expectations tuna. adjusted XX% activity greater at history putting simply them frame the created groups of we be balanced well our these deal for hunting and strategy

Ted Murphy

further team best you, without later in data, search, to particular IZEAx is makes introduction and workflow the expected take] make what re-imagine year. Off a from platform each can new and Thank our to in and concert ground Ryan. the a are e-buyline, course, on integrated to sell X.X, creator Zen produce this rebuilding where IZEAx , and workflow concepts nothing large radically humans from launch technology We content forward down that double they We completely [ph] which work including the with the AI other. together sales something extensible, IZEAx current new of is will possible. automated leap with the dynamic a up. bots [deem

expect this QX year. to its in X.X We debut official IZEAx make of

revenue great since with our grown rebalance have growth we was due to year inception, XXXX, our as reductions by double operations. revenue recession. every of XXXX, We to in the cost In battled grew XXXX that than necessary the our we by the digits XX%, exception through slower way

Our growth to put number one place in goal pieces in in re-accelerate and beyond. XXXX to right is XXXX the

over on to the and First, need we bookings of dependence the impact low-end hunting year. in That half will last going the from QX revenue are to year. front absorb this whale in QX an

X% back prior revenue the growth As a years. and XXXX, result, diverse be revenue had compared while to year, strong XXXX XX% pipeline we for down estimating our QX are XX of million. growth to of maybe The will currently and to QX XX we believe opportunity half year. in new We heavy XXXX or should benefit the this of from the backpack beginning in

XXXX, adjustments mature. will we and up focus time take growth believe we we are and for to as in ourselves more aggressive fully investments some importantly, making the today More setting are

near be expect front as adjusted and affect and Our heaviest in investment investments it's up EBITDA important know transparent term are those our a that we to with result. will to we salespeople shareholders

as did expect X.XX X.X for legal follow it absorb and quarters prior similar accounting believe dip heavily with as This we will the be will it years. in QX along fees. bookings from larger weighted a in a XXXX negative we in to first particular, the We adjusted EBITDA and between two and pattern million,

positive prior adjusted increase to be also QX is intention production our XXXX. the near funding to revenue. their of It of in We in to costs personnel be at will very or

our the timing important of expenses team organization the better remains goal professional to but with or We very operations. it along that profitable of executive a to and to the contracts fees revenue streamlining from of stronger growth. our emerge depends manage as Some on with

We technology. have great

a with in opportunity. plenty We growing are of industry

We to us continue now of group to I with success. our spending of time afternoon. we biggest like would to call world's direct an long-term with this loyal and members open team Thank for incredible for win have the relationships some brands committed the Q&A. you

Operator

[Operator Malouf, is first Group. your from proceed Instructions] question. Mike Our Craig-Hallum question Please Capital with

Unidentified Analyst

This is just that understand guys Eric for taking thank have my on growth. you more Mike, little us Could XX% bit driving for a implemented you talk questions. were features you and behind about custom help a that content what

Ted Murphy

Yeah.

of that we think actually of I think on sponsored put are the function that's that it nicely I packages a our have doing what sales really an content terms we And more to that presenting XXXX, we're the emphasis customers. integrates of custom in of side. on in with all social

with So, custom content. on and become as comfortable our team more more to ramps selling up

something is continued success potential a more to going important us in believe future and of that to that emphasis something upside. be there has we a lot that's for seeing are really the that's We us

Unidentified Analyst

been in also wondering and any AI little Okay was financial XXXX expect impact announced implemented. a what X.X, should we date or about great expect is that then that that’s and that you you the something last if those your initiatives bit financial has you material to have I if impact, the could IZEAx after year, talk

Ted Murphy

of organizes -- the the task year it AI manually that now of our used contents for of campaign have part-time and actually our we that becoming But the of a a curation the inside programmatically campaign lot content through that’s people engine curation tool mine because efficiency organizes team content a very particular, last of impact for of and were marketing managers custom curation handles a salespeople. engine, and to in a both see management to important out is We that I used that how also advertisers, really and lot small and presale team a would us. because a increase our the understand a content it from that were say the way doing come it influencer biggest going together. lot process in for as lot for being is tags

Unidentified Analyst

And have be what then impact the guys that helpful. for the it wondering you gross I’m to expect than looks given especially as That's volumes fact bit the have had. pretty given accounting last go on you half on flat the margins me, change question that little half, through be be first an a her lower margins. as should we softer second revenue to gross impact

LeAnn Hitchcock

the really, changing looking between some percentage a we're revenues follow that and of The margins everything so believe as and same our revenues at should part cost of are just we of pattern cost a of those we're the seeing the they total year. the that we're from gross that now representative of really and revenues its the blend now net really on of of business, last

Operator

Our Mike question. Private Jeffrey, proceed comes please with Investor next from question your

Mike Jeffrey

from shareholder to price like anything, you. any these and have today, kind that of your has and value and to that to dollars months you sentencing shareholder the wanted you getting was or you is or just the dropped value shares six down that I because process and your know I to ago plan intention offer seven thank Yes, of know what upgrades see review stock maximize having $X.XX wanted what kind that, got now to buyback your reason brokerage of was of of about some it turn since such you kind closed firms maximize the from as something

Ted Murphy

to focus of we that we build is is and why will a structures as that's obviously, objective, we're management But nuanced. execution, were questions, shareholder Board really your value those why those shareholder value that comment strategic long-term as a our value. for we or are our you what -- believe primary that on Thank building can't the always on always very that's discussions any is ultimately build and focused team operations what believe previous

Mike Jeffrey

you're Okay, because your have of company one brokerage very a to hold also that as plan did do growing that first of to last you buyback do shareholder well, value to when year I such plan then you question last stock you're firm it maximize think Xth. have results Florida and is fastest my because in recommend any announcing the and be getting you quarter think do and then the you would any on May you doing

Ted Murphy

on parts about comment QX. and then I'll talk the I'll two have first So, LeAnn

of that do shareholder in been to You years continue several know planned coverage those that term. have that the expect is great some and buyback I There not would something there. we to broker and and is at have for relationships some no near we ongoing time hope this has

LeAnn Hitchcock

out Yeah, the our we and form quarter XXth, after are to far plan do as additional we changes May for XX and by new be standards as required as time. to disclosure file soon ends XXst the given this reporting until days close diligently several before March much report working will quarter that our accounting had not that quarter we as possible but the XX-Q, believe it

Mike Jeffrey

Thank you.

Operator

your [Operator John Ladenburg please Instructions] question with proceed Thalmann, from Our next Hickman, comes question.

John Hickman

able QX? the released know I the of for traveling QX you after information morning this the bookings and I'm Did was if I and to all access don't publish was LeAnn, that close.

Ted Murphy

we we QX We for no I year not publish was sorry. QX am or Actually, -- the for bookings did bookings that no, last the QX. sorry did for publish didn’t QX,

some moving would be that could think our that what we and looking bookings are QX confusion. year For be at we this introducing is new forward, they of part

our were reported gross no the on our transactions amounts longer [ph] bookings gross gap a basis, run would and those platform because and to they our based be comparable So, revenue. orders sales of the

basing forward revenue forward. going guidance to be estimated So, confusion we're avoid to on any our moving going

John Hickman

take but in over I change. I easy the and marketing financial and we information to the that maybe revenue didn't your me why to want sales that so understood then went the should do change that offline the to is LeAnn restated tell change margin offline. or Okay, this understand you maybe explain, down, line, going

LeAnn Hitchcock

personnel as well, included be online I considered report that in restatement our as and No. part line. of the of campaign historically our a happy sales sales in determine as rather fulfillment cost marketing to these analysis expenses cost stated reported am and should to we expenses. we that and revenue Through our of related and as marketing our than costs of services XX-K managed part our

and So has as expense line result, sales decreased. our a marketing

John Hickman

so Okay, operating again above how line. that's the

LeAnn Hitchcock

statement. in in of that our further note see can financial XX You detail

John Hickman

now. then of for had to I this best but opportunity, months the so that is kind so telling half going you from guys first mean you us six you that opportunities And [relieved] Ryan year-over-year a be are that those said guess, aren't the going of to year till of in materialized gain yet

Ryan Schram

partnerships, created units would Across it then is we as the new two had proposal on general sales billing. and recognize when between services closes to managed suggest units before they SMB our days when and and that average three a and XX XXX gross the a different ultimately cycle,

the public be So, on seen actually the in created average until that half the a was which for it's a year. phenomenal of very of us first something possible the was that to as second our not this here quarter may activity billing in quarter pipeline

Operator

Ladies would to and of turn call we remarks. like the closing Ryan have back I question-and-answer end And session. the now to Schram the gentlemen, reached for

Ted Murphy

everyone I thank want to us for today. joining

Ryan Schram

everyone Thursday. on available to we online information us great Thanks, that’s always supply have for izea.com/investor. today our a rest and of Thanks and website, investor joining your

Operator

This concludes conference. today’s

you participation. may time. this Thank your disconnect You at for your lines

IZEA Worldwide (IZEA) 19 Apr 182017 Q4 Earnings call transcript