IZEA - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, greetings and welcome to the IZEA Worldwide Inc. Fourth Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A brief Q&A session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure your my Chief Ryan now Officer. Operating is to host, introduce Schram, It you. Thank

begin. may You

Ryan Schram

quarter Good to Chief and IZEA's call. IZEA. afternoon welcome joining Chief I XXXX fiscal And Vanke, am earnings Financial year Earlier XXXX details Executive issued a company Officer, Officer, Chief Ryan and today for pertaining and Schram, the me Operating our Murphy. Thanks year being release today, with Troy and with at Chairman IZEA's Officer Ted us is performance. QX to fourth IZEA's this fiscal afternoon. press and

to details, be website If review you information Investor is investor which of can like on Relations our those all IZEA’s izea.com/investors. found

made and factors, and in the most subject Before take earnings as our company’s Harbor no risks SEC. the These of the that discuss statements are that advised differ our press financial team's recently make team due to periodic we results. Safe and based from outlook management today And of our management relied statements. during number or trends uncertainties our the IZEA's events, today's assume release note expectations mentioned of are today’s please business the of course obligations and inherent on should be could martially unduly covering not any appears forecast begin, will paragraph a team reports that call, end at with to upon. including in predictions to the statements those forward-looking Actual of be results, filed forward-looking our The company call. update

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

Troy Financial and my With am I Vanke. pleased the introduce Chief of out disclosures IZEA's to Troy? Officer, appropriate colleague the way,

Troy Vanke

Thank afternoon, everyone. you, good Ryan and

I quite such I would to thank forward drive. weeks In and like ongoing to to Ryan join relationship. energetic amazing Ted company, an dynamic with short the vision begin, organization. and truly challenge been opportunity the been six organizational Before looking and I've for the building I'm and the team many met the to a I've and I've impressed members, lasting by the

revenue amounts I turn to XXXX. would the rules, Since results, the figures the to remind company of financial today review year on starting quarter with for apples-to-apples pure XXXX prior call recognition any a new the comparison isn't the revenue new revenue of like As did figures of recognition of not comparison. its to first recast those that IZEA revenue XXXX I guidelines, adopted XXX% corresponding

the year. Now, to on quarter XXXX our let me turn to before full moving fourth

combined we releases, significant public acquisition a This prior revenue in the TapInfluence services mentioned mix strong in SaaS effort business As during in is as what in revenues. XXXX, to increase starting software organic IZEAx service acquired or SaaS offerings. with to you're growth a of our our XXXX. which driven has and of we an balance between managed our offerings see made our Also, from

gross to what and as to as in time, business Over gets have we paid this result continue fees related this net net revenue of important report IZEA’s ultimately, Managed being SasS recognition as are widen recognized treatments fees business creators. the to IZEA is more SaaS to services in marketplace billings revenue As we different bookings it we rules. revenue shift statements, while as note workflow financial our offerings. towards difference will and revenue, revenue the and recognition what make recognized accounted amounts transition the and services, gap our gross individual revenue the legacy and, between licensing gross for with that in under streams the new accounting SaaS our

total million, million XXXX, X.X million coming revenues with SaaS X.X offerings. XXXX fourth from XXX,XXX for For our quarter million less reported X.X offerings. managed the with business This services services revenues IZEA our compares of nearly and than X.X of for QX SaaS and from almost managed coming

of Although XXXX, discretely gross compared is with during services history between disclosures, X.X in the at we evident not in SaaS billings XX.X gross in which, QX saw our public our XXXX. shift from the IZEA’s quarterly in QX for revenues evident highest and billings, managed mix amount million gross million billings also

XX.X to increased in XXX% million QX X.X For XXXX. XXXX, QX million compared with bookings

revenue, in million QX Our compared exclusive in as XXXX, X.X X.X cost of QX XXXX. of to amortization, million was

of our of of offerings from increases. XX.X% our revenue is cost improvement has what our consistent exclusive to QX in XXXX, a percentage as balance or basis XX.X% QX SaaS revenues, improved from expect to an XXX in amortization, of see would revenue, derived with As points. improvement of This we XXXX

and credit, cost math increase QX adding costs of down XXXX million, X.X impacting are pronounced average our XXXX mix, XXX,XXX XX.X Doing in in million net an the look to for total on our QX Full-year quarters compared were the Our TapInfluence in per for full-year the were and to business higher XXXX, relation largely of themes share revenues and from compared XX.X QX same XXXX. amounts in for with for I outstanding our balances expense million although net resulting are discussed as acquisition for the a iterated taking on million and $X.XX XXXX. from by driven X.X expenses amounts, the QX full-year since less loss XXXX as line was or shift XXXX. third loss of XXX,XXX the or the impacted at our only per XXXX, the QX When fourth revenue revenues. interest share our $X.XX of for

XXXX. Bookings increased million XX% to were XXXX. for However, up for for XXXX compared our XXXX from for gross billings under XX.X million, XX million to XX.X just XX.X

of revenue this to Again, XX% over or XX.X just offerings of improvement million about revenue SaaS see from is was X as cost what revenues XXXX. revenue our about amortization of balance would our XXXX, increases. we expect for for Our from XX.X% of derived down or million exclusive of

Our million and from for XXXX. were XXXX, XX.X total costs million XX.X for down expenses

we As of a booked our total and QX over is a $XXX,XXX actually year year our expenses. in outstanding reminder, which charge associated costs litigation XXXX deductible improvement in for reducing insurance

to compared for XXXX briefly our share to before $X.XX million net for liquidity per X.X net XXXX discussion Our over loss the call or the $X.XX to share million X.X turning of loss Switching the was or per Ted. back

cash with an just under of we our of million balance line on million. XX, credit X December XXXX, X.X on of had approximately hand outstanding As of

as amount the X.X Our line limit remains of had approximately million, of us. so we XX, of December X credit credit available million deducting drawn to

draw Ted. I'll due available issue operating are it to turn our to likely on be In addition, a the credit XX line our that to as today, we our on and TapInfluence of With full line desired. accounts back that, us But the will acquisition. on for next for we earlier sufficient that to our to months. had July call the books support hand we XXXX over filed in cash payment expect had the needs And disclosed in been sufficient equity cover receivable annual report we for

Ted Murphy

quarters, is would to six XXXX. we a team want call, line our QX. quarters shared EBITDA positive for QX commend adjusted adjusted commitment leadership in am to Troy. company get In contributed I to manage our the team. to to I we three return that in the this our deliver them have as that to adjusted profitability QX team we a On important early. EBITDA Keeping believe earnings adjusted you, IZEA This us as, last march pleased positive to positive were I remains grit another EBITDA two positive. us adjusted goal. Thank responsibly. that been across positive continue EBITDA able us important we and member helping of quarter, achieve to EBITDA of its Every towards and growth to sight

will EBITDA our yet with I While positive, a we not we quarter adjusted that adjusted positive. are towards do every progression be pleased at point where am believe EBITDA

platforms IZEA’s IZEA been of have seasonality IZEA At to I content significant year, majority IZEA’s annual agencies to the talk QX like of these These pay with where marked of a expenses revenue. a bookings half annual have driven we incur going. to run on using our in technology campaigns and model of other been behalf. we where beginning organization. transformation that and each managed their services accounting time, including we have would XXXX and by influencers year same has are for audit. and fundamental our hire both business, the campaigns brands We the in and for offering to employees back significant our creators. brands. the will agencies historically business and discover, marketing about manage execute we bit the

through early to been more develop significantly higher and we marketing model more creators IZEA, our for just has value way, contracts revenue this securing success and it started our and model companies. for that While unlock It our their with monetization media a software point outcomes network our grown software. and had customers on to of initiative believe meaningfully always empowers do can that along to we for opportunities engage is this has our we creates XXXX, this sustained the some marketers, In quality our own. business that, And streams business better scalable an goal large to creators.

relatively to buyers did sell sell end available campaigns. itself of yet for The IZEAx and resources Many the enough started operate end IZEA special were needed things to were we that marketing. roll have platform being not wanted successfully not experience to the not features team customers the the ready recognized we as out allocated large The yet. yet access organizations The we platform to made to of was users our the quickly. execute influencer the licensing were budgets they members to dedicated There had these However, to. to to fees. two weren't warrant software partners, ready no to not

this in building resourcing we Then, year, President and Instead market Once software also give year, point. to of to an market team validated. were pursue SaaS to to out inflection a started services, seeing financial in an the enterprise to the managed of we of now usage. it clear we which Vice world us became take solution had the nearing sales with Marketing time product domain seeing invest agencies, also ourselves to signs at and much our refining acquired would more We the including this were to platform. and on end in titles our instincts Influencer SaaS platform of and again, into effort. order brands team to time XXXX, back strategic platform started from were mature. XXXX of support TapInfluence, additional which decided the We SaaS to available. We larger was added the We and half that customers began real with our By progress complexities back to We with customers continued us in some prematurely, and bolstered decisions about for the quickly this of we our of that initiative and during last led companies, didn't the SaaS handful pull order allow believe we provide selling to experience. focus that selling resources significant platform transformation. Early our continue market the perfect requirements. made account security budgets organizational the made

helped financial XXXX reduction management decrease This reduced December associated with December revenue software. Our of properly was resources to campaign investment gradually necessary managed and from reflected headcount in XXXX. by the that to business, was the our organization but sell XX% approximately directly services service part and the managed sales to our in staff services in XX% free

net Troy revenue a marketplace treatments. spent number. reported managed the gross services on is on Services while As mentioned, from Managed customer is accounting reported and spend SaaS have different services only

want year-over-year, up gross XX% our margin, billings the provide largely marketplace to QX. in required QX, XXX% higher of revenue spent. derive financial with QX long to software less SaaS our is services was margins in were SaaS is profitable, investments saw in and majority While growth were due licensing customer due highest SaaS we will for and largely in history, underlying streams concentration. through ultimately bookings our to the term. where down believe sustainable up revenue model recurring gross revenue In This services. we We our

SaaS, on still both Many effort a will customers our want believe addressable focusing be of need solution. and we While for large we market that more managed services there's business. a segments

commitment. in a And SaaS with parallel sometimes even

expect given on grow quarter, to segment. investment We business in emphasis each SaaS substantially that and revenue services our year-over-year

We through correlated is to expect managed this This less services services sales. directly QX bookings managed to in be headcount down of year-over-year year.

We again to QX growth year. take this growth year-over-year or in the half two bookings. expect to return a of bookings reflect managed for revenue services to It after quarter second may in

to roughly briefly like of operations and about the half and we We I every sales have bookings come adjustments expect quarter services Ryan year-over-year in increase bookings forward. from as SaaS speak expect to XXXX. made of head XXXX of some we moving those to we would into to

Ryan Schram

well to will of deliver and members and as success remarkable a Thanks, our Ted. for shareholders team term value XXXX alike. clients, our lend change expect one for evolution as long year organization, we that our was

acquisition Let this has the Tap’s by the We very out closing so be we catalyst how gone the key process that accomplish following to share outcomes integration enabled me provided far. begin continue by late set pleased July. TapInfluence the five Overall, and deal in to acquisition recapping transaction. with

two, mix increase from revenue boost Number SaaS through to to to diversify as as marketplace licensing margins. and First, operating well strengthen revenue IZEA’s a spend.

industry's consolidating create our bolster investment software one, in for consolidation that market order combining the transform want in an a players influencer market of to and being two footprint day the our share Fourth, And largest to premier increase the space to major by technology driven content engineering we highly services otherwise market. to Third, with organization fragmented marketing. marketing the of wanted by and on we technological first of platform record influencer promise offerings. last, value delivering the first, of operations with leading in

Tap other, many IZEA. aspects together objectives, were but five equally there these obvious, of valuable and Beyond less bringing

providing deal partner value will planning For close. to flow with our than efficiency of them charges example, opportunities overall. super This diligence the it ahead before. create worked by marketplace more and the relationships working for greater liquidity collaboratively solid at acquisition, to to and brands economy strengthens swiftly more ever already our creators with post terrific the integrate official of and two due IZEA creator conversations organizations Every department thanks and the

of EBITDA, of expense benefit quickly ahead careful our a As of cost in and reductions overall have combined net-net, a impact through we the of result, a realized positive elimination duplication own even streamlining operations. The our expectations.

roadshow the key and IZEAx. Some multi-month included of choreography the initiatives acquisition combined over the customers customer vision first XXX days extensive as as roadmap well to the technological post legacy companies the TapInfluence for with explain executing of

mean several product brands. combined across HQ renewals agencies sessions SaaS were to and IZEA We fall resulted from customer legacy We during in large briefing with the and organization forward. success. also are remarkable about executive they for the also including figures SaaS monthly, dozen including of able newly and enterprise, our is a and for We over for TapInfluence for efforts the fourth incremental IZEA These and a the here potential from to terrific quarter revenue customers IZEA, even spend visioning six about. SaaS potential only hosted to at we're various honored to row. resources right the want and the there's award and by same Deloitte XXX customers we that what quarter meet expect spends, our those research into engineering large have customers. believe to But compound to first and their of annually ideas benefit in speak the innovative starting model drive SaaS ahead forward. legacy eager to we of growth. benefit to briefly available low figures moving Those the IZEA spend These to experiences software the unique marketplace of the spend monies customers to functionalities in here get up that did products, schedule. hen to during in captivate and I be advantage are to mid Also, over customers that migrate marketplace XXXX. for the second fulfill of those speed five just of disruptive who licensing isn't some IZEAx were Tap named customers announced companies converted Fast customers And Access moving from recognizes services fall, thing a time. that on who year we of the committed are desire them only will and take excited The a can

client direct our service commitment for a for great here remain expansion seven still Another year first to aggregate time. much mark continued having potential their We and of with this managed committed IZEA was last the XX relationship explanation so see business. the figure our at segment services with from Fortune a of reached point managed

previously, Ted integrated they're provider technology. solution we've mentioned can flexibility that through services or often As the technology, that offer heard not and clients services from seeking an

opportunity is by the particular specific Speaking dollar was which that the presented over new during clients, million. quarter, pipeline of during total just generation proposals $XX quarter, fourth a period during of value clients

important part new contractual unless area of counts that committed as marketplace it's an pipeline upfront is of However, a is that process, unusual. to that not understand spend towards spend generation which our is opportunity SaaS bookings

the forward. the changed The have needs job way our As organization part dynamics we have also and IZEA. sales transformation, of of build time market the we’ve of our want over examined reevaluated to as moving

IZEA the and we immersive can changing in full initiatives, unit candidates six potential Program. months, way but is indoctrinating the By wants recruiting sector. our climate identifying high a in address across program a experience generationally. who with believe unique hiring training introduced result, sales, career proactively Selling the a education via high in tasked may practical time As individuals caliber, and we the internal this new This lack we've IZEA Professional

career As XX% according not prospective consider to sales recent a employees GenZ appealing do an study, of path.

that. to want we change So

so, year positions, applicant to Over next intend PSP pools addition regular from of talent. program the and we external in our to and the of or inbound course in sales graduate to manage individuals service recruiting prospective

the have Finally, and Ted success before our underscores record call and Troy client $XX units breaking that and of accomplishment like teams highlighted. to the first the To QX for recognize development, for all themes across but handing mark I’d through client service Ted, operational back thank have that of both customer and our bookings have only to bookings many is quarterly as million the shared today. million an well goals time, exceeded not of the here $XX we've pushed to

Ted Murphy

Thank you, Ryan.

of Over amount inward our outward has at business leadership team year, the at the industry. a considerable time, past spent looking and our

in space focused $X spend to will a consumer is marketing Influencer estimates few at no is growing. virtually As future, dominate. industry real approximately the in is afterthought The large way. and growing we longer our annual tag some we look an budgets remnant have platforms Two, and the One, every beliefs. our company buy. marketing or billion. the Current industry influencer of are core utilizing

marketing space. didn't those It increase intense are important are players platforms evolving. with a our platforms that While to literally it providers. arms incredibly still need changing to in networks manually, competition transactions the tools and is brands pictures a is for technology expensive and moves to This to is social it hundreds more point, breakout will one in the happening and with build market in and to and space changes meaningful space changes Twitter snail's It and is customers grow, is note partner fast awareness, in moving efficient. requirements. and influencer majority stories. is It that At have Their to software at and this an didn't of continue make pace, sales, of in our will those display the customer technology make way. fragmented difficult always them constant space investment a agencies well. share ad and race. to changes constantly as space so change require marketing our require order There and significant Instagram for industry Unlike effectively that and have

and be space industry the win. Four, technology As bigger, in investment is marketing gets scale will matters. so to required and compete sales. is expensive, this as maintaining Building and

to opportunity and gain there's real However, also efficiency scale.

spread operational the grows, the customer line As grows, a infrastructure among top larger leverage are as base. costs

and we they positive that For to leverage It could heavily business. transaction TapInfluence, were spent duplicative the make to influencer other in Because scale Five, coming. is space in of to this consolidation operational build is industry This gave reasons, us and standalone QX. required. we inside adjusted with contributed meaningfully example, acquired But The investing in among it of amount the as EBITDA consolidation was coming ultimately company. that CEOs IZEA, a their belief marketing money is the also ultimately when sense. spent. doesn't common unsustainable compete our aforementioned eliminate of being is each

mission. inbound transform is options be opportunities XXXX this We look to enterprise our discussions pull totality, company share and significant company, to have continue invest we to responsible share for we have and our operations for our yielded only grow and space spend the our in in domain public of the as business. coming at benefited beliefs and another and this the better unique best IZEA. amount back is year clear growth since indeed the If important marketplaces, We are that parties these going use our we new have of platform as to vision opportunity for resources in believe space most the IZEA. a future. there the that acquisition and the position it beliefs and We we that These the activity from month far in our In industry, made the by from our in together. the intend of most experience. for becomes and a TapInfluence, we to further significant

platform work, the of to of you. and incredibly over excited the upon IZEAx This is release years coming quickly with hard we new the share are two combination of We are X.X.

received when engineers and reception early have from one from The number have the to overwhelming. can show the to clients Please we been our XXrd outdone we have very platform. soon, us Our preview is it? of we the been them clients The join future get it we have has given of themselves is, answer April an who when soon. on see question

for details this announced event SaaS value Additional can foundation. customers. foundation, open IZEAx will about as Both on will a us managed time well. more technology efficient we tools our deliver sides now X.X of more be Q&A. advance. for like with but Better services, our and only business for not afternoon. better for would the in mean be services you this spending for the I rise to Thank call provide

Operator

[Operator Instructions] Malouf from first question Craig-Hallum. Mike comes the from of line Our

Mike Malouf

questions congrats getting our to ahead of EBITDA outlook. Great. on my for positive, Thanks taking and guys that certainly

So that was great.

Troy Vanke

you. Thank

Mike Malouf

or first for the sense to Question agencies on each that on roll color right jump are SaaS in as and platform you a what, us you have this of you it's out maybe just you, total many that whether business, give a the of little are brands on give can it's us now? how

Ted Murphy

pretty throw Yeah, we're a agencies, firms. PR big seeing actually I between would is it's brands been a and category that actually and mix even

as lot it a the about the in multiple sort brand that of in side, platform, releasing put of types evenly pretty we on selling obviously business for one spend There's category those of is cases clients. able agency in that yet different customers. number brand two direct So, any through We're customers. if But to we're or not of lot the depending And of an I would different them like agency. a But numbers a the agencies. terms support the between like they're well. marketplace of relationship use that things is we of the

Mike Malouf

will a then quarter, into the being And it in do managed be first again, down as down the Obviously, year-over-year, first be in the in then and you revenues be when second down, that in revenues? grow that How look to maybe see the in you trail will growth services, quarter, little probably bit will bookings fast but but, second quarter. growth? down think quarter, again great. Okay, we starting it'll

Troy Vanke

typically at really six of of it's about mean, look I what it depends if And on Yeah. bookings kind months. is are. the and trailing customer been mix what you the the there, effect the programs

it's that. We're speculate team started think that time their flow a early it's revenue. us I their here on going managed build to ultimately and that pipeline, be the for process, rebuilding have some for services and to through to little bit to So, them grow to then bookings, have going take but

Mike Malouf

you remind gross for services the sort if years? question. And Can those three relative a when business, and over Got then SaaS revenue of the it? just one of three, all final at margins you the couple us look next you as target again, to managed managed are of service, at we the take look just the business, license software where marketplace,

Troy Vanke

there's historically that -- lot you've and got And just the engineering, Yeah, services, the over A about infrastructure XX.X%. at so a averages is, lower at of hair Marketplace, customers are side, then licensing XX%. about through marketplace it's if it Tap but legacy look managed or been you it's XX% basically the of cost flows XXX%. the that on a fee. at that

Operator

Instructions] [Operator to comments. closing further queue. over and Ladies management have floor to for turn gentlemen, the like questions no I'd in back we

Ryan Schram

would everyone to this for like us thank I afternoon. joining

if Have As it's IZEA available for evening. izea.com/investors. at investor, a online any additional an great like you’d information a you as reminder, on friendly

Operator

this teleconference gentlemen, our Ladies today. and conclude for you. Thank does

your your time. disconnect now at may Thank this for participation You you wonderful day. line and a have

IZEA Worldwide (IZEA) 28 Mar 192018 Q4 Earnings call transcript