IZEA (IZEA) Q3 2025 Earnings Call Transcript

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Date

Wednesday, November 12, 2025 at 5:00 p.m. ET

Call participants

• Chief Executive Officer — Patrick James Venetucci
• Chief Financial Officer — Peter J. Biere
• SVP, General Counsel — Sandra Carbone

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Takeaways

• Total Revenue -- $8.1 million, a decrease of 8% attributed to intentional exit from unprofitable, nonrecurring project work and weakness in government and retail accounts.
• Managed Service Revenue (ex-Hozoo) -- Increased 5% with management citing ongoing focus on profitable accounts.
• Operating Expenses -- Down 67% to $4.3 million, reflecting reduced employee, contractor, and external service costs, and the absence of a prior year $4 million noncash goodwill impairment charge.
• Net Income -- $100,000 versus a net loss of $8.8 million in the prior year quarter, marking the second quarterly operating profit in company history.
• Cash and Investments -- $51.4 million as of September 30, 2025, an increase of $300,000 above year-beginning balances, driven by improved operating results.
• Managed Services Bookings (ex-Hozoo, YTD) -- Declined 26% to $18.2 million, with contract backlog reduced to $7.1 million from $15.5 million at the start of the year, reflecting strategic deemphasis on lower-value accounts and market caution.
• Sales & Marketing Expenses -- $1.1 million, down 62% reflecting workforce reductions and pausing of select initiatives.
• General & Administrative Expenses -- $3 million, down 49% year over year due to staffing reductions, lower contractor fees, and spending discipline.
• Cost of Revenue -- $4.2 million, representing 51% of revenue, a reduction from 59% reported in the prior year quarter; ex-Hozoo, cost declined 5% year-over-year.
• Adjusted EBITDA (non-GAAP) -- $400,000 for the quarter, compared to negative $3.4 million same period last year, calculated on a revised non-GAAP basis excluding non-operating items.
• Stock Repurchase Program -- 561,950 shares repurchased for $1.4 million since inception; no shares repurchased during the quarter.
• Enterprise Account Growth -- Management stated enterprise accounts are "now growing at double-digit rates, that are well above the industry average and a few at triple-digit rates."
• Technology Platform Development -- Infusion of AI-powered features in Q3, with further disclosures promised soon.
• Backlog -- $7.1 million at quarter end, down from $15.5 million at year start, linked to strategic account focus and client caution.
• No Debt -- Company reported having no debt on the balance sheet.

Summary

IZEA Worldwide (NASDAQ:IZEA) reported its second-ever quarterly operating profit and highlighted three consecutive quarters of financial improvement, closely linking performance gains to a multi-quarter transformation focused on enterprise accounts and cost reduction. Management stated that enterprise segment growth is outpacing the overall industry and referenced pipeline highs with new business from large brands, suggesting a redirection of business momentum. Company cash and investment balances increased modestly due to disciplined expense management and profitability, and AI-based technology enhancements were launched to support future service penetration and differentiation.

• Chief Executive Officer Venetucci said, "Our enterprise accounts are now growing at double-digit rates, that are well above the industry average and a few at triple-digit rates," signaling a targeted shift toward higher-value recurring business.
• The 26% decline in managed services bookings and reduced backlog to $7.1 million from $15.5 million were directly attributed to the deliberate exit from low-margin, nonrecurring clients and wider market hesitancy, which may affect near-term revenue predictability.
• Hires of new executive leaders from large agency and private equity backgrounds point to expanding enterprise sales capability and renewed emphasis on scaling recurring account wins.
• No shares were repurchased in the recent quarter, though buybacks of 561,950 shares totaling $1.4 million have been made to date under the program, and no new debt was taken on.

Industry glossary

• Managed Services: End-to-end campaign and influencer marketing solutions delivered by a dedicated account team, as opposed to self-service or transactional projects.
• Hozoo: Business line or subsidiary excluded from certain comparative managed service calculations per management statements.
• Adjusted EBITDA: Non-GAAP earnings metric excluding specified non-operating items, such as interest income, restated for comparability as of late 2024.

Full Conference Call Transcript

Operator: Greetings, and welcome to the ICS Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference call, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sandra Carbone, SVP General Counsel at IZEA Worldwide, Inc. Please go ahead.

Sandra Carbone: Good afternoon, everyone, and welcome to IZEA Worldwide, Inc.'s earnings call covering the 2025. I'm Sandra Carbone, SVP, General Counsel at IZEA Worldwide, Inc., and joining me on the call are IZEA Worldwide, Inc.'s Chief Executive Officer, Patrick James Venetucci, and IZEA Worldwide, Inc.'s Chief Financial Officer, Peter J. Biere. Thank you for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA Worldwide, Inc.'s performance during Q3 2025. If you would like to review those details, please visit 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 Worldwide, Inc.'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 our reported results can also be found in our earnings release issued earlier today and in our publicly available filings.

And with that, I would now like to introduce and turn the call over to IZEA Worldwide, Inc.'s Chief Executive Officer, Patrick James Venetucci.

Patrick James Venetucci: Thank you, Sandra, and good afternoon, everyone. In Q2, I proudly announced that for the first time in the history of this company, we were profitable. This quarter, I'm pleased to announce that Q3 marks our third consecutive quarter of financial improvement. While total revenue for the quarter decreased 8% to $8.1 million as a result of our choosing to shed unprofitable, nonrecurring project work and some softness in government and retail accounts, the underlying health of our business is strong. Managed service revenue, excluding Hozoo, increased 5%. Total operating expenses decreased by 67%. Net income totaled $100,000 compared to a net loss of $8.8 million during Q3 last year. And cash increased by $800,000 to $51.4 million.

Year to date, our managed services revenue is up 14% and net income totaled $1.2 million. Three consecutive quarters of continuous improvement underscore that our strategic direction and transformation towards sustainable, profitable growth is firmly taking hold. Since I stepped in as CEO, our objective has been clear: fortify, simplify, and focus. During the first half of the year, we fortified our business in America, simplified many aspects of our go-to-market, and focused on our managed services. We segmented our managed service accounts focusing on enterprise customers with recurring revenue and high growth potential instead of the long tail of transactional customers with small projects and high churn rates.

As we've strengthened and expanded our relationships with enterprise clients, we've been rewarded with more business. Our enterprise accounts are now growing at double-digit rates, that are well above the industry average and a few at triple-digit rates. Our sales and marketing efforts are attracting new clients such as Amazon, General Motors, and Owens Corning. Plus, our pipeline reached a new high for the year with invitations to larger pitches growing. Lastly, we produced new work for Kellogg's, Clorox, Nestle, Danone, and many more clients.

To bolster our enterprise growth strategy and momentum, we hired Steve Bunnell, EVP Account Management, who joined us from Publicis Group where he has a track record of rapidly growing large enterprise accounts such as McDonald's and Samsung. We also hired John Francis, VP Marketing and Revenue Operations, who joined our team from private equity-backed marketing services firms where he'd built effective B2B growth programs. Although we have been highly focused on services this year, we continue to invest in our technology platform. Earlier this year, we began simplifying our tech product offerings by focusing on fewer products, consolidating features, and delivering a more intuitive customer experience.

In Q3, we infused our technology platform with AI-powered features that provide clients with strategic insights and campaign performance. We will be announcing more about our technology development soon. With all of this momentum and opportunity ahead of us, I am optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders—shareholders, clients, and employees alike. With that, I'll turn the call over to Peter J. Biere, our Chief Financial Officer, for a closer look at the financial results.

Peter J. Biere: Thank you, Patrick, and good afternoon, everyone. This afternoon, we released our results for the third quarter and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. Today, I'll review our operating results for the quarter ended September 30, 2025, with year-over-year and year-to-date comparisons. Highlight key balance sheet items, and provide an update on our stock repurchase activity. Beginning in early 2025, we implemented a new account management model focusing our resources toward larger, more profitable recurring accounts while scaling back selling and delivery efforts previously devoted to lower-value project-based accounts with limited repeat business. Strategic realignment reduced current year contract bookings but has materially improved profitability and strengthened our foundation for sustainable growth.

Managed services bookings represent a total of sales orders received during the period, net of cancellations and refunds. They are an indicator of overall demand but are not necessarily predictive of quarterly revenue as timing varies with contract size, complexity, and customer arrangements. As we continue to emphasize enterprise accounts, individual bookings are expected to become higher in value but less consistent in timing, which can impact comparability. For the nine months ended September 30, 2025, managed services bookings, excluding Hozoo, declined 26% to $18.2 million compared to the prior year period and contract backlog decreased from $15.5 million at the beginning of the year to $7.1 million at quarter end.

The decline primarily reflects the company's strategic focus on higher quality recurring accounts, along with more cautious marketing spend among certain enterprise and agency clients amid broader economic uncertainty including tariff impacts. Revenue from managed services excluding Hozoo increased 14% for the nine months ended September 30, 2025, compared to the prior year period, while overall growth slowed 5% in the current quarter. Growth in both comparative periods was driven by expansion among enterprise customers, partly offset by a reduction in smaller nonstrategic accounts that we intentionally deemphasized.

Our total cost of revenue, including both external creative and internal labor costs, totaled $4.2 million or 51% of revenue in 2025, compared to $5.2 million or 59% of revenue in the same quarter of the prior year. Excluding Hozoo, the cost of revenue declined approximately 5% year over year, reflecting improved margin mix in the current period. Operating expenses other than the cost of revenue totaled $4.3 million for the third quarter, down $8.7 million or 67% compared to $13 million in the prior year quarter. Sales and marketing expenses were $1.1 million, down 62% from the prior year period, reflecting workforce reductions and a temporary pause in certain marketing initiatives.

General and administrative expenses declined 49% to $3 million, primarily due to lower employee-related costs, reduced use of external contractors, and decreased spending on professional services, software licenses, and data storage. The prior year period also included a $4 million noncash charge related to goodwill impairment from an acquisition we made in 2019. We achieved profitability for the third quarter, generating net income of $100,000 or $0.01 per share on 18.7 million shares, compared to a net loss of $8.8 million or negative $0.52 per share on 17 million shares in 2024.

This marks only the second quarter in the company's history in which profitability was achieved through operating performance, and the third consecutive quarter of financial improvement, underscoring that our transformation continues to be underway. Adjusted EBITDA for the third quarter 2025 was $400,000 compared to negative $3.4 million in the prior year quarter. As a reminder, we revised our non-GAAP definition of adjusted EBITDA in late 2024, excluding non-operating items such as interest income from our investment portfolio and restated prior year's results for comparability. A reconciliation of adjusted EBITDA to net income is available at the bottom of our earnings release.

As of September 30, 2025, we had $51.4 million in cash and investments, an increase of $300,000 from the beginning of the year. This modest increase contrasts with an $8.8 million reduction in cash in the prior year period and reflects the benefits of improved operating performance and disciplined cost management. Operating cash flow is positive for the year-to-date period, inclusive of normal working capital timing variances. In September 2024, we announced a commitment to repurchase up to $10 million of our common stock in the open market, subject to customary restrictions, including regulatory limits on daily trading volume and company-imposed share price thresholds.

Through September 30, 2025, cumulative repurchases totaled 561,950 shares for an aggregate investment of $1.4 million under the program. No purchases were made during the third quarter. We also earned $500,000 of interest in our investments during the recent quarter, and finally, we continue to operate with no debt on our balance sheet. With cash on hand and liquidity, we remain well-positioned to support organic business growth initiatives and pursue strategic acquisition opportunities. Thank you for your time today. And at this time, we invite our investors and analysts to share their questions so that we can provide clarity and insight.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Ladies and gentlemen, if you wish to ask a question, please press star. Reminder, ladies and gentlemen, if you wish to ask a question, please press star.

As there are no questions in the queue, I now hand the conference over to IZEA Worldwide, Inc.'s SVP and General Counsel, Sandra Carbone, for closing comments.

Sandra Carbone: Thanks so much, Ryan. And thank you, everyone, for joining us this afternoon. As a reminder, a replay of today's call will be available shortly on our website izea.com/investors. We appreciate your continued interest and support and hope you'll join us for our next conference call to discuss our fourth quarter 2025 results.

Operator: Thank you. Ladies and gentlemen, the conference of IZEA Worldwide, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.

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