Greetings, and welcome to IZEA Worldwide, Inc. Fourth Quarter 2020 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 the conference is being recorded. I will now like to turn the conference over to your host, Ryan Schram, President and Chief Operating Officer.

Good afternoon, and welcome to IZEA’s Q4, 2020 earnings call. I’m Ryan Schram, President and Chief Operating Officer at IZEA. And joining me today is IZEA’s Interim Chief Financial Officer, LeAnn Hitchcock; and IZEA’s Chairman and CEO, Ted Murphy. Thanks for being with us this afternoon. Earlier today, the company issued a press release with details pertaining to our fourth quarter performance for 2020. If you like to review those details, all of investor information can be found on our Investor Relations website at izea.com/investors. Before we begin, please take note of the Safe Harbor paragraph that appears at the end of the press release covering the company's financial results and be advised that during the course of today's earnings call, our management team will discuss IZEA's business outlook and make forward-looking statements. These statements are predictions based on our team's expectations as of today that are subject to inherent risks and uncertainties and should not be unduly relied upon. Actual events, results or trends could differ materially from our forecast due to a number of factors, including those mentioned in our most recently filed periodic reports with the SEC. The company and our management team assume no obligations to update any forward-looking statements made in today's call. In addition, our update today will refer to the key metrics regarding gross billings and the non-GAAP financial measures regarding adjusted EBITDA. A detailed explanation of these measures is disclosed in our earnings release and in our most recent Form 10-K available under SEC filings in the Investors section of izea.com. With the appropriate disclosures out of the way, I'm pleased to introduce my colleague and IZEA's Interim Chief Financial Officer, LeAnn Hitchcock. LeAnn?

Thank you, Ryan. And good afternoon everyone. For the three months ended December 31, 2020, IZEA’s total revenue was $6.4 million, a 10% increase compared to Q4 2019 with $5.9 million coming from our Managed Service business and $537,000 coming from our SaaS offerings. We saw a 17% increase totaling $842,000 in our Managed Service revenue and a $274,000 decline in our SaaS Services revenue in Q4 2020 as compared to Q4 2019. As we have previously announced, our bookings of Managed Services increased approximately 48% in Q4 2020, compared to Q4 2019. As a result, our revenue for Managed Services not only increased by 17% compared to the comparable quarterly period in 2019, it also increased by $2.3 million or nearly 67% compared to our Managed Service revenue in Q3 2020. Larger customers are increasing their marketing spend with us and more brands are shifting more of their marketing dollars to influencer marketing campaigns. For Q4 2020, our gross billings increased $8 million compared to $7.8 million in Q4 2019. This 2% increase in gross billings was primarily due to the $842,000 increase in Managed Service revenue offset by the decline in marketplace spend and license fees from SaaS customers. The reduction in SaaS gross billings due partially to customer churn, lower fees and changed spending habits due to COVID uncertainties and other factors, resulted in the $274,000 decrease in SaaS Services revenue in Q4 2020 as compared to Q4 2019. Our cost of revenue exclusive of amortization was approximately $2.7 million in both quarterly periods. But as a percentage of revenue, our cost of revenue exclusive of amortization has improved from 46% in Q4 2019 to 43% in Q4 2020, primarily due to the reduction in personnel and travel related costs on the fulfillment of our customer marketing campaigns. Our total costs and expenses were $7.4 million for Q4 2020, compared to $8.2 million for Q4 2019. If we exclude the non-cash $418,000 impairment of intangible assets recorded in Q4 2019, the improvement between periods is approximately $300,000, primarily as a result of cost reduction efforts affecting personnel, rent and travel expenditures that were cut due to COVID operating changes. As a result of the notable improvements in our operating results, our net loss was $1 million or $0.02 per share in Q4 2020 compared to our net loss of $2.3 million or $0.07 per share for Q4 2019. With the increase in overall revenues, we were able to improve adjusted EBITDA by $825,000 or 64% to only negative $467,000 in Q4 2020, compared to negative $1.3 million in Q4 2019. This was achieved through the steps taken to increase revenue and maintain a virtual work environment during this quarter. Although our team is working remotely, our internal business operations are fully functional. We have observed changes in advertising decisions, timing, and spending priorities from our customers, which initially had a negative impact on our revenue. However, we found ways to reduce expenses and gain efficiencies in our internal operations to minimize the initial effects and focus our team to meet the needs of our customers throughout this year. Bookings is one of our key metrics that is our measure of all sales orders minus any known, or expected cancellations or refunds within a period. However, bookings is not always an indicator of revenue for the quarter and could be subject to future adjustment. Revenues for Managed Service bookings is typically recognized over a six-month period on average. Based on the increase in bookings in Q4 2020, we are entering 2021 with a revenue backlog of approximately $10.6 million. And we are expecting to see continued increases in revenues in 2021, compared to 2020, which will be used to further invest in our own marketing and engineering spend. While we anticipate increased revenues, there is still a high level of uncertainty around the duration and total economic impact of the COVID pandemic on our industry in the future. As of December 31, 2020, we had cash on hand of $33 million and we subsequently raised $34.3 million under our ATM offering in the first quarter of 2021. From June, 2020 to date, we have raised total gross proceeds through the ATM offering of $62.8 million. These funds put us in a position of strength with capital, for our future growth. With that, I will turn the call back over to Ryan.

Thank you, LeAnn. It's hard to reconcile the last year of our lives, both personally and professionally at times. In late March, 2020, there was unprecedented uncertainty, not just within our business and the greater Creator Economy, but of course the world at large. When we sent our team members across North America to work-from-home on Friday, March 13, we thought it would be 15 days to flatten the curve. A minor distraction to end our fiscal quarter perhaps. It's almost laughable now looking back to see how naïve we all were as a society, as we faced, what may likely be the largest global challenge of our generation. What transpired after the week of March 13 was horrifying, our clients canceled our froze campaigns. All new business activity was stopped in its tracks. And suddenly, the realization that IZEA could be highly vulnerable amidst all the broader chaos became a very real fear for us. But where other companies panicked and suffered as a result, we put our heads down and got to work. We focused on controlling the things that we could control within the dynamics of a once-in-a-lifetime pandemic, creating content, sharing thought leadership, developing new products and inspiring brand investment through a stable hand. I personally can say, I have never worked so hard while at the same time being so terrified about the unknown and much of our staff of course felt the same. And along the way, it hasn't been easy. In fact, nothing about the last 54 weeks has been easy on any of us. Our team members all took temporary pay cuts so as to avoid laying off full-time team members who needed health insurance, and income during the height of the pandemic. Some of us got sick, but thankfully recovered. Some of us lost beloved family members who passed away while alone in a hospital. Many of us were and still are lonely due to an extended social distancing. But through it all, the conviction of our team was unwilling to waiver. We, team IZEA, found a way forward to not just survive, but thrive by adapting quickly. For example, thanks to our cloud first infrastructure approach, originally designed years ago to help us navigate being headquartered in a hurricane zone, our team members were able to move from offices to home without missing a beat. And while we all prefer to see a few less Zoom meetings in 2021 as immunization rates increase and it becomes safer to be together again, having the ability to collaborate in real time seamlessly during the workday provided many of us solace in an otherwise physically disconnected world. As society fell into the COVID economy last summer, we quickly realized that amidst the tectonic shifts in advertising and marketing that occurred due to the pandemic, that influencer marketing mattered more than ever. We committed to aggressively invest in our future, building a complete ecosystem of solutions anchored by proprietary technology. We weren't satisfied with the idea of shifting from “brace for impact” to just recovery mode. Now we shifted from recovery mode to a high growth posture with confidence. In our Managed Service unit we teed in on the fact that more than ever the COVID economy brands wanted and needed a partner like IZEA who could provide agile, campaign focused flat-fee relationships with world-class execution instead of burdensome, expensive, multi-year retainers. Paired with a strong relationship basis our client facing team members have built over the years, allowed IZEA to deliver its highest Q4 Managed Service bookings ever in 2020. In our enterprise SaaS work group, the macro economic impacts in the greater MarTech sector opened up a window of opportunity for us to overhaul our entire go-to-market approach via best-in-class cost to value pricing, improved term flexibility, and a relentless focus on reducing the time to impact for new customers onboarding. All of which drove a record number of SaaS customers signing up IZEAx. And we did it all with a smaller workforce than we've historically had in place, fueled by increases in individual contribution productivity that was enabled by the technology investments we've made in our platforms. We have fewer people delivering more revenue per person. However, to be truly successful on a global basis, we cannot just go it alone. You have to link arms with like-minded companies who share IZEA’s, worldview, and compliment what we cannot do solely by ourselves. Through our partnership’s work group, IZEA formed a multitude of industry first working relationships during 2020 and into early 2021. First, with the formation of Influence+United last September, which has brought a cohesive multi-continent concepting integrated strategy and investment strategy to the industry. Our fellow charter alliance members give reciprocal capability presence across North America, LATAM, the EU, Southeast Asia, India, Australia, the continent of Africa and across the Middle East. Never before in the influencer marketing industry has a partnership structure enabled global brands, the opportunity to streamline their end-to-end investments, achieving scale through localized execution while saving time and money. More recently, IZEA announced the creation of entire partner program ecosystem. The newly established roster of invitation only companies bring together best-in-class solution providers and top representation agencies that strategically integrate with IZEA’s consultated Managed Service offering and across our various software platforms, including Shake, IZEAx Unity Suite and IZEAx Discovery. By leveraging members of the partner program, IZEA clients and customers can take their influencer marketing initiatives to new heights, igniting exclusive executional possibilities across a wide array of prominent talent and innovative technologies. Looking into the future. Our goal is to not just partner with these companies, but provide a basis for even deeper relationship with our clients and customers as a result, leading to increase spend while providing the highest quality of service paired with revolutionary technology. Now to provide some more details in the road ahead and to share some exciting announcements on the other aspects of our progress. I would like to turn the call over to my colleague and IZEA’s Founder, Chairman and CEO, Ted Murphy. Ted?

Thank you, Ryan. Before I begin, I would like to share a heartfelt thanks to LeAnn for her years of service to IZEA. As previously announced tomorrow is LeAnn’s last day serving as Interim CFO. She has been an incredible CFO for this company and is one of the most amazing human beings I've ever had the pleasure to work alongside. You will be greatly missed, and we appreciate all that you have done for this organization and our shareholders. Speaking of our shareholders, I want to thank you as well without your support and belief in this team and our company, we would not be in the position we are today, 2020 was no doubt the most challenging year in the history of our company, but it was also among the most rewarding and transformational periods we've ever experienced. Last year in the middle of the pandemic, we launched two new products, BrandGraph and Shake. At a time where many companies were laying off staff, shutting down new initiatives and retreating the safety. Instead of pulling back on research and development, we increased the size of our engineering team, dramatically reduced our licensing fees and got much more aggressive with our marketing initiatives to build back our sales momentum. IZEA’s vision has always been to connect the buyers and sellers who drive the Creator Economy forward. Our goal is for both parties to financially benefit by transacting and collaborating with each other. Our intent is to make IZEA’s technology platforms available and affordable for the broadest base of customers possible. The introduction of IZEAx Discovery, lower pricing tiers in IZEAx Unity Suite and of course the introduction of Shake are all part of that vision, but we are still in the early days of what we believe is a very large opportunity within a total addressable market that is growing each year. At the end of Q3, we shared that we had an all-time record number of customers, licensing our software largely due to self-service sign-ups for IZEAx Discovery. This trend continued in Q4, last I spoke on our Q3 earnings call, I commented on the resilience demonstrated by IZEAx Discovery since the onset of COVID. That resilience has now translated to growth. As a result, we are ending Q4 with the highest number of active software customers we've ever had. And as we peak into Q1, we expect that number will be bested yet again in March. Record, customer counts are always exciting, but what is even more exciting is that our Discovery product is on the verge of a major technology upgrade in Q2 of this year. We've completely rewritten core components of our influencer search experience and that will benefit both IZEAx Unity Suite, as well as IZEAx Discovery users. For the first time, you will see deep IZEAx integration with BrandGraph and Shake, all within one incredibly powerful and easy-to-use solution. It is the culmination of years of engineering effort and something I can't wait to share with you in next quarter. In addition to major IZEAx enhancements, we continue to improve Shake, which opened up for public transactions for the first time in November, 2020. Shake is very much so a nascent platform, but we are making consistent improvements each week with new creators and buyers joining the platform. One of the challenges of any marketplace is balancing supply and demand in the very early days. You need to have inventory to sell to buyers and you need buyers to attract sellers. As we have onboarded new talent, we've seen an increase in the amount of money being spent on the platform, but these numbers are still small compared to our overall revenue today. And it will take some time to build into a meaningful portion of IZEA revenue. Increasing inventory is a primary directive of the Shake team. And we have aligned many of our engineering sprints towards increasing conversion rates and the creation of quality Shake listings. Our product team has also identified multiple opportunities to improve the Shake creation experience, starting with the redesign of the homepage that launched a few weeks ago. This has had an immediate positive impact on-time, on-site conversion rates and bounce rates. We're also in the process of designing and implementing other Shake platform changes that we believe will have a positive impact on both sign-ups and the creation of approved Shake listings. In addition to software refinements, our Shake inventory building effort also includes larger initiatives such as our recently announced Parade of Stars, as well as the IZEA Partner Program that Ryan mentioned earlier. We are seeing a steady uptick of new Shakes from creators and influencers of all sizes in Q1. And the rate of Shake creation is accelerating from the rate we saw on Q4. These improvements to Shake would not be possible without the recent investments we've made to expand and enhance the Shake product team. In the very beginning, Shake started out as a skunkworks project with me and a single engineer. We now have a proper, dedicated product management team, a team of front-end and back-end engineers and dedicated QA resources. The Shake platform and the team behind it is still maturing and gaining momentum. And as it does, we expect Shake to grow in inventory, capabilities and revenue. This is a common theme in our engineering organization. IZEA has been able to accomplish a great deal with a relatively small team today, but that has been as the greater expense of speed to market and our product capabilities. A small engineering team working on very complex systems can only take you so far. To give you some perspective on this, last year IZEA spent $4.1 million in development costs for its various SaaS platforms. In comparison a competing public company that operates a marketplace similar to Shake spent over $45 million on research and development in 2020, more than 10x IZEA’s investment across multiple platforms. We are very proud of what we've been able to do with such a small talented team, but we are changing our approach moving forward. We are making the engineering investments needed to fully realize the potential of the platforms that we have created. Over the past few quarters, we've been working to build out our engineering and product teams. In addition to bolstering our count of engineers writing code, we have created and filled many of the management positions needed to scale from here. We've added multiple new product managers, a new Director of Engineering and starting this week, a new Senior Manager of Data Science and Data Engineering. We are investing heavily in research and development. And we intend to continue to bring on engineering and product talent throughout 2021 and beyond. We are doing so in order to expand the capabilities of our existing platforms. Refine our offerings based on customer feedback and build out new software products that are focused on the Creator Economy. That includes things such as the next generation of IZEAx and BrandGraph. As well as the expansion of Shake, including a much requested Shake mobile app. We have built a vast technological foundation in IZEA and we intend to aggressively pursue the development of our software to address the market opportunities. Alongside the investment in product, we intend to market much more aggressively. And that investment will ramp up as we release new software features. Expect to see up to triple the investment in marketing over the course of 2021 as we seek to increase brand awareness and significantly grow revenue in this year and beyond. Again, to provide some perspective on this, last year IZEA spent approximately $6 million in total sales and marketing. In comparison that same marketplace I previously referenced spent $94 million in sales and marketing, almost 16x that of IZEA that is 30% of revenue for IZEA versus 50% of the revenue for our competitor. Making no mistake, IZEA is transitioning to an aggressive growth mode. And to achieve the type of aggressive growth we are aiming for we must invest aggressively, well ahead of near-term profits. We are focused on expanding our customer base, increasing the inventory of creators available in our platform, providing the best possible customer experience we can. And of course, meaningfully growing our revenue while increasing operational efficiency. Our team will do so in a strategic and responsible way, but we will bias towards speed, we will bias towards growth and bias towards capturing as much here of the influencer marketing industry as we can. Over time, we believe our biases will result in a larger, more valuable and more profitable company with the scale needed to sustain the technology and marketing investments needed to continue gaining market share, we have waited 15 years for influencer marketing to become mainstream. For all the negatives that have come with COVID-19. It has also served as the catalyst to propel influencer marketing to center-stage and spawned the rebirth of IZEA. We had the worst possible social and economic scenario thrown at us last year. Not only have we survived, but we have thrived and we have emerged a better company for it. We are positioned to attack the market on all fronts. We have a strong balance sheet to support long-term investments. We have an incredible and growing base of customers ranging from four of the Fortune 10 to hundreds of smaller brands and agencies. We have a proven team that can tackle the most difficult situations, and we are building on an amazing technology base that is constantly raising the bar for others. Thank you all for your support. I would now like to open up the call for Q&A.

[Operator Instructions] And our first question is from Jon Hickman with Ladenburg Thalmann. Please proceed.

Can I just ask a couple of clarifications? Hello?

Go ahead.

Okay. just a couple of clarification questions first. So, bookings in Q4 were $8 million total?

They were $8.3 million in total.

$8.3 million. Okay. And did you break out and managed services in that or not?

Managed Services was $6.6 million of that.

Okay. Thank you. And then can you maybe this is a question for LeAnn. What's the share count now with the $33 million – $34.3 million raise in the last couple of months?

We are at 59 million shares outstanding currently.

59 million, okay. And then as you said you're going to spend 3x in marketing from last year. Is that what you meant to say?

Yes, correct. [indiscernible] sales and marketing that is just marketing. And that's correct. That's going to ramp up over time. So, it's not the entire sales and marketing line.

So, do you have a, like a target for like how much of sales are you going to spend in operating? And then….

We haven't set a specific target for that now.

Okay. So then elaborate a little more, you're going to – you're introducing a new version of Discovery?

Correct, correct.

We'll be launching a new version of Discovery that will bring in aspects of Shake and of BrandGraph into that Discovery experience.

Okay. And what about like an overhaul of like as – are we looking forward to IZEAx 4.0?

That will be kind of part of a larger initiative around idea IZEAx 4.0. We're going to be breaking those out into different releases over the course of the year. So, we're focusing first on the Discovery component, which touches BrandGraph, Shake, IZEAx Discovery and it's also part of IZEAx Unity Suite. And then we'll have subsequent releases that are dealing more on the workflow side that will give some peaks into in this quarter.

Okay. And then just from a modeling standpoint, LeAnn said that you are looking forward to increased revenues from 2020, any help with like percentages or sequential, quarterly increases, anything else you can touch?

We're not really giving guidance. If you look at the release that we put out yesterday, we are now past a 100% growth in bookings for Managed Services here in Q1. Our Q2 pipeline looks very strong as well. But we're still, very much aware that we're in the middle of a pandemic and we're taking each quarter as it comes right now.

And then so do you think you have enough capital to do what you want to do?

I think that we've got a pretty strong balance sheet right now. Yes.

Okay. I will leave someone to ask questions.

Thank you, Jon.

And our next question is from Sean Gibney with Alliant, please proceed.

Hi everyone. And thanks for taking my question here and Ted congratulations on the extreme growth and with you and the team, obviously very impressive. Kind of one, and I definitely wanted to touch on a couple of the items that the previous individual spoke to, but I think one of the kind of questions I've had for a while is, does any of that marketing spend for Shake going to be spent on Shake as to say, are you going to target those influencers that are on Shake to target than other influencers using your platform?

So that marketing spend is spread across Shake, BrandGraph and IZEAx Discovery. And we're using that on both sides of the Shake marketplace, both to attract new creators to sign up to the platform as well as driving marketers to hire those creators. I think one of the things that's really unique about Shake and what we can do with it is that we can actually use the influencers themselves in our marketing. So, in a lot of the paid media that you see through social channels, we are actually featuring the individual creators and driving traffic to specific shake listings.

Got it. And I guess, it's really starting to just ramp up now where you're seeing sort of some – a lot of revenue come from Shake. But has there been any pushback from any individuals signing up for shake any of the individual influencers on sort of the spread? I think – or can you comment on sort of what you guys are taking for post, I think I had read 15%?

Yes. Our fee is 15% inclusive of the credit card fees, which is significantly less than what you see on other competing platforms.

Got it. I’ll let another individual jump on here. Thank you very much Ted.

Thank you.

And our next question is from [indiscernible] who is a private investor.

Good evening everyone. Great information, Ted and team. I was here for the last four years as an individual investor. So, one thing which I want to ask is pretty layman question, and I keep wondering, the competition with Fiverr, how IZEA stands out with Fiverr? And with respect to the stock price difference, how do you plan to take over the stock price to that level?

Thank you. If you look at the type of inventory that is in a platform like Fiverr versus what's in Shake, I think one of the things that you'll see right away is that the quality of the inventory, the associated pricing with that inventory is just dramatically different. We have people in there that are listing Shakes for thousands to tens of thousands of dollars that have millions or tens of millions of followers. And that is just not something that you see inside of the Fiverr platform.

So, you are counting on Shake to take IZEA to that next level?

No, it's really a combination of all of the platforms, and that's one of the things that I'm most excited about is that all of these are working together. The people that are in Shake are also largely in IZEAx. The type of advertiser that might sign up to license our enterprise platform may also want to hire somebody that they could find in Shake or we may have an advertiser who can't afford an enterprise license for IZEAx Unity Suite and May just want to do a $100 shake or license IZEAx discovery. So, the real goal here is to be able to have an offering for the entire spectrum of potential buyers, whether that's one of our Fortune 10 customers down to the very small agencies, and businesses that are going to hopefully be much larger agencies and businesses in the future.

Sure. Sure, thank you. Thank you, Ted.

Thank you.

And we have a follow-up question from Jon Hickman with Ladenburg Thalmann.

Ted, I want to put you on the spot here, but could you comment on kind of the emerging markets for NFTs and if Shake has a place in that world?

So, I have certainly been following the developments around NFTs and have sold an FTA myself. I think that it is a very interesting space that has a lot of potential opportunity around it, but also a lot of lot of questions right now, and I think a lot of inefficiencies. I sold my NFT for, I think, $120, and it cost me $160 in gas. So wasn't such a great experience as a creator, and it would be hard to look at that and say that, that would be a win for creators right now, just given the way that a lot of those things are structured. I do think that assets, digital assets and digital collectibles could certainly have a future inside of shake and/or another platform. And assets in general, have been part of the greater vision of IZEA for some time now. So, I don't know that, that will be specifically NFTs or not, but, I think, that the idea that somebody could sell a digital asset, be that a photo, an illustration, a font, video will be something that you potentially see from IZEA in the future.

Thanks. I appreciate that.

Thank you.

All right, thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session, and I’d like to turn call back over to Ryan Schram for closing remarks.

Thanks, Omar. And we'd like to thank all of our passionate and loyal investors for joining us this afternoon. And as a reminder, all of our Investor Relations information can be found online on the IZEA website, which is izea.com/investors. Stay safe, be well, and we'll talk to you all soon.

This concludes this evening’s conference. You may disconnect you lines at this time. Thank you for your participation and have a great day everyone.