Greetings. Welcome to IZEA Worldwide, Inc. Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to Ryan Schram, President and Chief Operating Officer. Thank you. You may begin.

Good afternoon, and thank you for joining us for IZEA's earnings call covering the fourth quarter of 2022. I'm Ryan Schram, President and Chief Operating Officer at IZEA, and joining me on the call are IZEA Chief Financial Officer, Peter Biere; and IZEA's Founder, Chairman and Chief Executive Officer, Ted Murphy. We're glad to have you with us today. Earlier this afternoon, the company issued a press release detailing our performance for the fourth quarter of 2022. If you'd like to review those details, all of our investor information can be found online on 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 the company'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 measure of adjusted EBITDA. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today as well as in our publicly available filings. And with that, I'm pleased to introduce IZEA's Chief Financial Officer, Peter Biere. Peter?

Thank you, Ryan, and good afternoon, everyone. I'll review our operating results, provide additional context for the fourth quarter of 2022 and highlight our full year performance. Revenue has hit an all-time record level of $41.1 million in 2022, growing 37% over 2021 and representing the third straight year of top line improvement for IZEA. We narrowed our EBITDA loss in 2022 by 12%, also a consecutive 3-year improvement, moving steadily toward profitability. Total revenue for the fourth quarter of 2022 was $8.8 million, 15% lower compared to the prior year quarter. Managed services revenue was $8.4 million in the fourth quarter, also 15% below the prior year quarter. We recorded $371,000 in net revenue from our SaaS offerings during the fourth quarter, down 17% from the prior year quarter. Managed services revenue for the fourth quarter of 2022 fell by $1.5 million from the prior year's quarter, primarily due to weaker second half of the year bookings. As previously announced, managed services bookings fell by 26% to $7.8 million in the fourth quarter of 2022 compared to the prior year quarter, following a similar percentage decline in the third quarter this year as we saw the contracting process slow down over the summer months. Overall, approximately 80% of the bookings decline we experienced in the last 2 quarters was due to slowing demand from our largest customer. However, due to timing, revenues from this customer increased compared to the prior year fourth quarter, somewhat offsetting a 26% decline in year-over-year quarterly revenues from our other customers. On January 12 of this year, we announced that during the fourth quarter of 2022, we began the process of parting ways with the large managed services customer I just mentioned. This customer represented 23% of our 2022 managed service bookings, which totaled $37.5 million for the year, representing a 33% decrease in that customer's bookings compared to the prior year. The delivery time between bookings and revenues for this customer is longer than our average over recent years, which is a large reason for the growing gap between our bookings and revenues over the past 7 quarters. Additionally, the gross margin for this customer has averaged between 30% and 35% of our historical margin. Although the absence of this customer will cause a temporary decline in our managed services bookings, we expect to see our average margins gradually return to historical levels. At the end of 2022, the backlog attributed to this customer, which represents the lag between bookings and revenues, totaled $7.8 million, which we expect to recognize before the end of 2023. This carryover revenue will somewhat mute the top line impact of this customer loss while we continue to add new higher-margin customers. Our managed services backlog, which represents the total of unrecognized revenue for contracts that are underway as well as recent bookings that have yet to begin invoicing, totaled $18.3 million on December 31, 2022, and as previously mentioned, $7.8 million or about 43% is nonrecurring from our largest customer. We expect to record most of this backlog as revenue in the following 3 quarters. SaaS services revenue, consisting of license fees, self-service marketplace spend fees and other fees declined by $79,000 in the current quarter or about 18% compared to the prior year quarter. Revenue from license fees declined 27% from the comparative quarter while gross marketplace spend fees grew 32%. Gross billings for SaaS services fell by 15% compared to the prior year quarter, mostly due to a sharp decline in marketplace spending, including fewer marketers and lower average spending levels. It should be noted that our transition away from our legacy IZEAx platform to Flex brings with it a lower revenue model for self-service customers, which we believe will increase adoption over time. Our total cost of revenue was $5.7 million in the fourth quarter of 2022 or 65% of revenue compared to $4.7 million or 46% of revenue in the prior year quarter. Accordingly, our gross margin, including internal labor costs in the fourth quarter averaged 35% compared to 54% in the prior year quarter. The increase in the cost of revenue was primarily due to higher delivery costs on 1 large customer contract, which made up 19% of total revenues during the current quarter. This major customer aside, the cost of revenue for other customers, contracts during the fourth quarter was within the range that we've experienced historically. Expenses other than the cost of revenue totaled $4.5 million for the fourth quarter compared to $5.5 million for the prior year quarter. Sales and marketing costs totaled $2.2 million during the fourth quarter, up 2% compared to the prior year quarter. Additional headcount and related payroll costs associated with driving customer growth were mostly offset by lower sales commissions that vary with bookings. General and administrative costs totaled $1.8 million during the fourth quarter, $1.3 million or 42% less than the prior year quarter, due primarily to capitalized payroll and contracted costs associated with current period platform development. Our net loss was $917,000 for the fourth quarter of 2022 or negative $0.01 per share compared to a net income of $311,500 in the prior year quarter or positive $0.01 per share. Adjusted EBITDA was negative $301,000 for the fourth quarter of 2022 compared to positive $549,000 for the prior year quarter. The change in EBITDA was primarily due to lower gross margin dollars, partially offset by lower cash operating costs and higher interest income from our portfolio. As of December 31, 2022, we had $70 million in cash and investments. That's up from $67 million at the end of Q3, primarily due to the collection of customer receivables. Given the recent concerns coming out of the banking sector, it's important to note that we have limited our exposure where possible. Our investment portfolio is held in trust accounts, which are shielded from normal commercial banking risks and invested in high-quality instruments. In our still rising interest rate environment, our investment holdings have accumulated unrealized losses. However, we believe that we have plenty of liquidity to hold all of these investments to maturity with full principal recovery. We also changed our primary commercial bank to better enable international growth, which we understand has the added benefit of reduced venture lending exposure. We earned $489,000 in interest in our investments during the fourth quarter and $1.2 million for the year of 2022. Lastly, we do not have any debt on our balance sheet. So with cash on hand and liquidity from our investment portfolio as required, we believe that we're in a solid position to execute on business growth and opportunities that may lie ahead. With that, I'll turn the call back over to Ryan.

Thanks, Peter, and hello again, everyone. In taking inventory of the year in full, 2022 was quite the paradox for IZEA. On 1 hand, it was filled with meaningful accomplishments that brought the company to new heights: record bookings and revenue over multiple quarters, the company's launch into China and the U.K., solid cost containment, multiple industry awards and the announcement of not 1 but 2 entirely new software initiatives, Flex and Marketplace. At the same time, it's clear that following a period of significant acceleration in digital advertising investment during the height of the pandemic, the macroeconomic climate headwinds are being felt by everyone, including IZEA. In this moment, one of the greatest responsibilities and challenges our collective team has is finding signal from the increasing noise surrounding us and keeping everyone accountable on the things we can control. It's equally important to recognize that these same distractions are being faced by our clients and customers. They're trying to make the best business decisions possible while budgets are being unexpectedly shifted, time lines are being delayed and initiatives are being reprioritized. As a result, now more than ever, we believe that IZEA's near-term opportunity remains directly aligned to our long-term purpose as a company, leading to create our economy forward and rising to serve our clients in meeting their needs and respective need states with an unmatched level of flexibility. Thanks to prudent investments we have made over the last several years, IZEA stands ready to provide differentiated and cost-efficient solutions that brands and agencies look to value when value matters most. Our managed services group is built for all marketers, brand side or agency side. We work on a campaign basis that is priced upfront with guaranteed results, no hourly fees, retainers or other surprises. IZEA Flex has, in our opinion, the best price to value in the influencer marketing industry, paired with the latest innovation, which lowers the barrier to entry for enterprise-grade software competitively with no long-term contracts required. And the creator marketplace is geared towards one-off transactional engagements when buying software just doesn't add up. It's quick, it's easy and simple to use and absolutely perfect for small campaigns or projects that need fast turnarounds and transparent pricing. Based on what we know today, our team expects the remainder of the first half of 2023 to contain continued turbulence, with improving stability and growth sometime in the second half of the year. Much of our assumption is predicated on a general calming of the macroeconomic environment, paired with reduced interest rate hikes and consumers remaining resilient as they have in recent quarters. While that interim turmoil isn't enjoyable for anyone, we believe that short-term disruption can still be beneficial for IZEA and its shareholders. Our management team intends to further reduce spending in select areas across the company to make prudent investments in methods to unlock growth opportunities, be it in paid demand generation, event marketing or expanded types of services we offer to our clients. After all, when times are tough, clients look for new ideas from market leaders, and IZEA is well positioned to be a partner that they can trust while bringing innovative solutions to the table. That said, we continue to approach these trade-offs with an overarching mindset that flatter is faster, leaner is better and that technological innovation married with deep subject matter eminence makes us all the more differentiated. In addition, there may also be opportunities for inorganic growth through competitive acquisitions in the space, as nearly the entire creator economy was built off of a tremendous wave of venture capital, and many of those startups are now facing the harsh realities of a forced exit amidst the current climate. Because of that, we remain an interested and opportunistic prospective buyer for the right scenario as we believe the tide has turned to our space being a buyer's market compared to 12 to 18 months ago. Before I turn the call over to Ted, I also want to express a word of sincere gratitude to our team members, now on 4 different continents, who are the heart and soul of our business. For all of the industry recognition that comes from IZEA's campaign work or technological innovation, the awards that matter the most to us are those that come from comparably independent employee survey data, which honored our company with 5 different awards last year alone, providing IZEA with quantitative evidence that underscores the value we place in the IZEA way. I would now like to turn the call over to our Chairman and CEO, Ted Murphy, to share his perspective on IZEA's 2022 performance as well as additional commentary on what's next for 2023. Ted?

Thank you, Ryan. In 2019, prior to the pandemic, I set forth a growth plan with our team and Board to achieve an average of 30% revenue growth each year, with a target of reaching $38 million in revenue in 2023. I am very proud of this team for beating our third year revenue goal and delivering $41 million in revenue in 2022, a full year ahead of schedule. However, there is no doubt that we are operating in a different environment than we were in the early days of 2022. On 1 hand, the unpredictable and turbulent macroeconomic environment presents a variety of challenges relative to sales activity near term. But on the other, it creates a variety of opportunities to optimize and reallocate resources during a lull in economic activity. IZEA has been through many of these macroeconomic cycles over the course of our 16-year history. Each time, we have emerged a stronger and more capable organization. Our team is aligned to ensure that this cycle will be no different. We are aware of the obstacles we face and seek to capitalize on the opportunities rather than dwell on the challenges. Earlier this week, we announced that we have been named to comparably Best Company Outlook list. This list highlights companies where employees feel confident about their company's future success, are likely to recommend working there to a friend and are typically excited to go to work each day. Comparably awards are derived from sentiment ratings anonymously provided by employees about their workplaces in multiple categories on comparably.com during a 12-month period. I find this award to be remarkable and a testament to the leadership team we have built at IZEA. Our company has been making significant changes over the past 12 months. That includes investments in long-term areas of growth but also has meant trimming back, adjusting our direction and making some very painful decisions where necessary. As I first shared during our Q3 earnings call, we have reduced our staffing levels. Those adjustments have continued in Q4 and Q1 as we seek to optimize the organization for speed, efficiency and most of all, customer delight. The concept of customer delight is ideally a 2-way street. We want to provide the highest quality products and services we can for our customers. At the same time, we want to work with customers that value our company and our people. That means working with customers that have the right margin profile and sometimes parting ways with individual customers or customer types in order to focus our efforts on building long-term value. At IZEA, we run a very transparent organization. Our employees are aware of our strategic decisions. They are aware of the macroeconomic environment. They are aware of the disconnect between our stock price and our true value. Their positive outlook is a reflection of the strength of our global culture, the outstanding leadership team that I have a privilege to work with each day and the creativity, tenacity and grit of their fellow IZEAns. As Ryan shared earlier, we expect the first 6 months of this year to be more challenging than last year. We are using this time to shift some resources and accelerate key initiatives, the biggest of which is the transition of all customers from IZEAx to Flex in the creator marketplace, which was originally slated for the end of 2023. We expect to accelerate our original plan by 2 full quarters and anticipate shuttering IZEAx for customer use by the end of Q2. Once complete, the shutdown of IZEAx will lead to significant infrastructure cost savings for the company and allow us to fully focus our product, support and engineering efforts on the technology platforms of our future. By the end of Q2, we will complete the migration of hundreds of thousands of creators that have signed up to IZEAx and make them available for hire in the new marketplace experience. This will dramatically increase the amount of creators that brands can search for on izea.com. And we expect to increase the footprint of our site by 20 times in terms of publicly available pages. Since we shuttered shake and launched the IZEA Marketplace last fall, we have gradually seen a 2 times increase in organic search traffic, which in turn has helped feed more sign-ups for the Marketplace as well as inbound leads for managed services. We believe the addition of more public profiles will further increase this traffic and accelerate low-cost acquisition of customers of all types, whether they be Fortune 500 customers or the smaller brands and agencies who typically license our software. In addition to customer acquisition, the transition to Flex will help bring greater efficiency to our managed services organization, which we believe will allow us to do more with less needs for additional headcount in the future. The sooner we move managed services to Flex, the sooner we can optimize our legal, accounting, sales and service practices around our new operating platform. As with all software systems, we know that this migration won't be without its challenges for all parts of our organization. We went through this in 2014 when we transitioned from our sponsored tweets and social Spark platforms to IZEAx nearly a decade ago. We see this period in time as the perfect opportunity to make the transition as quickly as we can, and we are already well down that path from an operational perspective. But that does not mean that we're slowing down on innovation. Last week, we announced 2 new modules in Flex, A.I. Storyboards and Files, which brings cloud storage directly inside the platform. A.I. Storyboards are already wowing customers, providing a whole new way to brainstorm new ideas and develop influencer marketing campaign briefs. The Files module utilizes the power of Flex associations to organize documents related to creators and campaigns across organizations of all sizes. Expect to see another new module in April and an ambitious stream of new innovations moving forward in Flex, all offered with an industry-leading price to value. I can confidently say that there is not another influencer marketing platform anywhere near our price point that does what Flex does. But there's also not another platform that works the way that Flex does, period. It is a paradigm shift and we know it, a new way of doing things. I want to be clear that our expectation is that Flex is going to have a classic S curve when it comes to growth. It's going to take some time to dial things in. We've already onboarded a few Fortune 500 clients but success will not be overnight. The same is true with the Idea Marketplace. We are slowly growing our subscriber base there, which is going to take some time. But unlike shake, which was 100% transaction-based, Marketplace has a subscription component, which can scale and compound over time. The realities of the macro environment have informed our staffing structure for product development. We have created small, nimble, focused teams, rapidly innovating and iterating. A.I. Storyboards was just the beginning of what you're going to see from IZEA this year. We're going to be releasing a slew of AI-powered innovations in 2023, focused on helping our customers gain additional efficiencies in their own businesses. Some of you have asked, does management see near-term bumps in the road? Yes, we do. We can't ignore what is happening in the world right now and we made a variety of operational adjustments as a result. But are we simultaneously optimistic in our long-term outlook and our ability to navigate those obstacles? Yes. Our management team is and the overall company is as evidenced by the comparably award we just won. The Board and I are also confident. Today, I am pleased to announce that IZEA's Board of Directors has authorized a share buyback of up to $1 million. That is approximately 2.5% of the market value, assuming a market cap of $40 million, given the trading range over the past few weeks. IZEA's Board believes, as many of you do, that IZEA is significantly undervalued, trading at less than cash and investment value. At the same time, we want to be metered in our approach, given the opportunities we see in the market for both organic and inorganic growth. We are in a position of financial strength to ensure we can weather the economic unknowns ahead, and we intend to remain in that position of strength. The IZEA team is experienced, organizationally aligned for our strategy and well equipped to capitalize on the long-term opportunities that had been created by a short-term downturn in the economy. Thank you all for joining us today. I will now open the call for Q&A from the analyst community.

[Operator Instructions] Our first question is from Jon Hickman with Ladenburg. Please proceed.

So can you -- didn't you add a number of sales guys last year?

We added some salespeople and we also made some changes with some existing salespeople. So the net is actually a smaller sales team.

Oh, really? Okay. So can you like -- can you quantify at all your thoughts around the next 6 months, like year-over-year changes? I know like I've been reading that advertising across the board is down about 8% to 10% from last year. Can you provide any more clarity to your 6-month outlook?

Yes. I don't think that we're in a position to provide any sort of specific guidance there. I mean, we are definitely going to be impacted from parting ways with that large client who made up a significant portion of the bookings last year. And our focus is really on replacing that business the best that we can, but it was a large chunk of our bookings and revenue in 2022.

Then Ryan mentioned some about inorganic growth. Can you -- like is the target audience getting bigger or more desperate or any comments there?

Right. Do you want to add some additional context there, Ryan?

Yes. Sure. Jon, we're seeing, like I said, the fact that pretty much the entire creator economy being venture-backed is having a reconciliation moment, quite frankly. And there are some great companies that just aren't able to secure additional rounds and they may be forced to consider options. In that situation where there's a good complementary and accretive effect, like I said in my remarks, I think that we look at ourselves as a prudent and disciplined evaluator of those opportunities as a path towards inorganic growth. And what's nice about our business today is that we have the 3 lines between Marketplace, SaaS and managed services that can go a number of different directions in terms of the types of targets that we can look at and that would benefit shareholders.

There are no further questions at this time. I would like to turn the conference back over to management for closing comments.

Thanks, Sherry, and thank you, everyone, for joining us this afternoon. As a reminder, all of IZEA's investor information as well as recent press releases can be found on our Investor Relations website at izea.com/investors. Take care, and have a great second quarter.

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.