Greetings and welcome to IZEA Worldwide, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Matt Gray, Assistant Vice President of Marketing. Thank you, Mr. Gray. You may begin.

Good afternoon, everyone, and welcome to IZEA's earnings call covering the third quarter of 2024. I'm Matt Gray, AVP of Marketing of IZEA. And joining me on the call are IZEA Chief Financial Officer, Peter Biere; and IZEA Chief Executive Officer, Patrick Venetucci. Thanks for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q3 2024. 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 IZEA'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 and in our publicly available filings. And with that, I would like to now introduce and turn the call over to IZEA's Chief Financial Officer, Peter Biere. Peter?

Thank you, Matt, and good afternoon, everyone. I'll review operating results for the quarter ended September 30, 2024, compared to the prior year's quarter and discuss selected balance sheet highlights. Total revenue for the third quarter of 2024 was approximately $8.8 million or 12% above the prior year quarter. Excluding revenue attributable to the large nonrecurring customer with whom we parted ways in 2023, revenues grew a healthy 27% from the prior year quarter. Demand for Managed Services grew 11% to $7.9 million in the third quarter of 2024 compared to $7.1 million in the prior year's third quarter. This quarter's demand was slightly lower than experienced in the first half of 2024. We believe this decline is due to timing and some reduction in marketing budgets, particularly in emerging markets. It's important to note that IZEA's contract bookings take an average of 7.5 months to complete the revenue cycle. Many contracts are faster and some are longer. Our Managed Services backlog, a total of unrecognized revenue for contracts that are underway and recent bookings that we haven't started to invoice, totaled $14.6 million on September 30th, 2024. This is a decrease of $1 million versus the second quarter of 2024 and an increase of $3.4 million year-to-date. We will recognize much of this revenue in the following two to three quarters. Our Managed Services revenue totaled $8.6 million during the third quarter of 2024, which was $0.8 million or 10% higher than the third quarter of 2023. Removing approximately $0.9 million of revenue from our nonrecurring customer in the prior year quarter, Managed Services revenue increased by $1.7 million or 25% from the same period in 2023, coming in part from Hoozu and by strong demand in the first half of 2024. SaaS Services revenue totaled $206,000 in the third quarter of 2024 compared to $57,000 in the prior year quarter. Most of these customers are actively using IZEA's AI tools. Our total cost of revenue was $5.2 million or 59% of revenue in the third quarter of 2024 compared to $4.7 million or 59.3% of revenue in the prior year quarter. The current percentage cost decrease reflects improved margins within our existing customer base. Expenses other than the cost of revenue totaled $13 million for the third quarter of 2024, up 122% from $5.9 million in the prior year quarter. Sales and marketing costs totaled $2.9 million during the third quarter, up 7% to the prior year third quarter, mainly attributable to increased compensation costs partly offset by reduced spending on demand generation activities. General and administrative costs totaled $5.8 million during the third quarter, up 93% from the prior year quarter mainly due to accrued severance and noncash compensation expenses from the departure of two executives. The company also incurred increased costs from professional fees during the quarter. We also determined that the goodwill related to our 2019 acquisition of Tapinfluence was impaired, leading to a $4 million noncash charge in the current quarter. Our net loss in the current quarter totaled $8.8 million or negative $0.52 per share on 17 million shares compared to a net loss of $2 million or negative $0.13 per share on 15.5 million shares for the third quarter of 2023. Adjusted EBITDA was negative $2.8 million for the third quarter of 2024 compared to a negative $1.5 million for the prior year quarter. As of September 30th, 2024, we had $54.4 million in cash and investments, a decrease of $2.1 million during the quarter, primarily due to negative EBITDA and funding higher levels of working capital. We previously announced our commitment to buy $10 million of our stock in the open market, subject to some restrictions. On September 30, 2024, we adopted a Safe Harbor 10b5-1 plan to purchase shares without restrictions related to our periodic insider restrictive window, which became active on November 1st following the required quiet period. As of November 11th, 2024, we have purchased 51,503 shares at an average share price of $2.74 under our program for an aggregate investment of $142,273. We earned $0.6 million in interest on our investments during the current quarter. Lastly, we do not have any debt on our balance sheet. With cash on hand and liquidity from our investment portfolio as required, we're in a solid position to execute on our organic business growth and acquisition opportunities that lie ahead. With that, I'll turn the call over to Patrick Venetucci, our Chief Executive Officer.

Thank you, Peter, and good afternoon, everyone. I'm Patrick Venetucci, the new CEO of IZEA. Thank you for your time and attention today. On September 6th, we made several important changes both to management and the Board. On the management side, Ted Murphy, Founder and CEO; and Ryan Schram, COO, departed the company. I stepped into the CEO role, leveraging my 30-plus years of industry experience and six years on IZEA's Board. On the Board side, we made changes to the size, composition and committee structure of the Board. We separated the Chairman and CEO roles, naming Lindsay Gardner as Chairman of the Board. We added two new Board members, Antonio Bonchristiano and Rodrigo Boscolo from GP Investments. We created a Strategy and Capital Allocation Committee chaired by John Caron. And importantly, we increased our share buyback commitment from $5 million to $10 million as a demonstration of the Board's belief that IZEA's shares are undervalued as well as confidence in the company's ability to create more value. During my first 60 days, I went on a listening tour, held strategic workshops and hired our first Chief Talent Officer. My listening tour encompassed meetings with employees, clients and shareholders. What I heard was newfound excitement and optimism about IZEA's future. Our talent base is smart, charismatic and engaged. We have an extensive client list that includes Fortune 500 brands for which we have opportunities to do more. We have a strong culture of care, creativity and innovation. Our tech product innovation pipeline is robust, including AI. I quickly organized several strategic workshops with our executive leadership team, which led to new ideas for growth and efficiencies. Lastly, I hired our first Chief Talent Officer, Kerry Griffin, who has over two decades of experience and is charged with professionalizing our talent programs to enable us to attract and develop the best talents in the industry. In our business operations during Q3, we made notable accomplishments in sales, managed services and product development. We won new business from Nestle, Danone, Coursera and NHTSA. We produced exciting new work for one of the largest auto manufacturers. Our vibrant work launching the Barbie movie won numerous awards, including the Global Influencer Marketing Awards, The Global Agency Awards and Global Digital Excellence Awards. We advanced our tech product by launching IZZY, a cutting-edge AI assistant for marketers making creator campaigns. IZZY harnesses IZEA's rich data set and empowers users to make smarter, faster and more impactful creator campaign decisions. Lastly, as recognition of IZEA's attractive culture, we won several awards for being a Great Place to Work, Best Agency Workplace, PR Daily Top Agencies, Stevie Awards, Great Employers and Comparably. Looking forward, we are focused on our go-to-market model, driving top line growth and putting the company on a path to profitability. I believe we can do both and accelerate the path to profitability. There are opportunities to simplify, fortify and focus. We are beginning to identify and shift resources from business segments that are merely growing to segments with profitable growth. Our 2025 business plan process is underway. I look forward to sharing more about our future strategic direction and initiatives at the next investor meeting. In conclusion, a transformational change happened at IZEA during Q3. We are moving fast. We're making progress. The Board and management are optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders, shareholders, clients and employees alike. Thank you for your time today. I will now open the call for Q&A from the analyst community.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] As there are no further questions, ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Matt Gray for closing comments.

Thanks so much, Ranju, and thank you, everyone, for joining us this afternoon. As a reminder, you can find all of IZEA's Investor Relations information on our Investor Relations website izea.com/investors. Thanks again for joining us and have a nice evening.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation. End of Q&A: