IZEA Worldwide, Inc. (IZEA) Q4 2014 Earnings Report, Transcript and Summary

Greetings, and welcome to the IZEA Incorporated Fourth Quarter 2014 Earnings 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. I would now like to turn the conference over to your host today Mr. Ryan Schram, Chief Operating Officer. Thank you, sir. You may begin.

Good morning, everyone and welcome to today's IZEA fiscal 2014 investor update. I'm Ryan Schram, Chief Operating Officer at IZEA. And joining me on the call this afternoon is IZEA Chief Financial Officer, LeAnn Hitchcock; and IZEA Founder, Chairman and CEO, Ted Murphy. On behalf of our entire team at IZEA, we are glad to have you with us today as we share our updates and perspective on the business. During the course of today's call, our team will discuss our business outlook and probably make some forward-looking statements regarding the Company. These statements are predictions based on our management team's expectations as of today. Actual events or results could differ due to a number of risks and uncertainties including those mentioned in our most recent filings with the SEC, except as required by applicable laws the Company assumes no obligations to update any forward-looking statements made during this call. Now with the appropriate disclosures out of the way, I’ll turn the call over to LeAnn so that she can walk us through IZEA's financial performance in the fourth quarter of 2014. LeAnn?

Thank you, Ryan and good afternoon everyone. I am pleased to share that IZEA had another record breaking quarter on multiple fronts. IZEA had its best quarterly revenue in the history of the Company. Q4 revenue increased 26% to 2.46 million versus 1.96 million in Q4 2013. This increase was primarily attributable to larger IZEA managed campaigns. Revenue from booked business is typically fully recognized within 90 days of the initial sale, though some larger campaigns may take longer to fully recognize. Revenue for the year ended December 31, 2014, was 8.3 million, an increase of 26% over 2013 revenue of 6.6 million. Gross profit margin for Q4 was 65.5%, up from 56.5% during the same period in 2013. Gross profit for the quarter was 1.6 million, up from 1.1 million during the same quarter last year, an increase of 46%. Gross profit margin for the year ended December 31, 2014, was 65.8% up from 59.3% during the same period in 2013. This improvement is primarily attributable to larger advertisers using our managed campaign services, less celebrity centric campaigns and an increase in service fees. Gross profit for the year ended December 31, 2014 was 5.5 million compared to 3.9 million in 2013, an increase of 39%. Operating expenses for the fourth quarter were 2.8 million compared to 2 million in the same period in 2013. Operating expenses for the year were 10.1 million compared to 6.8 million in 2013. We are actively making investments in sales, marketing, engineering and investor relations. We expect that growth in expenses will outpace revenue growth near-term. This includes the acquisition of Ebyline and continued expansion of our sales and engineering teams. These investments are being made in order to provide the infrastructure to create continued revenue growth in the coming years. Operating EBITDA for the quarter was a loss of 973,000 compared to a loss of 460,000 during the same period last year. Operating EBITDA for the year was a loss of 3.7 million compared to a loss of 1.7 million during the same period last year. This is primarily due to our investment in sales and engineering personnel and increased advertising and marketing efforts. Net income for the fourth quarter was 1 million compared to a net loss of 569,000 in 2013. The income in 2014 is primarily due to a $2.2 million change in the fair value of the Company’s derivatives. Net income for the year was 3.2 million compared to a net loss of 3.3 million in 2013. The income in 2014 is primarily due to a $7.8 million change in the fair value of the Company’s derivatives. Earnings per common share for the year were $0.06 compared to a loss of $0.27 per common share in 2013. At December 31, 2014 our cash and cash equivalents balance was 6.5 million and we had a $6.4 million positive working capital balance. In addition to our cash on-hand we have a credit facility with Bridge Bank in the amount of 1.5 million. This line of credit is currently untapped. I will now pass it over to Ryan to speak about the client brands we partnered with in the fourth quarter of this year and our 2014 client development efforts.

Thanks LeAnn. All of these numbers would not be possible without our clients. They are the world’s leading consumer brands and the numerous agencies that support them. Being a strategic partner with a relationship-based on technological innovation and marketing thought leadership is at the core of IZEA’s client development ethos. Ultimately our unique position in the market allows us to work with a very wide range of end customers, from brand managers who focus on driving engagement and awareness to sharper marketing practitioners who drive consumers to store shelves and public relation specialists who enable brands to tell their story in a unique and compelling way. Compared to old establishment mediums, the journal only access one budget line item in the marketing house, Sponsored Social transcends multiple areas of benefits and budget. As we foreshadowed our third quarter shareholder update the team and I continued to make investments in growing our client development staff in the fourth quarter of 2014. We remain laser focused on capitalizing the opportunity in front of us by not only growing the depth of our client relationships, but also by leveraging the breadth of budgets available to our category. Now let’s talk about our key performance indicators, starting with one of the most important metrics, bookings. We had an all time record bookings high in Q4 with $2.7 million net, a 40% increase over the same quarter in 2013. In addition, three of the last four months of 2014 had booking in excess of over $1 million. We ended the year with 9 million in net bookings, an increase of 24% over our finish in 2013. Our team believes this type of momentum is yet another signal of the increased interest brands have in Sponsored Social as demonstrated by access to larger budgets and more frequent utilization of the medium over all. The compound annual growth rate for our average deal size over the past six years is 42% and from 2013 to 2014 it grew by 57%. This growth is a direct result of our efforts to continually improve our value proposition and aggressively grow our client base. The client dev organization proactively pursues new and existing clients in a very strategic manner. This approach resulted in a new opportunity pipeline where the total value of proposals placed in front of clients of $16 million in the fourth quarter of 2014. That was a 76% increase in activity from the same period in 2013, and demonstration of what added client development resources help accomplish in a company like ours. We look at new pipeline creation as an important upper funnel KPI of our client dev organization. You logically can’t grow your business without first providing a proposal. At our KPI we actively measure is the ratio of new and existing clients working with IZEA. During the fourth quarter we were privileged to welcome back a number of our loyal clients including Adidas, Brown-Forman, Capital One, ConAgra, Groupon, Kellogg, Philips, and Verizon amongst others. These clients made up approximately 60% of our Q4 net bookings. We also welcomed new members to IZEA family during the quarter including Abbott Nutrition, Chase, CLIF BAR, Hewlett-Packard, Jimmy Dean, NBC Universal, US Bank and Wrigley. At the conclusion of the fourth quarter the core carrying members of IZEA’s client development staff totaled 32 people in six locations with the vast majority based out of our Winter Park headquarters in Florida in addition to our field offices in New York City, Sherman Oaks, Chicago and Detroit. The number of personnel is slightly down from our previous quarter. We believe a high performing sales organization hold these numbers to a higher level of accountability as a result we actively apply performance management standards on an ongoing basis to assure the highest level of potential success for both our sellers and for the company overall. Beyond our client services organization team IZEA grew a total over 90 full-time employees at the end of 2014. One of the keys to our recruiting success continues to be the IZEA way encompassing both our company culture and our true north as a business. Now for some additional insight about IZEA and what’s ahead here in 2015 I will turn the call over to IZEA’s Chairman and Chief Executive Officer Ted Murphy. Ted?

Thank you, Ryan. 2014 was an incredible year for IZEA. In February of last year we closed on a $12 million equity financing with participation from some of the most prestigious funds in the microcap space. That financing allowed us to invest in building the infrastructure needed to take IZEA to the next level and opened up opportunities for inorganic growth. We launched IZEAx in the public beta in March of 2014 and began aggressively hiring personnel in sales, account management and engineering. We delivered a record Q2 followed by a record Q3 and as you just heard finished the year with a particularly strong Q4. Q4 was one of the most exciting and memorable quarters in IZEA’s history. We finished the sun setting process for all of our legacy platforms and migrated the vast of our legacy platform users to IZEAx. We continue to add talent throughout the organization including key hires in engineering and sales. We welcome incredible new brands and partners to the IZEAx ecosystem, and continued to deliver record revenue, bookings and margin growth. We did all of this while working our way through the biggest acquisition in our company history, more on that later. As of December 31, 2014 we had 243,000 registered users in IZEAx, up from 96,000 in Q3 an increase of 153%. The IZEAx aggregate network reach grew from 956 million to 2.3 billion during the quarter, an increase 138%. The IZEA Exchange crossed the 250,000 registered users milestone in January of 2015. And our aggregate reach is now in excess of 2.5 billion fans and followers. This number does not include the creator base from our Ebyline acquisition at the end of January 2015 which adds another 12,000 creators from a professional journalism background. Ebyline creators will be migrated to the IZEAx platform over the coming year. Our original goal was to have 12 IZEAx partners by the end of 2014. As of year-end we had 26 signed IZEAx partners including major media companies MCMs and talent agencies. The process of on-boarding and generating by side revenue fee was slow, but we starting to gain some traction in Q4 and believe we will continue to gain momentum throughout 2015. During our Q3 earnings call, I indicated that we were accessing a number of strategic acquisition opportunities. I received numerous questions after that announcement asking how we can make a meaningful acquisition given our market cap and balance sheet. The answer to that question remains the same. There is immense fragmentation in social sponsorship, content marketing and other ecosystems that leverage creators possessing various skill sets. The capital required to create, maintain and expand the marketplace is difficult to come by, especially in the current market for subscale companies. For a company that has the right strategic set, we provide a compelling platform to grow their business, leverage our resources and create a more defensible positive long-term. There are always creative ways to complete a transaction if the transaction itself makes strategic sense. We found one of those strategic opportunities with Ebyline, a marketplace designed to help publishers facilitate large scale content creation. Those discussions started in earnest in Q4 of last year and we closed the transaction at the end of January 2015. The Ebyline acquisition came with a healthy recurring revenue stream. They facilitated approximately $8 million in gross content transactions last year through their marketplace. The acquisition increases the size and quality of our creator base and brings with it deep ties to the publishing industry. Ebyline platform customers include companies such as E. W. Scripps and Tribune as well as organizations such as the local media consortium which represents over 1,000 local newspapers. IZEA is already starting to leverage those publisher relationships to strengthen our offering to brands and create new partnership opportunities. IZEA has historically focused on brands that are largely business to consumer in nature. To further take advantage of the Ebyline acquisition IZEA is establishing a business-to-business salesforce specifically for content marketing purposes. This team will expand our footprint and continue to diversify our client base. We have already consolidated our LA sales office with the Ebyline headquarters and made our first new hires to support content sales efforts, over the course of the next 12 to 18 months we will be consolidating the Ebyline workflow and user base into IZEAx much like we consolidated our previous three IZEA legacy platforms. There is always some inherit risk with any platform integration but we believe we can minimize any potential negative impact given our extensive experience with the user migration process. In the end, we believe we can offer a more compelling and comprehensive combined technology solution for brands, creators and partners. The Ebyline acquisition combined with the infrastructure investments we made throughout 2014 has set the stage for a transformational 2015. For 2015, we project booking growth of 175% or more resulting in $25 million in bookings driving an estimated $23 million in revenue. It is important to note that Ebyline’s historical business model has been largely based on recurring revenue at much lower margins than IZEA currently enjoys. This fact combined with increasing participation from IZEAx partners will have an impact on IZEA’s margins in 2015. We estimate our average gross profit margins for 2015 will be in the 30% to 35% range. That said our ability to change the margin profile on Ebyline’s content business is one of the reasons we were so interested in this acquisition. We believe we can significantly impact the margin profile over the course of 2015 to provide more gross profit in 2016 and beyond. While it is still early in the process we've a history of optimizing for margin. In fact we've increased our gross profit margin every year since 2007 and more than doubled our profit margin since inception. I’m confident and comfortable that we can optimize the margins on the Ebyline business as well. IZEA will continue making investments in sales and technology ahead of profits throughout 2015. We remain focused on top-line revenue growth, while being aware and respectful of the bottom-line implications. Our spending will increase this year as we absorb Ebyline expenses and build out the sales team to better service that offering. That investment should peak in Q2 as we onboard staff and begin optimizing margin. Spending will then begin trending downward as we realize gains from our investments. It is our steadfast belief that the marketplace with the highest quality creators and brands coupled with liquidity and ease of use will be platform that ultimately earns a lion share of this market. It is our intention to aggressively defend and build upon the space we created. We will continue to establish and fortify competitive barriers to organic growth, partnerships, and strategic acquisitions where appropriate. Thank you for spending time with us this afternoon. I would now like to open up the call for Q&A.

Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from Alex Silverman with Special Situations Fund. Please proceed with your question.

Hoping you could help me a little bit with your guidance here. I know that there is a earn-out for Ebyline reaching I believe 15 million or 17 million this year. Can you help us with the makeup of that 23 million, what do you assume for the legacy IZEA business in terms of growth? And we will start there.

We believe that the legacy business or the Sponsored Social business rather is going to continue to grow. With this acquisition comes a certain level of executional risk. And in the projections that we put forward, we're accounting for some of that risk, we are also accounting for some potential cannibalization of sales. So our existing sales people who are currently selling Sponsored Social are going to be selling content. We don’t know to what extent that will impact their overall sales and if that will be truly additive or if campaigns will switch from one bucket to another. So we believe those numbers are very attainable. And given the trajectory of Ebyline’s historical business and what we've been able to accomplish on our own this year, there is certainly room for upside on that number as well.

Can you help us with sort of how you see the linearity of this year?

Of 2014?

No, of this coming year 2015, in other words your comments earlier of Ebyline line being more of a recurring revenue business I assume they don’t typically get the fourth quarter pop that IZEA does?

There is actually some seasonality in their business it tends to be light in Q1 and pick up more in Q2 and Q3 and then our business aren’t historically online advertising tends to heavier in Q4, so one of the things to realize in all of that is that their historical business has been very publisher centric so there is some question as to what is going to happen as we’re selling more and more content to brands as opposed to just selling directly to publishers.

Going with that, can you give us some examples of what they’ve done with brands?

Yes, they’ve done work with companies like Intel and Microsoft, they’ve done work with companies like Bed Bath & Beyond, and a lot of what they’re doing is actually producing content that is either used inside of a corporate blog or they’re producing content that will be distributed through a third-party native ad buy. So a company may have an article produced by Ebyline and then distributed through a Forbes media buy for example.

Our next question comes from Matt Tiampo with Craig Hallum. Please proceed with your question.

I wanted to focus in a little bit more, again on the acquisition, but I’m wondering about both bookings and the longer term pipeline metric as we move forward and if those are, if the cadence of the acquired business, what your plans are for giving us those metrics going forward and if they really do speak to sort of the cadence of Ebyline’s business?

Yes, we intend to continue to give those numbers moving forward, recognize that from the Ebyline perspective as it relates specifically to the publishing side of the business, the bookings to revenue for that part of the business will be much tighter than our bookings to revenue recognition has been because most of those clients are ongoing users of that platform and we’re simply placing orders through that system. So it’s not necessarily that there’s even a proposal that goes out that gets booked. It is -- you’re kind of reconciling the orders that have come in, so that number will be included in our bookings but that revenue will be recognized much quicker than our traditional sale, now on the brand side of that business it should mimic our existing business much more closely where proposals are going out and contracts being drawn up and insertion orders being signed.

I wanted to ask two things about your balance sheet quickly, one, it seems like accounts receivable has been trending and DSOs have been trending upward is there any trend in your business that’s been causing that that we should be aware of and second how do you feel about cash?

There has been a trend and that trend has been increasing sales. So we’re happy about that, it’s a good problem to have, we’re comfortable with where we are right now in cash and luckily we still have our line with Bridge Bank which is a $1.5 million line and we haven’t tapped any of that.

And then I guess last do you think you’d be breaking out the two businesses going forward or you think you will continue to report them as a single unit and then maybe what’s your experience has been in the first two months of owning Ebyline and how have you seen that business trend coming out of like -- I think it was a pretty good 2014 for them?

Yes, so on the first question that is breaking out those two businesses and how we do that is something that we’re working through right now and to what extent we want to do that, so we’ll be reporting results from first quarter here by May 15th, so we’ll provide some more color at that time. And then in terms of Ebyline how things have been going so far, we’re very pleased with how that team is performing and so far I would say that the numbers that we had outlined and budgeted for they’re right in line with what they have been delivering.

Thank you. Our next question comes from George Kafkarkou, a Private Investor. Please proceed with your question.

Yes I have a few questions I could have many more but let me just stick to the couple of things first, if I heard right I think you capturized CAG our compound annual growth rate for bill sizes and the number I thought I heard was a 57% increase year-on-year, can you verify that I heard that properly and can you talk to if that’s the case why the bills what are you doing to make deals bigger?

Yes, that number is correct. We are working actively with our team to make sure that they are putting larger proposals in front of our clients. We are certainly taking advantage of clients’ increased interest in this space and their willingness to spend and we’re benefiting from the fact that many of these organizations finally have dedicated budgets specifically for Sponsored Social and for content marketing activities. So I think that as this space grows we will naturally grow along with it. I will say that I think our deal sizes have probably outpaced the spending allocations and that’s because I think Ryan has done a phenomenal job with his team coaching them and getting them more comfortable with selling larger and larger deals. That so far this year we are up 50% of where we ended last year, so we continue to push very hard on that average deal size and making sure that we’re putting compelling proposals in front of the clients and that we’re afraid to ask for bigger sales.

So reading it back it’s a mixture of two things, one better focus and becoming more mature in our sales efforts and providing more value, but also an increasing recognition in that dollars are being allocated to social sponsorship. So that’s even more encouraging, thank you and I mean please correct me if I heard that wrong, how would you eventually in Q4 but obviously it’s exciting we have some new customers like Chase and HP, and NBCUniversal, Wrigley very big names, why that is fantastic you mentioned some big names that are “returning” customers like the Kellogg’s and Adidas if I heard it right properly, how do you describe the sentiments of those customers coming back, why you believe why do they come back could you talk to that?

Hi, George it’s Ryan I’ll definitely hop in here so I think there is a couple of things that happened here. There is the ROI based sentiments on the multidimensional performance that our brands that return to do business with us see from their campaigns. So if you take a Sponsored Social campaigns it might include sponsored blog posts and YouTube videos and Instagram photos the type of engagement that they’re looking for not only exceeds benchmarks but in that cases blows away competitive mediums. They also look at it in terms of what they refer to is word of mouth, not just word of mouth meaning digital word of mouth. The fact that, that is inherently sharable content that consumers meet with, and unlike traditional advertising which is very much a broadcast mentality even your most targeted banner ad is broadcasting to you. This is something that is created by someone who is influential to you as an individual and that you want to interact with. And then the third dimension is, compared to that maybe a multimillion dollar production cost of a TV spot, allowing the tens and millions of dollars to reach the number of people in aggregate to then buy the airtime. Sponsored Social in particular is a value. So when we look at these brands, not only they returning a large enterprise catalog for example has over a dozen brands, right? So not only when you got the corporation coming back it’s the breadth of the brand portfolio also beginning to interact with IZEA. So those are the three things that really strike there.

So that’s a very good segway, fantastic, very exciting, very encouraging. But that segway into more brand recognition for what IZEA does for white-label partners presumably. So if I could extend that question into white-label partners, how would you characterize the sentiments of white-label partners versus what IZEA provides them, because given what you have just described of these big brands coming back or as a corporate rather individual specific brands and clearly I am trying to extrapolate what percent of them would be currently for white-label partners which is clearly a very significant competing commercial opportunity for IZEA?

I believe that we still have a lot of work ahead of us on the white-label partners. I mean we are gaining traction. Q4 we started to see some real dollar starting to come in, but the trick with the white-label partners has not been to get them signed up or even to get some of the networks built out underneath them. It’s really getting the sales teams aligned and getting the marketing teams aligned, so that we benefit from significant sell through on the other side. Q1 here has been encouraging for that, and we’re starting to also gain some traction on licensing fees. In the beginning we had to cut some deals on the licensing fees and now we’re getting people comfortable with paying those licensing fees. And I believe that that’s only going to continue. And we’ve invested some resources here to make sure that we’re really holding these partners’ hands as much as possible through this process and making sure that that they understand how to sell this properly. Obviously we had many more years experience selling directly to the clients and to the agencies and now we’re essentially working with our clients to help them establish the same type of organization that is comfortable selling social sponsorships inside their own companies.

Great, fantastic, so the final question…

And you are getting more questions?

No, no more questions. Hey turn this guy off.

If you can go just help me through the B2B, again that’s a very exciting development. Tell me what made you decide to create a dedicated B2B group. And after you answer that I’m good? And just again congratulations on a truly awesome quarter guys.

Yes so the concept behind building out the B2B team is really based on a whole that we’ve right now. So our business is very much still focused on our business-to-consumer brands, that is very much so our bread-and-butter. But with the addition of content marketing through the Ebyline acquisition we know that there are huge dollars available in the content marketing space, specifically for B2B clients, so that is the reason that we have established that is that we want to go after those brands that we weren’t previously a good fit for and sell them content marketing and content creation services as a new revenue stream.

Okay, great. Okay, super.

And then the other thing that you should be aware of there is that a lot of the clients that we do deal with they have a business to consumer side and have a business to business side, so we have often relationships inside that organization and now it allows us to actually go deeper as Ryan was saying and kind of star burst out inside that organization and tap into some dollars that we otherwise would not get access to.

The next question is coming from Bob Evans with Pennington Capital.

Alex asked some of the questions I had, but can you talk a little more in terms of the Ebyline, the acquisition what verticals does that open up or if you kind of look into 2015 what new verticals between the legacy and the new business do you think you can expand into?

The big opportunity with Ebyline is that they have historically focused on providing a solution to large scale publishers so their clients were companies like E. W. Scripts and Tribune and Forbes and they were providing content generation for them to put on to those sites, what they were not doing and what they were doing, I shouldn’t say not doing, a much smaller part of their business was focused at getting brands to produce content and provide them those services directly to brands and what they were looking to do was actually to build out a salesforce that would specifically go after that brand business. We obviously already have those relationships and what we want to be able to do is basically tap into our existing sales organization and our existing relationships and offer them those content creation services.

And can you kind of assess of where you are now in the market place in terms of the product that you offer and kind of knowledge and understanding out there what are we looking are we in, in terms of broader community trend on the popular and viewing you as a legitimate alternative?

I would still say that we are in early innings, there is a lot of green pasture out there and that’s one of the things that’s gets me so excited frankly is that whether you look at new clients or even existing clients where we have the opportunity to star burst inside those clients, we just, we have a tremendous amount of opportunity out there we’re nowhere near any level of saturation with brands or with agencies. So I would still say that we’re, people may know our names but we still have a lot of opportunity to really show people what we can do.

Final question, the salesforce, how are you in terms of where you’re at today and where you think you want to be?

I’ll let Ryan take this one.

Yes sure, we are always in sort of two or three different modes, but the thought process is we’re always recruiting for top talent and trying to understand how to fit that into the jigsaw puzzle of not only our business to consumer sales team but this newly formed B2B team. Inevitably any sales organization as I mentioned in my prepared remarks we hold our folks to a very high level of performance management so by constantly recruiting we have an ability to identify top talent to either fill those holes or capitalize on growth opportunities depending on the circumstance and then the third piece that we think is interesting in terms of being able to really extend upon the existing salesforce is the branding system that we use to allow for career progression and growth as individuals contribute more and more to the organization and that’s actually been a great way for us to retain top talent particularly folks who workout out of our Winter Park headquarters and are doing this from a telesales perspective, normally those jobs are stagnant and not very inspiring, we’ve been able to inject our culture in a different kind of organizational ethos in order to keep that staff motivated, growing and retained.

Our next question comes from Jon Hickman with Ladenburg Thalmann. Please proceed with your question.

I am trying to put some word in your mouth here. Could you comment on your expectations for bookings and revenues in 2015 you mentioned 25 million in bookings that that would generator 23 million in revenues, can you relate that to the -- when you bought Ebyline there were some earnout provisions that they have to perhaps the x number of revenues in the coming three years for them to earn the total payout, wasn’t that in this first year 2015 using that $25 million?

No, it is not 25 million, the target is 17 million and I believe the minimum is 15.6, if I am not mistaken and then that goes to…

That is for the combined entity, right?

No that is for content only that is for the content only part of the business. And then in the subsequent year I believe it goes to 23 million is the target.

So if they did 8 million last year and they have to get 17, well, 15-17 that’s doubling of their business about?

Correct, correct now recognize though that a lot of their business is from that recurring revenue stream right, so it’s not that they’re starting from zero to build that out.

And now they have you to help them right, so…?

Correct.

So whether if someone wants to model your 2015 year and the expectation is that what we just discussed for Ebyline and then you add some growth on top of your numbers and put the two together, it’s like in excess of 20 or it’s near $25 million, isn’t it?

Yes I mean we’re comfortable with a $25 million bookings number for this year and there is as I said earlier there is potential that if everything goes right and we don’t hit any bumps along the way that it could be bigger, but that alone is a 175% growth year-over-year from where we’re at?

And then out of that number well your total revenue numbers for next year and what do you expect to come from your white-label partners of percentage?

Right now we still kind of look at that as a very small number certainly and less than 5% and likely much less than that, that really remains kind of the wildcard. There are a number of relationships that have the ability to buy themselves, produce very significant amounts of revenue. But until we have those types of scenarios and really start seeing traction there to a point where we feel comfortable modeling it out we’re not going to include that in our projections.

So even your oldest like one of your oldest ones is in CBS right?

Correct.

Yes they’re still -- it’s not doing meaningful at this moment?

It’s not meaningful at this point and again it’s a very slow process and I would actually say that the larger the organization need more difficult and slow it is.

Our next question comes from Jim Kennedy with Marathon Capital Management. Please proceed with your question.

Most of my questions have been asked and answered. Could you all just spend a couple of minutes and discuss the competitive landscape. How that’s changed over the past year and what you see going forward?

Sure Jim it’s Ryan. So I would characterize it in two ways, the first is that, it is actually a very gratifying thing for a business like ours that was the pioneer to see not only brands recognize the opportunity, but that it verdantly upstart competitors. I think not -- pretty much every week that goes by we find yet another subscale closed network upstart that’s either angel or private or something that’s very early on trying to go after pieces of our business. And it’s a fine form of flattery but it’s definitely something that has reached the certain order of magnitude, we’re tracking very much close to 75 of those, and that’s how you have been including organizations like multi-channel networks that are starting to get into this space or even the agencies themselves in a boutique fashion. The benefit that we’ve is really tri-fold. The first is no one has an exchanged a network of networks these are all closed subscale competitors. The second is just the breadth and depth of the creator base. First of all when we Sponsored Social only by itself and then further amplified by the acquisition of Ebyline, IZEA journalism and expert creators. And then the third is the partnerships. So while we’ve made comments about the by-side partners taking longer to ramp-up, the thing I will say that we also have announced in multiple releases of the member of really interesting sell side partners. MCM’s like Ben Pixels for example or talent agencies like artist and brand whose individuals we’ve access to by the virtue of the technology of IZEAx but because of those sell side partnerships. Does that help get you some color Jim?

I’m just trying to get a handle on as you build your critical mass, how much of a barrier to entry is that? And it sounds like it’s getting greater and greater everyday that goes by?

That’s the whole idea the defendable position that had Ed mentioned in his remarks is the idea, right? And then ultimately how we see this game playing out is the largest highest quality and most diversified exchange out there will be the one that wins. So we are committed to not only being the first but being the best.

At this time there are no further questions in queue. I would like to turn the call back over to management for closing comments.

I would like to thank everybody for taking their time and listening today and your interest and support of IZEA it is very much so appreciated. For any of the IZEA team members that are listening thank you guys. So much for your dedication and perseverance, you guys are why I wake up every morning and put a smile on and come in here and you are just fantastic team members. And also I want to take the opportunity to thank the new team members that are part of the Ebyline teams in the IZEA’s family, these guys are fantastic. And obviously the numbers always have to work out in one of these types of transactions and the deal has to strategically make sense but a big part of that too is just making sure that you are getting the right people on-board and that the cultures are aligned, and that was one of the things that really kind of sealed the deal on the Ebyline acquisition. So we’re very excited to have those guys on-board. If anybody wants to take a look through the updated investor presentation you can always find that on corp.izea.com/investors. And if you have any IR questions you can always feel free to call me email me or our IR firm Genesis at any time. Thank you so much.

Thank you ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and have a great day.