Greetings and welcome to the IZEA’s Third Quarter 2017 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. It is now my pleasure to introduce your host Mr. Ryan Schram, Chief Operating Officer. Thank you, Mr. Schram, you may begin.

Good afternoon and welcome to IZEA's Q3 2017 earnings call. I am Ryan Schram, Chief Operating Officer at IZEA. And joining me today is IZEA's Chief Financial Officer, LeAnn Hitchcock; and IZEA's Founder, Chairman and Chief Executive Officer, Ted Murphy. On behalf of all those here at team IZEA, we are pleased to have you with us today. Earlier this afternoon, the company issued a press release with additional information regarding our third quarter performance. As a reminder, all of our IZEA’s Investor Relations information can be found under the corporate section of our website, izea.com. During the course of today's call, please be advised that our management team will discuss IZEA's business outlook and make forward-looking statements regarding the company that are pursuant to the Safe Harbor provided by federal securities laws. These statements are predictions based on our 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. 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 certain non-GAAP financial measures, such as cash based OpEx and adjusted EBITDA. A discussion and reconciliation of these measures to the most directly comparable GAAP measure is available in our Form 10-Q issued today, which is available on our website. With the appropriate disclosures out of the way, I’m pleased to introduce my colleague IZEA's Chief Financial Officer, LeAnn Hitchcock, to provide a summary of the company's performance from the third quarter of 2017. LeAnn?

Thank you, Ryan, and good afternoon, everyone. I am pleased to share that IZEA continues to improve its operations and achieved new record milestones each period. IZEA reported third quarter 2017 revenue up 9% to $8.2 million compared to $7.5 million in the third quarter of 2016. This was an all time quarterly record revenue for the company and the first time revenue exceeded $8 million in the quarter. This increase was primarily due to organic growth in our managed service revenue, which is comprised of sponsored social and custom content. Our managed services increased 20% to another all time record of $7 million in Q3 2017 compared to $5.8 million in Q3 2016, accounting for 86% of total revenues in the quarter. Workflow, our self-service revenue from traditional news agencies and publishers decreased 28% to $1.1 million in Q3 2017 compared to $1.6 million in Q3 2016, accounting for 14% of total revenues in the quarter. Total net bookings increased 2% to $7.9 million in the third quarter of 2017 compared to $7.7 million in 2016. Bookings for managed services increased 12% and accounted for $6.7 million of total net bookings in the third quarter of 2017, compared to $6 million in 2016. Revenue backlog at the end of the quarter was $11 million compared to $9.2 million in the same quarter last year, an increase of 20%. This includes unbilled bookings of $7.2 million and unearned revenue of $3.8 million. Revenue backlog is increasing as a result of a large amount of bookings for longer term contracts that are up to a year in length. Revenue backlog consists of unbilled bookings for campaigns which have not yet started as well as unearned revenue for campaigns that have been built that are not yet complete. Gross profit for the…

Thanks, LeAnn. When we kicked off the fiscal year with our Q1 earnings call, we spoke about the change in revenue groupings to discuss IZEA’s performance in terms of our managed service group and workflow as the two lines of the business. With the managed service unit being the growth vehicle of IZEA. Through a highly collaborative effort that involved every department across the company. Our team delivered a wonderful trisector of results in Q3, record quarterly revenue, record gross margin and the highest quarterly bookings to date in 2017. They achieved those figures by driving greater contribution across the board in both sales and service year-over-year, while also making up for the guided decrease in workflow bookings that have been realized as a legacy business line continues to wither along with the industry it was originally established to support. To create the 12% growth in sponsored social and content managed services quarterly bookings and to offset the 28% year-over-year quarterly declining workflow. Our team established three simple goals. Number one, drive net new business, with an emphasis on custom content and e-commerce content; number two, place an emphasis as a sharing renewals with an existing strategic accounts. And third, use economies a scale, become from our marketplace of creators to drive a favorable gross margin. I'm pleased to report this afternoon that the team accomplished all three. First, let's talk about new client wins. During the quarter, the IZEA family was pleased to welcome an incredible group of brands, including Amazon, Aviva, Igloo, Google and New Era amongst others. Driving the growth in bookings during Q3 was both an increase in average deal size of our managed service business, as well as an increase in the percentage of opportunities that included custom content, as part of their scope. IZEA’s…

Thank you, Ryan. Earlier this year we set out to transform IZEA’s operations, realigning our focus to emphasize profitability and organizational efficiency as our number one objective. We established a goal of delivering our first EBITDA positive quarter by the second half of 2018. But I also challenged our team internally to see if it was possible to move even faster. Team IZEA rallied, immediately we've been into action and steadfast in their determination to accelerate results. Our departmental leaders analyzed every aspect of the organization through the lens of profitability. The mantra shifted from how can we get to our first EBITDA positive quarter next year, so what can we do to get to our first EBITDA positive quarter this year. The passion and motivation to achieve this goal wasn't limited to our leadership team. Everyone began looking at their job through a new lens. Opportunities for cost savings and revenue generation were surfaced by individual contributors across the organization. We empowered our team members to make change and gave them the time and resources they needed to create efficiencies with minimal impact to the ongoing operations. Some took on the mission to renegotiate contracts and vendor relationships. Others raise their hand to take on additional workload and responsibilities, while still others again building automation tools to save time and money. Our engineering team has historically been in a mode of building new features for IZEAx. We have relentlessly innovated, but with that innovation comes a natural level of inefficiency and bloat. There hasn't been much time to re-factor, work on back office projects or optimize infrastructure for cost savings. So earlier this year, we made the decision to slow down new feature development to do just that. We freed up some time for all of our engineers and…

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] The first question comes from Mike Malouf with Craig-Hallum Capital Group. Please go ahead.

Hey guys this is Eric Des Lauriers on for Mike. Thanks for taking my questions and congrats on reaching profitability solely.

Thank you.

So, I noticed that your managed services margins have been coming up sequentially for the past four quarters. And I know you guys have – obviously it is AI development that you’re working on. I’m just wondering you could talk to us a bit more about where you see managed services going or where they could be as we walk into 2018 and 2019.

Yes. I think as we work forward, we’ve done a fantastic job of getting managed services to the level that it’s at today. But I think, I would look at the future being pretty steady from this point moving forward. We do see greater margins on larger clients. But overall I think that the margins are probably going to be in the same type of range that they are today as we work forward.

Okay, great. And then your gross profit guide or your gross margin guide of 50% to 51% since you imply notable compression from Q3 to Q4 just taking everything at the midway point. Is there anything in there beside mix that’s really driving that? Or are you guys seeing anything else with managed services this coming quarter? Just trying to reconcile those a bit. Thanks.

Sure. Now we are expecting managed services margins to stay the same, there really is a mix of the content to those managed services to the extent that managed services revenue increases above that then the margin could increase above that prediction. But until we know where it falls out that really is we’re keeping with that 51% production for now.

Make sense. All right. Thanks guys.

Thank you.

The next question comes from George Kafkarkou, Private Investor. Please go ahead.

Hey guys. Can you hear me?

Hi, George.

Congratulations on a great quarter guys, great job.

Thank you.

Two very simple questions. The revenue backlog, which includes unearned revenue $11 million, I assume that’s the highest backlog you guys have had at any quarter is that correct?

No. It actually was about $11.4 million in the last quarter it has come – and it was $11.8 million in March. It has been coming down because as our annual renewal go down that will decrease but we will expect that to increase at the end of Q4, where we get a lot annual renewals for 2018.

Right but also – if I understand this correctly, one of the biggest drivers behind revenue backlog are the bigger deals, right? Because you can’t burn them all in the same quarter. Is that a fair statement?

Yes, so if you kind of think of it, we’re typically doing the larger deals and the annualized deals in Q4 and Q1 and then we kind of burn-off those deals throughout the year. We would expect that that number would go up here in Q4 and then as we look into next year it will kind of burn over time as well as we start chipping away at that revenue and begin to recognize it.

Okay. How do you guys think about the increasing numbers of the good deals? Do you see a ceding to that or – how do you guys think about that?

We’ve approached that in a couple of different ways George, it’s Ryan. Looking in the rearview, I think we’re in a very fortuitous place in the modern ecosystem right now. We want to be very opportunistic the fact that content and overall is an increasingly larger and larger demand as brands have to act more like publishers like I stated in my remarks. So I think by virtue of that we’re going to see thankfully even more of larger opportunities going to future. But that doesn’t mean that we’re just going real hunting. We’ve structured our client's development team in such a way where there is stratification of the types of businesses who do work with. And I think that’s also going to be a factor as well as the future in terms of being able to – a different pool customer base, a differ tiers of content creation. So for example, whereas today I would generalize our go-to-market strategy is really being a Fortune 500 or maybe even Fortune 1,000 sort of blends we certainly believe there’s plenty of room to play well beneath that into the future.

Very good. Okay, just one final question. You mentioned specifically the new customers; if I heard this correctly in the prepared remarks Amazon and Google can you talk to which kind of products they paid for? Was it the managed services? Can you talk about anything about those two specifically with Amazon and Google?

I can’t talk about each of them but some of those campaigns are not completely done yet. However, those are both managed service unit opportunities for both Amazon and for Google. And in certain cases where we’re working with them is to leverage a mix of both influencer marketing and content marketing.

And you can’t talk to the size of those deals? They’re not a certain figure deal or you’re alone from sharing them?

We’re now to disclose the deal size for those.

Is it the first time both Amazon and Google have become customers?

They are, they are both first time player.

Okay. Great quarter guys, great job, well done. Thank you. Thanks for taking my question.

Thank you, George.

You’re welcome. Thank you.

[Operator Instructions] There are no further questions registered at this time. I would like to turn the floor back over to Ryan Schram for closing comments.

Thanks to everyone for joining us this afternoon, this evening. And again if you like to follow more of our updates please do so on the Investor Relations section of our corporate website at izea.com, izea.com. Have a wonderful evening.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.