Greetings and welcome to the IZEA’s Incorporated Q4 and Annual 2017 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, this conference is being recorded. I would now like to turn the conference to your host Mr. Ryan Schram, Chief Operating Officer.

Hello and welcome to IZEA's Q4 2017 earnings call and fiscal year recap. I am Ryan Schram, Chief Operating Officer at IZEA. And joining me today call is our Chief Financial Officer, LeAnn Hitchcock; and IZEA's Founder, Chairman and Chief Executive Officer, Ted Murphy. On behalf of our entire team, we appreciate your time, we’re pleased to have you with us today. On Wednesday, April18, the company issued a press release with highlights from our fourth quarter and 2017 fiscal year performance. If you would like to review those details all of our IZEA’s Investor Relations information can be found online at izea.com/investors. Before we begin pleased be advised by that during the course of today's earnings call 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 ore trends to differ martially from our forecast due to a number of risks and uncertainties, including those mentioned in our most recent filings period 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 certain non-GAAP financial measures, specifically gross billings and adjusted EBITDA. A discussion and reconciliation of these measures to the most directly comparable GAAP measure is presented in our most recent Form 10-Q available under SEC filings in the investor section of izea.com. Now with the appropriate disclosures out of the way, I would like to turn the call over to IZEA's Founder, Chairman and CEO, Ted Murphy. Ted?

Thank you, Ryan. I would like to start today's call by addressing the restatement of our financials. The restatement of our financials is the result of an unfortunate but good-faith error discovery during our review of our 2017 financials in preparation for our adoption of ASC 606 a new accounting standard for revenue reporting in 2018. Accounting standards are nuanced and complex. We carefully prepared our historical financial statements and believe our previous practices to be in line with gap Standards. Nonetheless, upon further review. We determined that there were errors in our previously issued financial statements. These issues were related to our presentation of revenue associated with the self-service content workflow portion of our revenue and our classification of cost of revenue related to our managed services. Upon discovery of the errors the audit committee took swift and diligent action to analyze and address the situation, including by engaging in an additional independent third-party to further assist in the verification and correction of the errors. We are now taking steps to correct those errors and have restated our financials accordingly, in our most recent 10K. The restatement had no impact on our previously reported loss from operations, net loss, loss per share or on any of the consolidated balance sheets, statements of cash flows, and statements of stockholder's equity. The Board and I take these matters very seriously and team IZEA along with our independent auditors at BDO USA, LLP have worked diligently to address these matters as quickly as possible. We are working with our audit committee and partners to further strengthen our accounting procedures moving forward. I would now like to turn it over to our Chief Financial Officer, LeAnn Hitchcock, to provide a summary of the company's performance from the fourth quarter of 2017.

Thank you, Ted, and good afternoon everyone, the financial information presented on today's call and in our annual report on form 10K for fiscal year ended December 31st 2017 reflects restated financial information related to our prior period information. All comparisons are on an as adjusted basis, for further details regarding the restatement adjustments keynote 2 and 14 in the notes to our consolidated financial statements under item 8 in our form 10K. We will begin with an overview of our annual results for fiscal year ended December 31, 2017. Revenues for fiscal '17 was up15% to 24.4 million compared to 21.2 million in fiscal 2016, this was an all-time annual revenue record for the company. This increase is primarily due to organic growth in our managed service revenue which is comprised of sponsored social and custom content services. Our managed services revenue increased 17% to 23.8 million, compared to 20.4 million in 2016 accounting for 98% of our total revenue in the year. Content workflow, our self-service revenue from the use of our platforms by marketers to handle their content workflow decreased 25% to 351,000 in 2017 compared to 465,000 in 2016 accounting for 1% of total revenues in 2017. With the change in the presentation of reported revenue in our financial information we believe that it is important to report gross billings to provide continued visibility to the growth amount earned from our customers for the services we performed and total transactions billed through our platform. This is an important indicator of the value of our services and platforms provide to marketers and it also is a critical measure to our cash flow. Gross billings for 2017 was 29.2 million compared to 27.3 million in 2016, cost of revenue as a percentage of revenue decreased from 49% in…

Thank you, LeAnn. First, I would like to provide some update on previously announced initiatives. We start with the strategic review process announced last year. In 2017, we announced that the company had received an unsolicited acquisition offer that offer went to board to engage Waller capital partners. In July 2017 to run a strategic review process. The board reviewed a number of strategic alternatives over the course of 2017 and into 2018. While we will continue to have strategic discussions with various parties from time to time, that formal review process has now concluded and we ended our relationship with Waller Capital in January of 2018. As a result of the review process, we have made the decision to focus our primary efforts on the growth of our business and strengthening operations. Earlier this year we announced that we were commencing limited crypto currency mining operations in connection with our development on software that can pool are networks computing resources to mind crypto currency. Our engineering team make quick work against that goal and was able to create a functional CPU software minor and supporting infrastructure. However, despite how fast we were able to move the crypto environment changed even faster over the past three months. Since we made our crypto announcement, Facebook, Twitter and Google have banned crypto currency related apps. Our email provider Mailchimp has taken similar steps regarding email sent. These steps combined with the global increase in regulatory scrutiny and subsequent impact on the crypto market have fundamentally altered the challenges, opportunities and risks associated with our original crypto strategy. While the mining software we developed works the landscape has become too muddied for us to have a clear path forward with our original plan. As such, we have decided not to release our mining…

Over the past several years our leadership team has placed emphasis on increasing our average deal size as a JPI and while that average deal size in 2017 was a record high for IZEA and a 22% increase over 2016 we've also become increasingly mindful that that focus on larger deals can inadvertently manifest into an unhealthy deal mix, causing sales people to sometimes miss out on smaller transactional opportunities with clients that can then expand the larger engagements over time. Now to be clear, we are thrilled to have earned the opportunity to receive six and seven-digit investments from agencies and brands alike. These 'whale size deals' are a very positive indicator about IZEA's place in the broader marketing ecosystem. However, what we weren't is that one happens to slip from one quarter to the next or a budget is unexpectedly cut, it becomes very difficult for us to manage. And while we didn't have one client representing over 10% of our revenue in 2017 when a few deals shift or reduce scope unexpectedly they have a real impact on our quarter. To that end the team and I believe that we're impacted by whale hunting in Q4 of 2017 and again in Q1 of this year. While the majority of the deal that we expected to see from Q4 have indeed come in, some commitments were smaller than we had hoped, others have been floated [ph] in chunks over multiple quarters rather than one large annual booking as we saw in years past. This is due in part to the clients managing their own budget against a larger spend with us overall. We're currently outpaced our first client spend in excess of $3 million in their services with us this year. That's a meaningful spend and a testament…

Thank you, Ryan. Off course, our sales team is nothing without the technology that makes what they sell possible. IZEAx in particular will make a large leap forward with the introduction of IZEAx 3.0, which is expected to launch later this year. We re-imagine creator search, double down on data, further integrated AI and are rebuilding a completely new workflow from the ground up. We [deem to take] [ph] the best concepts from e-buyline, Zen content and the current IZEAx platform to produce something radically new and extensible, including a dynamic workflow where humans and automated bots , can work together in concert with each other. We expect IZEAx 3.0 to make its official debut in Q4 of this year. We have grown revenue by double digits every year since inception, with the exception of 2009, as we battled our way through the great recession. In 2017, we grew our revenue by 15%, that was slower than our growth in 2016 due to the cost reductions necessary to rebalance operations. Our number one goal in 2018 is to put the right pieces in place to re-accelerate growth in 2019 and beyond. First, we are going to need to absorb the low-end bookings in Q4 and Q1 from an over dependence on whale hunting last year. That will impact the revenue in the front half of this year. As a result, we are currently estimating 8% to 10% revenue growth for 2018 or 26 to 27 million. We believe our revenue growth will be back half heavy in 2018, while the beginning of the year, maybe down compared to prior years. The backpack should benefit from the strong and diverse new opportunity pipeline we had in Q4 of 2017 and Q1 of this year. More importantly, we believe we are setting…

[Operator Instructions] Our first question is from Mike Malouf, Craig-Hallum Capital Group. Please proceed with your question.

This is Eric on for Mike, thank you for taking my questions. Could you guys talk a little bit more about custom content and just help us understand what features that have you implemented that were behind driving a 47% growth.

Yeah. I think that that's actually more of a function of sales in 2017, we have really put an emphasis on custom content in terms of all of the packages that we're presenting to our customers. And I think that it integrates nicely with what we are doing on the sponsored social side. So, as our team ramps up on to become more and more comfortable with selling custom content. We are seeing more success there that's going to be a continued emphasis for us in the future that's something that is really important to us and something that we believe has a lot of potential upside.

Okay that’s great and then I was wondering if you could also talk a little bit about the financial impact, your AI initiatives that you announced last year, what those have to date and if you expect any material financial impact in 2018 or is that something that we should expect after the IZEAx 3.0, has been implemented.

I would say that the biggest impact last year were from curation engine, in particular, we used to have a small team of people that were going through and manually doing that curation and now that’s a part-time task because curation engine handles a lot of that out for us. But is also increase the efficiency of our campaign management team because it organizes a lot of the content -- the AI organizes a lot of content programmatically tags it inside of contents mine and that is becoming a very important tool both for our campaign managers and actually for our salespeople. We see it being used a lot in the presale process as a way for the advertisers, to really understand how influencer marketing and custom content come together.

That's helpful. And then last question for me, given the accounting change that you guys have had. I’m wondering what you expect the impact on gross margins to be especially given the fact that first half looks to be a little bit softer than second half, should it be pretty flat as we go through her as the lower revenue volumes have an impact on gross margins.

The margins really now are representative of the cost of revenues and its really a blend of everything now that we're changing between the net and the gross on part of our business, so really, we're just looking at those cost of revenues as a percentage of the total revenues and we believe that they should follow some of the same pattern that we're seeing from last year.

Our next question comes from Mike Jeffrey, Private Investor please proceed with your question.

Yes, I just wanted to know that now that the sentencing and review process is closed I wanted to see what kind of offer you got and what was the reason that you turn it down because your intention was to maximize shareholder value and since six months ago the price of your stock has dropped from seven dollars to about $2.75 today, and you have any kind of plan to maximize shareholder value such as having some kind of you know getting upgrades from these brokerage firms or buyback of your shares or anything, something like that, thank you.

Thank you for your questions, building shareholder value is always our primary objective, we can't really comment on any previous strategic discussions or what the structures were of those obviously, those are always very nuanced. But our focus as a Board as a management team is to build that value and that is why we're focused on operations and execution, that's why we believe -- that's what we believe will ultimately build that long-term shareholder value.

Okay, and then do you have any plan to maximize shareholder value such as getting hold of a brokerage firm to recommend your stock because you're doing very well, you're one of the fastest growing company in Florida and then also do you have any plan to buyback and my last question is that when do you think that you would be announcing the first quarter results because last year you did it I think on May 7th.

So, I'll comment on the first two parts and then I'll have LeAnn talk about Q1. You know we do have some broker coverage and some of that has been ongoing for several years and we continue to hope to have those great relationships there. There is no planned shareholder buyback at this time and that is not something that I would expect in the near term.

Yeah, and as far as the plan for our reporting we had until May 15th, 45 days after our March 31st quarter ends to file the form 10-Q, we are working diligently to close out the quarter and report as soon as possible but given additional disclosure changes required by several new accounting standards this quarter we do not believe that it will be much before that time.

Thank you.

[Operator Instructions] Our next question comes from John Hickman, Ladenburg Thalmann, please proceed with your question.

LeAnn, I'm traveling and I don't know if I was able to access all of the information that was released this morning after the close. Did you publish the bookings for Q4 and Q1?

We did not publish the bookings for Q4 or for Q1. Actually, we did publish the bookings for Q4 last year -- I am sorry no, no we didn’t that was Q3, sorry. For Q4 that would be part of this new year and what we are looking at is our bookings moving forward, we think that they could be introducing some confusion. So, our bookings were based on the gross amounts of the sales orders and our platform transactions and because those run a gross [ph] basis, they would no longer be comparable to our reported gap revenue. So, to avoid any confusion going forward we're going to be basing our guidance on estimated revenue moving forward.

Okay, so then maybe LeAnn maybe we should take this offline but in going over the restated financial information I understood the revenue change and the margin change. I didn't understand the change to your sales and marketing line, why that went down, is that easy to explain, or do you want to tell me that offline.

No. I am happy to report that online and as stated in our 10-K as well, we historically considered and reported the cost of our campaign fulfillment personnel as part of our sales and marketing expenses. Through part of our restatement analysis we determine that these costs should be included as a cost of revenue related to managed services rather than in our sales and marketing expenses line. So as a result, our sales and marketing expense line has decreased.

Okay, so again that's how above the operating line.

You can see further detail of that in note 14 in our financial statement.

And then I guess, this for Ryan so you said that you had a best year-over-year of gain in opportunity, but yet you guys are kind of telling us that the first half of the year is going to be [relieved] so that mean those opportunities aren't going to materialized till six months from now.

Across the three different units managed services we had before and then the two new units SMB and partnerships, our general sales cycle, suggest 90 to 120 days on average between when a proposal is created and when it ultimately closes and they would recognize that as a gross billing. So, on the average it's very possible that something that was created in our pipeline here in the first quarter which was a phenomenal quarter of activity for us may not be actually seen to the public as a billing until the second half of this year.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And now I would like to turn the call back to Ryan Schram for closing remarks.

I want to thank everyone for joining us today.

Thanks to everyone for joining us today and always we supply information available online on our investor website, that’s izea.com/investor. Thanks, and have a great rest of your Thursday.

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