Good day and welcome to the IZEA, Inc., First Quarter 2020 Earnings Conference Call. All participants will be a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ryan Schram. Please go ahead.

Good afternoon and welcome to IZEA's Q1 2020 earnings call. I am Ryan Schram, Chief Operating Officer at IZEA and joining me today is IZEA Interim Chief Financial Officer, LeAnn Hitchcock and IZEA Chairman and Chief Executive Officer, Ted Murphy. Thanks for being with us this afternoon. Earlier today, the Company issued a press release with details pertaining to our first quarter performance for 2020. If you like to review those details, all of investor information can be found on our Investor Relations website at izea.com/investors. Before we begin, please take note of the Safe Harbor paragraph that appears at the end of the press release covering the Company's financial results and be advised that during the course of today's earnings call, our management team will discuss IZEA's business outlook and make forward-looking statements. These statements are predictions based on our team's expectations as of today that are subject to inherent risks and uncertainties and should not be unduly relied upon. Actual events, results or trends could differ materially from our forecast due to a number of factors, including those mentioned in our most recently filed periodic 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 also refer to certain non-GAAP financial measures, specifically gross billings and adjusted EBITDA. A reconciliation of these measures to the most directly comparable GAAP measure is presented in our earnings release with additional discussion of both of these measures available in our most recent Form 10-K and 10-Q, available under SEC filings in the Investor section of izea.com. With the appropriate disclosures out of the way, I am pleased to introduce my colleague and IZEA's Interim Chief Financial Officer, LeAnn Hitchcock. LeAnn?

Thank you, Ryan, and good afternoon everyone. On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus also known as COVID-19 as a global pandemic and recommended containment and mitigation measures worldwide. On Friday, March 13th, we directed all of our staff to work-from-home effective the next business day on Monday, March 16th, and they are continuing to do so for the foreseeable future. All of our business operations and ability to support our customers are fully functional while our employees are working from remote locations. However, we have begun to see impacts on our operations due to changes in advertising decisions, timing, and spending priorities from our customers, which may result in a negative impact to our bookings and revenue in current and future quarters. While the destruction is currently expected to be temporary, there's uncertainty around the duration and total economic impact. Total revenue in our first quarter of 2020 was flat year over year at 4.8 million with 4.1 million coming from our Managed Service business and 583,000 coming from our SaaS business. We saw a 258,000 or 7% increase in our Q1, 2020 managed service revenue as a result of increased sales orders, which we called bookings in the second half of 2019. This increase in bookings led to increased revenues and Q1 2020, as managed service bookings typically convert to future revenue over the next 3 to 12 months. Our revenue from SaaS services decreased by 333,000 in Q1, 2020 as compared to Q1 2019, primarily as a result of lower spend levels from our SaaS marketers and as a result of competitive pricing efforts, which reduced our margins on those spend and on our licensing fees. Our SaaS marketers also curtailed spending in March, 2020 as a result of…

Thank you. LeAnn. It is hard to believe, but it's now been two months since IZEA first directed our employees to stay-at-home and work remotely as a result of the coronavirus pandemic. What has happened in that period of time has been challenging, emotional and humbling, but most of all, it has been inspiring to me as the leader of this organization filled with such wonderful and dedicated people. At the end of September of last year, I delivered a speech to my fellow IZEAns, about our need to move faster and adapt to the ever changing environment and industry that we work in. In Q4 of last year, we began implementing those changes. We made shifts in marketing and product development, reduced the size of our leadership team and consolidated departments to allow them to operate more efficiently. Heading into this year, our leadership team knew that we would continue to make adjustments as needed, but little did we know what we would be facing in just a few short months. In the weeks leading up to the stay-at-home orders being issued across the country due to COVID-19, our team had really hit its stride on both sides of the business. We were seeing strong bookings in Managed Services and have had record new customer starts for IZEAx Unity Suite in Q1. Prior to March 13th, we were expecting strong year over year bookings and revenue growth for the Managed Services business and had visibility to an even higher number of new SaaS customers then the record we set in Q1. As we gain more insight into the near-term implications of COVID, we made dramatic changes. Some of the measures we took were, reduction of employee salaries by 19% to 21% at all levels of the organization. Reduction of…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Clarke Murphy with Craig-Hallum. Please go ahead.

So first just wanted to go over the goodwill impairment charge that you guys have, was this related to the TapInfluence acquisition, if you could give any additional color there that would be helpful?

Sure. I can jump on that. Yes, it's not really related to any one acquisition. We do have goodwill from all three of the acquisitions that we've acquired over the years and we report everything as one operating unit. So, it really is on the Company as a whole, not just any specific reporting unit.

Okay. That's helpful. And then looking at um, the financials here, it looks like you guys have like virtually no CapEx in the quarter. I just don't know if you had any insight onto what CapEx will look like for the rest of the year?

Yes, I can take that as well. With the implementation of IZEAx 3.0 last year, we are having a lot less in CapEx. That was where the majority of our spend was coming, was developing that software and increasing. We also completed more at the end of last year and a little bit in the first quarter of this year, a complete overhaul of equipment for our staff. So, we are anticipating not a lot of spend for the remainder of the year.

Okay. And then one more from me, if you guys will take it. If you could just give any color into the BrandGraph offering and how that continues to perform, and what you're seeing in terms of trends to customer acquisition and then kind of looks in cross-selling opportunities on the IZEAx platform?

Yes, I'll speak to that. BrandGraph is really kind of in the same boat as IZEAx in terms of the pipeline that we had generated for that platform with a lot of those customers being in retail segments that were dependent on physical locations. So, we have had to rebuild a lot of that pipeline. A lot of those customers are on hold until their businesses, really open up in a material way. I will say that in our previous sales cycles prior to COVID-19, it was the fastest sales cycle that we had seen. And we believe that, as the states start to open up and restrictions start to loosen a bit, that we will hopefully see some of those customers back that were in the pipeline prior, but I've also been building a strong pipeline with new clients who aren't as impacted as the previous clients due to COVID-19.

Our next question will come from Michael Bienstock with Semaphore. Please go ahead.

I have actually two questions. One, I didn't know if you can give any color on the repurchase program that had been in effect, if that was still ongoing or if that was completed or put on hold or if you could give any color on that? And the second is just a little bit of thoughts and perspective from your side with respect to the 1.9 million PPP. I know there's a lot of pushback against publicly traded companies applying for the program. Many had given back the PPP, but you guys are under the 2 million Safe Harbor ruling that seems to just come out in the last few days. So, I just wanted some perspective on that?

Yes, great. I'm happy to take those questions. On the stock buyback, there has not been any sort of a stock buyback, obviously, with advent of COVID-19 and us taking a PPP loan that is not something that we would be doing at this time. In terms of the PPP loan itself, we believe that we're in a good position there. We feel comfortable in taking those funds and feel even better now that some of the new guidance has come out because there's been a lot of questions and changing perspectives over time.

This concludes that question-and-answer session. I'd like to turn the conference back over to Ryan Schram for any closing remarks.

We'd like to thank everyone for joining us today and a reminder that all of our investor information is available on our Investor Relations website, which is izea.com/investors. Please stay safe and stay healthy. Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.