Greeting and welcome to the IZEA, Inc., Second Quarter 2020 Earnings Conference Call. At this time, all participants will be in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note that today’s conference is being recorded. At this time, I’ll turn the conference over to Ryan Schram. Ryan you may now begin.

Good afternoon and welcome to IZEA's Q2, 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 second quarter performance for 2020. If you like to review those details, all of IZEA’s 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 refer to certain key metrics and non-GAAP financial measures, such as bookings, gross billings and adjusted EBITDA. A detailed explanation and reconciliation of these measures is disclosed in our earnings release and in our most recent Form 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. We directed all of our staff to work from home after March 13, and they will continue to do so at least through the end of 2020. All of our business operations and ability to support our customers are fully functional while our employees are working from remote locations. Although our internal operations are fully functional with minimal impact, we did experience impacts from our customers in the quarter. We observed changes in advertising decisions, timing and spending priorities from our customers, which had a negative impact on our revenue in the current quarter. While the disruption is currently expected to be temporary, there is a high level of uncertainty around the duration and total economic impact. The following is a summary of our results for our second quarter ended June 30, 2020. Total revenue in the second quarter was down 20% to $3.1 million, compared to $3.9 million in the second quarter of 2019 with $2.5 million coming from our Managed Service business, and $645,000 coming from our SaaS business. We saw a $501,000 or 17% decrease in our Q2, 2020 Managed Service revenue. The decrease in revenue is driven by two things, marketers or canceling or delaying the launch of previously sold campaigns largely from bookings in the fourth quarter of 2019 and in the first quarter of 2020. IZEA’s revenue recognition is tied to the start and fulfillment of our customers advertising campaigns and content needs. And many customers hit pause during the period due to the COVID changes and uncertainty. Secondly, as previously discussed on our last call, and…

Thanks, LeAnn. Without a doubt, the second quarter of 2020 was one of the most historic, chaotic, but also clarifying periods in our Company's history. And like so many organizations around the world when COVID began to make its impact in mid-March, IZEA and its team needed to rapidly adapt and evolve in unprecedented manner. Initially, we were extremely concerned what appeared to be dire circumstances and consequences. Key promotional periods for our clients, such as Spring Break vacation, St. Patrick's Day, March Madness, Easter, even Major League Baseball opening day were all canceled within days of each other. The added uncertainty of consumer discretion and non-discretionary spending gave some clients cause to freeze their existing campaigns that were already in progress or in other cases canceled them all together. And that's to say nothing about the net new sales progression that was temporarily stalling out simultaneous to all of that, as brands were shell shocked and hesitant to commit to anything or just try to gauge operational risks amidst massive swings in consumer behavior. It was awful and scary, but our team did not back down from the challenge. We knew that IZEA’s plant sector concentrations, if approached in a pragmatic manner could serve us well. Well, some of our influencer marketing competitors have banked their business on super serving “slash year segments” such as high end fashion or beauty categories. Our approach has always been to align ourselves to traditional mass margin expenditure sectors, such as high frequency consumer packaged goods, direct-to -consumer e-commerce, entertainment and media, personal finance and insurance and consumer technology. Other sectors including travel and tourism and consumer hospitality have benefited system consistent part of our client mix over the years that have never been more than 10% to 15% of our gross billings.…

Thank you, Ryan. Our client services team has done an outstanding job adapting to the landscape and customer dynamics, all while working from home with no ability to meet customers face-to-face. Managed services sales efforts shining to two, but SaaS licensing for enterprise contracts remain challenged throughout the quarter, and is likely to still face some headwinds as we look to the future. While we saw a record addition of enterprise SaaS customers in Q4 new customer acquisition has been slowed since COVID-19 began to impact our customers and customer pipeline. The longer term commitments coupled with higher minimum investment requirements make it a challenging proposition for many marketing organizations that have pulled back and or downsize their staff. Conversely, our monthly IZEAx Discovery offering has grown aggressively year-over-year in both customer count as well as revenue, though offer smaller base. This lower cost credit card driven alternative is filling a need for marketers. In fact, we had an all time record number of customers licensing our software at the end of the quarter, largely due to IZEAx Discovery. We launched this platform at the end of December 2019. And it is growing to become a meaningful part of our SaaS licensing revenue. The challenges that we've observed in the marketing landscape since COVID-19 served to amplify our excitement about Shake’s business model. We believe many marketers are simply wary of long-term licensing commitments at this particular point in time, but they are still very much so interested in influencer marketing. To that end, we will be releasing different licensing models for IZEAx unity suite to enterprise customers in Q3 to meet our customers changing needs during the pandemic. I'm proud of what we've accomplished in Q2, particularly with our Managed Services team. But I don't want to give anybody…

Thank you. At this time, we will now begin the question and answer session. [Operator Instructions] One moment, please while we poll for questions. Thank you. Our first question is from the line of Max Haggard [ph] with private investor. Please proceed with your question.

Hi, I was wondering if you could provide maybe a little bit of insight or more detail in regards to the specifics of the relationship with a Fortune. I believe it was 10 Retail and Fortune 500 I believe it was a financial firm. Maybe specifics regarding the size of the relationship or guessing you can't provide anything on the name, but looking at the other side, if you don't mind.

We wish we could provide a name for a lot of those close customers. But unfortunately we're not allowed to -- we actually secured a number of new relationships with Fortune 500 customers in Q2 as well as renewed some relationships that had gotten dormant after COVID-19. Not all of those relationships are north of six figures or they're at least six figures and some of them are mid-six figures in terms of the individual contracts with some of those customers spending seven figures with us on a more annualized basis.

Thank you, Ted.

My pleasure.

Thank you.

Our next question is from the line of Mike Jeffery [ph], a private investor. Please proceed with your question.

Good afternoon, Mr. Murphy. I have two questions. The first one is that in January of 2018, you wanted to get into crypto-currency blockchain business because at that time the prices of Bitcoin was very high. Now the prices of Bitcoin is high again, okay, after two and a half years. Do you plan to consider getting into crypto currency or blockchain again or not? And then I have my second question.

Yes, we started down that path and if you remember correctly, we made some inroads there, but really decided not to pursue that at the time due to regulatory and legal obstacles. It's not a core focus of ours right now. It's not something that I think that we're going to be putting engineering resources towards anytime near-term either.

Okay, and then my second question is, when are you going to show us the investor, the revenue growth and profit both together not just one? I know you……?

I would say that near-term, our focus is definitely going to be more on the top line. We think that we've got a unique situation here where a lot of our competitive set is really struggling and we are going to be focused more on gaining market share. At the same time COVID has really forced us to look at all aspects of our organization and see where we can streamline. Certainly we're saving a good amount of money by not having physical facilities and also saving significant amount of money on travel. But for the near-term here the focus is going to be on investing in salespeople, investing in marketing and investing in our technology.

Okay, and the last thing is that I have suggestion is that for the last few years whenever you wanted to buy a company to IZEA they were not really profitable companies and I am suggesting that in the investors they really like to see that the price of the IZEA stock goes up. And I've seen many companies when they buy a company that is profitable, the price of that company goes much, much higher. Is it possible that the next time that you plan to buy a company since you have a lot of money now you have over $20 million or $25 million? Do you buy a company that is already profitable rather than losing money?

I would say that our focus right now is really on our core operations. We're not really looking at doing any near-term acquisitions of any type. There's just so many different challenges and unknowns with COVID-19. I'd say that we're really just focusing on the things that we can control. We think we've got a lot of catalysts on our own.

But do you think that Quarter 3 would be much better than Quarter 2?

We think that we're going to benefit from our bookings that we had in Quarter 2 certainly. But we're not providing any sort of guidance. We don't ever provide any guidance.

Okay. Thank you very much sir.

Thank you.

Thank you. [Operator Instructions]. The next question is from the line of Michael Frensic [ph] a private investor. Please proceed with your question. Mr. Frensic, your line is open for questions.

Sorry, I was muted. Okay. Sorry about that. Thank you for taking my question. I've been basically calling the company for a while and I am an investor in the company and I appreciate all of the activity in terms of you using Twitter and others to basically inform us what's going on that's been very, very helpful and keeping us aware as to kind of where things are going and stuff like that. So thank you for that. My question is that, yes -- and my question is that we saw the BrandGraph integration with Microsoft teams. And that was something that was pretty cool to see something like that happen. I'm wondering from the standpoint of maybe other types of things, are you looking at other platforms to look to try to integrate in different areas and stuff like that? And the other piece is, the second part of this is that are what other areas are you looking at in terms of like advertisement, I just saw a really great ad on Facebook and that kind of got me excited to kind of see that kind of stuff going on. So okay.

Yes. So the first I'll talk about integrations. We really believe that integrations are going to be a key part of our strategy moving forward. So, you saw the integration with Slack with Microsoft teams. There is going to be more of that in the coming months and in the coming year. That's going to actually be a real pillar of IZEAx and really the whole IZEA ecosystem moving forward. A lot of marketers have their existing marketing MarTech stacks. And we want to provide integrations into those MarTech stacks and other tools that they may be using. The second part of that on marketing, you shouldn't be seeing ads on Facebook and Instagram and Tik Tok and LinkedIn and Google display ads and Google search and we've definitely increased our investment on the marketing front. We will be increasing it even more on the other side of the Shake launch and looking the partners to help us get the word out. We're still relatively small team here from a marketing perspective. And to the point that Ryan shared earlier, we've engaged three different boutique agencies to help us with some new creative and also help us build-out some additional sales channels.

Great, thank you. Thanks for your answers. And by the way, those ads look very professional. I mean, it's just it looks really good. So thanks again.

Thank you. I appreciate that.

Next question is from the line of Josh Bagger [ph] of -- also a private investor. Please proceed with your question.

Hey, good afternoon, everyone. I'm an investor in the stock. I've been following you for quite some time. My question is with respect to some of the changes we're seeing on Facebook’s platform with respect to real and adding that Tik Tok X feature. What is the trajectory of the company moving forward with respect to some of these changes to the platform and especially with what's going on with Tik Tok and Donald Trump potentially banning the program?

Yes. So when we think about social platforms, we've always tried to be completely agnostic. When I first started this company, we were doing influencer sponsorships on MySpace and message boards. And a lot has changed since then. We believe that it's going to continue to change whether or not there are -- if there's a ban of Tik Tok, we can't predict that obviously. I personally don't think it's going to go anywhere. But there's obviously some big political issues that are being dealt with there. From a platform perspective, it is incredibly easy for us to add new platforms inside of Shake, you saw that we were able to add support for Instagram [Indiscernible] within two business days of that being announced. And in the future, I believe that we will likely be adding more and can have support for niche platforms that wouldn't necessarily make it into IZEAx, but are a natural fit for the Shake platform.

Awesome. Thank you guys appreciate that. That gives me kind of some confidence in terms of how quickly you can visit and address ever changing social media platforms. I think that's a big concern for a lot of investors at the moment. We're seeing a lot of change and I'm happy to hear that we're making quick and swift moves in action with Shake.

Thank you.

Thank you. At this time, we’ve reached the end of our question and answer session. And I'll hand the floor back to Ryan Schram for closing remarks.

I'd like to thank everyone for joining us this afternoon and especially thanks for the nice questions and feedback on our progress. We're very proud of what we've been able to accomplish, particularly during this unprecedented period of time. As a reminder, all of IZEAs investor information is available online at izea.com/investors. We post a lot of great information in addition to press releases and other research, other kinds of things that can be useful. So make sure that if you're not already subscribed to things like our email newsletter, you do so today. Thanks again for joining us. Stay well.

Thank you, everyone. This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.