Good day. And welcome to IZEA Worldwide Incorporated First Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. At this time, I'll turn the conference over to Ryan Schram. Please go ahead.

Good afternoon everyone. And welcome to IZEA’s Q1 2021 earnings call. I'm Ryan Schram, President and Chief Operating Officer at IZEA. And joining me today is IZEA’s Chief Financial Officer, Peter Biere; and IZEA’s Chairman and Chief Executive Officer, Ted Murphy. We’re glad here with us. Earlier today, the company issued a press release with details pertaining to our first quarter performance for 2021. If you'd like to review those details, all of our 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 included in today’s 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 a non-GAAP financial measure, adjusted EBITDA and key metrics, gross billings, and bookings, a detailed explanation of these measures is disclosed in our earnings release and in our most recent Form 10-K. With the appropriate disclosures out of the way, I'm now pleased to introduce my colleague and IZEA's Interim Chief Financial Officer, Peter Biere. Peter?

Thank you, Ryan. And good afternoon, everyone. Let me begin by saying that I'm excited to have joined the IZEA team and look forward to working for you, our investors, to build enterprise value. With that, I'd like to highlight our results for the quarter ended March 31, 2021. For the first quarter of 2021 IZEA's total revenue was $5.4 million, a 13% increase compared to Q1 of 2020 with $4.9 million coming from our Managed Service business and $504,000 coming from our SaaS offerings. Managed Service’s revenue increased by $747,000 or 18% while SaaS revenue declined by $135,000 or 21% in Q1 of 2021, as compared to the prior year quarter. We began to feel the impact of the COVID-19 pandemic in mid-March of 2020, resulting in lower bookings for Managed Services during the first quarter. We continue to see lower demand for Managed Services through late May, but have experienced strong growth, both in order volume and average order size through the end of 2020 and the first quarter of 2021. As previously announced, Managed Services bookings during the first quarter of 2021 increased approximately 130%, compared to the prior year quarter. We continue to see larger customers increasing their marketing spend with us, and believe that more brands are shifting a larger percentage of their marketing dollars to influence our marketing campaigns. These factors, taken together with the efforts put forth by our team to fulfill campaigns, resulted in increased Managed Services revenue during the current quarter. SaaS revenues, which are comprised of license fees, self-service marketplace spend fees and other fees were comparatively $135,000 lower for the first quarter of 2021 due partially to lower license fees and lower fees from self-service marketplace spending. Licensee counts are growing on all platforms, however, average license fees are…

Thanks Peter. And on behalf of everyone here at team IZEA, welcome to the company. We're delighted to have you and are excited to benefit from your valuable business experience. As we reflect in the first quarter of this year, the team and I are pleased with the continued progress IZEA is making financially, client-wise and product-wise. Yet, as we look to the future, we recognize now more than ever, that the inches are all around us to take the company and the industry we help to create to its next level of success by harnessing every bit of the opportunity laid out in front of us. So much of 2021 plays into our team's obsession with finding a better way, improving upon every process, every product and every client that entrusts us with their business. I love hearing team members in our internal meetings seize this moment with the spirit of if it's good, let's make it great. And if it's great, let's put it into an even higher gear. It's never been clear to me that this organization won't settle for less. In fact, we won't settle at all. I like to begin by sharing a few ways IZEA is actively growing forward from the things we've done so far this year in Q1 to the things that we look to do in the quarters ahead. First, let's talk about our key decision made on the future of work at IZEA. What we're calling to plan for the company is elastic workplace. High unemployment rates from the COVID-19 pandemic have not created the talent surplus, some predicted in the knowledge economy. Instead, the market efficiency of work-from-anywhere has driven up tele expenses domestically by creating shortages and critical functions. As a result, competition for personnel has become even…

Thank you, Ryan. Before I begin, I would like to welcome Peter to the team. We were very excited to have him on board and I look forward to taking IZEA to the next level together. When I first planted the initial seeds for our company, one of the platforms we focused on was My Space, the hottest social network at the time. Back in 2006, people were also buzzing about live journal and blogger fast-growing startups, which we also supported. In fact, there was a time when we supported vine, Foursquare, Google Plus, and Flickr all platforms that no longer exist or are no longer relevant in our space. During my time at IZEA, I've seen Yik Yak, Friendster, Meerkat, Google Wave, Google Buzz, Dodgeball by Google, Orkut by Google, iTunes paying, friend feed, daily booth, and most recently Mixer by Microsoft. All of these have come and gone leaving behind them a trail of both creators and brands that have invested countless hours building their audience on these platforms. The decision to be platform agnostic was one of the most important and fundamental strategies we adopted when we started this company. It was underpinned by the development of IZEAx as we sought to serve as a bridge between multiple platforms simultaneously. We didn't want to play favorites or tie our fate to any one partner. Rather we wanted IZEA to be an independent facilitator, connecting brands and creators. Since the day we started, there has always been a question of what happens if the social networks themselves enter into the influencer marketing space. What you realize is that it has already happened multiple times and the impact thus far has been negligible at best. We saw Twitter entered the influencer space with niche and YouTube entered the influencer…

Thank you. [Operator Instructions] The first question will come from Jon Hickman with Ladenburg. Please go ahead.

Hey Jon.

Hello. A couple of questions for you. Can you hear me okay?

Sure, can.

Okay. So, can you elaborate a little bit more on this discrepancy between the hundred and some odd percent growth in bookings and 18% growth in revenues?

Yes, so, I mean you have the…

Plus adding the bookings were really good for Q4 too.

Yes. So, we had a number of campaigns in Q4 that were actually recognized relatively, quickly. They were they were Christmas campaigns or holiday campaigns. We are seeing that now we are getting a lot of larger commitments from customers that are spanning longer than our average commitments than we've historically seen. So, historically we've looked at about a six-month average period from bookings to revenue recognition. It's looking a little bit more like eight to nine months at this point because we're seeing customers come in with larger campaigns that are annual campaigns.

Okay. So, going forward, didn't you say something about the back half of the year having these campaigns show up then? Is that [indiscernible]?

Yes so I mean I gave you some context, only 5% of the Q1 bookings actually converted into Q1 revenue.

Isn't that – historically has that been about 13%?

Yes, it's been historically much higher. So, we're seeing these larger campaigns that are spread over longer periods of time. And frankly longer lead times on starting the campaigns themselves.

Only 5% of first quarter bookings translated into first quarter revenues?

Yes.

So, how does a guy like me puts the model back? Any ideas?

It’s really interesting, because what we're seeing is a pretty big shift from what we saw at the height of COVID. A lot of the things that we were seeing during COVID were actually pretty fast turns where a customer would come in and it was kind of late last minute and they needed to go immediately and execute. And we're seeing almost the exact opposite now where the deal sizes are increasing, customers are looking for longer term commitments. And ultimately that's a very positive thing. But it does impact the near-term bookings to revenue conversion. I mean, one of the things that's super exciting right now is if you look at Q1 bookings at $6.4 million for the entire quarter for Managed Services, we're already sitting at a greater than $7 million here halfway through Q2. But again, a lot of those are large commitments that will ultimately stretch into the first quarter or potentially even the second quarter of next year.

Okay. Two more questions, real quick. Were any of the other revenues Shake revenues?

Yes, some of the revenues were Shake revenues. Those revenues are still small. But they did grow from Q4 to Q1. We're still working on building out the inventory there and – having more Shakes available for advertisers, but it did grow from Q4 to Q1.

Okay. So, I'm going to ask you to pontificate a little bit. So, this influencer marketing has been a big market for many years now, according to the studies and stuff. But it seems like you are getting a new level of interest at IZEA with advertisers.

Yes.

So, is this a general pickup in the whole marketplace or wasn't the market as big as people said before? Or are you just doing something different to get more share?

Well, I think, we're definitely getting more share. I don't think the entire space is growing at triple digits. And we also know that there's a number of competitors that are frankly struggling and seeing the exact opposite of what we've seen on our side. I think part of that has to do with our investment in marketing and continuing to build out the sales team.

Are you still doing your build it yourself sales team stuff?

Are you talking about the PSP program, Professional Software Program [ph]?

Yes.

We are still doing that. We're continuing to graduate classes and build out the next-generation of IZEA’s sellers. We've also added a handful of sellers from competitors. And we're going to continue to do that as well.

So how many sales guys do you have now, sales people?

I believe that we are in the mid-thirties right now.

And how would you want to? By the year end how many do you want to have?

I don't have that number in front of me. We're always hiring salespeople, so those jobs are – we're always looking to add qualified people.

Okay, thanks.

Thank you.

And the next question will come from Kevin Kelly with JR [ph]. Please go ahead.

Hi gentlemen, I just wanted to say I got a green presentation that was delivered here today. I really appreciate everything that you said. And as a young professional like myself who loves IZEA to the millennial who follows influencer culture. I was very excited about the possibility you are hearing that IZEA is looking to more, incorporate more remote work and looking to hire somebody as well to deal with the with – excuse me, I'm losing my words here. Yes, but the culture of the office, I think, was wonderful. My question more so has to do with reaching out to influencers themselves or working with influencers. How exactly does IZEA, for example, determine who is original influencer and is a credible influencer to work with in terms of their social media, just out of curiosity?

Yes, a lot of that is going to be based on the data that we're able to gather through our platform. We are ingesting the influencer content. We are scoring the influencer content. We're benchmarking the content against the entire network both the opt-in network and as well as our discovers network. So, we're able to look at influencer, both for their content as well as the data that we get in terms of an engagement authenticity and how influential they are, not just based on their followers, but how often they are being mentioned by other people, for example.

Got it. It sounds wonderful. And just the final question on [indiscernible] side, when exactly is IZEA planning to do the next round of hiring for young professionals, millennials, Gen Zers wise like myself for marketing, for sales, what timeline would you put on that?

There are a number of jobs that are already posted on IZEA's website specifically for sales. I believe that our next professional sellers program starts in about three months. So, that is for younger people that may not have as much job experience, but that are excited about, points for marketing space and a sales career. And we're going to be hiring pretty heavily in marketing in particular. We’re looking to add five people on the marketing department. We've got one of those jobs already posted for an affiliate marketing manager. We're going to be really spending a fair amount of effort in building out that affiliate program, both for shape, as well as for IZEAx discovery. And so we see that as a key hire, but we're also going to be hiring additional designers, people in SEO, additional people to help with our social presence. We think that there is a great opportunity to generate more revenue through our marketing efforts. That is a team that has historically been pretty small here and something that we're working to expand.

That sounds great. Yes, I was excited on fourth [ph] call and just began to call and we're excited about what you guys are doing now. But thank you for taking my questions.

Thank you.

[Operator Instructions] Your next question will come from Ed Danick [ph] Investor. Please go ahead.

Yes, thank you. Do you have any visibility as to when the EBITDA will be positive? I mean, you actually showed a decrease in EBITDA despite the huge increase in bookings in Q4 and Q1.

Yes. Right, now the focus is really more on growth than EBITDA. Our guideposts are to get that 30% of revenue growth and at the same time being very aware of what our revenue contribution per employee is. So, we're kind of using those two things to guide us moving forward. But the money that we raised through the $75 million ATM was really designed to invest in this next stage of growth and not to rush to profitability here at a company that did less than $20 million in revenue last year.

Okay. Fair enough. Let's talk growth. So, you've had some press releases about three-figure increases in bookings. And yet you're only projecting 30% increases in revenues over the next three years. How do you reconcile the two?

Yes, so what I said was the 30% revenue increase was what we had set out as a goal. And that was the goal that we had set out at the end of last year. I had commented that we're looking to exceed those in any way that we can, and we're certainly under trajectory right now to far surpass those. But those bookings do take some time to be recognized as revenue. And it won't likely be till the back half of this year, that you start to see the types of increases in revenue that correspond to the bookings increases.

So, you're going to be – so you're saying right now, you expect to be well over 30% this year, because your bookings are up triple digits?

Yes, the bookings are up triple digits. We had set out those goals at the end of last year. And that still remains our guideposts. But we're trying to grow as fast as we possibly can. So, the 30% is kind of our baseline and we're going to push that as much as our sales team can.

Well, why wouldn't you revise that upward? I mean, it seems like a three-foot high jump. I mean, anybody can do it and nobody wants to see it. Come on. So, we're in May, we're pushing to June, you can laugh. We're in May, we're pushing June, you've got these triple digit bookings, you are saying most of them are going to be realized between now and the end of the year. And you are still saying with the 30%, increase this year, that seems rather low to me. And I would respectfully suggest to revise them upward if you think you are going to realize the bookings.

Well, we're going to focus on exceeding those numbers the best we can, but we're not putting out any sort of additional guidance on top of that right now.

What scenario would cause, so you've got all these big bookings, what scenario would cause you to only come in at 30%? Would that have to be – would that have to be a large amount of cancelings, or…

Yes, there would have to be, I think, – there would have to be a significant amount of cancellations. I think that you would…

Okay.

You'd have to see some sort of world event that would drive would be my guess. But we also have to recognize we are still very much so in a pandemic and the world is a crazy place, right now. So, we are focusing on controlling what we can control. And to the extent that that we can continue this pace we are absolutely focused on doing that.

Okay. So, are you saying now, you're not confident that these bookings will result in the recognition of revenue?

No, I didn't say that. But I look, there is always the chance that the world can change between us booking something, and the revenue being recognized and the campaigns being run and we're not able to recognize the revenue until the campaign runs.

Okay. So, your projections are based upon some sort of worldwide catastrophic event. Is that fair?

Well, we've laid out kind of what that three-year vision is. I can't really expand upon that any further. But we know where we are for Q1 with our bookings. We've had strong bookings here in Q2 and the expectation as of right now is that those would be recognized in the back half of this year.

Okay. Thank you.

This will conclude today's question-and-answer session. I would now like to turn the conference back over to Ted Murphy for any closing remarks.

Thank you all for joining us today. This conference call will ultimately be posted on izea.com. And we appreciate you all being investors.

The conference has now concluded. Thank you for attending today's presentation. And you may now disconnect.