Company Overview

IZEA Worldwide, Inc. is a leading innovator in the creator economy, specializing in providing value through managing custom content workflow, creator search and targeting, bidding, analytics, and payment processing. The company’s mission is to make creator economy solutions for marketers. IZEA offers solutions ranging from creator agency services to creator technologies to a marketplace that connects marketers with creators. By fostering these connections, IZEA aims to “light up the creator economy” with social-first content made by creators that is culturally relevant and moves at the speed of culture.

IZEA was an early pioneer in the industry, launching the first influencer marketplace, PayPerPost, in 2006. Today, the company caters to a diverse range of clients, including independent creators and Fortune 10 brands, offering services in influencer marketing, customer-generated content, and custom content creation. IZEA provides tech-enabled managed services and self-service software tools to accommodate the varying needs of its clientele.

Key Products and Services

IZEA Flex is a robust suite of tools that enhance the company’s ability to manage influencer marketing at scale. The platform boasts a suite of core modules that provide a comprehensive toolkit for optimizing influencer marketing campaigns, including the ability to quantify the ROI of marketing efforts at scale and the introduction of AI-powered tools for content and creative campaign ideation.

On IZEA.com, the company offers a dynamic environment where creators can showcase their work to marketers, and marketers can directly engage and hire influencers, simplifying the collaboration process. This platform, alongside the innovative use of generative AI tools in FormAI, underscores IZEA’s commitment to facilitating content creation and enhancing the efficiency of digital marketing strategies.

Leadership and Strategy Transition

In September 2024, the Board appointed Patrick J. Venetucci as the new Chief Executive Officer following the resignation of Edward H. (Ted) Murphy. Concurrently, the company entered into a cooperation agreement with GP Cash Management, Ltd., GP Investments, Ltd., Rodrigo Boscolo, and Antonio Bonchristiano, who were appointed to the Board of Directors.

In December 2024, the company implemented a strategic shift intended to accelerate its path to profitability, including the divestiture of unprofitable investments, targeted workforce reductions, and the realignment of its sales and customer delivery teams into industry verticals. The company believes that these cost reductions and efficiency improvements will impact short and long-term profitability measures.

Financial Performance

Revenue

IZEA’s revenue is primarily generated from two sources: Managed Services and SaaS Services.

Managed Services revenue, which accounts for 98% of total revenue, decreased by 1.9% in 2024 compared to 2023. This decline was primarily due to the discontinuation of the company’s relationship with a significant customer in 2023, which contributed $8.1 million in revenue in 2023. Excluding the impact of this non-recurring customer and the divested Hoozu business, Managed Services revenue from the company’s recurring customer base reached $31.7 million in 2024, reflecting a 16.3% year-over-year increase.

SaaS Services revenue, which includes subscription fees, license and transaction fees, and other miscellaneous fees, increased by 74% in 2024 compared to 2023. This increase was primarily due to a growing number of licensees, although at lower average license pricing.

Costs and Expenses

Cost of revenue, which includes the direct costs paid to third-party creators and internal costs for campaign fulfillment and SaaS support, decreased by 1.9% in 2024 compared to 2023. Excluding costs related to the divested Hoozu business and the non-recurring customer, adjusted cost of revenue increased by 19.5%, driven by lower average margins from the company’s ongoing customer base.

Sales and marketing expenses increased by 15% in 2024, primarily due to higher sales and related international contract sales compensation costs.

General and administrative (G&A) expenses increased by 26.7% in 2024, primarily attributable to $1.3 million in severance costs related to executive departures and targeted workforce reductions, and $1.6 million in stock compensation mainly related to the accelerated vesting of equity awards. Additionally, professional services and contractor expenses increased, partially offset by reductions in software and licensing costs and public company costs.

The company recorded a $4.0 million impairment of goodwill related to prior IZEA acquisitions in September 2024, following changes in executive management and Board-level changes, including the Cooperation Agreement.

Depreciation and amortization expenses increased by 62.5% in 2024, primarily due to $0.2 million of accelerated amortization for certain software assets no longer in use.

Other Income and Expenses

The company recorded a $2.3 million loss from the divestiture of the Hoozu business unit, including the derecognition of goodwill, intangible assets, and other associated assets.

Other income, net, which primarily consists of investment portfolio interest income, remained relatively stable at $2.5 million in 2024 compared to 2023, despite an increase in the average return on invested capital from 4.3% to 4.7%.

Net Loss

Net loss for 2024 was $19.2 million, a significant increase from the $7.4 million net loss in 2023. The increase was primarily driven by the $4.0 million goodwill impairment, the $2.3 million loss from the Hoozu divestiture, and higher personnel costs related to executive departures and targeted workforce reductions, including severance and accelerated vesting of equity awards.

Key Metrics

Managed Services Bookings

Managed Services Bookings, a measure of all sales orders received during a time period, less any cancellations or refunds, increased from $28.1 million in 2023 to $39.1 million in 2024. Historically, bookings have converted to revenues over a 6-month period on average, but this has lengthened to approximately 9 months due to the company receiving increasingly larger and more complex sales orders. During 2024, the time between bookings and revenue improved to an average of 7.5 months.

Net Managed Services Revenue

Net Managed Services Revenue, a non-GAAP measure of total managed services revenues less the external direct costs associated with this revenue, increased from $18.9 million in 2023 to $19.7 million in 2024. This metric helps the company track labor efficiency by excluding internal expenses and focusing on the profitability of its managed services offerings.

Adjusted EBITDA

Adjusted EBITDA, a non-GAAP measure of operating performance that excludes non-cash and non-recurring items, improved from a loss of $5.5 million in 2023 to a loss of $8.6 million in 2024. The company’s CODM and Board of Directors have emphasized Adjusted EBITDA for planning purposes to allocate resources and enhance the financial performance of the business.

Liquidity and Capital Resources

As of December 31, 2024, the company had $44.6 million in cash and cash equivalents, an increase of $7.2 million from the prior year, primarily due to the maturation of certain investments. The company also had $6.4 million in short-term investments, for a total of $51.1 million in cash and short-term investments.

Net cash used for operating activities was $11.5 million in 2024, primarily driven by the continued use of cash to fund operating cash flow and increases in net working capital. Net cash provided by investing activities was $19.8 million, primarily due to the maturity of marketable securities. Net cash used for financing activities was $1.1 million, primarily driven by stock repurchase activity.

The company believes it has adequate cash and long-term investments to fund its business growth for the next twelve months, but may need to seek additional financing through equity, equity-based, or debt offerings in the future to support its continued expansion.

Outlook and Strategic Initiatives

IZEA has implemented a strategic shift to accelerate its path to profitability, including the divestiture of unprofitable international initiatives, targeted workforce reductions, and the realignment of its go-to-market teams. The company believes these actions will meaningfully reduce cash losses in the near term and strengthen its financial position.

Despite a slight decline in managed services revenue in 2024, adjusting for the loss of a major customer and the non-recurring Hoozu revenues, managed services revenue from the company’s recurring customer base grew by 16.3% year-over-year. IZEA believes its core market is experiencing double-digit growth, presenting significant opportunities to expand within its current account base and acquire new accounts.

The company’s stock buyback program, with up to $10.0 million in authorized repurchases, reflects its belief that its stock is currently undervalued. IZEA plans to continue the buyback program as long as it believes the stock is underpriced.

Overall, IZEA’s strategic initiatives, including cost reductions, efficiency improvements, and a focus on its core growth opportunities, position the company to accelerate its path to profitability and enhance shareholder value in the long term.