IZEA

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sandra Carbone, SVP, General Counsel, and Corporate Secretary of IZEA, Inc. Please go ahead.

Good afternoon, everyone, and welcome to IZEA's earnings call covering the first quarter of 2026. I'm Sandra Carbone, SVP, General Counsel, and Corporate Secretary at IZEA, and joining me on the call are IZEA's Chief Executive Officer, Patrick Venetucci, and IZEA's Chief Financial Officer, Peter Biere. Thank you for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q1 2026. If you would like to review those details, please visit 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 IZEA's financial results and be advised that some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially.

We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non-GAAP financial measures of adjusted EBITDA and revenues excluding divested operations. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today and in our publicly available filings. With that, I would now like to introduce and turn the call over to IZEA's Chief Executive Officer, Patrick Venetucci. Patrick?

Thank you, Sandra, and good afternoon, everyone. In 2025, we made a deliberate strategic shift away from SMB accounts toward enterprise clients. Over the past 12 months, we intentionally exited a significant portion of our SMB business, which was characterized by smaller, non-recurring, and often unprofitable project work. This disciplined action reset our economic model, resulting in a net profit swing of $18.9 million during 2025. As expected, revenue in Q1 2026 declined year-over-year, primarily reflecting the impact of this transition. However, this quarter represents an important milestone, marking the completion of our exit from the SMB model and the full transition to an enterprise-focused business. Today, our client portfolio is predominantly composed of large enterprise brands, including Warner Brothers., Coursera, Nestlé, Danone, Georgia-Pacific, and Stellantis.

We have meaningfully reduced our total number of accounts by more than 1/3 while increasing the quality and scale of our relationships. Many of our largest clients are now recurring revenue streams that are more predictable and durable than our prior SMB mix. While we did experience a temporary slowdown across our top three accounts in the quarter, this was more than offset by rapid growth across newer enterprise clients and contributions from new business wins. We added clients such as Hulu, ASICS, Garanimals, and Emmi Roth, and our pipeline remains healthy, giving us confidence about achieving growth for the year. Importantly, over the past 12 months, our enterprise portfolio has grown at a healthy double-digit rate, outpacing overall industry growth.

By streamlining our client base, we have increased average revenue per account by more than 33% and established a more consistent and scalable profitability profile at the account level. To support this trajectory, we've added a dozen new team members to our growth organization, blending deep influencer marketing expertise with broader enterprise marketing experience. We continue to build momentum creatively and operationally. During the quarter, we delivered standout work for brands including Jeep, Warner Brothers., and Netflix. We also launched ZED, our proprietary creator economy marketing operations platform infused with AI, which we believe will further differentiate our capabilities and drive efficiency at scale. In parallel, we have been highly active in the M&A market, engaging with a number of potential acquisition targets that would expand our capabilities and accelerate our growth strategy.

As we deepen and expand our presence within these enterprise client organizations, our role continues to evolve from vendor to strategic partner. We believe this positions IZEA to become an increasingly indispensable marketing partner to some of the world's leading brands. With that, I'll turn the call over to Peter Biere, our Chief Financial Officer, for a closer look at the financial results.

Thank you, Patrick, and good afternoon, everyone. Earlier today, we reported our first quarter 2026 results and filed our Form 10-Q with the SEC. I'll focus on the key drivers of our first quarter performance, frame our results in the context of our strategic repositioning and path to profitability, and close with an update on liquidity. As Patrick outlined, 2025 marked a deliberate reset of the business. We exited a substantial portion of lower-margin, non-recurring SMB activity and reoriented toward larger enterprise relationships while materially reducing our cost structure. This transition is nearly complete. Both contract bookings and revenues associated with non-core SMB customers will be substantially behind us after the second quarter, reducing their impact on year-over-year comparisons. While most of our cost actions are in place, we will continue to optimize our structure and capital allocation.

Overall, we believe the business is on a much stronger footing, positioning us for more consistent profitable growth in the second half of 2026. With that context in mind, I'll turn to our first quarter results. Managed Services bookings were down $1.2 million year-over-year, with roughly $1 million related to timing across several enterprise accounts and the remainder from non-core runoff. We expect these accounts to normalize with a more pronounced impact in the second half of 2026. As a reminder, revenue for Managed Services bookings is recognized over the life of the underlying contract, with the period from contract signing to final revenue recognition averaging approximately seven months. Revenue was $6.6 million, down from $8 million in the prior year quarter. The net decline is entirely due to our shift away from non-core customers.

Our enterprise accounts continue to grow, and based on customer engagement, we expect meaningful growth in the second half of this year. Cost of revenue, which includes direct production costs, direct internal labor, and certain overheads, reflects stable gross margins in both comparative periods. Operating expenses were $4.1 million for the quarter, down 3% year-over-year. Sales and marketing costs decreased by $0.2 million, primarily due to lower commission and headcount costs. G&A increased about 3% over the prior year period, driven by modestly higher payroll-related costs, partially offset by reductions in other areas. Overall, our cost structure is largely aligned with our current operating model, and we expect expenses to remain relatively stable through the balance of this year.

For the quarter, we reported a net loss of $0.8 million or -$0.04 per share on 17.3 million shares outstanding, compared to a net loss of $0.1 million in the prior year period, or -$0.01 per share on 17 million shares outstanding. The year-over-year change primarily reflects lower revenue in the quarter, partially offset by the benefits of our reduced cost structure. Adjusted EBITDA for the first quarter was -$0.5 million compared to -$0.1 million in the prior year quarter. A reconciliation of Adjusted EBITDA to net income is included in the earnings release. As of March 31, 2026, we had $46.5 million in cash and cash equivalents and no debt, a decrease of $4.4 million from the beginning of the year.

The change was primarily driven by working capital timing, including higher accounts receivable at the end of the quarter that were collected in early April, and the payout of prior year incentive compensation, along with normal fluctuations in other working capital accounts. Turning to capital allocation, the board authorized a $10 million share repurchase program in the fall of 2024. To date, we have repurchased 523,268 shares for approximately $1.3 million, primarily under our initial Rule 10b5-1 trading plan. Our current trading plan is scheduled to expire on May 15th, 2026, and we expect to adopt a new plan with updated purchase parameters based on market conditions.

We continue to view share repurchases as an attractive use of capital when our stock trades below the board's view of our intrinsic value and believe our balance sheet positions us well to support both organic growth initiatives and to pursue strategic acquisition opportunities. Thank you for your time today. We'll now open the call for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicated your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we'll wait for a moment while we poll for questions. We take the first question from the line of Kris Tuttle from Blue Caterpillar. Please go ahead.

Hey, thanks very much for taking my questions. I've got two really. One of them is, you know, now that you guys are on this solid footing, you've gotten exited that SMB business, what would you put as kind of the top governor on your ability to grow sequentially over the course of the next year or two? You know, what are sort of the gating factors right now?

Hey, Kris. It's Patrick. Yeah, I wouldn't say there's any, you know, meaningful gating issues. I mean, as we've said before, we're reaching higher and wider with our clients, and we're getting more assignments given to us by many of our enterprise clients. You know, I wouldn't call it a gating factor, but it's just kind of an issue of how fast we're getting traction, you know, how fast can we activate the.

The different opportunities that we have with our clients.

Okay. Does the release of ZED help you with that?

Yeah

Maybe provide a little context for me.

Yeah. No, ZED is definitely opening more doors. ZED is, you know, certainly as the demand for creator economy campaigns, not just goes up, but is going up in terms of scale, right? We have many, many clients who are coming to us saying that the days of testing this with five and 10 clients are over, and now they're trying to scale it up. In fact, in the past couple of weeks, I met with a CMO of a major global brand who's working with 1,000 influencers at a time, and his quote to me was that he wants to 10x that and was very interested in ZED. ZED is certainly, it's certainly gonna be something that's gonna enable us to scale this and operate more efficiently.

Okay. My other question was just regarding, you know, how you guys are thinking about M&A opportunities in your sector, either adjacencies, you know, vertically or horizontally. Just, you know, curious if you think it's a target-rich environment, you think there's some things that you can do this year that may, you know, accelerate your path. I'm just curious to know how you're kind of thinking about it right now.

The way we're thinking about it is we've prioritized a number of different capabilities that we would like to get, but we're also trying to stay flexible enough, knowing that, you know, you can't always find exactly what you want. We have a well-defined M&A strategy. The priorities are to add new capabilities, not necessarily just to add look-alike, to get scale. The new capabilities are capabilities that would allow us to cross-sell into these enterprise clients. Where we see it going is that right now it's very much kind of a narrow pure play offering of creator partnerships across the industry.

In the future, what we're seeing is that enterprise clients in particular are looking to have a more integrated offering, integrated across content, across media, across commerce, like social commerce, for example. We're actively out there having discussions. I would characterize it as you say it, as a target-rich environment. However, with that said, there's a lot of deals, according to the investment banking community, that there's a bid price ask spread that sometimes is insurmountable. We're being very disciplined. We wanna pay fair prices, but, you know, also don't want to overpay. We're planning on using the capital efficiently and responsibly. We're very encouraged based on the number of active conversations that we have and relationships that we're building.

Okay. Is there any way to talk about your current numbers, like apples to apples or same store sales where, you know, we factor out, you know, the SMB business and the project work that you didn't wanna continue on with in 2026 to kinda consider, like what is the core revenue and/or bookings growth look like if you strip out, you know, some of the business that you've intentionally tried to avoid?

Yeah. We're not reporting to that level of detail, but as I said in my comments, you know, over the past 12 months, our enterprise portfolio has grown at a double-digit rate. That's our attempt at, you know, sharing with you exactly what you're asking for. You know, we really believe that the underlying base is as soon as we can melt away this SMB, you know, project work and client base, that the underlying health of the enterprise accounts as a group is really encouraging. As I've said in the past too, it's growing faster than the market. That's where we're trying to get to as fast as we can.

Okay. Last thing, you know, for your consideration is, you know, should investors, you know, think that at this point, we'll see bookings begin to trend upwards with Q2 at this point in the business trajectory?

Yeah, I mean, that obviously we're not giving specific guidance, but that, you know, we are focused on increasing bookings. As Peter said, there has been some timing issues that we ran into this quarter with some of our larger clients, which already, you know, good things are happening with some of these clients. Stay tuned for Q2.

Okay, fair enough. All right. Thanks a lot, Patrick. It was good, catching up with you as always, and I'm sure we'll talk again soon. Thanks.

Thank you, Kris.

Thank you. Ladies and gentlemen. If you wish to ask a question, please press star and one. We take the next question from the line of Bill Church from TGRA Capital. Please go ahead.

Thanks for taking my question. We're seeing many consumer discretionary companies stumbling and missing numbers and talking about a slower economy and that sort of thing. I wonder if that, to the extent you're seeing that, does that increase a higher angst on their part to hire someone like you to help them sort of double down on their message? At the same time, I'm sure they're also looking at what the cost or expenses are and maybe kicking out some that haven't been as effective. Just trying to get a sense. Thank you.

Thanks for the question, Bill. I would say it varies sector by sector. You know, in the CPG industry, we have seen tariffs and inflation in particular impact their business. You know, some of the slowdown we referred to, you know, was a result of that. What we're also seeing too is that it can't last forever, right? These are very large enterprise, serious professional marketers, they are and already we're seeing that they're releasing some of those. That's why we characterized it as a slowdown. You know, it's not the case that we've lost any of these enterprise clients. Clearly there are some macroeconomic environment factors at play here.

Thank you.

Thank you. A reminder, if you wish to ask a question, please press star and one. As there are no further questions from the participants, I will now hand the conference over to Sandra Carbone for her closing comments.

Thank you, Ryan, and thank you everyone for joining us this afternoon. As a reminder, a replay of today's call will be available shortly on our website, izea.com/investors. We appreciate your continued interest and support and hope you'll join us for our next conference call to discuss our second quarter 2026 results.

Thank you. Ladies and gentlemen, the conference of IZEA, Inc. has now concluded. Than you for your participation. You may now disconnect your line.

Greetings, and welcome to the IZEA Worldwide Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, John Francis, Vice President, Sales and Marketing Operations. Thank you. You may begin.

Good afternoon, everyone, and welcome to IZEA's Earnings Call covering the Fourth Quarter of 2025. I'm John Francis, VP, Sales and marketing operations at IZEA -- and joining me on the call are IZEA's Chief Executive Officer, Patrick Venetucci; and IZEA's Chief Financial Officer, Peter Biere. Thank you for being with us today. . Earlier this afternoon, the company issued a press release detailing IZEA's performance during Q4 2025. If you would like to review those details, please visit 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 IZEA's financial results and be advised that some of the statements we make today regarding our business, operations and financial performance may be considered forward-looking and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non-GAAP financial measures of adjusted EBITDA and revenues excluding divested operations. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today and in our publicly available filings. And with that, I would now like to introduce and turn the call over to IZEA's Chief Executive Officer Patrick Venetucci. Patrick?

Thank you, John, and good afternoon, everyone. At the end of 2024, the leadership team and I have made a commitment to accelerate our path to profitability. I'm pleased to announce that at the end of 2025, we delivered on that commitment. Year-on-year, we broke even increased cash, held managed services revenue relatively flat, excluding Hoozu, and grew our enterprise accounts faster than the market. We achieved a net profit swing of $18.9 million, which is not only a first for this company, but is a notable event in the context of microcap public company turnarounds. Annual revenue was $31.2 million, a 13% decrease that reflects a deliberate strategic pivot toward long-term profitability compounded by broader macroeconomic headwinds. During the year, we successfully exited international markets and off-boarded lower-margin SMB accounts to prioritize a high potential enterprise portfolio. These internal shifts coincided with government-induced disruptions as [ DOGE ] and trade policies negatively impacted our government and retail accounts. Looking at the fourth quarter, revenue was $6.1 million, down 45% year-over-year. More than half of this variance was a direct result of our strategic client rationalization, while the balance can be attributed to delayed bookings in the second half of the year on a few key enterprise accounts and a conservative holiday marketing environment. Despite these strategic shifts and external headwinds, Managed services revenue, excluding Hoozu, remained resilient, finishing the year down a modest 2%. This relative stability masks significant underlying growth considering our enterprise accounts expanded well above industry growth rates. As we've strengthened and expanded our relationships with enterprise clients, we've been rewarded with more business. We have successfully scaled five enterprise accounts beyond the $1 million threshold each delivering double or triple-digit growth. Having largely worked through the attrition of our legacy SMB accounts, we believe the client portfolio is close to being stabilized, allowing the higher growth potential of our enterprise business to take center stage. Our sales and marketing efforts are attracting new clients and our pipeline reached a new high for the year with invitations to larger pitches growing. Lastly, we produced new work for Stellantis, Warner Bros., Georgia Pacific, Denon and many other leading brands consistently delighting our clients. Our restructured cost base was instrumental in our return to profitability this year. We achieved a 40% reduction in total operating expenses, driving a significant turnaround in cash operating profit to $0.7 million a substantial recovery from last year's $11.1 million cash operating loss. This disciplined approach further strengthened our balance sheet, putting an end to the cash burn. By implementing advanced human capital management systems, we have institutionalized this cost discipline to ensure our profitability is both sustainable and scalable. Looking ahead, our strategy is centered on a few core pillars. We are building deeper vertical expertise and executing key account plans on our enterprise accounts to maximized value for these high-potential clients. We are refocusing our SMB efforts on boutique accounts, clients with franchise business models so that our solution frameworks are highly repeatable. We are investing in high-tier talents who can level up our capabilities in creator strategy, media and commerce, which our enterprise clients are demanding. At the same time, we are extremely active in M&A discussions searching for companies that can build these capabilities faster and accelerate the growth of our enterprise client portfolio. It's important to note that given our low operating margin, an acquisition could be instantly accretive. Operationally, we are preparing to launch a proprietary technology platform which will enable our account managers to manage integrated creator campaigns at enterprise scale efficiently and effectively. This platform is infused with AI and tightly integrated with our unified operating model. In summary, we've reset the company's economic model in 2025 by creating operating leverage beyond cost reduction establishing durable breakeven economics where future revenue growth is expected to translate directly into profitability. This work has positioned the company for long-term success with a more focused client portfolio, a stronger leadership team, an engaging culture, significant client opportunity and incredible possibilities with IZEA's technology platform. With all of this momentum and opportunity ahead of us I am optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders, shareholders, clients and employees alike. With that, I'll turn the call over to Peter Biere, our Chief Financial Officer, for a closer look at the financial results.

Thank you, Patrick, and good afternoon, everyone. This afternoon, we reported our fourth quarter and full year 2025 results and filed our Form 10-K with the SEC. I'll focus today on the key drivers behind our operating performance add more color regarding our strategic repositioning and the resulting profitability improvement and provide an update on our cash position. All of today's comments exclude Hoozu, which we divested in December 2024. As Patrick described, we repositioned our business in early 2025 to prioritize larger recurring core enterprise accounts and reduce our exposure to lower margin project-based or high turnover client relationships. We refer to these collectively as noncore customers. Additionally, we reduced our annual cash operating costs in 2025 by over 40% and or $10 million, while increasing our investment in enterprise account management personnel where we're seeing growth. Overall, results show that we're on track posting positive cash from operations and breakeven net income for the year, both of which show significant improvement over 2024 results. Our strategic reset had a significant impact on 2025 contract bookings which declined by $10.3 million or 27% year-over-year. This decline reflects our intentional reduction in noncore customer activity, which accounted for the majority of the decline rather than weakness in our enterprise business. We ended 2025 with a $10.1 million contract backlog. Based on current pipeline opportunities and first quarter progress to date, we believe our bookings reset is largely behind us and expect to return to year-over-year bookings growth in early 2026. Given that revenue recognition for our managed services typically trails contract bookings by roughly seven months. 2025 revenue still reflected the runoff from noncore contracts booked prior to our repositioning, the majority of which concluded by the end of the second quarter of 2025. So we expect year-over-year revenue comparisons in the first half of 2026 to be lower, reflecting the absence of this noncore activity. We anticipate a return to year-over-year revenue growth in the second half of 2026 as revenue increasingly reflects our current mix of core enterprise engagements. Turning to results for the fourth quarter. Managed services revenue was $6 million, down from $9.8 million in the prior year quarter, reflecting our deliberate shift away from noncore accounts toward enterprise relationships. About half of the year-over-year decline relates to the expected runoff from noncore customers as a part of the strategic client rationalization, while the remainder primarily reflects the timing of bookings from several enterprise accounts and a more cautious holiday marketing environment. Operating expenses declined meaningfully to $4.4 million, down 40% year-over-year, driven primarily by lower sales and marketing spend and reduced employee and contractor costs, which reflect our structural cost reset. For the quarter, we reported a net loss of $1.2 million or $0.07 per share on 17.1 million shares outstanding compared to a net loss of $4.6 million in the prior year period or $0.27 per share on 17 million shares. This significant year-over-year improvement reflects the impact of our operating reset, improved cost structure and a higher quality customer mix. Adjusted EBITDA for the fourth quarter was negative $0.9 million compared to negative $2 million in the prior year quarter. As a reminder, in late 2024, we refined our non-GAAP definition of adjusted EBITDA to exclude nonoperating items, primarily interest income from our investment portfolio. And we restated the prior year amounts for comparability. A reconciliation of adjusted EBITDA to net income is included in the earnings release. We earned $0.4 million of interest income during the quarter primarily from cash balances held in a money market account following the maturity of all investment securities. And finally, we continue to operate with no debt on our balance sheet. In September 2024, we announced a commitment to repurchase up to $10 million of our common stock in the open market, subject to customary restrictions, which include regulatory limits on daily trading volume and company-imposed share price thresholds. Through December 31, 2025, cumulative repurchases totaled 561,950 shares for an aggregate investment of $1.4 million under the program. No shares were repurchased during the fourth quarter. We remain committed to a disciplined capital allocation approach, and we'll continue to evaluate repurchase activity in light of market conditions liquidity needs and alternative uses of capital. As of December 31, 2025, we had $50.9 million in cash and cash equivalents, a decrease of just $0.2 million from the beginning of the year. This compares favorably to the $13.1 million reduction in cash during 2024 and reflects improved operating performance and disciplined cost management. With $50.9 million in cash and investments at year-end, we believe we're well positioned to support organic business growth initiatives and pursue our strategic acquisition plans. Thank you for your time today. At this time, we invite our investors and analysts to share their questions so that we may provide clarity and insights.

[Operator Instructions] And our first question today comes from Jon Hickman with Ladenburg Thalmann.

So could you give us a little clarity on gross margins going forward? Kind of high [ accordingly ].

Yes, we don't give specific guidance, but I think we're on the right track. There's been an increase relative to the last couple of years. But more importantly, we really have our eye on net revenue. The real goal is to focus on growing the net revenue and keeping our cost structure aligned with that?

Okay. And then kind of in line with Peter's comments about the first half of the year being lower than last year, but the second half being higher. In total, do you expect year-over-year growth in revenues?

Yes, we're aiming for growth. I mean, this is a growth market. And so we're absolutely aiming for growth.

Okay. And then one last question. You mentioned several times in acquisition strategy. So do you see like lots of targets out there? Is it lots of sellers? Or are things tight. Can you maybe elaborate on that?

Sure. It's a very high priority. I'm spending a lot of time speaking with M&A targets. We're very active in the marketplace. As some of you know, I mean, this is my background. I've come from a space where I successfully was able to close quite a few deals in a short period of time. We're both tapping into my personal network of potential acquisition targets as well as working with quite a few investment bankers that specialize in this space. We're seeing good deal flow, and we're actively engaged at different stages of M&A.

So to follow up. In the past, there's been kind of a big difference between private market values and public market values. Is that -- valuations an issue for you or [indiscernible].

I agree. There definitely is a difference in valuation. It's not an issue for us. I think it points out an opportunity for investors in terms of investing in IZEA, because the equity value is not exactly what we're seeing in the private markets for IZEA. However, from our perspective, I mean, we have enough cash to be able to buy at a fair market value. We're going to be disciplined. We're doing our homework and using various valuation methodologies and so forth and making sure that any investment that we make, we have certain, we're modeling out what our return on capital would be, and we have certain hurdle rates that we're striving to achieve.

So are you interested in customers or technology, or both?

Well, more customers, I mean, we've got ample technology. As you know, we shifted our strategy to be services first supported by technology. And so our acquisition strategy really reinforces some of the things we've been outlining throughout the year. Number one, the verticalization and enterprise accounts. So if there's an ability to add to our depth of certain verticals to add enterprise grade clients with recurring revenue and strong relationships. That's one area. The second area is capabilities. As I've also stated throughout the year, we're trying to increase our service offerings that we're able to sell to our enterprise client base. Having an integrated service offering is certainly part of our future.

And your next question comes from Kris Tuttle with Blue Caterpillar.

I think one of the things that would be really helpful right now is you guys are obviously having a lot of terrific discussions with your clients and potential clients the last couple of months. I love an update on how are they thinking about IZEA in terms of their overall context? And not strictly speaking, competition, but going to creators directly or different strategies they might employ. I just love an update on how they're seeing you positioned relative to all the other things they have to consider and just some of your observations around that for this year.

We -- there's a massive shift happening in marketing right now that we're catching the tailwind on. And that is as television audiences have been declining. In social media audiences, have been increasing. We're at what I've coined the social singularity, meaning that the audiences have flipped -- so social audiences are now larger than television audiences. And a lot of marketers are still structured to service the old system, the old way, which was it was television first. And they're struggling to be social first -- and the way to reach social audiences is through creators. Creators are essentially modern-day channels. And that's where IZEA comes in. I mean we're -- we provide those kinds of solutions to marketers. We help connect the brands with the creators. But we look at it more as a marketing partnership where we help them select and curate the right combination of creators. We cut the deals with them and that helps them reach the right audiences and connect with their consumers.

Okay. All right. I got it a little bit. And then one last point on just the -- when I looked at the enterprise value today, relative to the cash, it was quite low. And I'm wondering, like is that where you look in terms of deciding when to deploy some of that buyback, given the fact that you have M&A opportunities, but it wouldn't take a lot for the enterprise value to get close to 0 again.

Yes. As in the past, we've been proponents of buybacks. Again, we believe that there's a lot of upside to this, and that's why we've done it in the past and continue to have a philosophy of doing buybacks at the right price. We're not coming out and staying in the specific price. But as I said before, I mean, we're looking at the market holistically and where we -- as John pointed out, there is a gap between what the private markets are valuing companies like ours and what the public markets are -- and so I think this is a great opportunity for investors. And with our capital, that's certainly one of our choices is to be an investor. And in the past, we've bought back. And if it continues to be that way, we'll continue to buyback.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. So I'll hand the floor back to John Francis for closing remarks. Thank you.

Thank you, Diego, and thank you, everyone, for joining us this afternoon. As a reminder, a replay of today's call will be available shortly on our website, izea.com/investors. We appreciate your continued interest and support, and hope you'll join us for our next conference call to discuss our first quarter 2026 results. Thank you so much.

Thank you, and this concludes today's call. All participants may disconnect.

Greetings, and welcome to the ICS Third Quarter 2025 Earnings Conference Call. At this time, all participants are in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference call, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sandra Carbone, SVP General Counsel at IZEA Worldwide, Inc. Please go ahead.

Good afternoon, everyone, and welcome to IZEA Worldwide, Inc.'s earnings call covering the 2025. I'm Sandra Carbone, SVP, General Counsel at IZEA Worldwide, Inc., and joining me on the call are IZEA Worldwide, Inc.'s Chief Executive Officer, Patrick James Venetucci, and IZEA Worldwide, Inc.'s Chief Financial Officer, Peter J. Biere. Thank you for being with us today. Earlier this afternoon, the company issued a press release detailing IZEA Worldwide, Inc.'s performance during Q3 2025. If you would like to review those details, please visit 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 IZEA Worldwide, Inc.'s financial results. And be advised that some of the statements that we make today regarding our business, operations, and financial performance may be considered forward-looking, and such statements involve a number of risks and uncertainties that could cause actual results to differ materially. We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors. Our commentary today will also include the non-GAAP financial measures of adjusted EBITDA and revenues excluding divested operations. Reconciliations between GAAP and non-GAAP metrics for our reported results can also be found in our earnings release issued earlier today and in our publicly available filings. And with that, I would now like to introduce and turn the call over to IZEA Worldwide, Inc.'s Chief Executive Officer, Patrick James Venetucci.

Thank you, Sandra, and good afternoon, everyone. In Q2, I proudly announced that for the first time in the history of this company, we were profitable. This quarter, I'm pleased to announce that Q3 marks our third consecutive quarter of financial improvement. While total revenue for the quarter decreased 8% to $8.1 million as a result of our choosing to shed unprofitable, nonrecurring project work and some softness in government and retail accounts, the underlying health of our business is strong. Managed service revenue, excluding Hozoo, increased 5%. Total operating expenses decreased by 67%. Net income totaled $100,000 compared to a net loss of $8.8 million during Q3 last year. And cash increased by $800,000 to $51.4 million. Year to date, our managed services revenue is up 14% and net income totaled $1.2 million. Three consecutive quarters of continuous improvement underscore that our strategic direction and transformation towards sustainable, profitable growth is firmly taking hold. Since I stepped in as CEO, our objective has been clear: fortify, simplify, and focus. During the first half of the year, we fortified our business in America, simplified many aspects of our go-to-market, and focused on our managed services. We segmented our managed service accounts focusing on enterprise customers with recurring revenue and high growth potential instead of the long tail of transactional customers with small projects and high churn rates. As we've strengthened and expanded our relationships with enterprise clients, we've been rewarded with more business. Our enterprise accounts are now growing at double-digit rates, that are well above the industry average and a few at triple-digit rates. Our sales and marketing efforts are attracting new clients such as Amazon, General Motors, and Owens Corning. Plus, our pipeline reached a new high for the year with invitations to larger pitches growing. Lastly, we produced new work for Kellogg's, Clorox, Nestle, Danone, and many more clients. To bolster our enterprise growth strategy and momentum, we hired Steve Bunnell, EVP Account Management, who joined us from Publicis Group where he has a track record of rapidly growing large enterprise accounts such as McDonald's and Samsung. We also hired John Francis, VP Marketing and Revenue Operations, who joined our team from private equity-backed marketing services firms where he'd built effective B2B growth programs. Although we have been highly focused on services this year, we continue to invest in our technology platform. Earlier this year, we began simplifying our tech product offerings by focusing on fewer products, consolidating features, and delivering a more intuitive customer experience. In Q3, we infused our technology platform with AI-powered features that provide clients with strategic insights and campaign performance. We will be announcing more about our technology development soon. With all of this momentum and opportunity ahead of us, I am optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders—shareholders, clients, and employees alike. With that, I'll turn the call over to Peter J. Biere, our Chief Financial Officer, for a closer look at the financial results.

Thank you, Patrick, and good afternoon, everyone. This afternoon, we released our results for the third quarter and filed our quarterly report on Form 10-Q with the Securities and Exchange Commission. Today, I'll review our operating results for the quarter ended September 30, 2025, with year-over-year and year-to-date comparisons. Highlight key balance sheet items, and provide an update on our stock repurchase activity. Beginning in early 2025, we implemented a new account management model focusing our resources toward larger, more profitable recurring accounts while scaling back selling and delivery efforts previously devoted to lower-value project-based accounts with limited repeat business. Strategic realignment reduced current year contract bookings but has materially improved profitability and strengthened our foundation for sustainable growth. Managed services bookings represent a total of sales orders received during the period, net of cancellations and refunds. They are an indicator of overall demand but are not necessarily predictive of quarterly revenue as timing varies with contract size, complexity, and customer arrangements. As we continue to emphasize enterprise accounts, individual bookings are expected to become higher in value but less consistent in timing, which can impact comparability. For the nine months ended September 30, 2025, managed services bookings, excluding Hozoo, declined 26% to $18.2 million compared to the prior year period and contract backlog decreased from $15.5 million at the beginning of the year to $7.1 million at quarter end. The decline primarily reflects the company's strategic focus on higher quality recurring accounts, along with more cautious marketing spend among certain enterprise and agency clients amid broader economic uncertainty including tariff impacts. Revenue from managed services excluding Hozoo increased 14% for the nine months ended September 30, 2025, compared to the prior year period, while overall growth slowed 5% in the current quarter. Growth in both comparative periods was driven by expansion among enterprise customers, partly offset by a reduction in smaller nonstrategic accounts that we intentionally deemphasized. Our total cost of revenue, including both external creative and internal labor costs, totaled $4.2 million or 51% of revenue in 2025, compared to $5.2 million or 59% of revenue in the same quarter of the prior year. Excluding Hozoo, the cost of revenue declined approximately 5% year over year, reflecting improved margin mix in the current period. Operating expenses other than the cost of revenue totaled $4.3 million for the third quarter, down $8.7 million or 67% compared to $13 million in the prior year quarter. Sales and marketing expenses were $1.1 million, down 62% from the prior year period, reflecting workforce reductions and a temporary pause in certain marketing initiatives. General and administrative expenses declined 49% to $3 million, primarily due to lower employee-related costs, reduced use of external contractors, and decreased spending on professional services, software licenses, and data storage. The prior year period also included a $4 million noncash charge related to goodwill impairment from an acquisition we made in 2019. We achieved profitability for the third quarter, generating net income of $100,000 or $0.01 per share on 18.7 million shares, compared to a net loss of $8.8 million or negative $0.52 per share on 17 million shares in 2024. This marks only the second quarter in the company's history in which profitability was achieved through operating performance, and the third consecutive quarter of financial improvement, underscoring that our transformation continues to be underway. Adjusted EBITDA for the third quarter 2025 was $400,000 compared to negative $3.4 million in the prior year quarter. As a reminder, we revised our non-GAAP definition of adjusted EBITDA in late 2024, excluding non-operating items such as interest income from our investment portfolio and restated prior year's results for comparability. A reconciliation of adjusted EBITDA to net income is available at the bottom of our earnings release. As of September 30, 2025, we had $51.4 million in cash and investments, an increase of $300,000 from the beginning of the year. This modest increase contrasts with an $8.8 million reduction in cash in the prior year period and reflects the benefits of improved operating performance and disciplined cost management. Operating cash flow is positive for the year-to-date period, inclusive of normal working capital timing variances. In September 2024, we announced a commitment to repurchase up to $10 million of our common stock in the open market, subject to customary restrictions, including regulatory limits on daily trading volume and company-imposed share price thresholds. Through September 30, 2025, cumulative repurchases totaled 561,950 shares for an aggregate investment of $1.4 million under the program. No purchases were made during the third quarter. We also earned $500,000 of interest in our investments during the recent quarter, and finally, we continue to operate with no debt on our balance sheet. With cash on hand and liquidity, we remain well-positioned to support organic business growth initiatives and pursue strategic acquisition opportunities. Thank you for your time today. And at this time, we invite our investors and analysts to share their questions so that we can provide clarity and insight.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while we poll for questions. Ladies and gentlemen, if you wish to ask a question, please press star. Reminder, ladies and gentlemen, if you wish to ask a question, please press star. As there are no questions in the queue, I now hand the conference over to IZEA Worldwide, Inc.'s SVP and General Counsel, Sandra Carbone, for closing comments.

Thanks so much, Ryan. And thank you, everyone, for joining us this afternoon. As a reminder, a replay of today's call will be available shortly on our website izea.com/investors. We appreciate your continued interest and support and hope you'll join us for our next conference call to discuss our fourth quarter 2025 results.

Thank you. Ladies and gentlemen, the conference of IZEA Worldwide, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.