IZEA Worldwide (IZEA) Q3 2026 Earnings Call Transcript

DATE

Thu, Nov. 12, 2026

CALL PARTICIPANTS

• SVP, Sales and Marketing Operations - John Francis
• Chief Executive Officer - Patrick Venetucci
• Chief Financial Officer - Peter Biere

TAKEAWAYS

• Revenue -- $6.2 million, decreasing 23% year over year due to uneven enterprise spending and an intentional transition away from noncore small-business customers.
• Top Three Accounts -- 21% year-over-year revenue growth, reflecting deeper penetration and increased creator marketing spend within strategic enterprise relationships.
• Managed Services Bookings -- $7 million, increasing 94% year over year and 54% sequentially as existing and new enterprise clients increased investment commitments.
• Q4 Revenue Guidance -- $7.5 million to $8.1 million, representing projected growth of 24% to 34% based on recent contract bookings and campaign schedules.
• Gross Margin -- 37%, compared to 49% in the prior year period, driven by revenue concentration in a lower-margin account and fixed internal labor costs.
• Net Loss -- $0.4 million, or $0.03 per share, compared to net income of $0.1 million last year, primarily resulting from lower revenue and compressed margins.
• Adjusted EBITDA -- Loss of $0.2 million, compared to a profit of $0.4 million in the prior year, partially offset by a 16% reduction in total costs and expenses.
• Cash Position -- $46.4 million, with zero long-term debt as of Sept. 30, 2026, providing liquidity for organic initiatives and potential acquisitions.
• Operating Expenses -- $3.1 million, decreasing 26% year over year due to personnel-related cost reductions and lower incentive compensation.
• Sales and Marketing Expense -- $0.7 million, representing a 33% decline driven by reduced personnel costs and refined go-to-market strategies.
• General and Administrative Expense -- $2.3 million, falling 25% year over year because of lower headcount and reduced overhead.
• Share Repurchases -- 250,583 shares, repurchased for $0.8 million during the third quarter under an ongoing $10 million board authorization.
• Revenue Recognition Lag -- Management reported that Managed Services bookings typically take an average of seven months to be fully recognized as revenue.
• SMB Transition Impact -- The company reported that noncore small and mid-sized business customers contributed $1.2 million in the prior year's third quarter.
• ZED Platform Adoption -- 100% of new campaigns are managed through the proprietary AI-powered operations platform to improve intelligence and brand safety.
• Target Account Engagement -- 27% of target accounts engaged with company marketing materials in Q3, increasing from 10% reported in the first quarter.
• Cost of Revenue -- $3.9 million, decreasing 6% year over year, which was slower than revenue decline due to the less variable nature of internal delivery labor.
• Operating Cash Flow -- $2.7 million in cash used in operations for the first nine months of 2026, reflecting working capital changes and technology investments.

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RISKS

• Venetucci stated, "we continue to experience uneven spending across our enterprise client portfolio, driven by macroeconomic uncertainty, client restructuring and delays in marketing investments," indicating external pressures on client budgets.
• Biere noted that the gross margin decline "reflects greater revenue concentration from a large enterprise customer with comparatively lower margins," highlighting the impact of client mix on profitability.
• Venetucci warned that "growth across the broader enterprise portfolio has been inconsistent," identifying a challenge in scaling beyond the top three strategic accounts.

SUMMARY

IZEA Worldwide, Inc. (NASDAQ:IZEA) reported a strategic shift toward high-value enterprise accounts despite a 23% decline in quarterly revenue. Management stated that the top-line performance reflected the phase-out of $1.2 million in legacy small-business revenue and macroeconomic delays impacting client marketing spend. The company highlighted a 94% year-over-year increase in Managed Services bookings as a indicator of future revenue recovery, supported by a specific revenue outlook for the fourth quarter. IZEA maintains a debt-free balance sheet with $46.4 million in cash, which the company intends to use for technology differentiation and potential acquisitions in the fragmented creator marketing industry.

• The company secured new business from major media and technology brands, including Disney-ABC, HBO Max, Hulu, and ASUS.
• Management indicated that M&A activity is at a historical high, with CEO Venetucci stating, "some of these opportunities have the potential to be transformational."
• High-visibility creator campaigns executed during the quarter included Nestl Vital Proteins at the US Open and Lionsgate’s The Hunger Games: Sunrise on the Reaping.
• The company reorganized its commercial efforts around specific industry verticals to improve go-to-market expertise and target account engagement.
• Management expects that existing expense levels can support higher revenue volumes without significant increases in operating costs.
• CEO Venetucci noted that the company is specifically pursuing larger acquisition targets compared to its historical pattern of smaller, bite-sized deals.

INDUSTRY GLOSSARY

• Managed Services Bookings: Total sales orders received during a specific period, net of any cancellations or refunds.
• ZED: A proprietary AI-powered creator marketing operations platform used for campaign intelligence and execution.
• Creator Economy: The ecosystem of independent content creators, influencers, and the technology tools that enable their monetization.
• SMB: Small and mid-sized businesses.
• Rule 10b5-1: A trading plan that allows company insiders to sell or buy a predetermined number of shares at set times to avoid insider trading allegations.

Full Conference Call Transcript

Operator: Greetings, and welcome to the IZEA Worldwide Third Quarter 2026 Earnings Call. [Operator Instructions] Please note this conference call is being recorded. I would now like to turn the conference over to Mr. John Francis, VP Marketing and Sales Operations. Thank you. You may begin.

John Francis: Good afternoon, everyone, and welcome to IZEA's earnings call covering the third quarter of 2026. I'm John Francis, SVP, 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 Q3 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 measure of adjusted EBITDA. Reconciliations between GAAP and non-GAAP metrics for our reported results can be found in our earnings release issued earlier today 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?

Patrick Venetucci: Thank you, John, and good afternoon, everyone. Our third quarter results reflect continued progress in IZEA's transformation to an enterprise-focused creator marketing company. While our overall revenue performance remains below our expectations, we are seeing encouraging signs that our strategy is working, particularly in the strength of our largest client relationships, the acceleration of contract bookings and the continued improvement in our operating efficiency. Today, I'd like to focus on 4 areas: our financial performance, enterprise client momentum, progress against our strategic priorities and our outlook for the fourth quarter and beyond. Third quarter revenue was $6.2 million, a decrease of 23% compared to the prior year. This decline reflects 2 distinct dynamics.

First, we continue to experience uneven spending across our enterprise client portfolio, driven by macroeconomic uncertainty, client restructuring and delays in marketing investments. Second, we intentionally transitioned away from smaller noncore customers that we had in Q3 2025 to concentrate our resources on larger enterprise relationships where we believe we have greater competitive advantages and long-term growth potential. Importantly, revenue from our top 3 enterprise accounts grew faster than the market quarter-over-quarter, demonstrating the growth potential of our enterprise model. Our objective is to replicate this performance across a broader portfolio of enterprise accounts. The most encouraging financial indicator this quarter was the significant acceleration in contract bookings.

Managed Services bookings increased 94% year-over-year to $7 million, representing 54% sequential growth over the second quarter. This improvement was driven by stronger commitments from existing enterprise clients and a broader group of customers making meaningful investments in creator marketing. At the same time, we maintained our focus on financial discipline. Total costs and expenses declined 16% year-over-year as we continued aligning our organization and resources with our enterprise strategy. We ended the quarter with a strong cash position and no long-term debt, providing substantial financial flexibility to invest in both organic growth and strategic acquisitions. Our largest enterprise relationships continue to validate the strength of IZEA's capabilities and our position as a strategic partner to leading global brands.

During the quarter, our top 3 accounts delivered their strongest combined revenue performance in our history. All 3 accounts grew compared to the prior year quarter, reflecting our ability to deepen client relationships, expand our scope of services and capture a greater share of their creator marketing investments. This is the model we intend to scale, building long-term strategic relationships with enterprise clients, delivering differentiated creator-led solutions and expanding our business within those accounts over time. We also made progress in developing new enterprise relationships. Our sales team won new business from major entertainment and technology leaders, including Disney's ABC, HBO Max, Hulu and ASUS.

For our existing clients, we executed high-profile creator marketing programs, including Nestlé Vital Proteins at the US Open, Lionsgate’s The Hunger Games: Sunrise on the Reaping, and Ravensburger’s Oh My Pigeons! launch. These programs showcase the breadth of our capabilities and our ability to execute sophisticated creator marketing initiatives for leading brands. While our largest accounts are performing well, we recognize that growth across the broader enterprise portfolio has been inconsistent. Improving client retention at the lower end of our portfolio, expanding account penetration and strengthening new business conversion remain critical priorities. Throughout 2026, we have been reshaping IZEA around 3 strategic priorities: enterprise specialization, operational excellence and technology differentiation. First, we continue to sharpen our go-to-market focus.

We have organized our commercial efforts around industry verticals where we believe our expertise, client relationships and capabilities provide meaningful competitive advantages. Our marketing organization is increasingly aligned with these priorities through targeted account-based campaigns. During the quarter, 27% of our target accounts engaged with our website compared to 10% in the first quarter. We are seeing improved engagement with prospective clients, and our focus now is converting that engagement into qualified opportunities and bookings. Second, we are putting in place operational systems to build a more efficient and accountable organization. We have taken deliberate steps to simplify our structure, align talent with our strategic priorities and manage costs.

These actions have reduced our expense base while preserving the capabilities we believe are essential for long-term growth. Despite significant organizational change, employee engagement remains strong at more than 3x average company engagement, which is important as we continue executing our transformation. Third, we are investing in technology as a competitive differentiator. Following the launch of ZED, our proprietary AI-powered creator marketing operations platform, 100% of new campaigns are managed through ZED. We continue developing ZED's capabilities in creator intelligence, brand safety, campaign management and workflow automation. Our longer-term vision is to leverage proprietary technology and AI to deliver greater value to clients, improving operating efficiency and monetize this investment. Turning to the fourth quarter.

We entered the period with strong momentum and confidence in our ability to deliver revenue growth. Following a significant increase in third quarter bookings, we are providing a fourth quarter revenue outlook to offer investors greater visibility into our revenue conversion. While we typically do not issue financial guidance, we are making a onetime exception to share these insights. The significant increase in third quarter bookings provides improved visibility into upcoming revenue and continued demand from our largest enterprise clients supports our outlook. We expect fourth quarter revenue to increase meaningfully on both a sequential and a year-over-year basis.

Although this improvement will not fully offset the revenue shortfall experienced earlier in the year, we believe it represents an important step towards restoring consistent growth. Our immediate priorities are clear: convert our enterprise opportunities, expand our largest accounts, grow our new business pipeline and maintain operating discipline. Finally, I want to address our approach to capital allocation and strategic growth. IZEA's balance sheet remains one of our most important strategic assets. With $46.4 million in cash and no long-term debt, we have the financial resources to pursue opportunities that can materially accelerate our transformation.

We continue to pursue strategic acquisitions that can expand our capabilities, diversify our revenue streams, leverage our technology offering and increase our scale in the creator economy. The creator marketing industry remains highly fragmented, creating opportunities to make strategic acquisitions that create a more comprehensive and differentiated platform with new combinations of capabilities. We remain disciplined in our approach, prioritizing opportunities that offer strong strategic alignment, attractive economics and a clear path to long-term shareholder value creation. In closing, while 2026 has been a challenging year, we are encouraged by the progress we made during the third quarter. Our largest enterprise clients are growing, contract bookings have accelerated significantly.

Our cost structure is improving and our technology platform continues to advance. We recognize that we have more work to do to deliver consistent growth across the entire business, but we believe the foundation we are building is increasingly aligned with the opportunities ahead. Our focus remains on translating this progress into sustainable revenue growth, improved profitability and long-term shareholder value. Thank you for your continued support. With that, I'll turn the call over to Peter Biere, our Chief Financial Officer, for a closer look at the financial results.

Peter Biere: Thank you, Patrick, and good afternoon, everyone. Earlier today, we reported our third quarter of 2026 results and filed our Form 10-Q with the SEC. I'll focus my remarks on the factors affecting our quarterly results, review our financial position and provide our outlook for the fourth quarter. Revenue was $6.2 million, down 23% from the prior year quarter. Enterprise customer performance was mixed. Revenue from our 3 largest customers grew 21% year-over-year, and we saw contributions from new enterprise customers. However, lower activity across other enterprise relationships and the remaining year-over-year impact of our transition away from noncore SMB business outweighed gains.

Managed Services bookings during the quarter totaled $7 million, up 94% from the prior year quarter, which supports revenue growth in the coming quarters. Bookings reflected stronger commitments across a broader group of enterprise customers, including both existing and new relationships. As a reminder, it takes an average of approximately 7 months to fully recognize revenue from Managed Services bookings. Gross margin for the quarter was 37% compared to 49% in the prior year period. The decline reflects greater revenue concentration from a large enterprise customer with comparatively lower margins as well as higher internal delivery costs. Unlike direct campaign costs, internal labor costs are less variable as we maintain the staffing needed to support anticipated revenue growth.

Operating expenses, excluding the cost of revenue, declined 26% year-over-year to $3.1 million. The decrease primarily reflects lower personnel-related costs following the reductions we've made over the past year. We believe our current expense levels can support higher revenue without a corresponding increase in operating expenses. For the quarter, we reported a net loss of $0.4 million compared to net income of $0.1 million in the prior year period. Adjusted EBITDA was a loss of $0.2 million compared to positive adjusted EBITDA of $0.4 million last year. The decline in profitability primarily reflects lower revenue and gross margins, partially offset by our reduced operating costs.

Looking ahead to the fourth quarter, as Patrick mentioned, we expect revenue to be between $7.5 million and $8.1 million, representing year-over-year growth of approximately 24% to 34%. Turning to our financial position. As of September 30, 2026, we had $46.4 million in cash and cash equivalents, a decrease of $4.4 million from the beginning of the year. The decrease reflects approximately $2.7 million in cash used in operations, including working capital changes as well as investments in our technology platform and share repurchases. We remain well capitalized with no long-term debt on our balance sheet. Finally, recall that our Board of Directors authorized a $10 million share repurchase program in the fall of 2024.

As of September 30, 2026, we have repurchased approximately 909,000 shares, investing $2.6 million primarily through our Rule 10b5-1 trading plans, including approximately 386,000 shares for $1.3 million since our current plan was adopted this past May. We believe our strong balance sheet positions us well to support organic growth initiatives and to pursue strategic acquisition opportunities. Thank you for your time today. We'll now open the call for questions.

Operator: [Operator Instructions] And the first question will come from Jeffrey Bronchick with Cove Street Capital.

Jeffrey Bronchick: There was a comment that, 'you book a Managed Services contract and then it's 5 to 7 months before it hits revenue.' And so when I see Managed Services bookings totaled $7 million, up 94% in this quarter, and then you're looking at fourth quarter revenue up 25%. Is there -- are those 2 different dynamics that are happening? The Managed Services that was booked this quarter is going to hit next year and Q4 revenue is the result of things that were signed 2 quarters ago?

Patrick Venetucci: Jeff, it's Patrick. Yes. I mean, obviously, there is a mix of booking duration, if you will. So -- and fourth quarters and especially towards the end of the year, some seasonality begins to happen. So obviously, holiday is a big time for marketers, and they begin working on those campaigns in Q3. So the duration of some of those bookings tend to be shorter. On the other hand, in Q4 with some of our longer-term bigger enterprise customers, we'll have bookings in the -- that are really about 2027 that happen at the end of the year and have longer duration.

So depending on the time of year that bookings hit that average duration -- that average duration can be different. But in general, across the year, it's 7 months.

Jeffrey Bronchick: Got it. But -- so if I sum what you're saying, so Q4 is usually big, obviously, as marketers' attention. So bookings in the Q3 tend to hit earlier than a Q1 booking for 'sometime over the year.' would that be a fair explanation of what you're saying in your press release?

Patrick Venetucci: Correct.

Jeffrey Bronchick: Okay. Got it. And second question would be, so what -- you came in, you saw, you fixed running breakeven and obviously, looking at acquisition targets and things to be more valuable to your clients. What would you say you've learned over the course of the year in that process as far as, like, what's available, what's affordable, the value of something big versus little bite-sized things? Or maybe any wisdom that you can share with us?

Patrick Venetucci: Yes. No, great question. I mean, we've learned to go bigger, right? As everyone has seen years ago, we did smaller deals, which really didn't make a sustainable impact. So that's part of the reason we've been more patient in pursuing the larger deals. As I've been saying all year, we have been putting a lot of energy against pursuing acquisitions, and it's been strategic. As I have said before, we've been focused on 3 things. So looking for expanding our capabilities, deepening our vertical expertise and increasing our scale, especially that last part. We believe that scale is important to stay competitive and to create value for all the stakeholders.

Our M&A activity is at an all-time high for IZEA, both in the number and the size of opportunities that we've been pursuing. And some of these opportunities have the potential to be transformational. So we are aiming high. We remain disciplined on strategic fit, valuation, integration readiness and financial returns. We are committed to executing the right transaction at the right value.

Operator: [Operator Instructions] This will now conclude our question-and-answer session. I would like to turn the floor back over to management, Mr. John Francis. Please go ahead for closing remarks.

John Francis: Thank you so much, Chuck, 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 the fourth quarter and full year 2026 results. Thank you.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines, and have a wonderful day.

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