Q3 2024 IZEA Worldwide Inc Earnings Call
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Greetings and welcome to ICL worldwide, Inc. Third quarter 'twenty 'twenty four earnings conference call. At this time, all participants are in a listen only mode.
Speaker Change: Question and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Mr. Matt <unk> Assistant Vice President of marketing. Thank you.
Speaker Change: <unk> you may begin.
Good afternoon, everyone and welcome to ideas earnings call covering the third quarter of 2024.
Speaker Change: I'm not grey, a VP of marketing at ICR and joining me on the call right Zia Chief Financial Officer, Peter Barry and I see it Chief Executive Officer, Patrick Vineet Tucci, thanks for being with us today.
Speaker Change: Earlier this afternoon the company issued a press release detailing Ics performance during Q3 2024.
If you'd like to review those details all of our Investor information can be found online on our Investor Relations website at Zia dotcom forward slash investors.
Speaker Change: Before we begin please take note of the Safe Harbor paragraph included in today's press release, covering Ics 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.
Speaker Change: We encourage you to consider the disclosures contained in our SEC filings for a detailed discussion of these factors our.
Speaker Change: 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 also be found in our earnings release issued earlier today and in our publicly available filings and with that I would like to now introduce and turn the call over to ideas Chief Financial Officer, Peter Barry.
Speaker Change: Peter.
Peter Barry: Thank you, Matt and good afternoon, everyone.
Peter Barry: I will review operating results for the quarter ended September 32024, compared to the prior year's quarter and discuss selected balance sheet highlights.
Total revenue for the third quarter of 2024 was approximately $8 8 million or 12% above the prior year quarter.
Peter Barry: Excluding revenue attributable to the large nonrecurring customer with whom we parted ways in 2023.
Revenues grew a healthy 27% from the prior year quarter.
Peter Barry: Demand for managed services grew 11% to seven 9 million in the third quarter of 2024.
Peter Barry: Compared to $7 1 million in the prior year's third quarter.
Peter Barry: This quarter's demand was slightly lower than experienced in the first half of 2024.
Peter Barry: We believe this decline is due to timing and some reduction in marketing budgets, particularly in emerging markets.
Peter Barry: It's important to note that I see is contract bookings take an average of seven and a half months to complete the revenue cycle.
Peter Barry: Any contracts or faster and some are longer.
Peter Barry: Our managed services backlog, a total of unrecognized revenue for contracts that are underway and recent bookings that we haven't started to invoice totaled $14 6 million on September 30 of 2024.
Peter Barry: This is a decrease of $1 million versus the second quarter of 2024.
Peter Barry: An increase of $3 4 million year to date.
Peter Barry: We will recognize much of this revenue with the following two to three quarters.
Peter Barry: Our managed services revenue totaled $8 6 million during the third quarter of 2024, which was point 8 million or 10% higher than the third quarter of 2023.
Peter Barry: Removing approximately <unk> 9 million of revenue from our nonrecurring customer in the prior year quarter.
Peter Barry: Managed services revenue increased by $1 7 million or 25% from the same period in 2023 coming in part from Hulu and by strong demand in the first half of 2024.
Peter Barry: SaaS services revenue totaled 206000 in the third quarter of 2024 compared to 57000 in the prior year quarter.
Peter Barry: Most of these customers are actively using <unk> AI tools.
Peter Barry: Our total cost of revenue was $5 2 million or 59% of revenue in the third quarter of 2024 compared to $4 7 million or 59, 3% of revenue in the prior year quarter.
Peter Barry: The current percentage cost decrease reflects improved margins within our existing customer base.
Expenses other than the cost of revenue totaled $13 million for the third quarter of 2024 up 122% from $5 9 million in the prior year quarter.
Peter Barry: Sales and marketing cost totaled $2 9 million during the third quarter up 7% to the prior year third quarter, mainly attributable to increased compensation costs, partly offset by reduced spending on demand generation activities.
Peter Barry: General and administrative costs totaled $5 8 million during the third quarter up 93% from the prior year quarter, mainly due to accrued severance and noncash compensation expenses from the departure of two executives.
Peter Barry: The company also incurred increased costs from professional fees during the quarter.
Peter Barry: We also determined that the goodwill related to our 2019 acquisition of tap influence was impaired leading to a $4 million.
Cash charge in the current quarter.
Peter Barry: Our net loss in the current quarter totaled $8 8 million or negative <unk> 52 per share or 17 million shares compared to a net loss of 2 million or negative <unk> 13 per share or $15 5 million shares for the third quarter of 2023.
Peter Barry: Adjusted EBITDA was negative $2 8 million for the third quarter of 2024 compared to a negative $1 5 million for the prior year quarter.
Peter Barry: As of September 32024, we had $54 4 million in cash and investments a decrease of $2 1 million during the quarter, primarily due to a negative EBITDA and funding higher levels of working capital.
Peter Barry: We previously announced our commitment to buy $10 million of our stock in the open market subject to some restrictions.
Peter Barry: On September 30th 2024, we adopted a safe Harbor <unk> five one plan to purchase shares without restrictions related to our periodic insider restricted window, which became active on November 1st following the required quiet period.
Peter Barry: As of November 11, 2024, we have purchased 51503 shares at an average share price of $2.74.
Peter Barry: Under our program for an aggregate investment of $142273.
Peter Barry: We earned $1 6 million in interest on our investments during the current quarter.
Lastly, we did not have any debt on our balance sheet.
Peter Barry: Okay.
Peter Barry: With cash on hand, and liquidity from our investment portfolio as required we're in a solid position to execute on our organic business growth and acquisition opportunities that lie ahead.
Speaker Change: With that I'll turn the call over to Patrick <unk>, Our Chief Executive Officer.
Speaker Change: Thank you Peter and good afternoon, everyone I'm, Patrick many to Chi the new CEO of ICF. Thank you for your time and attention today.
Speaker Change: On September six we made several important changes both team management and the board on the management side, Ted Murphy, founder and CEO and range SRAM C. O O departed the company I stepped into the CEO role leveraging my 30, plus years of industry experience in six years and a Z as board.
Speaker Change: On the board side, we made changes to the size composition and committee structure of the board, we separated the chairman and CEO roles naming Lindsay Gardner as chairman of the board.
Speaker Change: We added two new board members Antonio Bone, Christiana and Rodrigo Boscolo from G. P investments, we created a strategy and capital allocation Committee chaired by John Kerin, and importantly, we increased our share buyback commitment from $5 million to $10 million is the demonstration of the board.
Speaker Change: <unk> believes that a Z as shares are undervalued as well as confidence in the company's ability to create more value.
Speaker Change: During my first 60 days and went out on a listening tour held strategic workshops and hired our first chief talent officer.
My listening tour encompass meetings with employees clients and shareholders with a herd with newfound excitement and optimism about a Z as feature our talent base as smart charismatic and engaged we have an extensive client list that includes fortune 500 brands for which we have opportunities to do more.
Speaker Change: We have a strong culture of care creativity and innovation, our tech product innovation pipeline is robust, including AI I quickly organized several strategic workshops with their executive leadership team, which led to new ideas for growth and efficiencies Lastly, I hired our first <unk>.
Speaker Change: <unk> talent officer, Cary Griffin, who has over two decades of experience and is charged with professionalizing, our talent programs to enable us to attract and develop the best talent in the industry.
Speaker Change: And our business operations. During Q3, we made notable accomplishments in sales managed services and product development.
Speaker Change: We won new business from Nestle, Danone Coursera and Nitza.
Speaker Change: We produced exciting new work for one of the largest auto manufacturers are vibrant work launching the Barbie movie won numerous awards, including the global Influencer Marketing Awards, The Global Agency Awards and Global Digital Excellence Awards.
We advanced our tech product by launching izzi cutting edge AI assistant for marketers, making creator campaigns is he harnesses a Z as rich dataset and empowers users to make smarter faster and more impactful creative campaign decisions lastly, as recognition of AZ is attractive culture.
Speaker Change: We won several awards for being a great place to work Best Agency workplace.
Speaker Change: Our daily top agencies, Stevie awards, great employers and comparably.
Looking forward, we are focused center go to market model driving topline growth and putting the company on a path to profitability I believe we can do both and accelerate the path to profitability. There are opportunities to simplify fortify and focus we are beginning to identify and shift resources.
Speaker Change: From business segments that are merely growing segments with profitable growth. Our 2025 business plan process is underway I look forward to sharing more about our future strategic direction and initiatives at the next investor meeting.
Speaker Change: In conclusion, a transformational change happened at a Z. During Q3, we are moving fast, we're making progress the board and management are optimistic about the future of this company and our ability to deliver additional value to all of our stakeholders shareholders clients and employees.
Mike.
Speaker Change: Thank you for your time today, and we'll now open the call for Q&A from the analyst community.
Speaker Change: Thank you.
We will now be conducting a question and answer session.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.
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Speaker Change: One moment please poll for questions.
Speaker Change: Once again.
Speaker Change: Minded to all the participants that do my best start in one to ask a question.
Speaker Change: Once again, a reminder to all the participants that do my best thought and one last question.
Speaker Change: As there are no further questions, ladies and gentlemen, we have reached the end of question and answer session I would now like to turn the floor over to Matt Gray for closing comments.
Matt Gray: Thanks, so much for NGL and thank you everyone for joining us. This afternoon. As a reminder, you can find all of ideas Investor Relations information on our Investor Relations website, <unk> Dot com ports slash investors. Thanks, again for joining us and have a nice evening.
Speaker Change: Thank you.
Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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