Izea Worldwide (NASDAQ:IZEA) expects fourth-quarter revenue to grow from a year earlier after a surge in managed services bookings, even as lower spending across parts of its customer base contributed to a third-quarter revenue decline and a net loss.
The creator marketing company forecast fourth-quarter revenue of $7.5 million to $8.1 million, an increase of approximately 24% to 34% from a year earlier. Chief Executive Officer Patrick Venetucci said the company was making a one-time exception to its usual practice of not issuing financial guidance, citing improved visibility from bookings and demand from large enterprise clients.
Large accounts grow as broader revenue falls
Venetucci attributed the revenue decline to uneven spending among enterprise clients, including delays in marketing investments, as well as IZEA’s deliberate shift away from smaller, non-core customers. Chief Financial Officer Peter Biere said lower activity across other enterprise relationships and the remaining effect of that shift outweighed gains from the company’s largest customers and contributions from new clients.
Revenue from IZEA’s three largest customers rose 21% year over year, Biere said. Venetucci said the accounts generated their strongest combined quarterly revenue in the company’s history, with each growing from the prior-year quarter.
The company won new business from Disney’s ABC, HBO Max, Hulu and ASUS, Venetucci said. He added that improving retention among smaller clients, expanding existing accounts and converting new business opportunities remain priorities.
Average revenue recognition for managed services bookings takes approximately seven months, Biere said. In response to an analyst’s question, Venetucci said the timing varies: Some holiday campaigns booked in the third quarter have shorter durations, while larger enterprise bookings made late in the year can relate to the following year.
Margins narrow despite lower expenses
Third-quarter gross margin fell to 37% from 49% a year earlier. Biere attributed the decline to a greater share of revenue coming from a large customer with comparatively lower margins, as well as higher internal delivery costs. He said internal labor costs are less variable because the company maintains staffing to support anticipated growth.
Operating expenses, excluding cost of revenue, fell 26% to $3.1 million, primarily because of lower personnel-related costs. The company reported a net loss of $0.4 million, compared with net income of $0.1 million a year earlier. Adjusted EBITDA was a loss of $0.2 million, compared with positive adjusted EBITDA of $0.4 million in the prior-year period.
Biere said lower revenue and gross margins drove the decline in profitability, partly offset by reduced operating costs. He said current expense levels could support higher revenue without a corresponding increase in operating expenses.
Technology and acquisition plans
IZEA ended September with $46.4 million in cash and cash equivalents and no long-term debt. Cash declined $4.4 million from the beginning of the year, including approximately $2.7 million used in operations, as well as spending on technology and share repurchases.
Under a $10 million repurchase program authorized in fall 2024, IZEA had bought approximately 909,000 shares for $2.6 million as of Sept. 30, Biere said. That included approximately 386,000 shares for $1.3 million since its current trading plan was adopted in May.
Venetucci said the company continues to pursue acquisitions to expand its capabilities, deepen industry expertise and increase scale. He said IZEA had become more patient in pursuing larger deals because earlier, smaller acquisitions did not make a sustainable impact. Some current opportunities could be transformational, he said, while emphasizing discipline on valuation, strategic fit, integration readiness and financial returns.
On technology, Venetucci said all new campaigns are managed through ZED, IZEA’s proprietary AI-powered creator marketing operations platform. The company is continuing to develop tools for creator intelligence, brand safety, campaign management and workflow automation, with a longer-term goal of monetizing the investment.
About Izea Worldwide (NASDAQ:IZEA)
IZEA Worldwide, Inc. (NASDAQ: IZEA) is a marketing technology company that operates in the creator economy. The company helps brands and agencies develop and execute influencer marketing campaigns by connecting them with creators, including social media influencers, bloggers, and other digital content producers. IZEA provides both technology-enabled and managed services. Its offerings support creator discovery, campaign planning, content development, workflow management, payments, and performance measurement.
