Izea Worlwide: Questions to Patrick Ventucci | Value Bridge
Archieve - Everything Patrick Ventucci Said
Business Summary
IZEA is a marketing technology company operating in three business lines: Marketplace, SaaS, and managed services. The firm enables brands to engage creators and influencers for campaigns, ambassadorships, and content generation. Its business model combines recurring SaaS revenue with campaign-driven managed services, supported by its proprietary IZEAx platform and new product initiatives such as Shake and MetaMod for Web3. The company has historically maintained about 130 employees, with cost structure reductions in 2025 to improve profitability. Headcount is about 15% lower than its 2016 peak, reflecting a focus on generating higher revenue per employee.
IZEA holds substantial liquidity, including about $72 million in cash as of 2022, invested conservatively in high-quality bonds. A $100 million shelf offering was filed to run through 2023, but no capital has been raised under it. Management has prioritized optionality, a strong balance sheet, and readiness for organic and inorganic growth. Margins historically averaged around 50%, though marquee brand contracts came in below that, closer to the 10–20% industry average, depressing blended gross margin. By 2024, management indicated margin recovery following the loss of one major client, with SaaS growth expected to improve profitability.
The company has been investing steadily in new platforms, international expansion (Canada and China), and acquisitions such as Hoozu and Zuberance in 2024, while also executing cost reductions in 2025 to align operating expenses with revenue scale. IZEA positions itself in a fragmented market of nearly 200 managed services competitors in North America, targeting consolidation opportunities as valuations become more attractive.
Catalysts & Milestones
2015 - Began operating in Canada with local GM and team expansion
2016 - Employee base peaked before subsequent reduction of 15%
2022 - Filed $100 million shelf offering, maintained $72 million cash balance, invested in high-quality bond
2022 - SaaS billings declined 25% year-over-year as some clients shifted to managed services
2022 - Two new platforms announced for launch before year-end
2023 - Creator economy downturn increased M&A opportunities as venture-backed firms sought exit
2023 - Hired dedicated business development lead focused on M&A
2024 - Completed acquisitions of Hoozu and Zuberance, contributing revenue from Q1 onward
2025 - Executed cost reductions, lowering headcount and expenses to support profitability while preparing for disciplined M&A
Investment Highlights
Maintains about $72 million cash, invested conservatively to preserve capital and flexibility
Historical gross margin near 50%, with marquee deals closer to 10–20% industry average
$100 million shelf offering filed in 2022, never utilized, kept for optionality
Employee base about 15% smaller than 2016 peak, aligning cost with revenue scale
SaaS billings declined 25% year-over-year in 2022, highlighting client mix shift to managed services
Future Growth Drivers
Expansion into Web3 via MetaMod, enabling brands to explore metaverse, crypto, and new digital ecosystems
International operations in Canada and China, supporting multi-region client activations
Acquisitions of Hoozu and Zuberance to drive SaaS and APAC revenue growth
Dedicated M&A business development hire to accelerate inorganic expansion strategy
Cost restructuring in 2025 to enhance operating leverage and prepare for scaled growth
Risk Factors
Heavy reliance on marquee clients caused gross margins to fall by more than 10% in 2022
SaaS billings declined 25% year-over-year in 2022 due to client shifts
Bookings conversion to revenue averages 7.5 months, delaying cash realization
Economic slowdown and tariffs in 2025 led to bookings decline despite strong pipeline
Recruiting remains difficult, constraining ability to scale headcount when needed
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Capital Allocation
16/05/2022 The $100 million shelf offering runs through 2023. Do you need it, and why?
Yes, it runs through summer 2023. We have not raised any money on it and have no immediate plans to do so. It exists as a tool to move quickly in capital markets if needed, such as for consolidation opportunities. It is about optionality, not necessity, and we have not raised funds under it so far.
16/05/2022 You hold about $72 million in cash. How are you investing it, and what returns are you generating?
Given market volatility, we began investing early this year. We are building a conservative portfolio in high-quality bonds, making basis points above bank rates. The goal is not to maximize returns but to offset fees and manage the funds responsibly. The cash is primarily there to support growth opportunities, not to be a profit center.
16/05/2022 How much cash do you expect to use for growth and investments this year?
We have not provided a forecast. In Q1 we spent more than $2 million, while Q4 was the opposite. Revenue will grow this year, expenses at a lower rate, and margin swings depend on large contracts. Investments in product are steady, while marketing varies. Cash use will depend on the opportunities we pursue.
16/05/2022 Why not return excess cash to shareholders through a buyback or dividend?
We do have a forecast, though it is not disclosed. The priority is to maintain a strong balance sheet for organic growth and acquisitions. With potential economic strain ahead, we want the flexibility to consolidate or pursue opportunities. We are not considering a buyback or dividend at this time.
16/05/2022 Will you use a large proportion of the $70 million within the next 12 months?
No, we are not expecting to use a large proportion. We prefer to preserve cash and optionality. In the past, we had to raise capital from a position of weakness, and now we want to avoid that by maintaining financial strength.
30/03/2023 Are you seeing more opportunities for inorganic growth and is the target audience expanding or becoming more desperate?
We are seeing the creator economy, which is largely venture-backed, go through a reconciliation moment. Some strong companies are unable to secure additional funding and may be forced to consider options. In those cases, where there is a complementary and accretive effect, we see ourselves as prudent and disciplined evaluators of such opportunities as a path toward inorganic growth.
What is beneficial today is that we have three business lines, Marketplace, SaaS, and managed services, that can each support different types of targets and create value for shareholders.
15/05/2023 Can you comment on possible acquisition targets?
The market has definitely shifted from the past couple of years. There are a variety of targets out there at varying sizes, but we are not in a position to comment on anything right now. The economics have made M&A more attractive, but we still have to find the right fit for the company.
14/11/2023 Have you hired someone solely for business development?
Yes, we now have a team member whose role is fully focused on mergers and acquisitions activity.
13/05/2025 Can you elaborate on M&A opportunities and valuations?
We haven’t aggressively pursued acquisitions yet, as we wanted to get organizationally ready to integrate with the right partner. That said, we have looked opportunistically at opportunities, as we’ve received unsolicited inbounds. We’re now ramping up banker relationships and more actively looking ahead after recent structural changes.
We have a strong cost structure to build on. Valuations vary: some areas are reasonable, others are still hot. The creator economy is hot, which is one reason we’re executing the share buyback, as we believe we’re undervalued. Going forward, we’ll be disciplined and will not overpay in the market.
12/08/2025 Are you actively pursuing M&A opportunities?
We are. We're actively talking to people, and as I've said in the past, this is definitely part of our ambition, but we're being strategic and choiceful about our strategy. We're also making sure we have integration readiness. In the first half of the year, we put a number of processes in place to ensure we have a platform ready to integrate.
So we are ready both from a financial capital perspective and from an operational perspective, and we're actively out there talking with folks.
12/08/2025 How are you approaching valuations in private markets?
We're going to be reasonable. We're not going to overpay, and we want to be fair on both ends of it. But we're certainly not going to chase deals or overpay. We're going to be very responsible with our capital. I think we're in a position to work out deals that can be accretive and a win-win for all parties.
Competitive Advantage
16/05/2022 Does anyone else have an automated network like your public marketplace?
Many companies compete with us in different aspects of the business. In managed services alone, we count close to 200 companies of varying sizes in North America. Our opportunity is to focus on gaining market share and consolidating that fragmented space.
Operations
16/05/2022 How many employees do you currently have? LinkedIn shows 282, while you reported 131 at year-end.
We have about 130 employees. The inflated LinkedIn figure may reflect creators listing themselves as working for us.
16/05/2022 So headcount has not grown since the start of the year?
Yes, it is at about the same level as year-end.
16/05/2022 How much of your technology team is dedicated to Shake versus IZEAx and other platforms?
All of our technology team is focused across IZEAx, Shake, and our next-generation platform. The majority are dedicated to IZEAx and the new platform we discussed last quarter, which will give clients more flexibility in campaign management and activation platforms. IZEAx supports both our managed services team and SaaS customers.
16/05/2022 How many employees are you ramping up in Canada now, and how many do you currently have?
We are not sharing headcount figures publicly due to the competitive environment. We have a country GM in place building the team, and we have been operating in Canada since 2015. This is a further investment in the region.
16/05/2022 So you have only the GM in Canada?
No, we have additional Canadian employees beyond the GM.
16/05/2022 How many team members are in China since starting that division?
We are not sharing specific numbers, but it is more than one, and we may provide more detail in future calls.
16/05/2022 Employee count was 130 in 2021. Is that accurate?
Yes, that is directionally correct, though I do not have the exact figure in front of me.
16/05/2022 Do you have a cap on permanent employee numbers, perhaps around 150?
We do not cap headcount. Current staff is about 15% smaller than our 2016 peak. We are focused on generating more revenue per employee, but will make hires as needed. Recruiting remains challenging, but we are actively adding talent where we find the right fit.
15/08/2022 What is the status of the new platform you’ve mentioned, not called IZEAx? What will it do for you?
Two platforms are set to launch before year-end. We will provide announcements at the appropriate time regarding their functions, but we expect both platforms to be launched prior to year-end.
30/03/2023 Did you add a number of salespeople last year?
We added some salespeople and also made changes with some existing team members. The net result is actually a smaller sales team.
13/05/2025 Are cost-cutting measures complete, and is this a good level going forward?
Some costs are structural and will remain. We reduced headcount significantly, which is our biggest expense item. That doesn’t mean we won’t hire more, but we brought costs down to a level the business can afford. Our goal is profitability, so we need more top-line synergy and to grow costs slower.
We're in a good position to manage ourselves that way. For this year, the cost structure you see is probably solid. We’ll likely add people in summer and early fall, but we expect revenue growth to cover that. We’re staying disciplined to meet our objectives.
Competition
16/05/2022 Competitively, when you bid on marquee contracts, are you seeing less competition or more point-solution rivals?
The competition has never been more fierce. Many smaller players in this fragmented market still capture share. We are reluctant to ease our efforts because we see real strategic opportunity for IZEA. Average deal sizes continue to increase, and we are also seeing ambassadorships with durations measured in quarters and years. These trends affect both revenue timing and cost recognition.
Growth
16/05/2022 What is the average spend per brand for a typical contract?
We have not shared a number in recent years. It depends on the type of engagement. Ambassadorships can drive seven-digit brand investments, while one-off campaigns start at our public minimum of $25000 and can reach the high six-digit range.
16/05/2022 What factors influence brand spend levels?
It depends on the brand, the competitiveness of their segment, and the outcomes they want. Those considerations determine whether the investment is at the lower end or reaches seven digits.
16/05/2022 SaaS billings declined 25% year-over-year. Is that outside managed services, and why the decline?
Yes, it is outside of managed services. Some customers have shifted from SaaS to managed services because they lack the internal staff to manage campaigns themselves. We use the same software for managed services, which allows us to deliver campaigns more effectively.
16/05/2022 Does SaaS revenue include Shake?
Yes, Shake is included in SaaS revenue.
16/05/2022 Do you target all industries, including cannabis, alcohol, hunting, or do you exclude certain ones?
Cannabis is difficult due to the federal environment, but may become viable in time like other regulated industries. We focus on major advertising sectors, especially consumer non-discretionary and consumer affordable luxury. We also invest in new categories, including B2B and Web3, through initiatives like MetaMod. We are sector-agnostic but selective, pursuing categories that benefit both creators and brand clients.
16/05/2022 How can I study Web3, and what does MetaMod have to do with it?
MetaMod is our operational unit for Web3, helping brands explore opportunities in the metaverse, cryptocurrency, and related fields. There is abundant material online covering Web3. At its core, it blends the physical and virtual worlds, extending beyond mobile and laptops to future devices like smart glasses or contact lenses for both content creation and engagement. This is one example of the promise of Web3, which goes well beyond that.
16/05/2022 How do you view virtual reality glasses from Snapchat or Ray-Ban and their role in the metaverse?
They are still in early stages. I have tried them, and while they are good for capturing video and photos linked to your phone, the metaverse goes far beyond that. Imagine glasses that overlay information on your lens seamlessly into the physical world. We believe that is inevitable, and brands of all sizes will want to engage in those environments just as they do today on TikTok or Instagram.
15/08/2022 Is revenue from this large customer recurring in Q3?
Yes, that customer continues to spend with us. The recognition of that revenue depends on when influencers are actually activated, which varies depending on the influencers and the customer’s initiatives.
15/05/2023 Was April the best month of the year or the best in the past year and a half?
I don’t believe I said that. It was the best month so far this year. Ryan clarified that on a number of opportunities basis, April was one of our best two months over the last year and a half. That reflects the count of opportunities.
14/11/2023 Can you elaborate on the new opportunity pipeline and how it works into bookings?
Jon, the new opportunity pipeline refers to opportunities we have identified with customers where active proposals and associated dollars are in play. It is the very top of the funnel. A customer enters as a lead, we begin working with them, and then we put a proposal in front of them. That is the new opportunity pipeline Ryan was referencing.
14/11/2023 Should those opportunities theoretically translate into bookings?
Yes, that funnel flows into bookings, which then ultimately translates to revenue. The key factor is the close rate on the new opportunity pipeline. The past two months were records for us in terms of volume.
14/11/2023 On the record for the close rate?
The records were for the gross size of the pipeline. It then takes time to work through the pipeline itself and determine which deals actually close.
14/11/2023 With the big customer gone, what percentage of bookings close in the quarter? It used to be about 60%.
Are you asking about the time it takes for a booking to turn into revenue?
14/11/2023 Yes.
Peter mentioned that it is currently about 7.5 months.
Financials
16/05/2022 Can you elaborate on the contract that caused gross margins to decline by more than 10%?
That contract involved much larger influencer activations, including celebrity-level campaigns. For those types of activations, we simply do not achieve the same margins, and that is what impacted the overall contract.
16/05/2022 Was that a one-off situation, or how frequently do you encounter it?
With this particular client, who has been with us for two years, they typically involve celebrity or bigger-name influencers. That impacted margins last year and again this year.
16/05/2022 Is that business you want, or do you take it only because it is large?
It is definitely business we want. This is a marquee brand, and the activations we are running are incredible. However, we cannot achieve the same markup or margin on those types of influencer relationships.
16/05/2022 What do you mean by incredible?
The content is incredible, and the people we are working with are equally impressive. It is a marquee brand, a top global marketing spender, and we are very excited to be working with them.
16/05/2022 For marquee contracts, is your take rate around the 10–20% industry average?
It is actually a bit higher than that, but still lower than our normal margins. That is why those deals negatively impacted overall margins.
16/05/2022 What is the difference in margin percentage points between marquee contracts and your average?
Historically, our margin has been about 50%. The marquee contracts are significantly less than that, though still more than 10% or 15%.
15/08/2022 Can you go over the large customer and the $2 million catch-up revenue? Would that have been recognized in Q4 and Q1?
Yes, it would have been spread over those quarters.
15/08/2022 Did the extra $2 million catch-up revenue affect margins, or was it just the campaign overall?
The only impact on margin was from concentration. We had more lower-margin revenue from this customer because of the catch-up adjustment, but that was the only reason.
01/04/2024 Can you elaborate on gross margins going forward?
We expect margins to improve since we parted ways with that one large client. There is a mix of gross margins between the U.S. and those from APAC and our emerging markets team. As bookings and revenue increase there, it will have some impact, but margins should not be as depressed as they were with that one customer.
01/04/2024 As SaaS revenues grow, will that help margins?
Yes. As SaaS revenue grows, it will also contribute to stronger margins.
01/04/2024 What about operating expenses?
Operating expenses will rise with the acquisitions we’ve completed, but we intend for them to be accretive. We are working to optimize those costs, which will take some time. By the back half, we expect cost optimizations to show results.
01/04/2024 With gross margins in the high 40% range, does breakeven on adjusted EBITDA require $46–47 million?
I don’t want to give an exact breakeven estimate. Your view is not unreasonable, though it may be on the low side. It depends on how quickly we acquire revenue and how profitable it is. If an acquisition adds to our bottom line right away, that helps, but we still have a ways to go in the U.S. before breakeven.
13/05/2025 What do you expect gross margins to be for the rest of the year?
Well, as you know, we're not giving guidance. But with that said, I think our margins are fairly steady. They fluctuate within a band depending on mix. You saw margins in the fourth quarter drop a bit, but we're back up. We also cleared out some of the really low margin work. So, I would imagine margins will be stable through the rest of the year.
12/08/2025 Do you expect operating expenses to grow in the next quarters?
We cut costs that we don’t expect to repeat until they are needed to fuel growth. The exception might be marketing costs, which we previously used to drive demand. Going forward, we'll continue marketing at a low rate but are pausing for now. Quarter 2 costs look about how they're going to look, and we have efficiencies and headroom to grow without increasing costs. We'll be judicious and keep our eye on the bottom line.
I would add that with the change in our business model, we permanently lowered our cost structure and are proving we can be profitable. We intend to scale efficiently. As revenues grow, expenses will grow, but we’re disciplined in ensuring they grow in parallel.
Ouutlook & Guidance
16/05/2022 How should we model margins for the rest of the year?
You will continue to see some impact going forward. Many of those activations are still in progress, and we have not yet recognized all the revenue. As Peter mentioned, some of that revenue will come in the next couple of quarters, which will affect margins in Q2 and Q3. At the same time, those bookings will positively impact revenue.
16/05/2022 Are you pulling back spending on sales, marketing, and engineering given recession concerns?
We will continue to invest, but growth in those areas will be more tempered, and we are cautious about long-term commitments. Much of our engineering spend is through contractors, giving us flexibility if the economy weakens further. Still, we intend to grow, capture share, and build the teams required to achieve that.
16/05/2022 Negative EBITDA this quarter was significant. Is there a breakeven plan?
Breakeven is not the priority this year. We are investing in marketing, expanding our sales team, and developing new technology platforms. Growth is our primary focus, supported by a strong balance sheet, and we are intent on creating long-term value.
16/05/2022 Do you expect profitability in 2023?
Our goals are focused on revenue growth, not profitability targets at this stage. Internally we have investment guidelines, but this year our priority is achieving 30% revenue growth while managing expenses carefully.
16/05/2022 Can you increase visibility to support the stock price, which has been trading around $0.90–$1.05?
Yes, that is one of our plans. We have been building the marketing team to enhance visibility both to customers and creators, as well as investors. Expect to see more of IZEA in the back half of the year, aligned with the launch of our new platform.
16/05/2022 Is the new platform 3.0, and when will it launch?
No, it is entirely different from IZEAx. It will launch in the back half of the year. We have not provided the exact date, but investors will be notified ahead of launch.
30/03/2023 Can you provide clarity on your 6-month outlook given advertising is down 8–10% year over year?
We are not in a position to provide specific guidance. We will be impacted by parting ways with a large client who represented a significant portion of bookings last year. Our focus is on replacing that business as best we can, but it was a substantial share of our bookings and revenue in 2022.
15/05/2023 Will the significant customer relationship end within the next two quarters?
Yes, we are winding it down. There are still some small bookings coming in, but the intent is to have it completely wound down in the next two quarters.
01/04/2024 Are you expecting revenue contributions from the two acquisitions in Q1 and beyond?
Yes. You can see in our filings disclosures about Hoozu’s revenue size, and you can also see the impact of software licensing from Zuberance in December.
01/04/2024 If you reach $76 million in three years, will there be profitability?
Our goal is to achieve profitability within that three-year timeframe.
12/08/2025 Can you explain Q1 and Q2 bookings decline and revenue outlook?
There are really three issues driving the decline. One was simply a timing issue on a significant client. If you equalize for timing, bookings are actually up. The second issue is our intentional shift away from unprofitable accounts. This reflects a change in our model from transactional to enterprise and relationship-oriented, targeting the higher end of the market, which has more upside and is profitable.
The third factor is the macroeconomic environment. With tariffs and government uncertainty, some clients paused, but in other industries and verticals we serve, we're seeing growth not just in double digits, but even triple digits. It's a portfolio.
12/08/2025 Can you provide revenue guidance for the remainder of the year?
You don’t get if you don’t ask. We're not going to give guidance. The public statement we made in the earnings release and the liquidity section of the 10-Q and MD&A is that we have a good pipeline, relationships are strengthening, and we’re adding large customers. We think that supports growth going forward, though it could be uneven. That further emphasizes keeping a close eye on costs to ensure they stay in a healthy relationship.
Risks & Macro
16/05/2022 How long do you hold cryptocurrency before converting it to US dollars?
We have not published a formal policy. We have held, sold, and bought cryptocurrency depending on market conditions. The market is fluid and volatile, so our approach is to remain flexible and nimble in managing those holdings.
13/05/2025 Are you seeing clients pull back on advertising spend due to economic slowdown concerns?
Yes, there is a lot of uncertainty in the world, but our pipeline is actually growing. More importantly, the quality of clients we’re speaking with is improving. We’re engaging with higher-end organizations, having more substantial enterprise-level conversations, and discussing larger deal sizes.
It comes down to short-term versus long-term. While some clients are pausing, others see our category as a better place for media spend because it requires no large upfront commitments. Our solutions are more controllable and agile, allowing spend to be shifted tactically. We don’t have a crystal ball, but we see strong long-term signs that may offset near-term risks.
Personal Questions
15/05/2023 Will you continue doing business with that customer in the future?
Right now, we are just parting ways.
12/08/2025 Does your VP of Talent Acquisition work full-time for IZEA?
Yes, we're investing in her.
12/08/2025 Is the VP of Talent Acquisition mainly focused on marketing talent?
No, all sorts of talent. We believe this is not just a technology-driven industry, but also a talent-driven industry. This is about positioning ourselves for future growth and making sure we're out in the market establishing relationships with talent so that as we grow, we can do so seamlessly. We’ll be making announcements in the future about new talent joining us.
Other
15/08/2022 You mentioned being judicious with OpEx but also hiring seasoned salespeople. How many have you hired?
We are not giving specific numbers, but it is fewer than 10. This is not a large increase in headcount, but we are continuing to invest in sales personnel in particular. For other parts of the organization, we will likely just backfill attrition rather than aggressively hire more people in those roles.
Disclaimer:
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