IZEA Worldwide Inc

NOTE 12. REVENUE

The Company has consistently applied its accounting policies with respect to revenue to all periods presented in the consolidated financial statements contained herein. The following table illustrates the Company’s revenue by product service type:

Managed Services revenue is comprised of two types of revenue, Sponsored Social and Content. Sponsored Social revenue, which totaled $7.6 million and $20.8 million for the three and nine months ended September 30, 2024, respectively, is recognized over time. Content revenue, which totaled $1.0 million and $3.4 million during the three and nine months ended September 30, 2024, respectively, is recognized at a point in time.

The following table provides the Company’s revenues as determined by customer geographic region:

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers reported in the Company’s consolidated balance sheet:

The Company does not typically engage in contracts that are longer thanone year. Therefore, the Company will recognize substantially all of the contract liabilities recorded at the end of the year in the following year. The contract liability balance as of December 31, 2023 was $8.9 million. Of that balance, $8.0 million was carried to revenue during the first three quarters of 2024. The contract liability balance as of September 30, 2024 was $9.1 million. The Company expects to recognize the associated revenue during the next twelve months. The accounts receivable balance as of December 31, 2023 was $6.6 million. $0.2 million of the outstanding receivables balance from the prior year is still outstanding as of September 30, 2024. The carryforward receivables balance is fully reserved as of September 30, 2024.

Contract receivables are recognized when the receipt of consideration is unconditional. Contract liabilities relate to the consideration received from customers in advance of the Company satisfying performance obligations under the terms of the contracts, which will be earned in future periods. Contract liabilities increase as a result of receiving new advance payments from customers and decrease as revenue is recognized upon the Company meeting the performance obligations. As a practical expedient, the Company expenses the costs of sales commissions that are paid to its sales force associated with obtaining contracts less thanone year in length in the period incurred.

Remaining Performance Obligations

Due to most of the Company’s contracts beingone year or less in length. As such, the remaining performance obligations at September 30, 2024 and December 31, 2023, are equal to the contract liabilities disclosed above. The Company expects to recognize the full balance of the unearned revenue on September 30, 2024 within the next year.

NOTE 13. INCOME TAX

The provision for income taxes for interim periods is determined using an estimated annual effective tax rate in accordance with ASC 740-270, Income Taxes, Interim Reporting. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax position, if any, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business.

The Company’s income tax expense and effective tax rate were as follows:

The Company’s estimated annual effective tax rate for the three and nine months ended September 30, 2024 differed from the statutory rate primarily due to changes in the valuation allowance.

NOTE 14. SUBSEQUENT EVENTS

The Company has completed an evaluation of all subsequent events through November 14, 2024 to ensure that these consolidated financial statements include appropriate disclosure of events both recognized in the consolidated financial statements and events which occurred but were not recognized in the consolidated financial statements. The Company has concluded the below that no subsequent event has occurred that requires disclosure.