Good afternoon, ladies and gentlemen, and welcome to the IZEA Worldwide, Inc. third quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. At that time, if you have a question, please press the one followed by the four on your telephone. If at any time during the conference you need to reach an operator, please press star then 0. As a reminder, this conference is being recorded. I will now turn the conference over to Ryan Schram, President and Chief Operating Officer. Thank you. You may begin.
Good afternoon, everyone, and thank you for joining us for IZEA's earnings call covering the third quarter of 2022. I'm Ryan Schram, President and Chief Operating Officer at IZEA. Joining me on the call are IZEA's Chief Financial Officer, Peter Biere, and IZEA's Founder, Chairman, and Chief Executive Officer, Ted Murphy. We're glad to have you with us today. Earlier this afternoon, the company issued a press release detailing our performance for the third quarter of 2022. If you'd like to review those details, all of our investor information can be found online on 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 the company'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 also be found in our earnings release issued earlier today, as well as in our publicly available filings. With that, I'm pleased to introduce IZEA's Chief Financial Officer, Peter Biere. Peter.
Thank you, Ryan, and good afternoon, everyone. I'll review our operating results and provide additional context for the quarter. Revenue for the third quarter of 2022 totaled $10.8 million, 40% higher than in Q3 of 2021. Managed Services revenue totaled $10.5 million during the quarter, growing 44% over the prior-year quarter. We recorded $350,000 in net revenue from our SaaS offerings during the current quarter, down 23% from the prior-year quarter. Managed Services revenue grew by $3.2 million quarter-over-quarter, primarily due to revenues on one large customer contract, which grew by $2.6 million. Revenues from all other customers grew approximately 10% compared to Q3 of 2021.
As previously announced, Managed Services bookings fell by 27% to $8.2 million in the third quarter of 2022, as we saw the contracting process slow down over the summer months. Bookings on our large customer contract represented 57% of the total quarter-over-quarter decline, so bookings for all other customers declined a more moderate 17% in Q3 over the prior year quarter. September bookings were strong this year, delivering our second-best monthly bookings total, and we ended the quarter with a solid pipeline of opportunities. There is a lag between bookings and revenue recognition. Some of the slowness over the summer is reflected in the current quarter revenue total, but a higher percentage will manifest in Q4 2022 and early 2023 revenues.
Our Managed Services backlog, which represents the total of unrecognized revenue for contracts that are underway, as well as recent bookings that have yet to begin invoicing, totaled $19.2 million on September 30th, 2022. We expect to record most of this backlog as revenue in the following three quarters. SaaS Services revenue, consisting of license fees, self-service marketplace spend fees, and other fees, declined by $102,000 in the current quarter, or about 23% compared to the prior-year quarter. Total license accounts on all platforms declined by 22% in the current period. Revenue from license fees declined by 10% in the comparative quarter, while gross marketplace spend fees fell 82%. Gross billings for SaaS Services fell by 23% quarter-over-quarter, mostly due to a sharp decline in marketplace spend, including fewer marketers and lower average spending levels.
Our cost of revenue was $6.6 million in the third quarter of 2022, or 61% of revenue, compared to $4 million or 52% of revenue in the prior year quarter. Accordingly, our gross margin in the third quarter averaged 39%, compared to 48% in the prior year quarter. The increase in the cost of revenue was primarily due to a higher delivery cost on one large customer contract, which made up 31% of total revenues during the current quarter. This significant contract aside, the cost of revenue for our other customer contracts was within range of recent historical averages.
Expenses other than the cost of revenue totaled $5.6 million for the third quarter, compared to $5.1 million for the prior year quarter. Sales and marketing costs totaled $2.5 million during the third quarter, $261 thousand or 11.7% higher quarter-over-quarter. Additional headcount and related payroll costs associated with driving customer growth were partly offset by lower sales commissions and that vary with bookings. General and administrative costs totaled $2.9 million during the third quarter, $256 thousand or 9.7% higher quarter-over-quarter, due primarily to higher professional fees associated with changing our auditor.
Our net loss was $906 thousand for the third quarter of 2022, or $0.01 per share, compared to a net loss of $1.4 million in the prior year quarter or $0.02 per share. Adjusted EBITDA was -$591,000 for the third quarter this year, compared to a - $926,000 for the prior year quarter. As of September 30th, 2022, we had $67 million in cash and investments, down from $75.4 million at the beginning of the year. Lower, partly due to - $2.5 million of adjusted EBITDA for the year-to-date period, with the rest of the change tied up in working capital, mostly due to timing difference of payments and receipts relating to our large customer contract.
We made $447,000 in interest income on our investments during the quarter. As previously announced, we terminated our at-the-market equity offering during the quarter. We have not raised any capital through the ATM and believe that we are well capitalized for our current growth strategy. Lastly, we do not have any debt on our balance sheet. With cash on hand and liquidity from our investment portfolio as required, we are in a solid position to execute on business growth and opportunities that may lie ahead. With that, I'll turn the call back over to Ryan.
Thanks, Peter, and hello again, everyone. There's no question we're operating in an uncertain environment and that businesses across all sectors continue to get tested in new and different ways. When it comes to how IZEA is helping brands and agencies navigate the sweeping changes in the advertising industry while also further embracing the creative economy, our mission remains unchanged. As I mentioned on our Q2 call, we are continuing to sharpen our focus on a clear set of product and business priorities. The product and expansion announcements we've made in just the last quarter alone have demonstrated that very clearly, including significant improvements to our creator marketplace on IZEA.com by launching our next-generation enterprise software solution, Flex, and the continued growth of geographic markets around the world where we can serve Managed Services clients in a differentiated and compelling manner.
These will all drive value for marketers, creators, and our business simultaneously. We have also worked throughout the year to drive efficiency by realigning internal resources to invest in our biggest growth opportunities for 2023 and beyond. Shareholders can expect that as we plan for the fiscal year ahead, IZEA is committed to making important trade-offs where needed and will moderate operating losses prudently due to the current macroeconomic climate. For those of you who tuned into our live streaming event on September 21st, you saw the result of many quarters of investment and hard work finally unveiled to the public. The all-new creator marketplace on IZEA.com is geared toward bespoke influencer marketing initiatives and transactional engagements. It's quick, easy, and simple to use, and is perfect for small campaigns and projects that need fast turnarounds and upfront pricing.
Best of all, it builds off of all the marketplace findings our team learned from the launch of Shake in 2020 and expands upon it with bilateral interactions, including creator casting calls that are designed to encompass all things influencer marketing. A reimagined marketplace was just the beginning. Our team also announced the introduction of an entirely new way of working within enterprise software, IZEA Flex. Modern influencer marketing spans the gamut of complexity, process, and measurement. Some brands need a quick post and want content on a modest budget, while others are executing complex multi-year ambassadorships across multiple platforms with everything from nano-influencers to celebrities. Our legacy enterprise solution, IZEAx Unity Suite, excels at structured workflows and bringing buyers and sellers through a clearly defined process. As the industry has expanded, so too have the needs of our customers.
There is a gap in the addressable market to provide software designed to accommodate the needs of brands and agencies, both big and small, built from the ground up to be as flexible as it is powerful. There's so much more to share about Flex's benefits for both IZEA's current and future customers. Central to its business strategy is providing the best price to value in the influencer marketing industry, lowering the barrier to entry for enterprise software across the board competitively. From our completely free tier that allows new users to come in and get a feeling for how Flex's power tools would work for their organization to the extremely affordable price points of our annual starter and power plans at $130 and $500 per month, respectively.
We want as many marketers to be able to try this new platform as possible and make the switch if they're currently using inferior, more expensive solutions. If you'd like to learn more about the new IZEA.com or IZEA Flex, an archive of our Superchanged streaming event is linked on the company's online press center. Last but not least, on October eighteenth, we announced the company's official launch into the United Kingdom. Having built a reputation as a trusted strategic partner in the North American and Chinese markets, IZEA has brought our flexible Managed Services model, underpinned by our powerful technology platforms, to one of the world's epicenters of advertising itself.
As part of our broader emerging market strategy, we conducted extensive competitive and client due diligence, which underscored that the U.K., like many corners of the world, has tremendous growth potential but lacks the experience and innovation required by top brands. As a battle-tested, best-in-class partner, IZEA will be filling a significant gap in the market by working both directly with brands or alongside partner agencies while dispensing the mandatory long-term retainers and hourly billing that currently dominate the sector. Thinking about these initiatives holistically, when faced with an uncertain economy or other unexpected volatility, clients and customers tend to double down spending with the companies that they believe have the best customer experience and focus on delivering lasting value, and that is where our efforts remain focused.
Across all of our lines of business, Team IZEA remains head down, concentrated on driving a fantastic experience across all of our services and products, as we believe putting clients and customers first is the only reliable way to create lasting value for shareholders. For additional thoughts on our third quarter and how we are looking at the road ahead for IZEA, I'd now like to turn the call over to my colleague and our Chairman and CEO, Ted Murphy. Ted.
Thank you, Ryan. We have seen a tremendous amount of market change over the past two quarters, with businesses of all sizes in all sectors impacted by the slowing of the global economy. Even our largest clients are now showing signs that they are not immune to the economic fallout, and there have been negative implications for IZEA's overall momentum as a result. Bookings in Q3 were not as strong as we had projected they would be based on the robust performance we delivered in the front half of this year. Customer contracting throughout the quarter was slower than we expected, particularly for net new clients. As the quarter progressed, we concluded with a strong September, the second-best month that we've had so far this year. That did not make up for the slower preceding months.
We saw our new opportunity pipeline for Managed Services hit an all-time high in Q3 of 2022, up 40% from the new opportunity pipeline that we delivered a year ago in Q3 of 2021. We've also seen this trend continue in October, which was our best month ever for new opportunity pipeline generated. New opportunity pipeline for Managed Services is the strongest it has ever been, but we remain cautious on the forward projection of close rates as we look to Q4 and beyond. Our opportunities continue to progress at a slower pace than we would like, and we believe that this is the result of a more wary economic outlook adopted by current and prospective clients. This has negatively impacted close rates in the back half of this year, though they are still well above our historical averages.
We have made great strides improving our average close rates, but we are expecting a bit of a pullback in the coming year, which means we will need to generate more pipeline than ever. While many aspects of the global economic picture remain hazy, it is clear that we are entering a more challenging macro environment. Sales will be harder, competition more fierce, and customer expectations elevated. IZEA will navigate the year ahead through a combination of efficiency and growth efforts. Our single biggest expense is talent. Over the past two years, we have been expanding our team and filling needed roles throughout the organization. While we are larger than we were at the onset of 2020, we still have about 15% less full-time employees compared to our peak in 2016. We did not go on an all-out hiring spree when the markets were relentlessly climbing.
We chose to be more pragmatic and reserved in our approach. Markets have changed quickly, and we are now benefiting from that decision. In Q3, we have further slowed the pace of hiring, filling all critical roles, essential backfills, and hiring new sales team members directly tied to revenue generation. Despite our plan to keep headcount relatively flat near term, we do expect costs related to labor to continue to rise in 2023, though not at the rate that they have over the past two years. There is no escape from the rising cost of inflation, impacting everything from salaries to insurance costs. To help counteract those rising costs, we have already implemented some staffing adjustments and reorganized departments in this quarter to optimize for efficiency moving forward.
Throughout 2022, we have been streamlining our product team to deliver more innovative products faster, and we intend to keep a lean mentality moving forward. We have seen that small teams of smart people can be incredibly effective, and our globalization of the product organization has resulted in lower cost per team member. The streamlining of the product organization goes hand in hand with the consolidation of the software products under the IZEA umbrella. In late October, we shuttered Shake in favor of the IZEA marketplace, and we will shutter IZEAx in late 2023, along with a multitude of legacy services associated with that platform that are expensive to run and maintain. BrandGraph customer-facing experience will be rolled into IZEA Flex in 2023, and we will eventually market under the IZEA brand for all software services.
This decision will help us consolidate marketing spend and create a more cohesive user ecosystem in the years to come. We expect IZEA Flex to reach MVP in this quarter and will begin the transition of IZEAx customers after the holidays in Q1. On the growth side of the equation, we have been working to position ourselves to benefit from a number of catalysts in 2023. We will enter this year with two new software platforms, along with a sales presence in China as well as the U.K. IZEA has a strong pipeline of Managed Services opportunities, but we must continue to build that pipeline given the longer close cycles and impacts on close rate we have seen in the back half of this year. The macro environment will require us to support sales efforts with increased marketing, including an aggressive event schedule, content production, and demand generation efforts.
We're excited by some of the early indications from these initiatives and intend to capitalize on these opportunities in the quarters ahead. While there is no denying that some choppy economic waters lie in our path, we are in a position of financial strength, and this team is experienced and well-equipped to navigate them. Thank you all for joining us today. I will now open up the call for Q&A from the analyst community.
If you'd like to register a question, please press the one followed by the four on your telephone. You will hear a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press the one followed by the three. If you are using a speakerphone, please lift your handset before entering your request. Once again, that's one four to register for a question. One brief moment for the first question. There's no questions at this time. I'll turn the call back to Ryan Schram.
Thanks so much, Scott, and thank you to everyone joining us this afternoon. As a reminder, all of IZEA's investor information can be found online at IZEA.com/investors. To our team members, investors, and analysts affected by the hurricane in Florida today, please stay safe, and thank you again for joining us this afternoon. Take care.
That concludes the call for today. We thank you for your participation, and at this time, please disconnect your line.