Q1 2021 Super League Gaming, Inc. Earnings Call

And part of me. This is the operator today's conference is scheduled to begin and shortly please continue to standby and thank you for the patient.

[music].

Good afternoon, everyone and thank you for your participating on today's conference call to discuss Super League Gaming financial results for the first quarter ended March 31st 2021, as well as an update from this morning's annual shareholder.

Eating and the proposed acquisition of Mop crashed.

Joining us today are Super League, President and CEO, and hand, and CFO Kate on him.

Following their remarks, well open the call for your questions before we go forward there. Please take note that.

The company's safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995. The statement provides important cautions regarding forward looking statements the.

Company's remarks during todays conference call will include forward looking statements. These statements along with all the information presented that does not reflect the historical fact are subject to a number of risks and uncertainties actual results may differ materially from those implied by these forward looking statements.

Please refer to the company's and recent earnings for me and to the company's reports filed with the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to the fat.

I would like to remind everyone that this call will be available for replay through 8 P. M. Eastern time on June 30021, starting on a P M Eastern time Tonight and.

A webcast replay will also be available via the link provided in todays press release as well as on the company's website at Www Dot Super League Dot Com now I would like to turn the call over to the President and CEO of Super League gaming and hand.

And.

Thank you and good afternoon, everybody. We're so delighted to have the joining us we have great news to discuss today on so many fronts. We issued a press release on May 17th detailing the very strong growth. We saw on our first quarter and all of our revenue sources and most notable kpis today, we will talk about that.

But more importantly, we want to talk about the new Super League. Thanks to our shareholders support today, we are moving forward with the acquisition of mob crush.

But first let's table set as many of you know now already as followers of Super League and the greater gaming category gaming is the dominant form of entertainment worldwide. It is the gravitational force the new playground, where Gen Z culture is created as the meta versus plays out it is introducing seismic trend.

Shifts that speak to not only how new generations want to connect and virtual worlds, but also how they want brands to communicate with them and the style of content. They wish to consume the democratization of content creation, meaning it is no longer 5 or 10, Big studios, serving down content, but hundreds of millions of individuals.

Serving up content from anywhere means everyone can produce and distribute entertainment and participate in the economy and then there is the entire advertising model, which has been up and did as well from.

And the disaggregation of content and move away from linear TV through to the thirst for live stream content and adoption of AD blocking technologies the advertising world will never be the same again.

The big AD dollars going to lucrative primetime television AD spots for the most part is the thing of the past.

Another Mega trend has emerged around creator of economies I mentioned on our last call that this is at the heart of the roadblocks model, which recently I P O.

And finally on the trend front it can never be standard enough as it changes how we all evaluate the greater opportunity for the gaming ecosystem, most avid gamers watched games more than they play games. So.

So the headline gaming as entertainment and gaming is the new content and gaming and its culture and Super League and mob crush fit squarely in each of these game changing trends.

So first I wanted to provide a high level recap on Super League performance as a standalone entity for <unk>.

And we'll go more into the details, but first on the financial front.

Our first quarter 'twenty 'twenty, 1 revenues more than tripled relative to 1 Q2020 with 70 per cent of our revenues coming from repeat advertisers and nice trend lines and the newer revenue streams of direct to consumer and content monetization.

Second we continue to uphold our strong margin profile, while holding operating expense relatively flat challenging ourselves to absorb our material growth and our current infrastructure as best we can and we are adding diversity into our AD portfolio by introducing quality programmatic inventory.

Tori and new partners to our AD stack to serve as a complement to our more premium direct sales approach to scale, our inventory faster and introduce yield management.

As far of Kpis, our momentum from 2020 continues through April 30th everything has more than doubled relative to the performance of our first 4 months of 2020 registered users are seen at $3.9 million versus 1.6 million through April of last year and up 30% relative to for Q2.

'twenty.

This translates to nearly 500000 monthly active users engagement hours sit at 46 million for the first 4 months of 'twenty 'twenty, 1 versus 17 million and through April of 2020 and.

And finally viewer impressions, which is at the top of the funnel and the feeder into our advertising inventory. We reached 698 million viewing impressions through April of 'twenty 'twenty, 1 relative to $332 million for the first 4 months of the prior year.

When we saw the surge of engagement on our platform in March and April last year. Many of you asked us how durable it would be that was a logical concern.

If the surge and viewers and users was driven by Covid, what would happen once COVID-19 got under control and consumers had more alternatives for entertainment.

We believe the subsequent growth in Q3, and Q4 last year that endures into this year further validates the view that the increases are sticking.

But that just tells you about the Super League. We were last month and last year, we were proud of our strong organic growth and the monetization that at the beginning to flow.

We indicated and the original S..1 that it would take bold inorganic growth as well. So today is a new chapter after receiving your support to acquire mob crush at today's annual shareholder meeting I believe we laid out of strong case for why the steel right now is the right opportunity for us I can speak for the exec.

The team the board and for me on a very personal level that we have never wavered on this decision. It just all adds up.

First as a reminder, mob crushers, primarily of live streaming platform used by hundreds of thousands of gaming influencers, who generate and distribute almost 2 million hours of original content annually to their own social audiences.

These streams reach over 4 billion of their own fans and subscribers across the most popular live streaming and social media platforms, including Twitch and Youtube Facebook Instagram and Twitter.

At the simplest level. The 2 companies are about the same thing providing gaming experiences and entertainment for what we will call mid tier of gaming enthusiasts or the middle of the pyramid so to speak.

What does that mean, they're avid they represent over half of the world's 3 billion gamers and they like to create gameplay experiences they loved to compete and they liked the share meaning to broadcast or streamed their own gameplay content. So we share the same target market.

And our offers converge the.

The avid player in many cases is also the streamer they want the tools and experiences to level up the competition along with the tools to share that same game play with their friends and their social audiences.

As I mentioned on the last call. The combined company has a suite of offers that mirrors. The gamers journey today's young Gamer and creator is tomorrow streamer, Tomorrow's Influencer and maybe even tomorrow's esports star.

And we monetize and the same 3 ways. The primary revenue stream for both companies has historically been advertising and the way we can embed premium high C. P M AD inventory and game and experience and in stream to connect brands right to their target.

And where are these coveted cord cutting consumer spend and spending the bulk of their time well their gaming. We know media is all about scale. This merger made sense just by examining the last 2 points of alone the complementary demographic of Gen Z and millennial gamers plus the combination of premium ad inventory.

Tori and reach means we have heft, we can take a larger share of advertisers wallets.

Together, we provide a formidable and highly scalable gaming centric media platform, reaching 1 of the largest addressable audience of gamers and the United States.

Our second love of lack of revenue is direct to consumer monetizing the players themselves and.

And Super League and mob crush do so through their brands mine hut and mine belt, respectively, which specifically target of younger gaming demographic and the 12 to 18 year old range focused on Minecraft of top 5 game globally in terms of player accounts.

Together, we reach over 20 million players annually operating great gaming with a built in market place to purchase game modes skins and in the case of mine had expanded services on a subscription basis all to enrich their overall gameplay experience.

This is a real point of differentiation Super League and mob crush of a material foothold on the young gaming demographic and marketing 1 O..1 is get them young we have opportunities to cross fertilize, our 2 communities and to stay with them longer as they grow and advance and their minecraft journey and then to other games beyond.

And then there is the third leg of monetization content.

With so much additional upside.

Super League generated over 30 per cent of their revenue last year from content through syndication and selling our content and technology as a service the pandemic brought on a global void and content and put a spotlight on both the value of our content library and a bit of Super League Diamond and the rough our patented cloud based Roe.

Video production and broadcast technology Virtual studios, which is beginning to show promise as a pure technology licensing play and itself and be on gaming applications.

With close to 3 million hours of combined package content on our 2 platforms in 2020 alone. We are only scratching the surface of where this compelling library of competitive gameplay and entertainment content can live.

But if you go a layer deeper there is more.

Our technology stacks have tremendous synergy.

Virtually all studios Livestream Tech stack is aimed at the high quality broadcasters and storytellers for professional sports teams like jet and G. Through 2 to top studios like Endemol Shine, who recently used our technology to produce the TV game show Lego Masters mob crushes technology provides and advanced set of tools for the <unk>.

And coming broadcaster and storyteller.

Put our technology stacks together and we can provide content producers at all levels streamers creators digital and television production companies branded content studios and more with and exciting suite of tools and capabilities designed for the unique needs of today's production and distribution realities as well as of forward opportunity.

To combine and cross sell of our technologies and tools to existing and new customers down the road.

Now before I hand, it over to Clayton and I would like to remind you of some of the compelling metrics. The come from this combination of <unk>.

First we reach of U S viewing audience of over 75 million monthly equivalent to a top 100 U S Nielsen media and property.

And per annum have over 7 billion video views across our owned and others streaming platforms.

This is of scale that will command the attention of brands and advertisers and that has already begun winning us our first combined deal with a notable top 3 global media powerhouse.

Again think about that already before we even merged today, we've already been able to go out and jointly sell and win a lucrative deal together because of the power of our AD inventories coming together.

Second on our last call I reported the mob crushes unaudited 2020 revenue was approximately $6 million with roughly 4 million coming from the advertising model and.

And 2 million coming from direct to consumer as combined companies. This means we would've had a split of 65 per cent AD revenue 25 per cent direct to consumer and 10 per cent from the burgeoning content monetization revenue stream.

While the AD model has historically been both company's bread and butter, we liked the healthy balance begin to emerge across our 3 points of monetization.

And I can share that the pro forma revenues of the combined new company for the first quarter of 2021 were $3.2 million all the while maintaining a strong margin profile.

Because this is where the story is headed early on we spoke to you mostly about the growth kpis as the leading indicators and have now started our charge towards the top line acceleration, but margins matter too as we continue a steady march to become sustainably cash flow positive.

So this is where the new we sits on this new day, where of modern media company placed and a prime position for the transformation of the advertising model as we've known it we are of modern consumer company leveraging the power of our tools and community to drive of shared economy, where both sides can win.

And we are of modern entertainment company focused squarely on where the younger generations content their slides with gaming because again, they're all gaming and.

At this point and I will turn the call over to the CFO Clayton Haynes, who will provide an overview of first quarter financial results after which I will come back on with some closing remarks Clayton.

Okay.

Thank you Anne and good afternoon, everyone.

I would first of all I too echo and sentiments expressed earlier regarding our excitement about the support that we received from shareholders and connection with our acquisition of Bob Crush and we are eager to get to work on integration as we move forward as the combined force and the gaming and creator ecosystem.

To summarize Super League Standalone results for the first quarter of 2021, we recorded another record quarter of revenues, which was slightly higher compared to our strong fourth quarter of 2020 and more than tripled compared to the first quarter of 2021.

We saw strong revenue increases across our 3 primary revenue streams.

Our cost of revenue was 192% higher compared to the prior year quarter as compared to the 224% increase and revenues for the same period with our average margin well above the Q1, 2020 level and our operating expenses relatively flat on a GAAP basis, leading to a lower GAAP operating.

The loss when compared to the prior year quarter.

As summarized in our earnings release previously filed on May 17, 2021.

First quarter, 2020.1 of revenues were 788000 compared to 243000 and for the first quarter of 2020.

The 224% increase was driven by strong triple digit increases for all 3 of our primary revenue streams, including advertising and sponsorships content sales and direct to consumer revenue.

Advertising and sponsorship revenues, which includes traditional advertising, including programmatic display and video.

And brand sponsorships of on owned and operated properties along with our more customized brand partner programs increased 170 per cent compared to the prior year quarter.

558000 as compared.

Through approximately 70.

And comprised of approximately 71 per cent of revenue for the first quarter of 2021 as compared to 85% of revenues of the first quarter of 2020.

Content sales, which includes our E sports and entertainment content related revenues and third party content licensing.

690% of the over the prior year quarter.

166000, and accounted for approximately 21 per cent of revenue for the first quarter of 2021 compared to approximately 9% and the prior year quarter.

Direct to consumer revenues, which primarily consisted of subscription and digital goods revenues related to our minds on digital property rose, 327% to 64000 compared to the prior year quarter and.

And accounted for approximately 8% of revenues compared to 6% and the prior year quarter.

First quarter 2021 cost of revenue increased 192% to 342000 compared to 117000 and in the comparable prior year quarter.

Lower increase than the 224% increase and revenues for the same period the.

The less than a proportionate increase in cost of revenue was driven by the increase and lower cost advertising and third party content sales and revenues during the first quarter of 2021 as compared to the prior year quarter.

As noted previously cost of revenues fluctuate period to period based on the specific programs and revenue streams contributing to revenue as each period and the related cost profile of our physical and digital experiences and advertising and content sales activities occurring each period.

First quarter of 2021 operating expenses were $5.1 million compared to $5.3 million and the comparable prior year quarter.

Noncash stock compensation charges for the first quarter of 2021 decreased to 411000 as compared to 702000 and the first quarter of 2020.

Excluding noncash stock compensation, our operating expenses increased slightly from $4.6 million to $4.7 million, reflecting net higher of selling marketing and advertising expense and support of the increase in revenue and to drive future monetization.

This increase was partially offset by a decrease and.

And technology platform and infrastructure expenses, which included a reduction in engineering related personnel costs and platform related intangible asset write downs, which was partially offset by an increase and cloud services and other technology platform cost, primarily reflecting the impact of the surgeon engagement across our digital properties.

Occurring subsequent to the fourth quarter of 2020 and continuing into fiscal year 2021.

Operating expenses for the first quarter of 2021 also included approximately 217000 of mob crush acquisition transaction related expenses.

Acquisition costs are expensed as incurred in the period incurred pursuant to the U S GAAP requirements.

On a GAAP basis, which includes the impact of non cash charges net loss from the first quarter of 2021 was $4.6 million or 23 per share compared to a net loss of $5.1 million or <unk> 60 per share and the comparable prior year quarter.

Excluding noncash stock compensation charges and other non cash charges on a pro forma net loss was $4.2 million compared to $4.1 billion and the comparable prior year quarter.

As described in our earnings release, and 8-K filed with the SEC on May 17 pro forma net income or loss is a non-GAAP measure of that we believe investors can use to compare and evaluate our financial results along with other applicable kpis and metrics discussed by and earlier.

Please note that our earnings release continues the more detailed description of our calculation of pro forma net loss as well as a reconciliation of pro forma net loss with the most directly comparable financial measures prepared in accordance with U S. GAAP.

Looking at the balance sheet as of March 31, 2020, 1 we had $36.7 million and cash no debt and total shareholders' equity of $40.2 million.

Monthly net cash burn rate continues to be and the 1.3 to $1.4 million range.

And response to the uncertainty associated with COVID-19, we execute of certain cost cutting activities and 2020 as discussed on previous calls that we expect will serve to keep our standalone monthly burn relatively consistent with past levels.

As previously reported during the first quarter of 2021, the company raised approximately $33.4 million and net proceeds from the sale of approximately $7.5 million shares of common stock at a weighted average price of $4 and 47 per share.

As and described earlier, we announced today that shareholders have approved the issuance of approximately $12.6 million shares of our common stock as merger consideration in connection with our acquisition of mob brush.

The transaction is expected to close on or about June 1st of 2021 subject to various administrative closing conditions as outlined in the merger agreement as amended previously filed with the SEC.

As such Super League first quarter of 2021 financial results as discussed here today are presented on it are presented on a standalone basis and do not include any financial results related to mob crush of.

Upon the closing month crushers.

<unk> financial results will be included in our reported results.

On a consolidated basis from June 1 and 2021.

And the anticipated transaction closing dates forward.

As a result of our financial results for the second quarter of 2021 will include approximately 1 month of Mark crush related operating results, including approximately 1 month of revenue and expenses.

Along with the impact of other acquisition related accounting entries as estimated and summarized on a pro forma basis and our definitive proxy filed with the SEC on April 30 of 2021.

Please note as Ann mentioned, we did include first quarter of 2021, comparative unaudited Standalone financial information for mob crush and of our definitive proxy statements filed with the SEC.

In summary, as disclosed in our definitive proxy mop prices first quarter 'twenty 'twenty..1 of results included revenues of $2.4 million of 43% from the prior year quarter net margins of approximately 34% total operating expenses of $2 million down 21% from the prior year quarter and the net loss of <unk>.

And $2 million down 37% from the prior year quarter.

Based on the first quarter 2021 results from a crush the net quarterly burn rate was and the approximately 400000 per quarter range.

Again, thank you for joining us today, and I look forward to being with you all for our Q2, 2020, 1 and earnings call.

That I will turn the call back over to and for some additional remarks and.

Thank you Clayton and in closing we're proud of the continued growth of the Super League team has demonstrated in the first quarter of 2021, both in revenue and Kpis. We're thrilled our shareholders have approved the highly synergistic merger with mob crushed and have already begun to work as 1 company to build scale and create a highly sought after solution.

And for advertisers targeting gamers, we look forward to providing more details on the combined company the new Super League on upcoming calls and with that Clayton and I are now happy to take your questions.

Thank you and to ask the question you will need to press star 1 on your telephone to withdraw the question press the pound or hash key again that he started 1 to ask the question. Please standby, while we compile the Q&A roster.

Our first question comes from the line of Jacob Silverman with Allianz Global please.

Please proceed.

Hi, and high Clayton and this is Jacob on for Brian Thanks for taking our questions.

Obviously, not all of US have an AD unit what is the annualized revenue for all available AD inventory that was still not including Bob crush.

Yeah no. It's a good question. So you know keep in mind that when we're talking about views, we're aggregating views on our own owned and operated channels and then we're also aggregating all of the reach that we get through our social channel. So that's Instagram that's tick tock now, obviously with Snapchat and our strategic partnership we've shown that we can provide.

<unk> them content and that we can kind of clear and AD revenue off of that that was a 400000 last year and well over 100000, and just <unk>. This year, but you know when we're talking about Instagram views and Tic Toc views, we do have ways to to try to embed some Brad.

And branded content and that clearly that's something mob crushed us really well with the way they can and bad premium AD inventory and stream. So we believe their capability on the social AD inventory side will really be powerful to help Super league optimize more of them, but right now you know when we talk about those.

Big viewership numbers, and we're really talking about only about 10% of them today have an AD unit against them and so you know we've got a couple of things. We're working on 1 is how do we add and optimize more AD units and our owned and operated how do we start to and bed and think more about the right now the viewership.

And where we don't have and AD unit available to sell.

And then the sell through rate right. So 1 of the reasons that I talked a little bit about programmatic today is because.

I did get some great comments from analysts previously who said Hey, you know every every view of perishable. So is there a way you can start to turn on programmatic don't have it cannibalize your direct sales, but but do add AD units that can start to create a little bit of of higher sell through rate for those AD units that still like.

Strapped of decent C. P. M. We're talking about video AD units and the programmatic space that have you know maybe of 5 to $10 C. P M, but theyre not taking away from our direct sales effort and we're starting to see about 40% sell through on programmatic as a complement to you know of lower per cent right now that we're selling out of.

On direct sales now that said my where I see direct sales going is I think we're getting really clever on our owned and operated about starting to almost be the the the driver of what the advertising and promotion is so you'll see things like us talking about winter Wonderland or.

Spring break and we have and upcoming activation around the and jam those are all things, where we're creating of beacon property and set of AD inventory and then we're learning the advertisers into join it and so it really is 1 of those things where it goes both ways, they're coming to us with their campaigns, but we're also starting to create these speak and.

<unk> to sell through more of that AD inventory and what I will do in future calls is try to break out a little bit more of the color about the AD inventory because of the end game the and stream. The inexperience and then programmatic are really 4 unique legs that have different metrics around them different tar.

And they take on different shapes of as we try to optimize the whole portfolio.

Great and on the topic of programmatic did you generate any programmatic revenue during the first quarter and.

Now when do you expect to start generating some programmatic revenue.

And you think it'll become a meaningful contributor.

Yeah. So we definitely started building out some of that programmatic out of and AD inventory and for Q.

And we do now have several units we've built out a and AD partner advertising Tech stack that has several different partners participating in that marketplace and right now, we're averaging about 200 and $500 of day and just programmatic alone and again that really is kind of like crazy.

The or icing on the cake, because where we're not really taking those AD units away from the direct sales effort. So it's supplemental.

And then just 1 last 1 from me.

Advertising budgets strengthened considerably what does that mean for Super League gaming better AD fill rates higher CPM or is there no major short term impact.

What I think it really means obviously sales force effectiveness is the big driver right. We want you know you can't sell out all of your out of inventory that you know best in class team sell out 70.580 per cent, but you know even combined Super League My price, we've got a ways to go right. So if we're selling now you know you know 10 to 20.

Per cent of our AD inventory, we've got so much opportunity to just sell what we have now that said.

I really do think the biggest trends that I'm looking at when we do our weekly pipeline calls the size of deal you know we have a 7 deals and <unk> that are 6 figure deals you know so you know that's up from you know and <unk> just a few deals that were 6 figure and and the important note that I mentioned and.

And the script is just you know the fact that over 70% of our <unk> deals for Super League is the Standalone were repeat buyers.

I think that bigger deal sizes repeat buyers is probably the 2 most important pipeline trends that tell you that you're really going to become a go to once they've put their money to work with you once if they're of Netflix or Disney plus and and you've been able to deliver them the ROI and the reach that they're looking for the next time they come to you for.

For that next big release, they're coming with more dollars to put to work and you become almost of go to like a staple inside there and they're kind of AD partner portfolio. So those are the things we're looking at when when we try to measure what tells us that the AD model is about to take off it's really deal size repeats and inevitably with the.

Pizza too.

You, you're you're you're you're ideally your clothing things faster right, because you're now very familiar with that AD partner and they understand how you work what you can offer and so I think the third thing that I would look at and and the overhaul overall health of the pipeline is just some speed to close.

Thanks, so much and.

Thank you.

Thank you. Our next question comes from Scott Buck with H C. Wainwright. Please proceed.

Hi, good afternoon guys.

I'm curious and on the increased size and the advertising deals do you have a sense of whether or not you're actually taking share of of advertiser wallet stewards and simply the size of the wallet, they're just getting bigger versus what it was a year ago.

Yeah, I think it's a little bit of both right I think because where where we have so much repeat.

And we're clearly going to be playing a lot more money, you know where I should say the advertiser.

That you know is that repeat buyers pay more money to work with Super League than they did last year. You know a good example, if you go into mine hut, you know over the last 6 months and you'll see that and of recurring basis, we're doing more and more work with Moose toys.

We've always had a long term partnership with large attack and and that's continued to increase especially over the last year and so I think that debt. You know we are taking a greater share of of specific brands wallet.

Because now, especially when you put our AD inventory with mob crushed there's really no type of competitive game or we can't reach I mean, we speak to such a broad range of age ranges and genres of games and skill levels debt. There's a good program for everyone now what I would say too is advertisers are coming back right.

Advertising classically always has a heavier back half of the year than the front of house. It's just it's just how it's always been they're putting more money to work when it's back to school and holiday, but certainly advertising's picked up well I thought the Super League and mob crushed and exceptional job really responding to the pandemic last year I mean ever.

He advertisers stopped spending money, even if you if you could put money to work against gaming properties, you're still froze a little bit and so I will say that you know I think both companies recovered well reposition themselves in front of advertisers and agencies and so I I see us having a really strong year and I expect similarly.

And that you'll see our revenues improve as we March and later into the year, because that's just when the AD model and general pandemic or not picks up.

That's helpful. Second 1 from from me can you give us some color on where my crushes, Ben and I don't want to say more successful, but maybe a little bit ahead of you guys on the direct to consumer side, and how you might be able to layer on some of that strategy into the legacy Super League business, Yeah. It's a great question.

You know what what mind Bill is is it's 1 of 6.

And the dedicated servers inside the game of Minecraft, and so that's where Microsoft who publishes minecraft. They are the people that hire companies like mob crash to run 1 of these gaming server. So that means if you of a son or daughter, who who turns on their iPad or or or.

Phone and they want to play the mobile version of Minecraft. This is 1 of our.

6 dedicated gaming servers that they can jump into and what the team of mob crush does is is under their great kind of dedicated Minecraft leadership, they spin up great gaming experiences and mindful that really look of kids into wanting to go in there because of the games are fun and exciting now once you're in mind Bill playing that game.

Again, and a mobile version and so you're playing on a tablet or phone.

If you choose to make purchases and that game, it's still on the back of the Microsoft or Minecraft marketplace, but what it means is that every time of kids and they're making purchases you get a rev share off of it and so the slight difference with mine Ville is if they don't solely on the customers the kids, who are playing and that.

Averse, because it's Microsoft and the beat of be relationship asking them to run 1 of those gaming servers and to really know what that commodity once but wow. It's a great amount of revenue like I said $2 million last year, but then where it gets interesting for us is.

When we talk about mine hut, that's our own owned and operated universe. We are the number 2 of server farm globally private server farm for Minecraft number 1 server farm and North America. So you know when we talk about aggregating. These millions of players. There are people we have a direct relationship with we have their email we're on.

And communication with them.

We've now introduced the marketplace as well, which has that kind of shared economy feel but this time the creator isn't the guys at mob crush making games the person that we're going to partner with to make the experiences and games cool or actually the 12 to 18 year olds, who using our service of small little difference with mine hut.

His main hub is mostly today.

Based on the the the job of software and what that means and Minecraft and that's the Kid playing on a laptop effectively so it's a little bit more of and advance player. So when I talk about cross fertilizing the communities, but also cross fertilizing the learning the the game modes.

We have a tremendous amount of expertise and mob crushed it that really knows a lot about that earlier stage Minecraft player Who's just getting started on tablet and then what we have and mine hut is exceptional leadership and knowledge about that more advanced player and you know the truth is the 2 gentlemen, who run those 2 business.

It's forest they've known each other for 10 years, because that's how small of the world is when you are a real avid minecraft enthusiasts and so these are 2 gentlemen, Mirage and Trent, who really are friends and they know a lot about each other's communities. So you put those 2 powerful knowledge bases together and we.

Can start owning of Minecraft players' journey and understanding you know really to your original question, how to monetize them and all different kinds of ways leveraging all of the capability and the tools already been built independently with boat. We just started.

Introduced the marketplace and for Q, we had never tried to really and a formal way monetize our direct to consumers clearly the the guys at mind Bill and their partnership with my Microsoft Hip and have been doing it longer and we are so excited to see how we can accelerate what we're doing on the the main hot side faster.

But there's the synergies go way beyond just top line.

That's the that's really helpful. I appreciate the time guys.

Thank you. Our next question comes from and Jack and vendor or a day with Maxim Group. Please proceed.

Great, Hi, Hi, and I quote and congrats on the mob crush and congrats on the on the acquisition or at least it sounds like it's almost going to be closed.

Couple of questions.

And maybe I'll just start with you mentioned that the the first quarter 'twenty, 1 pro forma revenues were about $3.2 million of.

Which and quite and kind of dug into this a little bit to the implies $2.4 million of mob crush our revenue just a couple of follow up questions on that can you just break out maybe what that or even just roughly breakout what that mob crush revenue of $2.4 was Bob between the category or type or is it just like the 100% adverse.

And related revenues.

No. It it was I would call it about 70.30 advertising to direct to consumer.

Got it that's helpful and nice and concise 70 to 30 day.

<unk> of about 30, okay.

And then is.

Is this $2.4 million and I saw that there was a bunch of pro forma statements released and of filing and at the end of April as Quintin mentioned is this sort of a good way to think about I'm not sure of what the seasonality might be related to this business. So as you look at the remaining normalized full quarters of contribution from up groceries to point for a good day.

And to work off or was <unk> seasonally stronger or slower and.

Color there would be helpful.

Yeah, you know, we don't give guidance, but but certainly I do think that you know right now where while we know that advertising is historically very seasonal and the first half of the year I think that the companies are early enough that you know what I would say is I think using you know 1 queue with some.

Very.

Reasonable modest growth is probably a good place to start if you want to think about the shape of revenues for the year.

Okay. That's helpful and then.

Just a housekeeping question just so I understand you know I think you said in your prepared remarks. The combined company will have 75 million monthly U S viewership audience and a 7 billion annually and then and the press release I think of like Super League had 578 million viewers and.

And the first quarter 'twenty, 1 so am I and my comparing apples to oranges with all of these various viewership and yeah or if you are okay.

It's a good question it does kind of get confusing and some of it is how these different social media partners, how people count viewership I mean, when we're talking about the 579 million and that's just Super League stand alone.

But the powerful thing is is that when you look at all of the gaming Influencers that are using mob crushes tools. These free tools to multi cast their live stream gameplay to their own personal channel. So so it's it's gaming gaming streamer, a it's him.

And to his his twitch and his Instagram and Facebook live accounts simultaneously. So we can count all of those people those nodes audiences as well so it's not a pure mob crusher Super League branded node, but we get to count that reach and that matters because when we.

Go to advertisers that reaches legitimate we can say look you're not just going to reach our influencer, you're going to reach everybody else that they reach and so that amplification effect does start to change the nature of the conversations we can have with advertisers both companies were starting to have.

A decent amount of materiality on their own so that we could sit there and have those conversations with the big brands and prove to them that we could deliver the reach that they need but you put the things together and as I said on the call you and a media is all about scale and so.

You know when we talk about being able to reach you know 75 million Americans monthly that's a big number and that's the number that wakes advertisers up and really goes back to a previous question about you know that's the number that legitimately can grab a bigger share of advertisers wallets, but what we will be doing you know 1 thing I.

We did well and Super League over the course of the last couple of years of being public is we just kept really simplifying our story because we know you guys are saying, they're saying how do I model of this so what I would say is when we are able to talk and.

As a newly combined company and our next call we're going to really think about how to just stay on that simple track here of the few the kpis that you need to care about and here's how they relate specifically to each revenue stream. So that it starts to become a bit more way that you guys can start thinking about model.

And because it does also go back to an earlier question about how do I think about programmatic. So what we're gonna do once we get the company's integrated is really think about how we can present that narrative to you. So it just makes it a little little more simple.

Okay, great no that that'd be very helpful. And then just just maybe a follow up question kind of unrelated may.

Maybe if you could talk about the advertising revenue mix between your owned and operated channels versus the third party channels, excluding mob crush, so where where does that mix today for Super League and then where do you see that heading 1 to 2 years down the road and and then longer term from a yeah.

And revenue Mackay early direct sales on our owned and operated.

Because that is really you know at the heart of it.

What is the most premium AD inventory, we have the way that we can integrate and advertiser authentically and game is is very compelling and you know what.

Do you have and interactive and activation and so the majority of it is and the owned and operated a we haven't pushed too hard on selling the AD units of the extended social reach we have but that's really where the strength lies with the mob crush is how to to kind of embed ad units and and sell the.

That kind of extended social reach through partners channels. So it's almost predominantly for Super League direct sales and then the beginnings of the programmatic, which like I said, it's they're decent C. P. M and it's becoming you know a nice kind of chunky amount of revenue that is is not cannibalizing the direct sales.

Units, but as I mentioned earlier you know, we're seeing you know days, where we're doing 12 to $1500 of day and peer programmatic.

Got it fantastic that's very helpful and again congrats on the progress of the acquisition and that's it from me. Thanks. Thanks.

Thank you and as a reminder to ask the question simply press Star 1 on your telephone.

Our next question comes from Bill Morrison with National Securities. Please proceed.

Alright and Clayton.

Congrats on the shareholder vote and how about.

Just a couple of questions.

Number 1.

1 of the Cpm's looked like.

Comparable between companies and roughly similar.

Much of difference.

Yeah.

Hello.

Oh I'm sorry on here.

And the mob crush the P. M are very similar and.

So you know because what what is happening and their stream.

Is the streamer is holding up of Logitech mouse and speaking about why they love to play with it or they're taking a break and saying hey, I'll be back and stream with you and and 30 seconds, but watch. This video for this new you know a new car, that's coming out of new model or or it could be of new movie release.

And so because it's almost like a branded product placement. It has a same kind of rich C. P M and that kind of 10 to $15 range that we see with our our Super League efforts and you know look it is and it is the direct sales effort like ours right, we're going out to brands and we're matching brands up with them.

Inventory. The difference is just the kind of high end product placement of inventory is sitting inside someone else's gaming stream that happens to use the mob crushed tools for free.

Good Okay, that's great and then what's the take rate roughly 4 of the.

Bob crushed PTC.

The take rate on D towards the 1 of the split with Microsoft Oh Oh.

And it's it's generous.

And I don't know if it's if it's appropriate that we disclose it but it's it's it's a generous split them and so it's a it's certainly makes it more than the attractive from a margin perspective for us to invest the money that the mob crush team does and making new games and those game experience is great.

And and that's the nice thing about you know their business, we're staying with the little bit better of a margin profile and some of it is is because we started to really get a boost on margin coming out of our content side of the house you know, we're making you know 50% to 70% margin, whereas we repackage and.

And sell some of this derivative content. So that's why you're seeing Super League margins go from what we already thought was quite healthy and that 50 per cent range to you know as quite and reported you know of high 50 per cent for this this quarter now you know we don't want you to start modeling and how does the target, but certainly mob crushes.

Margins are strong and healthy when you look at their AD and D. T. C model combined I'm not quite as strong as ours, but when you look at them on a weighted basis. We think the narrative that this is still a a strong margin model.

Good top line growth and as I mentioned, you know starting to March towards a cash flow positive that's really the the rally cry for us over the next kind of the 12 to 18 months.

Beautiful right and then the too soon too soon to know or do you have any idea of.

And what the near term goals are and for the.

<unk> team of tools on the sales side.

Yeah, I think it would probably be best for us to just take the the the beat and integrate the 2 companies and teams I mean, certainly with Securities Counsel support we were able to start getting our sales teams together over the last few weeks you know their point of view is hey, you guys could commercially go out and sell together even.

And if you don't receive shareholder approval and so and we said, yes that would be true we would go out and sell together because if we can sell more together than apart why wouldn't we and so what that has been of great exercise and doing is a couple of things first of all fantastic Lee kind of complementary sales team and that's what you want right.

We want more more of our people to be revenue facing we said to you guys a year ago. We wanted to increase the percentage of revenue facing and talent well, we just inherited a wonderful and very talented sales team and mob crushed that just gelled perfectly with our team and.

And they are and they've been added a little longer to so they bring just a lot of great experience and and wealth. The second thing that happened is we compared pipelines and to our delight and surprise there wasn't a ton of overlap.

And so that was interesting that we thought gosh, we're not really going to cannibalize. Each other we're real strong and kind of toys and entertainment you know, but we had really no penetration and automotive well they've had some fantastically successful deals of mob crushed and automotive and other categories. So lots of overlap and synergy there.

And then the third thing as I mentioned and the scrip as you know we've already gone out and pitch together our heads of sales for both companies pitched at the new front E sports.

Even a few weeks back and you know just the exercise of putting our 2 sales pitch decks together and seeing how seamlessly the emerge and then the the fact that last week. We were made aware that we won a deal with the very notable big media company.

And that is buying of inventory from both its buy and inventory outside of Super League and its also going to pick.

Pick ups of mob crush inventory again, it just shows that some of these programs cut right across both companies' inventory that is now 1 it's the same inventory.

That's great.

So what is the profile of the team looked like.

Upon closing.

Roughly how many of your going to happen.

And their productivity level will be roughly.

Well productivity level I hope as high Bill My Heavens, we're all remote workers. So I mean, I think we live and breathe of our job these days, but but yeah. We will have the head count of.

Of about 80.

80 people.

There's some real good synergies I mean, and sales and engineering as I mentioned.

And because mob crush had done a lot of work to lean themselves out over the last year. They didn't have a internal finance team our marketing team. So it's not a classic you know M&A event, where the first thing you are doing is trying to slash costs and backed if any.

The thing I think it's gonna be notable if we can just whole cost because both companies are growing and you know when we start to turn our marketing talents onto mob crush who has been deprived of marketing capability, we're going to see growth and their platform as well and I think it's gonna say a lot if we.

He can just absorb that growth whether it be true head count or infrastructure with the current levels of spend we have but where I do know we are going to see acceleration is on the top line mm Theres no doubt in my mind. It was the whole reason.

And that we felt so confident and the and the opportunity was that we did see a 1 plus 1 equals call. It 3.4 of 5 I'm just on the AD model of load, but you're going to see it on direct to consumer and content I'm certain as well. So we will have a higher percent of people that are revenue facing they had a larger per.

Set of their overall head count that was focused on sales and direct to consumer and so we like that healthy balance that we'll have.

A healthy 1 third of the staff that are purely revenue facing 1 third engineering and then 1 third dispersed amongst you know biz Dev, which again as revenue facing but then a lot of the corporate functions as well.

Beautiful very exciting.

Thanks, a lot and talk to you later.

Okay take care of them.

Thank you and at this time. This concludes our Q&A session. Our line to turn the call back to Ms hands for closing remarks.

Yeah, what I wanted to do right before we close out as you know we had our annual shareholder meeting today and we did get a few questions that were asked him and I want to be sure that we have satisfied those passionate investors. We have there were 2 questions that really related to technology stack the broadcasting technology.

All of these stack so virtually all of studios for Super League and then the broadcasting <unk> technology that and monetization technology that mob crush offers up to its mid tier streamers and so I hope. The script has expressed that we do see a lot of synergies and that tech stack.

If you put their technology and our technology together all kinds of things start to emerge you know right now the mob crush model is a free model. So you get to use the tools for free but some of the more premium broadcast and aspects of technology that sit and virtual Alice.

For more of those high and storytellers broadcasters could become you know the could help them on crush turned into more of a freemium model, where you get a basic set of tools for free as you do now, but maybe for that really advancing creator who is starting to build out larger and larger social audiences and really aspires to.

B. The next Ninja you know maybe for them.

They can upgrade and they can start to access some of that that higher and kind of higher quality broadcasting tech and so we think theres a lot of synergies. There. We also think you know when we put those pieces of tack together it changes the all of the B to B conversations and it can have.

Whether we want to go talk to you know of high and studio like Endemol Shine about using more of the premium aspects of our tech stack, but there's all kinds of devices that sit out there that have streaming technology on it like you're yourself and so when you put the power of the 2 technologies together I think the business development partnerships.

Conversations are going to get really interesting and that opens up more of like a beat of be licensing. The SaaS model that almost becomes a fourth leg of revenue and that sits outside of the the 3 legs that we have now and then there was a question about potential rumors about.

You know other M&A and you know obviously, we are not in a position where we can comment on any other M&A. What we've always told you is very openly that we are seeking opportunities to accelerate the growth of the company and and that continues and when those things advance to a place that they require disclosure you know.

We will disclose that and you'll be the first people to know them and then the last question was about and F T's and.

Look certainly it's a it's a hot space and it has some interesting intersections with E sports and wagering and it is just an area that we continue to become more educated on and keep a close eye on them, but we don't have any material announcements on the N F T side to make it this time.

So I hope that that attempts to answer some of the questions that our investors posed at the AGM.

So with that we'd like to thank everyone for listening to today's call and we look forward to speaking with you at upcoming conferences and when we report our second quarter results and August Thanks again for joining.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

And.

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