Q3 2021 Super League Gaming, Inc. Earnings Call

[music].

Good afternoon, everyone and thank you for participating in today's conference call to discuss Super League Gaming's financial results for the third quarter ended September 30.

One.

Joining us today are Super league's president and CEO.

N C C F O Clayton Haynes following their remarks, we'll open the call for your questions.

Before but before we go further please take note of the company's Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 1995.

These statements provides important cautions regarding forward looking statements. The company three months during today's conference call will include forward looking statements. These statements along with other information presented that does not reflect historical facts.

Subject to a number of freeze and there's uncertainties actual results may differ materially from those implied by these forward looking statements. Please refer to the company's recent earnings.

Our next release and to the company's reports filed with the Securities and Exchange Commission for more information about studies and uncertainties that could cause actual results to differ I would like to remind everyone that this call will be available for replay through eight P. M. Eastern time on November 20, <unk> 2021 starting at eight.

P M. Eastern time Tonight, a webcast replay will also be available via the link provided in todays press release as well as on the company's website. If people W. Dot Super League Dot Com now I would like to turn the call over to the President and CEO of Super League Gaming and Hunt and.

Thank you Mary and good afternoon everybody.

We have lots of fantastic progress to report from material expansion in our creator and audience reach through to another record breaking revenue quarter.

But before we dive then I would be remiss to not mention the meta versus as it seems to be the buzzword of the quarter. Thanks in part to Facebooks rebranding.

According to did today, Google searches for meta versus stock have increased by nearly 18000% from this time last year, but this isn't news to us or to any of you as investors in Super League, we've been talking about the motor versus for some time and it's not just an aspirational statement. We are already there we are in it.

And it is bigger than a buzzword. It is a persistent user defined digital layer of our physical world. It is limitless and enables relationships commerce experiences and self expression.

And most of all it is not controlled by just one or a few it is built by creators and developers and it generates real human interaction and real world dollars.

That brings us right back to Super League. We are a creator centric platform a league of creators, who create and share with their audience their meta versus their gameplay and their livestreams. Our talented creators are the sun in our universe and by empowering them with our tools and economies their content and their audiences become a part of our <unk>.

<unk> is well.

Before I get into the business context for the quarter, Let me provide a quick recap of our financial performance in Q3.

Our third quarter revenues reached a record $3 6 million up 402% compared to Q3, 2020 and up 233% compared to Q2 2021.

Our three primary revenue streams, each increased significantly, notably advertising and sponsorship revenue made up 65% of our third quarter revenue up from 42% of revenues in the prior year quarter.

The reduction in our margins to 37% for Q3, 2021 is still healthy and in line with our expectations as the newly combined inventory has a lower weighted C. P. M. But this is just part of the transition as we continue to absorb and optimize our premium ad units.

Our balance sheet remains strong with $24 5 million of cash on hand as of September 30th 2021 and our balance sheet remains clean we continue to have no debt.

And as always there are leading indicators that represent the health of our growing ecosystem.

We currently have 1.1 million creators on our platform and as I said earlier creators bring in players and viewers through their engaging content that they develop and share.

Through those over 1 million plus creators, we reached nearly 70 million monthly active players players and our owned and operated properties have generated 90 million hours of gameplay through October.

And this leads us to spectators the audience viewing our creators content. We are currently trending to surpassed 10 billion views. This year five times, our views from 'twenty 'twenty, reaching a U S audience of over 119 million as verified by creator IQ.

Now this in itself is worth parts. The company. We are today is profoundly different than 2020, our type of business model requires critical mass for scale today, we have way more heft and have laid the foundation. This year for real scale in 2022 and beyond we aren't just a small player anymore.

Now I'd like to shift to other business updates.

So first a refresher on why we exist today Super League is a leading meta versus and creator economy platform at the intersection of gaming in pop culture dedicated to empowering everyday creators content creation is no longer the purview of big media companies democratized anyone with an active social media count is in the content business.

We want to support those creators that are looking to monetize their content in the new creator based economy with tools that enable them to build their audience and entertain their fans. Moreover people are consuming content in vastly different ways than they used to whether it's on Instagram tick tock snap Youtube twitch the traditional advertising model is no longer.

Efficient to create brand awareness and deliver marketing campaigns brands and advertisers need to go where this new generation plays and that's online and in the meta versus and since we control and gaming in stream advertising inventory. We can help brands reach this elusive audience of passionate highly engaged gamers and the seamless authentic way.

So let's move on to our recent M&A.

In the third quarter, we made moves that enrich our offer to creators and deepen our reach into the meta versus and in doing so expand our differentiated inventory for advertisers.

Most recently, we acquired a very exciting company called blocks, there's an acquisition perfectly aligned with our strategy block space enables roblox game developers to monetize their games through in game ads that take the form of creative Billboards that complement the gaming experience, allowing for natural discovery without interrupting gameplay.

Our portfolio includes more than 75 popular brand safe Roblox game titles and growing and provides brands with measurable advertising through blocks businesses advanced technology, which verifies view ability in the <unk> space and provides aggregated audience geographic language and device data.

The creator benefits from our technology as well through dashboards, providing monetization updates in game analytics boxes reached over 60 million monthly active users in October representing 30% of all roblox users and then October AD exposure time equated to 142 years of gameplay.

Needless to say, we are bullish on the potential for this product.

As well we are two months into the integration of banner Fi, which we spoke about on our last earnings call banner Fi extends our creator base in social media audience through a creator economy that overlays premium scalable custom AD placements into our creators native streams.

This industry, leading and friction free solution delivers a seamless way for advertisers to reach banner 565 million strong audience of social fans on Youtube. This.

This inventory now merged into our suite of AD products is allowing us to bring more international eyeballs for advertisers and boost the size of our campaigns to grab a greater share of advertisers wallets.

And this is just phase one by year end, we'll be integrating our technology to expand the banner fried product to all of our mob crush social media creators to further unlock their audiences and in turn making them our audience.

And it is now five months since Super League and mob crushed joined forces as you may recall mob crush enables live streamers to multi cast their gameplay streams across twitch, Facebook and more and monetize their content with custom AD placements similar to banner Fi.

Bob crush not only brought us the lion's share of our current U S audience reach but also a super skillful and Passional set of colleagues across all disciplines.

I believe we have demonstrated to the market that we are judicious when it comes to putting our cash and equity to work for inorganic growth that we identify smart opportunities that are on strategy and deliver on the integration of those opportunities. We are not about short term revenue Pops, we're building a differentiated position in the media and games gaming ecosystem.

And I would be remiss to not underscore again.

What M&A has brought us when it comes to our talent pool, our people from the breadth and depth of the capability I cited earlier the way we've been infused with talent from mob crush through to the very bright minds behind blocks. Those in banner fight that are now a part of our team Super League is punching above its weight, thanks to brilliant progressive thinkers focusing on delivery.

Superior products and results.

And with all of this M&A it is about more than the expansion of our in game and in stream AD inventory what might not be as obvious to the everyday investor just yet is the emerging common thread a connected technology backbone across our suite of Super League products and this is a big deal. It is as important as the valuable.

Spending AD inventory, we were on a path toward Ottoman date automation of our tech stack from AD unit delivery to campaign management tools and reporting and analytics for ourselves our creators and our advertisers. It's what will enable us to scale to increase our fill rates, while protecting our margins and expand into different game.

Yes, meta versus and to reach new creators and Influencers even beyond gaming.

And it's just not the technology that links us it is our brand too and our brand is Super League. While we have a suite of products and offers that speak to different types of creators and players we're not a holding company we are a platform.

Platform that can stay with the creator throughout their gaming and content creation journey.

What form that enables our business model to scale and a platform under the badge the Super League brand promises empowerment inclusion and community.

Before turning the call over to our CFO Clayton Haynes for a deeper dive on our financials I'd like to take a few minutes to review the solid progress we made this quarter across our three primary revenue streams.

So as we've said the heart of our business model is advertising, how we connect our creators and their audiences our supply side to brands and advertisers the demand side of the equation.

<unk> are becoming more progressive more sophisticated we are no longer educating them on the basics of how to reach cord cutting AD blocking gamers they get it.

But now we can do so much more for them than just achieve short term campaign objectives. We can provide them an even richer opportunity to create a new digital expression of their brand through persistent motor versus and social influencers that is authentic and engaging.

This is where meaningful brand affinity customer loyalty is built we are currently working across verticals from CPG to automotive to retail to introduce their brands to new audiences and drive digital to physical consumption crossover.

And the statistics prove it 76% of Gen Z C. It is easier to relate to brands with a digital presence and 60% say they feel affinity to brands as a result.

Our advertising and sponsorship business from which the bulk of our revenues are derived continues to see strong growth our pipeline of potential opportunities has quadrupled over the last six months and our average deal size in Q3 was just over $200000.

Premium in game and in stream C. P. M continue to be in the 10 to $25 range and our advertisers are validating the marketing performance, we deliver with over 74% of our deals in Q3 coming from repeat buyers.

We also continue to build out our programmatic advertising tech stack to automate and optimize the sale of our unused video and display inventory and.

And are seeing some nice recurring programmatic revenue coming through with healthy upside.

As well you might've seen our announcement about an expanded sales partnership with screen vision media, a national leader in cinema and premium out of home video advertising, we launched Super League spotlight as pre roll in over 2000 theaters across the country, giving our own direct sales team and Theres, a new property to sell against but there's more here.

The use of an indirect sales force or resellers is another critical part of our 2022 sales strategy through blocks visit banner five we now have a significant amount of international AD inventory and currently our fill rates across our network or a modest 10%. So you should expect to see us smartly expand our indirect sales.

To help us optimize the yield of our abundant growing inventory.

While premium game for diving as it's called is our central source of revenue we have products that go further downstream direct to consumer which accounted for 17% of our revenue mix. This quarter was up 900% over the prior year quarter and is a meaningful part of our revenue growth our three direct to consumer.

<unk> mine hut mine Ville and pixel Paradise, drawing millions of players on a monthly basis and through subscriptions and micro transactions, our creators and players can expand their server features and enhance their gaming experience.

Finally, there is our content revenue stream as we've described so far we are finding creative ways to distribute and monetize the trove of proprietary gameplay content created by our users.

Content made up 17% of our overall revenue mix in the third quarter, we continue to derive revenue from distribution partnerships with Snapchat, Cox media and others as well as the recently announced partnership with clicks television or streaming OTT network that will tap into our existing short form programming library.

But it's more than just the content there is value in the technology that sits behind it as you know from previous calls we continue to see increased revenue opportunities for virtual Alice our virtual studio technology for esports original gaming entertainment and beyond and the proof is in the numbers technology as a service revenue as a <unk>.

<unk> of our content revenue line represented 86% in the third quarter of 2021 up 68% from the prior year comparable quarter fueled by industry needs for remote production capability, along with our expanding partnerships with big name companies like Twitch and top golf.

To wrap dare I say, the word meta versus one more time, but seriously it feels so energizing to be able to communicate to our arden institutional and retail investors that were on the move that we're making things happen that we believe will make this a great investment decision for all of you I mentioned on our last call that you should expect at least <unk>.

7 million in revenue for the second half of the year because at the end of the day topline is still our number one priority in this rapid growth stage, well hitting $3 6 million in Q3 is a great start and we have enough line of sight to predict that we will deliver over $4 million in Q4 to beat our original estimate.

At this point I'll turn the call over to our CFO Clayton, who will review our third quarter financial results after which I will come back on with some closing remarks Clayton.

Yes.

Thank you Anne and good afternoon, everyone.

I'd like to start by expressing how excited we are to have added blockbusters and banner.

Roster.

Moreover, we continue to make significant progress on fully integrating the mob first team across sales engineering and other areas we.

We are delighted to see the synergies that we are generating from all of these new properties as we further expand our reach into the meta versus and enable creators to create distribute and monetize their content.

Jumping right into the results for the third quarter.

In our earnings release filed this afternoon.

Third quarter 2021 revenues were $3 6 million compared to 718000 for the third quarter of 2020.

402% increase in revenues was driven by strong increases for all three of our primary revenue streams, including advertising and sponsorships content sales and direct to consumer revenues.

Yeah.

Third quarter, 2021 advertising and sponsorship revenues, which includes direct sales advertising and brand sponsorships as well as programmatic display and video advertising revenues increased $2 1 billion or 689% totaling $2 4 million for the third quarter of 2021.

From 299000 in the third quarter of 2020 and comprised approximately 65% of revenues for the third quarter of 2021.

Third or 42% of revenues in the third quarter of 2020.

The increase in advertising and sponsorship revenues, primarily reflects the first full fiscal quarter of integrating mob crush add products to our platform and our sales team can take to market.

Contract sales revenues increased 63% over the prior year quarter to 618000 and accounted for approximately 17% of revenue for the third quarter of 2021 compared to approximately 53% of revenues in the prior year quarter.

Content sales revenue was generated in connection with our curation and distribution of E Sports and entertainment content for our own network of digital channels, and our media and entertainment partner channels.

Includes the syndication of licensing of original programming content user generated content, including online gameplay and gameplay highlights and the creation of content for third parties utilizing our virtue hours remote production in broadcast technology.

<unk> emerged as a component of revenue in the back half of 2020.

Yeah.

The increase in content revenues for the third quarter of 2021 was driven.

106% increase in our livestream remote production broadcasting game played related content sales activities in the quarter.

Direct to consumer revenues, which consist of sales of digital goods and subscriptions across our owned and operated mines digital property and mine Bill and pixel Paradise official Minecraft server products in partnership with Microsoft.

ROE was greater than 900 per cent compared to the prior year quarter to 627000 compared to 41000 in the comparable prior year quarter.

<unk> accounted for approximately 17% of revenues compared to approximately 6% of revenues in the prior year comparable quarter.

The increase in direct to consumer revenues, primarily reflects the first full fiscal quarter of mind Bill in fiscal Paradise digital good sales revenues in the third quarter of 2021 totaling 545000.

Third quarter 2021 cost of revenues was $2 3 million compared to 327000 in the comparable prior year quarter.

The increase was primarily driven by the strong increase in related topline revenues in the third quarter of 2021 as well as the impact of a lower margin on mob trust related ad products.

As a result of our 2021 M&A activities and we just as we have described today and on prior earnings calls our AD inventory has increased fivefold as compared to the prior year period and compared to earlier this year.

Our sales and product teams have been and continue to be in the process of absorbing and optimizing the significant increase in premium high quality advertising inventory.

From a detailed review of rate card pricing for our increasing array of AD products to technology platform automation and other cost areas that we believe will provide strong opportunities for us to drive up margins across our AD inventory in future periods.

As we have noted on previous calls cost of revenues fluctuate period to period based on the specific programs and revenue streams contributing to revenues each period and the related cost profile relative to pricing of our advertising and content sales activities that occur in each period.

Third quarter 2021, operating expenses were $8 3 million compared to $4 $7 million in the comparable prior year quarter.

Noncash stock compensation charges for the third quarter of 2021 increased to 636000 as compared to 472000 in the third quarter of 2020.

The increase in sales marketing and advertising expense, primarily reflects an increase in personnel costs in connection with the acquisition of mob crushed and the talented mob cross sales team and also reflects an organic increase of approximately five sales and marketing fulltime employees in support of the increase in revenues since the end of the prior year quarter and who focus.

On driving future monetization.

The increase in sales marketing and advertising expense also included noncash amortization expense related to sales and marketing related to intangible assets acquired.

Acquired in connection with the acquisition of mob trusts totaling 503000, and an increase in digital marketing expenses, which were lower in the third quarter of 2020 due to the impacts of COVID-19.

The increase in engineering technology and development expenses was primarily due to an increase in engineering personnel costs related to the mob crush acquisition and the related integration of the mob price engineering team as well as cloud services and other technology platform cost related to the overall surgeon engagement across our digital platform.

Norms.

As well as a full quarter of platform costs related to mob crush.

The increase in engineering technology and development expenses also included the amortization of developed technology related intangible assets acquired in connection with the acquisition of mob crush.

195000.

The increase in general and administrative expenses in the third quarter of 2021 was primarily due to a slight increase in personnel costs and related stock based compensation quarter over quarter.

The increase in G&A expense also included an increase in professional fees related to the acquisitions of mob crushed banner flying a block space.

Mm 124000, including legal audit and advisory service related costs.

The change also reflects noncash trademark and influencer related intangible asset amortization charges related to intangible assets acquired in connection with the mob crushed acquisition totaling 118000.

On a GAAP basis, which includes the impact of noncash charges and credits net loss in the third quarter of 2021 was $7 million or <unk> 20 per share compared to a net loss of $4 3 million or <unk> 36 per share in the comparable prior year quarter.

Excluding noncash stock compensation charges, and noncash amortization of intangibles, our pro forma net loss for the third quarter of 2021 was $5 5 million or <unk> 15 per share compared to $3 8 million or <unk> 32 per share in the comparable prior year quarter.

The quarter over quarter change primarily reflects the increase in topline revenues and gross profit and the expense related relationships are fluctuations described earlier.

The weighted average diluted share count for the third quarter of 2021 was $35 5 million shares compared to $12 1 million shares for the third quarter of 2020.

The weighted average diluted share count for the third quarter of 2021 reflects the impact of the issuance of the $12 1 million shares of our common stock in connection with the acquisition of mob crush as merger consideration and the all stock transaction, which closed on June one 2021.

As disclosed in our earnings release, and 8-K filed with the SEC. This afternoon pro forma net income or loss is a non-GAAP measure that we believe investors can use to compare and evaluate our financial results.

Please note that our earnings release contains a 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 September 32021, we reported $24 5 million in cash no debt and total shareholders' equity of $94 1 million.

Our current monthly Opex gross cash burn rate is expected to be in the $2 1 billion to $2 $3 million range, excluding the impact of nonrecurring M&A related transaction costs, and including incremental estimated costs related to our banner site in block space acquisitions.

Lastly, I wanted to provide some information regarding the Q3 2020 one's financial statement impact of our Q3 2021, and our more recent acquisition activities.

To discuss the impact of the accounting for the mob crush acquisition on our financial statements on our Q2 earnings call. So my comments today will address our banner flying blocks for this transaction.

As previously reported we closed the <unk> acquisition on August 24, 2021.

Super League results released today include the results of operations for <unk> from the closing date, which was August 'twenty four 2021 to September 32021.

<unk> did not have a material impact for the approximately one month stub period included in our Q3 2021 financials. However, as Dan mentioned identify expands the size and reach of our AD inventory as well as our advertising and sponsorship partner base and we look forward to <unk> technology platform being a revenue accelerator for us similar to mob fresh going.

Forward.

The initial closing consideration for the <unk> transaction totaled $2 4 million comprised of 525000 in cash and $1 9 million in common stock.

Jack to our customary hold back with the remaining consideration up to $4 5 million subject to an earn out based on the achievement of future revenue targets.

The balance sheet impact of the <unk> acquisition as of September 32021 was comprised primarily of the capitalization of developed technology intangible assets acquired totaling approximately $3 1 million, which included a noncash deferred tax liability related gross up totaling 505.

556000.

The benefit transaction was accounted for as an asset purchase under the applicable accounting guidance, Hence no new goodwill was recorded in connection with the accounting for the transaction.

In addition, we closed the blocks for this transaction on October four 2021.

Since the blocks. This transaction closed subsequent to the 930 quarter in Q3 2021 financial results do not include any of the operational results of block space.

Block space will be included in our financial results for the fourth quarter of 2021 from the closing date of October four to December 31 2021.

Again, thank you for joining us today, and I look forward to being with you all for our Q4 and year end 2021 earnings call.

With that I will turn the call back over to Ann for some additional remarks.

Thanks, Clayton well I hope you can all sense the enthusiasm we feel for what we've built to date and where we're headed as a company.

Our solutions provide in comparable access to talented creators and they're highly engaged audiences along with millions of players and the amount of Earth.

We will continue to expand our mat averse reach and suite of tools to further empower our creators to grow and monetize their fan base and as a result continue to grow our differentiated advertising inventory to enable brands to achieve impactful marketing outcomes with gamers of all ages.

And as I mentioned earlier Q4, Q4 is looking very very bright and with that Clayton and I will now take your questions operator.

Thank you as a reminder, if you wish to ask a question. Please press star followed by one on your thoughts on telephone. If your question has been answered or you wish to withdraw your question Bryce to biology.

Again, if you wish to ask a question. Please press star followed by one on your thoughts Don telephone.

Your first question comes from the line of Jack Vander <unk> from Maxim Group. Your line is open.

Great Hi, Ann Hi, Clayton and congrats on the solid momentum in the latest acquisition of blocks is pretty exciting stuff.

Thanks for taking my questions I'll just jump into it.

First let me just start with Super League and mob crush and their performance during the course Super League and mob crushed during the quarter.

And just how how did mob crushing Super League and the integration process, just how did that all play out in the results which were on the top line are clearly noticeable those uptick just how did that perform from relative to your expectations from the last time, we talked a couple of months ago.

Yeah, I mean, I would say very candidly that we delivered we proved the point we had said all along that you know you put together the powerful sales teams the powerful inventory and one plus one equals 345, and what we knew even before we close on the transaction is that we had already.

Sharing our pipelines and realize we werent chasing the same deals we were kind of had strengths in different verticals and more importantly that when you put the inventory together that now we can start really boosting the campaigns, we can be selling a lot more playing it a lot more AD inventory to work for these advertisers.

So you see that represented.

Not in the way our deal size has grown I mean, we used to to Pat ourselves on the back when an average deal size was in the 50 60 70000 range now we're talking about deal sizes that are you know.

Over 200000 on average.

And even when you look at what we're selling Jack I mean, we you know multiple rfps are going out and they are truly depending on whether the the brand or advertiser wants to reach a young gamer audience.

Or a older gamer audience, we're picking across widely across the inventory and then these rfps are bringing together lots of AD units that really not only out deliver for that campaign, but they're coming from legacy parts of mob crushing Super League combined and so you.

Really can't any more look at any of our campaign deals and in the advertising deals are pitching and say well that was a mob crush one that's a legacy Super League. One that's kind of the power, whether we're grabbing young or old or social influencers, whether we're touching into you know Super League zoned in.

Operated med adverse property with mine hot or now all the reach the block space Gibbs.

You're seeing us reach across all of those add properties to really give the advertiser are really unique blended campaign that none of us could have done independently. If I had to put a number on it I would say that I think at least a million dollars of the the revenue that we delivered in three Q again. This is just a guess estimate.

Is is really through the synergies and driving the deal size up because the not only the team, but the inventory came together.

Excellent I appreciate the added color there.

Just just speaking of which may be a follow up to that is on the advertising sponsorship side.

I believe I heard correctly that average deal size was around 200, K and AD inventory opportunities were up five five fold or five times over the prior year.

It is great to hear can you maybe just talk about how that average deal size and ad inventory.

Relates to your your expectations maybe for this same time next year.

That compares.

Yeah, I mean I I.

I can't really predict what.

What I would say is is that just like we're seeing a step change in the revenue of Super League from last year to this year.

We would expect a similar kind of step change as well you know, we really think that we've laid a lot of foundational work for 2021 into 2022 is a year, where we're going to show investors that we can really start ramping up again, continuing this trajectory ramp on revenues and so with that one of the things you need to do is make sure.

You have a healthy pipeline to supply.

And to deliver those revenue streams. So if we want to grow our revenues at some some rate we're gonna have to see a corresponding growth in the pipeline size I do believe we're going to continue to see the average deal size grow as well.

We are already winning pizza.

Pieces of business are bidding on pieces of business that now are more in the four 500 K range. We have a couple of those under our belt for the second half of this year and so.

I believe that the trend line that will continue and again it means that you know as we also see that other healthy metric that I spoke about earlier, 70% repeat.

That's so important because that means that we're delivering the outcomes the advertisers need.

But as I already said two when you now look across all the verticals that we're chasing these these AD deals on you know the richness of you know now a a you know for the second year in a row of rich deal that we've secured with Hyundai.

The automotive category the way, we're expanding into to retail and consumer products.

We want to see both the breadth and the depth in those verticals continue to grow and that's how the pipeline is going to grow and then the more AD inventory we have to sell that's compelling the more that we can drive up the overall deal size as well.

Excellent and then just let me switch gears and that covers the advertising side quite a bit.

Speaking of the creator side you mentioned you currently have over $1 million I guess $1 1 billion careers in your platform already and which might be rather impressive something that probably snakes under a lot of investors' radars.

Just given this new age of meta versus economy.

And given the emphasis on creators just a couple of things here does this create a number include <unk> and then second in general can you just speak on why having 1 million plus crazy so important to your business and how that kind of compares to your longer term plans for what how many more quarters youre going to add.

Yeah. The key is is that.

And I'll take the latter question first I mean, it is the core driver that that brings and community and content and audience and AD inventory into our flywheel right. So as I said, if the creators are the son of our universe every time, we add to create or there is a exponential.

New set of of eyeballs are audience that comes with that creator, there's that creators engaging content as well, which we can find derivative homes and monetization for just like we do with Snapchat and others and so the creator is kind of the way every time you add one into the flywheel. There is this amplification effect.

That happens around our community audience and kind of content engine so to speak.

Hmm.

What I would say about the the breakdown of that $1 1 million creators right now a significant of them are are.

Round, the meta versus so I would say that you know roughly.

Probably at least 50% we are people, who are creating their own games or realms inside a meta versus property now that can either be creating their own roblox game titles for which then they become a business partner of boxes, using the Blackberry technology as a way.

To sell AD units and to monetize their exciting roblox game.

Are there people who are earlier, they're kind of the future roblox game developers. They are the people on our property mine, where they're creating their own private realms in game play for their friends and growing audiences and keep in mind. Our main hub. We can have everything from a very young Gamer, who may be just has 10 friends inside their game to vary.

Sophisticated minecraft game developers, who are reaching thousands and thousands of players.

Now keep in mind too we're not done with just those Matt averse properties right. So if anybody thinks we're just focused on minecraft and roblox or not when I talked about that connected technology stack. The way that we can start to to drop AD units in a highly automated way to deliver care.

Pains in an automated way to extract analytics and reporting those things are now a backbone that we can start adding more and more madam first properties onto now the other half of that one point, well 1 million creator base about let's call. It 600000, and so little more than 50 person.

Are those social media Influencers. They are the social content creators that use our various tools, whether they have signed up for banner five because they want to the ability to have that very seamless custom AD placement drop into their Youtube videos and as a way to monetize there.

They're they're they're gaming centric content or they're using mob crushes multi cast tool. So that instead of me having to do one unique live streamed to Facebook and then jump on and do a second one for Twitch I can multi cast.

Across all my social channels, My Livestream gaming content, and then again participate in the the AD economy, which is a way to kind of take that that gaming interest and all of that hard work building your audience in your audience nodes across your various social channels and start to make a bit of a livelihood off of it. So every time.

We had somebody who is a game maker.

Or is streaming their game centric content that is an injection into the flywheel of of our audience growth of compelling content growth and and and really kind of in live and the whole universe and the way that a creator can amplify our growth overall.

I did mention the fact that we do go downstream if you imagine that the creator economy and they create or tools is that some of the universe well, yes. We do have these direct to consumer nodes right, where we go further downstream those things feed the universe to you know when we're when we're engaging with players.

And Minecraft, we can tell them about ways that they can start streaming their minecraft content through mob crushed tools. So we can bring in mudra links between those players back into some of our creator offerings as well and so their feedback back loops as well. These arent just adjacent separate businesses they are interconnected.

Two the kind of primary reason that we exist.

Okay, Great I think Ive asked enough questions I'll hop back in the queue again, great quarter, great to see thank you.

Thanks Jack.

Again, if you wish to ask a question. Please press star followed by one on your thoughts on the telephone.

Again, that's star followed by one on your thoughts on the telephone.

Your next question comes from the line of Bill Morrison.

We had national Securities. Your line is open.

Hi, Adam Clayton grants on the significant revenue growth in the.

Latest deals and transactions.

Just my first question.

I've not heard about a lot of about social media.

<unk> on your platform and can you remind me what percentage of.

You know your users and revenues.

Derived from social media Influencers, well keep in mind, what I'm talking about their bill is we're talking about the fact that when that stream or let's take that live streamer who's using the suite of tools for mob crush right. So they they use the free set of tools for this multi casting and then they can opt in if they want to participate in the <unk>.

And model the moment, they do that when I talk about us, reaching a $119 million.

U S audience, a month as verified by creator IQ that $119 million is for every one of those people using our mob crushed tools are using some of our other creator tools, we get to add up the audience is how many people follow them on Facebook or Twitch, we get to add up all their nodes and.

Aggregate that as our audience reach and so when we talk about creators social media Influencers. It's really the same group in that case. It's these people who are streaming content to their social media channels and and turn by using our tools, we get to control the eyeballs and AD.

Tori on that distributed set of nodes of their audiences across all of their channels.

So whether we call them social media creators are influencers, they're really the same thing now we do focus bill more on what we call the mid tier creator. So while we have very sophisticated tools and AD models that we think over time will attract those big Mega creators, we've always been about kind of entering and <unk>.

<unk> and our relationship with creators when they're earlier in their journey and just starting to add to build those audience. So that we can kind of grow with them as they become more and more power powerful influencers, but again all of that said the fact that if you add up the social media audiences of all of our <unk>.

Our social media creators alone that we're talking about almost a 120 million Americans.

As an audience a month, it's material and we would also take a point of view, which we we say to advertisers and they they agree which is that that kind of real kind of stickiness brand affinity real community happens at that middle tier where these are audiences that really are invested in.

This does kind of up and coming creator and want to follow their their compelling content.

Great and interesting and was there a number you put on as far as a percentage of inventory in it.

The address for that slot.

Oh, well I mean, you know look we I think the easiest way that we do try to talk about.

Our reach is I think it's best to say we really.

Divide our inventory into two buckets. There are things that we do as I mentioned earlier for that under 18 Gamer, we call that our young Gamer network and we pull from properties you know the games that we reach through block suppose for roadblocks with mine hut through Minecraft.

Our other minecraft properties in mind, they'll pixel Paradise, plus what we would call under 18.

Of these social Influencers and creators so if a brand wants to reach a call. It 14 to 16 year old demographic, we're going to pull from all that different AD inventory and say here's a package for you of a really compelling full circle campaign to reach this this young gaming audience and then when we talk about the <unk>.

Older demo.

That over 18 kind of more competitive gamer, we're gonna pull from our mob crush kind of influencers, which tend to be more of an 18 to 30 year old demographic of social media Influencers creators.

We'll also look at properties and offers like Super League Arena, our branded Super League social channels under frame rate.

Those audiences tend to overlap and so when were going for an older demographic, we will be pulling from those types of properties I would put banner fire as well.

Now in that kind of older game or demographic, but here's what's great. We can start.

Cross Fertilizing, we can start offering mob crush and banner phy products to younger gamers and start to build out more kind of social reach with young gaming audience is two to package that into our young Gamer campaign Rfps. So so that's really the way I would think about it and.

And you know I don't I think the point is I don't know if it's so important to split let's call. It 60 40 young to older Gamer the split of the inventory I think what's more important is is that we're we're not even we're barely selling out 10% now some of that you'd say well gosh Ann.

Is that mean that you guys just aren't good at selling no obviously not look at the step change of 402% increase in revenue relative to prior year. It's because at the same time as we're doing these acquisitions and we're organically growing our growth of our inventory is faster than we can sell it and so we've got to work on that and Thats why.

Selling bigger campaigns is good that'll up our our fill rates.

But we're kind of almost playing catch up right now because the overall inventory is growing so exponentially so fast it fast and very exciting ways, which is good for the investors that means that this picture only gets better.

Yes, it sounds great and along those lines.

Sure.

No big bump up in average deal size can you give me a little more color on what the advertiser pipeline looks like.

Like a number of different industries in a number of different logos that are.

How interested versus say six months ago. Yeah. I mean, you know I mentioned earlier the automotive sector is an exciting sector, where we've seen a lot of growth when I talk about CPG I'm talking about you know kind of the big name companies you'd expect you know all you know whether it's it's kind of talking to two <unk>.

He is like the PNG is of the world or the nestle's. It's about what are ways that they can start thinking about the matter versus a way to drive people into physical conversion.

Even seen it bill with fashion recently.

At first it looks like a gimmick when you see that a brand like Gucci you know high end luxury retail brand is selling virtual Gucci fashion accessories and video games, but think about it. The first thing is is well, it's very affordable to buy a $5.

<unk>.

Gucci Cape for your digital Avatar, So first you're introducing a brand that is seen as very exclusive to an audience that maybe you would never reach in a game and you're also starting not just a brand awareness journey, but a a legitimate interest in that brand. So not only is it may be a revenue stream.

Dream selling digital goods that Gucci never imagined would be even if it's small on their P&L, but know that person who has their digital avatar wearing these products is now going to a must have a much higher likelihood to actually want to bring a little bit of that brand into their physical lives as well.

<unk> to perhaps.

Shop online for physical goods or even walk into one of those stores and so when I talk about digital to physical crossover you even saw it and in our Moon.

Moon Jam.

Concert that we ran this summer in mind hut.

He had gamestop in there and there were ways that people could get educated on products that could drive people to to Gamestop web site or to their physical stores to do what the gamestop needs, which is to drive like for like sales online and in real life and so.

That digital to physical crossover is gonna be a game changer for brands and I'll I'll be even more direct.

I used to run a lot of brands globally for BP and what I would love to go back and tell that former self when I thought about digital marketing.

I saw it as a compliment as just a small sub component to my my overall campaign spend in dollars and I really believe that any CMO who's not thinking right now about the fact of what is my met averse play no matter, what vertical I'm in and how am I going to make that.

Central because see the meta versus doesn't ever go away.

You can think about all the campaigns you want to run all next year is a big brand and you could have a living complete expression a home for all those campaigns all year long and you can be building a different layer of customer interest and loyalty with it and so.

Those are the kinds of conversations I'm now, having with cmo's across tons of verticals Bill because I've stood in their shoes.

And this is what I wish my farm herself could've seen ahead of of my competitors.

Uh huh.

The.

You talked about better versus.

And your relationship with snap.

Are you going to tie into there.

Augmented reality ecommerce.

Product or how does that work.

You know, we already have a very healthy kind of strategic partnership with them.

I do not know of any specific plans to do that just yet, but there's just really no reason, if we're supplying them content.

That it's certainly theyre going to want that to integrate with the augmented reality e-commerce that they're building so while I can't say, we have an active conversation on it right now given its work in progress I would not be surprised that they would be taking that content that they are asking us to make for them where.

We do already today share a really healthy AD revenue share split when they are out promoting that content I can't imagine we wouldn't be overtime, tying some of those advertisers into ways that they can.

Click on that content and by whether it be in stream or inside the content or in the advertising that gets overlaid on top of it. So I think the key here is our relationship with snap and with Twitch. You know we're in a place where now we are doing business with them every month.

So in both cases, we've become strategic partners and so I think we're becoming a central.

Part of continuing to be heavily integrated and their strategy is going forward.

And my last question.

Given the recent deals what is the.

The AD platform look like going forward like how many screens and how many backend how many salespeople are what does that look like going forward.

Yeah, I mean right now we it's sales is definitely.

Engineering or the two largest teams in the company and when you look at what.

Now happened exponentially not just with mob crush, but then.

Bringing in mob crushed came with a healthy strong sales team, but now when you add in this fresh new exciting inventory with boxes and banner Fi.

You will see us continue to grow our sales team I think what I would do want to really emphasize for investors.

Is and I said it a couple of different times in different ways and the call is the other key is around the automation of our tech stack.

As you can see if we're selling a very small percent of our inventory and the inventory is not static it's continuing to grow one of the material ways that we can continue to sell more and more of our inventory, but not exponentially have to grow our sales team is through automation.

And so.

Whether that is through campaign meta tools that can create and deliver a campaign.

Extract real time reporting so that we don't have human bodies, putting those reports together, that's probably the thing that.

Maybe it wasn't as obvious.

Through just the press releases alone, but you know blocks present banner, if I did not just bring a new piece of that inventory and a chunk of new creators to the platform. They brought some tech behind it and its exactly the kind of tack that we knew we were gonna have to build for ourselves and so we got it.

Jumping ahead on the automation curve and some pretty exciting work and the product roadmap and for Q.

So now this automation journey it it's it will be marching through that through a lot of next year or two so this isn't something that's an easy switch to flip, but ultimately it means that while we will continue to to grow our sales team and our efforts. We don't have to every time, we get a new chunk of that inventory add bodies against it.

That's great. Thank you guys. So I was kind of looking for like the sales efficiency exam.

Exactly where it goes.

Forward, but yeah, no. We're definitely right now I mean, you know where you.

We're seeing that our sales team is is strong and performing we think best in class that you know every single sales person. It could be you know at their optimal efficiency selling you know two and a half 3 million of sales a year.

And so we know that right now worried about like call. It 25, 30% efficiency, but again, we're still absorbing all of this new inventory. The other thing is is that we are also really taking a look at not just fill rate, but just our overall C. P. M. Now that we've got some real case studies of how are you.

Yeah, It's a performing we recognize we can be pushing C. P. M is up and so a big piece of the work that Mike won the former CEO of mob crush is leading for us as he leads our sales team and all of those efforts as is how do we think more about yield management and how do we get the optimal amount.

Of of revenues and Cpm's out of our inventory how do we improve sales force efficiency and the use of resellers I talked about how do we use indirect sales as a complement not to cannibalize, our direct sales, but as a complement to them to make sure we don't leave any.

Sorry on the table you know inventories ultimately.

Perishable and so we think there's a smart way to through the use of our sales teams other sales teams like screen vision media.

And continuing to grow the health of our AD inventory will continue to see margins grow and then again automation plays a big piece of that too because it means that the more time, our salespeople can be selling and not delivering campaigns.

Thanks for answering all my questions I appreciate it.

At this time. This concludes our question and answer session I would now like to turn the call back over to MS. HANDE for closing remarks.

Okay, well, we'd like to thank everyone for listening to today's call them look for Super League participation at the Masters of the meta versus webinar on December 7th and the Wolfe Research Conference on December 14th and we look forward to speaking with you again, when we report our fourth quarter and full year results in March and with that we wish you guys a great evening take care.

Sure.

Yeah.

Ladies and gentlemen, this company's thoughts concludes today's teleconference. You may now disconnect. Your lines at this time. Thank you for your participation.

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Good afternoon, everyone and thank you for participating in today's conference call to discuss Super League Gaming's financial results for the third quarter ended September 30, plenty plenty want.

Joining us today are Super League's president and CEO and head N C. C. F O Clayton Haynes following their remarks, we'll open the call for your questions.

Before but before we go further please take note of the company's Safe Harbor statement, if we didn't the meaning of the private Securities Litigation Reform Act of 1995.

The statements provides important cautions regarding forward looking statements the company to Mikes. During today's conference call will include forward looking statements. These statements along with other information presented that does not reflect historical fact are.

Subject to a number of freeze and there's uncertainties actual results may differ materially from those implied by these forward looking statements. Please refer to the company's recent earnings.

Our next release and to the company's reports filed with the Securities and Exchange Commission for more information about studies and uncertainties that could cause actual results to differ I would like to remind everyone that this call will be available for replay through eight P. M. Eastern time on November 20, <unk> 2021 starting at eight.

P M. Eastern time Tonight, a webcast replay will also be available via the link provided in todays press release as well as on the company's website at people W. Dot Super League Dot Com now I would like to turn the call over to the President and CEO of Super League gaming and head and.

Thank you Mary and good afternoon everybody.

We have lots of fantastic progress to report from material expansion in our creator and audience reach through to another record breaking revenue quarter.

But before we dive then I would be remiss to not mention the meta versus as it seems to be the buzzword of the quarter. Thanks in part to Facebooks rebranding.

According to do today, Google searches for meta versus stock have increased by nearly 18000% from this time last year, but this isn't news to us or to any of you as investors in Super League, we've been talking about the motor versus for some time and it's not just an aspirational statement. We are already there we are in it.

And it is bigger than a buzzword. It is a persistent user defined digital layer of our physical world. It is limitless and enables relationships commerce experiences and self expression.

And most of all it is not controlled by just one or a few it is built by creators and developers and it generates real human interaction and real world dollars.

And that brings us right back to Super League. We are a creator centric platform a league of creators, who create and share with their audience their meta versus their gameplay and their livestreams. Our talented creators are the sun in our universe and by empowering them with our tools and economies their content and their audiences become a part of our <unk>.

University well.

Before I get into the business context for the quarter, Let me provide a quick recap of our financial performance in Q3.

Our third quarter revenues reached a record $3 6 million up 402% compared to Q3, 2020 and up 233% compared to Q2 2021.

Our three primary revenue streams, each increased significantly, notably advertising and sponsorship revenue made up 65% of our third quarter revenue up from 42% of revenues in the prior year quarter.

The reduction in our margins to 37% for Q3 2021 is still healthy and in line with our expectations as the newly combined inventory has a lower weighted C. P. M. But this is just part of the transition as we continue to absorb and optimize our premium ad units.

Our balance sheet remains strong with $24 5 million of cash on hand as of September 30th 2021 and our balance sheet remains clean we continue to have no debt.

And as always there are leading indicators that represent the health of our growing ecosystem.

We currently have $1 1 million creators on our platform and as I said earlier creators, bringing players and viewers through their engaging content that they develop and share.

Through those over 1 million plus creators, we reached nearly 70 million monthly active players players and our owned and operated properties have generated 90 million hours of gameplay through October.

And this leads us to spectators the audience viewing our creators content. We are currently trending to surpassed 10 billion views. This year five times, our views from 'twenty 'twenty, reaching a U S audience of over $119 million as verified by creator IQ.

Now this in itself is worth pause the company. We are today is profoundly different than 2020, our type of business model requires critical mass for scale today, we have way more heft and have laid the foundation. This year for real scale in 2022 and beyond we aren't just a small player anymore.

Now I'd like to shift to other business updates.

So first a refresher on why we exist today Super League is a leading meta versus and creator economy platform at the intersection of gaming in pop culture dedicated to empowering everyday creators content creation is no longer the purview of big media companies Democratized.

One with an active social media count is in the content business, we want to support those creators that are looking to monetize their content and the new creator based economy with tools that enable them to build their audience and entertain their fans. Moreover people are consuming content in vastly different ways than they used to whether it's on Instagram tick tock snap you.

Tuber Twitch the traditional advertising model is no longer sufficient to create brand awareness and deliver marketing campaigns brands and advertisers need to go where this new generation plays and that's online and in the meta versus and since we control and gaming in stream advertising inventory. We can help brands reach this elusive audience of passionate highly.

We engaged gamers and the seamless authentic way.

So let's move on to our recent M&A.

In the third quarter, we made moves that enrich our offer to creators and deepen our reach into the meta versus and in doing so expand our differentiated inventory for advertisers.

Most recently, we acquired a very exciting company called blocks does an acquisition perfectly aligned with our strategy blocks, but its enables roblox game developers to monetize their games through in game ads that take the form of creative Billboards that complement the gaming experience, allowing for natural discovery without interrupting gameplay are.

Portfolio includes more than 75 popular brand safe Roblox game titles and growing and provides brands with measurable advertising through blocks businesses advanced technology, which verifies view ability in the <unk> space and provides aggregated audience geographic language and device data.

And the creator benefits from our technology as well through dashboards, providing monetization updates in game analytics.

Those reached over 60 million monthly active users in October representing 30% of all roblox users and then October AD exposure time equated to 142 years of gameplay Needless to say we are bullish on the potential for this product.

As well we are two months into the integration of banner five which we spoke about on our last earnings call.

<unk> extends our creator base in social media audience through a creator economy that overlays premium scalable custom AD placements into our creators native streams. This industry, leading and friction free solution delivers a seamless way for advertisers to reach banner 565 million strong audience of social fans on Youtube.

This inventory now merged into our suite of AD products is allowing us to bring more international eyeballs for advertisers and boost the size of our campaigns to grab a greater share of advertisers wallets.

And this is just phase one by year end, we'll be integrating our technology to expand the banner fried product to all of our mob crush social media creators to further unlock their audiences and in turn making them our audience.

And it is now five months since Super League and mob crush joined forces as you may recall mob crush enables live streamers to multi cast their gameplay streams across twitch, Facebook and more and monetize their content with custom AD placements similar to ban or Phi.

Mob crush not only brought us the lion's share of our current U S audience reach but also a super skillful and Passional set of colleagues across all disciplines. I believe we have demonstrated to the market that we are judicious when it comes to putting our cash and equity to work for inorganic growth that we identify smart opportunities that are on strategy and.

Or on the integration of those opportunities we are not about short term revenue Pops, we are building in a differentiated position in the media and games gaming ecosystem.

And I would be remiss to not underscore again.

M&A has brought us when it comes to our talent pool, our people from the breadth and depth of the capability I cited earlier the way we've been infused with talent for mob crush through to the very bright minds behind blocks doesn't banner fight that are now a part of our team Super League is punching above its weight, thanks to brilliant progressive thinkers focusing on delivering <unk>.

Perrier products and results.

And with all of this M&A it is about more than the expansion of our in game and in stream AD inventory what might not be as obvious to the everyday investor just yet is the emerging common thread a connected technology backbone across our suite of Super League products and this is a big deal. It is as important as the valuable expansion.

Ending AD inventory, we were on a path toward Ottoman date automation of our tech stack from AD unit delivery to campaign management tools and reporting and analytics for ourselves our creators and our advertisers. It is what will enable us to scale to increase our fill rates, while protecting our margins and expand into different games.

Meta versus and to reach new creators and Influencers even beyond gaming.

And it's just not the technology that links us it is our brand too and our brand is Super League. While we have a suite of products and offers that speak to different types of creators and players. We're not a holding company. We are a platform a platform that can stay with the creator throughout their gaming and content creation journey a platform that enables our business model to scale.

Bill and a platform under the badge the Super League brand the promises empowerment inclusion and community.

Before turning the call over to our CFO Clayton Haynes for a deeper dive on our financials I'd like to take a few minutes to review the solid progress we made this quarter across our three primary revenue streams.

So as we've said the heart of our business model is advertising, how we connect our creators and their audiences our supply side to brands and advertisers the demand side of the equation.

<unk> are becoming more progressive more sophisticated we are no longer educate them on the basics of how to reach cord cutting AD blocking gamers they get it.

But now we can do so much more for them than just achieve short term campaign objectives. We can provide them an even richer opportunity to create a new digital expression of their brand through persistent motor versus and social influencers that is authentic and engaging.

This is where meaningful brand affinity customer loyalty is built we are currently working across verticals from CPG to automotive to retail to introduce their brands to new audiences and drive digital to physical consumption crossover.

And the statistics prove it 76% of Gen Z say it is easier to relate to brands with a digital presence and 60% say they feel affinity to brands as a result.

Our advertising and sponsorship business from which the bulk of our revenues are derived continues to see strong growth our pipeline of potential opportunities has quadrupled over the last six months and our average deal size in Q3 was just over $200000.

Premium in game and in stream Cpm's continue to be in the 10% to $25 range and our advertisers are validating the marketing performance, we deliver with over 74% of our deals in Q3 coming from repeat buyers.

We also continue to build out our programmatic advertising tech stack to automate and optimize the sale of our unused video and display inventory and.

And are seeing some nice recurring programmatic revenue coming through with healthy upside.

As well you might have seen our announcement about an expanded sales partnership with screen vision media, a national leader in cinema and premium out of home video advertising, we launched Super League spotlight as pre roll in over 2000 theaters across the country, given our own direct sales team and Theres, a new property to sell against but there's more here.

The use of an indirect sales force or resellers is another critical part of our 2022 sales strategy through blocks bids and banner Phi We now have a significant amount of international AD inventory and currently our fill rates across our network or a modest 10%. So you should expect to see us smartly expand our indirect sales.

To help us optimize the yield of our abundant growing inventory.

While premium game for diving as it's called is our central source of revenue we have products that go further downstream direct to consumer which accounted for 17% of our revenue mix. This quarter was up 900% over the prior year quarter and is a meaningful part of our revenue growth our three direct to consumer.

<unk> mine hut mine Ville and pixel Paradise, drawing millions of players on a monthly basis and through subscriptions and micro transactions, our creators and players can expand their server features and enhance their gaming experience.

Finally, there is our content revenue stream as we've described so far we are finding creative ways to distribute and monetize the trove of proprietary gameplay content created by our users.

Content made up 17% of our overall revenue mix in the third quarter, we continue to derive revenue from distribution partnerships with Snapchat, Cox media and others as well as the recently announced partnership with clicks television or streaming OTT network that will tap into our existing short form programming library.

But it's more than just the content there is value in the technology that sits behind it as you know from previous calls we continue to see increased revenue opportunities for virtual Alice our virtual studio technology for esports original gaming entertainment and beyond and the proof is in the numbers technology as a service revenue as a <unk>.

<unk> of our content revenue line represented 86% in the third quarter of 2021 up 68% from the prior year comparable quarter fueled by industry needs for remote production capability, along with our expanding partnerships with big name companies like Twitch and top golf.

To wrap dare I say the word met averse, one more time, but seriously it feels so energizing to be able to communicate to our arden institutional and retail investors that were on the move that we're making things happen that we believe will make this a great investment decision for all of you I mentioned on our last call that you should expect at least <unk>.

$7 million in revenue for the second half of the year because at the end of the day topline is still our number one priority in this rapid growth stage, well hitting $3 6 million in Q3 is a great start and we have enough line of sight to predict that we will deliver over $4 million in Q4 to beat our original estimate.

At this point I'll turn the call over to our CFO Clayton, who will review our third quarter financial results after which I will come back on with some closing remarks Clayton.

Yeah.

Yeah.

Thank you Anne and good afternoon, everyone.

I'd like to start by also expressing how excited we are to have added blocks foods and banner slides the Super League roster.

Moreover, we continue to make significant progress on fully integrating the mob first team across sales engineering and other areas.

We are delighted to see the synergies that we are generating from all of these new properties as we further expand our reach into the meta versus and enable creators to create distribute and monetize their content.

Jumping right into the results for the third quarter.

Summarized in our earnings release filed this afternoon third quarter 2021 revenues were $3 6 million compared to 718000 for the third quarter of 2020.

The 402% increase in revenues was driven by strong increases for all three of our primary revenue streams, including advertising and sponsorships content sales and direct to consumer revenues.

Yeah.

Third quarter, 2021 advertising and sponsorship revenues, which includes direct sales advertising and brand sponsorships.

As well as programmatic display and video advertising revenues increased $2 1 billion or 689%.

<unk> $2 4 million for the third quarter of 2021.

Up from 299000 in the third quarter of 2020 and comprised approximately 65% of revenues for the third quarter of 2021 as compared to 42% of revenues in the third quarter of 2020.

The increase in advertising and sponsorship revenues, primarily reflects the first full fiscal quarter of integrating mob crush add products to our platform, but our sales team can take to market.

Content sales revenues increased 63% over the prior year quarter to 618000 and accounted for approximately 17% of revenue for the third quarter of 2021 compared to approximately 53% of revenues in the prior year quarter.

Content sales revenue is generated in connection with our curation and distribution of E Sports and entertainment content for our own network of digital channels, and our media and entertainment partner channels.

This includes the syndication of licensing of original programming content user generated content, including online gameplay and gameplay highlights and the creation of content for third parties utilizing our virtue hours remote production in broadcast technology, which emerged as a component of revenue in the back half of 2020.

The increase in content revenues for the third quarter of 2021 was driven by 106% increase in our livestream remote production broadcasting gameplay related content sales activities in the quarter.

Direct to consumer revenues, which consist of sales of digital goods and subscriptions across our owned and operated mindset digital property and mine Bill and pixel Paradise official Minecraft server product in partnership with Microsoft Roes.

<unk> is greater than 900% compared to the prior year quarter to 627000 compared to <unk> 41 in the comparable prior year quarter.

And accounted for approximately 17% of revenues compared to approximately 6% of revenues in the prior year comparable quarter.

The increase in direct to consumer revenues, primarily reflects the first full fiscal quarter of mine Bill in fiscal Paradise digital good sales revenues in the third quarter of 2021 totaling 545000.

Third quarter 2021 cost of revenues was $2 3 million compared to 327000 in the comparable prior year quarter.

The increase was primarily driven by the strong increase in related top line revenues in the third quarter of 2021 as well as the impact of a lower margin on mob trust related ad products.

As a result of our 2021 M&A activities and we just.

As we have described today and on prior earnings calls our AD inventory has increased fivefold as compared to the prior year period and compared to earlier this year.

Our sales and product teams have been and continue to be in the process of absorbing and optimizing this significant increase in premium high quality advertising inventory.

From a detailed review of rate card pricing for our increasing array of AD products to technology platform automation and other cost areas that we believe will provide strong opportunities for us to drive up margins across our AD inventory in future periods.

As we have noted on previous calls cost of revenues fluctuate period to period based on the specific programs and revenue streams contributing to revenues each period and the related cost profile relative to pricing of our advertising and content sales activities that occur in each period.

Third quarter 2021, operating expenses were $8 3 million compared to $4 $7 million in the comparable prior year quarter.

Noncash stock compensation charges for the third quarter of 2021 increased to 636000 as compared to 472000 in the third quarter of 2020.

The increase in sales marketing and advertising expense, primarily reflects an increase in personnel costs in connection with the acquisition of mob crush and the talented mob cross sales team and also reflects an organic increase of approximately five sales and marketing fulltime employees in support of the increase in revenues since the end of the prior year quarter and who focus.

On driving future monetization.

The increase in sales marketing and advertising expense also included noncash amortization expense related to sales and marketing related to intangible assets acquired.

Acquired in connection with the acquisition of mob trusts totaling 503000, and an increase in digital marketing expenses, which were lower in the third quarter of 2020 due to the impacts of COVID-19.

The increase in engineering technology and development expenses was primarily due to an increase in engineering personnel costs related to the mob crush acquisition and the related integration of the mob price engineering team as well as cloud services and other technology platform cost related to the overall surgeon engagement across our digital platform.

Farms as well as a full quarter of platform costs related to mob crush.

The increase in engineering technology and development expenses also included the amortization of developed technology related to intangible assets acquired in connection with the acquisition of mob brush.

195000.

The increase in general and administrative expenses in the third quarter of 2021 was primarily due to a slight increase in personnel costs and related stock based compensation quarter over quarter.

The increase in G&A expense also included an increase in professional fees related to the acquisitions of mob crushed been applying a block space.

Mm 124000, including legal audit and advisory service related costs.

The change also reflects noncash trademark and influencer related intangible asset amortization charges related to intangible assets acquired in connection with the mob crush acquisition totaling 118000.

On a GAAP basis, which includes the impact of noncash charges and credits net loss in the third quarter of 2021 was $7 million or <unk> 20 per share compared to a net loss of $4 3 million or <unk> 36 per share in the comparable prior year quarter.

Excluding noncash stock compensation charges, and noncash amortization of intangibles, our pro forma net loss for the third quarter of 2021 was $5 5 million or <unk> 15 per share compared to $3 8 million or <unk> 32 per share in the comparable prior year quarter.

The quarter over quarter change primarily reflects the increase in topline revenues and gross profit and the expense related relationships are fluctuations described earlier.

The weighted average diluted share count for the third quarter of 2021 was $35 5 million shares compared to $12 1 million shares for the third quarter of 2020.

The weighted average diluted share count for the third quarter of 2021 reflects the impact of the issuance of the $12 1 million shares of our common stock in connection with the acquisition of mob crush as merger consideration and the all stock transaction, which closed on June one 2021.

As disclosed in our earnings release, and 8-K filed with the SEC. This afternoon and pro forma net income or loss is a non-GAAP measure that we believe investors can use to compare and evaluate our financial results.

Please note that our earnings release contains a 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 September 32021, we reported $24 5 million in cash no debt and total shareholders' equity of $94 1 million.

Our current monthly Opex gross cash burn rate is expected to be in the $2 1 million to $2 $3 million range, excluding the impact of nonrecurring M&A related transaction costs, and including incremental estimated costs related to our banner site in block space acquisitions.

Lastly, I wanted to provide some information regarding our Q3 2020 one's financial statement impact of our Q3 2021, and our more recent acquisition activities.

To discuss the impact of the accounting for the mob crush acquisition on our financial statements on our Q2 earnings call. So my comments today will address our gas volume blocks for this transaction.

As previously reported we closed the <unk> acquisition on August 24, 2021.

Super League results released today include the results of operations for <unk> from the closing date, which was August 24 2021 to September 32021.

<unk> did not have a material impact will be approximately one month stub period included in our Q3 2021 financials. However, as Ann mentioned satisfy expands the size and reach of our AD inventory as well as our advertising and sponsorship partner base and we look forward to <unk> technology platform being a revenue accelerator for us similar to mob brush going.

Forward.

The initial closing consideration for the <unk> transaction totaled $2 4 million comprised of 525000 in cash and $1 9 million in common stock.

Jack to our customary hold back with the remaining consideration up to $4 5 million subject to an earn out based on the achievement of future revenue targets.

The balance sheet impact of the <unk> acquisition as of September 32021 was comprised primarily of the capitalization of developed technology intangible assets acquired totaling approximately $3 1 million, which included a noncash deferred tax liability related gross up totaling 505.

556000.

The identified transaction was accounted for as an asset purchase under the applicable accounting guidance, Hence no new goodwill was recorded in connection with the accounting for the transaction.

In addition, we closed the blocks of this transaction on October four 2021.

Since the blocks. This transaction closed subsequent to the 930 quarter end for Q3 2021 financial results do not include any of the operational results of block space.

<unk> will be included in our financial results for the fourth quarter of 2021 from the closing date of October four to December 31 2021.

Again, thank you for joining us today, and I look forward to being with you all for our Q4 and year end 2021 earnings call.

With that I will turn the call back over to Ann for some additional remarks.

Thanks Clayton.

I hope you can all sense the enthusiasm we feel for what we have built to date and where we're headed as a company.

Our solutions provide in comparable access to talented creators and they're highly engaged audiences along with millions of players and the amount of Earth.

We will continue to expand our mat averse reach and suite of tools to further empower our creators to grow and monetize their fan base and as a result continue to grow our differentiated advertising inventory to enable brands to achieve impactful marketing outcomes with gamers of all ages.

And as I mentioned earlier Q4, Q4 is looking very very bright and with that Clayton and I will now take your questions operator.

Thank you as a reminder, if you wish to ask a question. Please press star followed by one on your thoughts on telephone. If your question has been answered or you wish to withdraw your question press the pound key.

Again, if you wish to ask a question please press star.

Followed by one on your thoughts Don telephone.

Your first question comes from the line of Jack Vander <unk> from Maxim Group. Your line is open.

Great Hi, Ann Hi, Clayton and congrats.

Congrats on the solid momentum in the latest acquisition of boxes pretty exciting stuff.

Thanks for taking my questions I'll just jump into it.

First let me just start with Super League and mob crush and their performance during the course Super League and mob crushed during the quarter.

And just how how did mob question Super League and the integration process, just how did that all play out in the results which were on the top line are clearly noticeable those uptick just how did that perform from relative to your expectations from the last time, we talked a couple of months ago.

Yeah, I mean, I would say very candidly that we delivered we proved the point we had said all along that you know.

You put together the powerful sales teams the powerful inventory and one plus one equals 345, and what we knew even before we closed on the transaction is that we had already started sharing our pipelines and realize we werent chasing the same deals we were kind of had strengths in different verticals.

And more importantly that when you put the inventory together, but now we can start really boosting the campaigns, we can be selling a lot more playing it a lot more AD inventory to work for these advertisers and so you see that represented.

And the way our deal size has grown I mean, we used to to Pat ourselves on the back when an average deal size was in the $50 $60 70000 range now we're talking about deal sizes that are you know over 200000 on average.

And even when you look at what we're selling Jack I mean, we know.

Multiple rfps are going out and they are truly depending on whether the the brand or advertiser wants to reach a young gamer audience or a older Gamer audience, we're picking across widely across the inventory and then these rfps are bringing together lots of ad units.

That really not only out deliver for that campaign, but theyre coming from legacy parts of mob crushing Super League combined and so you really can't any more look at any of our campaign deals and the advertising deals, we're pitching and say well that was a mob crush one that's a legacy Super League one.

That's kind of the power, whether we're grabbing young or old or social influencers, whether we're touching into you know Super league's owned and operated med adverse property with mine hot or now all the reach the blocks both Gibbs.

You're seeing us reach across all of those add properties to really give the advertiser are really unique blended campaign that none of us could have done independently. If I had to put a number on it I would say that I think at least a million dollars of the revenue that we delivered in <unk> again. This is just a guess estimate.

Is is really through the synergies and driving the deal size up because the not only the teams, but the inventory came together.

Excellent I appreciate the added color there.

Just just speaking of which may be a follow up to that is on the advertising sponsorship side.

I believe I heard correctly that average deal size was around 200, K and AD inventory opportunities were up five five fold or five times over the prior year.

It's great to hear can you, maybe just talk about how that average deal size and ad inventory.

It relates to your your expectations maybe for this same time next year.

Where that compares.

Yeah, I mean I.

I can't really predict.

What I would say is is that just like we're seeing a step change and the revenue of Super League from last year to this year.

We would expect a similar kind of step change as well you know, we really think that we've laid a lot of foundational work for 2021 and the 'twenty to 'twenty two is a year, where we're going to show investors that we can really start ramping up again, continuing this trajectory ramp on revenues and so with that one of the things you need to do is make sure.

Sure you have a healthy pipeline to supply.

And to deliver those revenue streams. So if we want to grow our revenues at some some rate we're gonna have to see a corresponding growth in the pipeline size.

I do believe we're going to continue to see the average deal size grow as well.

We are already winning.

As a business or bidding on pieces of business that now are more in the four 500 K range, we have a couple of those.

Under our belt for the second half of this year and so.

I believe that the trend line that will continue and again it means that you know as we also see that other healthy metric that I spoke about earlier, 70% repeat.

That's so important because that means that we're delivering the outcomes the advertisers need.

But as I already said two when you now look across all the verticals that we're chasing these these AD deals on you know the richness of you know now a you know for the second year in a row of rich deal that we've secured with Hyundai and the automotive category the way, we're expanding into to retail.

In consumer products.

Want to see both the breadth and the depth in those verticals continue to grow and that's how the pipeline is going to grow and then the more AD inventory we have to sell that's compelling the more that we can drive up the overall deal size as well.

Excellent and then just let me switch gears and that covers the advertising side quite a bit.

Just speaking of the creator side you mentioned you currently have over $1 million I guess $1 1 billion careers in your platform already which might be rather impressive something that probably snakes under a lot of investors' radars.

Given this new age of meta versus economy.

And given the emphasis on creators just a couple of things here does this create a number include virtual outlets and then second in general can you just speak on why having 1 million plus cars are so important to your business and how that kind of compares to your longer term plans for what how many more quarters youre going to add yes.

The key is is that.

I'll take the latter question first I mean, it is the core driver that that brings and.

Community and content and audience and AD inventory into our flywheel right. So as I said, if the creators are the son of our universe every time, we add to create or there is a exponential new set of of eyeballs are audience that comes with that creator there's that creators engaging content as well.

<unk>, which we can find derivative homes and monetization for just like we do with Snapchat and others and so the creator is kind of the way every time you add one into the flywheel. There is this amplification effect that happens around our community audience and kind of content engine so to speak.

Hmm.

What I would say about the breakdown of that $1 1 million creators.

Right now a significant of them are.

Around the met averse, so I would say that roughly.

Probably at least 50% we are people who are creating their own.

Games are realms inside a meta versus property now that can either be creating their own roblox game titles for which then they become a business partner of boxes, using the Blackberry technology as a way to sell AD units and to monetize their exciting roblox game.

Or are there people who are early are there kind of the future roblox game developers. They are the people on our property mine, where they're creating their own private realms in gameplay for their friends and growing audiences and keep in mind. Our main hub. We can have everything from a very young Gamer, who may be just has 10 friends inside their game too.

Sophisticated minecraft game developers, who are reaching thousands and thousands of players.

Now keep in mind too we're not done with just those Matt averse properties right. So if anybody thinks we're just focused on minecraft and roblox or not when I talked about that connected technology stack. The way that we can start to to drop AD units and in a highly automated way to deliver.

Campaigns in an automated way to extract analytics and reporting those things are now a backbone that we can start adding more and more madam first properties onto now the other half of that one point, well 1 million creator base about let's call. It 600000, and so little more than 50 per.

Are those social media Influencers. They are the social content creators that use our various tools, whether they have signed up for banner five because they want to the ability to have that very seamless custom AD placement drop into their Youtube videos and as a way to monetize that.

They're they're they're they're gaming centric content or they're using mob crushes multi cast tool. So that instead of me having to do one unique live stream to Facebook and then jump on and do a second one for Twitch I can multicast.

Across all my social channels, My Livestream gaming content, and then again participate in the the AD economy, which is a way to kind of take that that gaming interest and all of that hard work building your audience in your audience nodes across your various social channels and start to make a bit of a livelihood off of it. So every tie.

We had somebody who is a game maker.

Or is streaming their game centric content that is an injection into the flywheel of of audience growth of compelling content growth and and and really kind of enlivens, the whole universe and the way that a creator can amplify our growth overall.

I did mention the fact that we do go downstream if you imagine that the creator economy and they create or tools is that some of the universe well, yes. We do have these direct to consumer nodes right, where we go further downstream those things feed the universe to you know when we are when we are engaging with play.

Here's an minecraft, we can tell them about ways that they can start streaming their minecraft content through mob crush tools. So we can bring in mudra links between those players back into some of our creator offerings as well and so their feed back loops as well. These are just adjacent separate businesses. They are interconnect.

<unk> to the kind of primary reason that we exist.

Okay, Great I think Ive asked enough questions. So ill hop back in the queue again, great quarter, great to see thank you. Thanks Jack.

Again, if you wish to ask a question. Please press star followed by one on your thoughts on the telephone.

Again, that's star followed by one on your thoughts on telephone.

Your next question comes from the line of Bill Morrison.

With National Securities. Your line is open.

Hi, Aaron Clayton Greg.

Congrats on the.

Significant revenue growth.

Latest deals and transactions.

Just my first question.

I've not heard about a lot of social media Influencers on your platform and can you remind me.

What percentage of.

Your users and revenues.

Derived from social media Influencers, well keep in mind, what im talking about their bill is we're talking about the fact that we.

When that stream or let's take that live streamer who's using the suite of tools for mob crush right. So they they use the free set of tools for this multi casting and then they can opt in if they want to participate in the AD model. The moment, they do that when I talk about us, reaching a $119 million.

U S audience, a month as verified by creator IQ that $119 million is for every one of those people using our mob crush tools are using some of our other creator tools, we get to add up the audience is how many people follow them on Facebook or Twitch, we get to add up all their node.

And aggregate that as our audience reach and so when we talk about creators social media Influencers. It's really the same group in that case. It's these people who are streaming content to their social media channels.

And in turn by using our tools, we get to control the eyeballs and AD inventory on that distributed set of nodes of their audiences across all of their channels. So whether we call them social media creators are influencers, they're really the same thing now we do focus bill more on what we call the mid tier.

<unk>, so while we have very sophisticated tools and AD models that we think over time will attract those big Mega creators, we've always been about kind of entering and starting a relationship with creators when they're earlier in their journey and just starting to add to build those audience. So that we can kind of grow with them.

As they become more and more power powerful influencers, but again all of that said the fact that if you add up the social media audiences of all of our our social media creators alone that we're talking about almost 120 million Americans.

As an audience a month, it's material and we would also take a point of view, which we we say to advertisers and they agree which is that that kind of.

Real kind of stickiness brand affinity real community happens at that Middle tier where these are audiences that really are invested in this this kind of up and coming creator and want to follow their their compelling content.

Great and interesting and was there a number you put on for as far as a percentage of inventory in.

And AD revs for that slot.

Oh, well I mean, you know look we I think the easiest way that we do try to talk about.

Our reach is I think it's best to say we really.

Divide our inventory into two buckets. There are things that we do as I mentioned earlier for that under 18 Gamer, we call that our young Gamer network and we pull from <unk>.

Properties.

The games that we reach through blocks bids for roadblocks with mine had through Minecraft.

Our other minecraft properties in mind, though pixel Paradise, plus what we would call under 18.

Of these social Influencers and creators so if a brand wants to reach a call. It 14 to 16 year old demographic, we're going to pull from all that different AD inventory and say here's a package for you have a really compelling full circle campaign to reach this this young gaming audience and then when we talk about the.

Older demo that.

That over 18 kind of more competitive gamer, we're gonna pull from our mob crush kind of influencers, which tend to be more of an 18 to 30 year old demographic of social media Influencers creators.

We'll also look at properties and offers like Super League Arena, our branded Super League social channels under frame rate.

Those audiences tend to overlap and so when were going for an older demographic, we will be pulling from those types of properties I would put banner <unk> as well.

Now in that kind of older game or demographic, but here's what's great. We can start.

Cross Fertilizing, we can start offering mob crushing banner phy products to younger gamers and start to build out more kind of social reach with young gaming audiences to to package that into our young Gamer campaign Rfps. So so that's really the way I would think about it and.

And you know I.

I think the point is I don't know if it's so important to split let's call. It 60 40 young to older Gamer the split of the inventory I think what's more important is is that we're we're not even we're barely selling out 10% now some of that you'd say well gosh am does that mean that you guys just aren't good it's.

Selling no obviously not look at the step change of 402% increase in revenue relative to prior year, it's because at the same time as we're doing these acquisitions and we're organically growing our growth of our inventory is faster than we can sell it.

And so we've got to work on that and that's why selling bigger campaigns is good that'll up our fill rates.

But we're kind of almost playing catch up right now because the overall inventory is growing so exponentially so fast it fast and very exciting ways, which is good for the investors that means that this picture only gets better.

Yes, it sounds great and along those lines.

And a big bump up in average deal size can you give me a little more color on what the advertiser pipeline looks like.

Like a number of different industries in a number of different logos that are.

I don't know interested versus say six months ago.

Yeah I mean.

I mentioned earlier, the automotive sector is an exciting sector, where we've seen a lot of growth when I talk about CPG I'm talking about you know kind of the big name companies you'd expect you know.

Whether it's it's kind of talking to companies like the PNG is of the world or the nestle's. It's about what are ways that they can start thinking about the matter versus a way to drive people into physical conversion.

You've even seen it bill with fashion recently.

At first it looks like a gimmick when you see that a brand like Gucci you know high end luxury retail brand is selling virtual Gucci fashion accessories and video games, but think about it. The first thing is is well, it's very affordable to buy a five dollar.

Gucci Cape for your digital Avatar, So first you're introducing a brand that is seen as very exclusive to an audience that maybe you would never reach in a game and you're also starting not just a brand awareness journey, but a legitimate interest in that brand. So not only is it may be.

Our revenue stream selling digital goods that Gucci never imagined would be even if it's small on their P&L, but know that person who has their digital avatar wearing these products is now going to have a much higher likelihood to actually want to bring a little bit of that brand into their physical.

As well to perhaps <unk>.

<unk> online for physical goods or even walk into one of those stores and so when I talk about digital to physical cross over you even saw it in and are.

Moon Jam.

Concert that we ran this summer and mine hut.

He had gamestop in there and there were ways that people could get educated on products that could drive people to to gamestop website or to their physical stores to do what the gamestop needs, which is to drive like for like sales online and in real life and so.

That digital to physical crossover is going to be a game changer for brands and I'll I'll be even more direct.

I used to run a lot of brands globally for BP and what I would love to go back and tell that for myself when I thought about digital marketing.

I saw it as a compliment as just a small sub component to my my overall campaign spend in dollars and I really believe that any CMO who's not thinking right now about the fact of what is my met averse play no matter, what vertical I men and how am I going to make that.

Central because see the meta versus doesn't ever go away.

You can think about all the campaigns you want to run all next year is a big brand and you could have a living complete expression a home for all of those campaigns all year long and you can be building a different layer of customer interest and loyalty with it and so.

Those are the kinds of conversations I'm now, having with cmo's across tons of verticals Bill because I've stood in their shoes and and this is what I wish My farm herself could've seen ahead of of my competitors.

Uh huh.

And.

The.

When you talk about meta versus.

And your relationship with snap.

<unk>.

Are you going to tie into their.

Augmented reality ecommerce.

Product or how does that work.

You know.

We already have a very healthy kind of strategic partnership with them.

I do not know of any specific plans to do that just yet, but there's just really no reason, if we are supplying them content.

That it's certainly theyre going to want that to integrate with the augmented reality e-commerce that they're building so while I can't say, we have an active conversation on it right now given its work in progress I would not be surprised that they would be taking that content that they are asking us to make for them where we.

Do already today share a really healthy AD revenue share split when they are out promoting that content I can't imagine we wouldnt be over time, tying some of those advertisers into ways that they can.

Click on that content and by whether it be in stream or inside the content or in the advertising that gets overlaid on top of it. So I think the key here is our relationship with snap and with Twitch. You know we're in a place where now we are doing business with them every month.

So in both cases, we've become strategic partners.

And so I think we're becoming a central.

Part of continuing to be heavily integrated and their strategies going forward.

And my last question.

Given the recent.

What is the.

The AD platform look like going forward like how many screens, how many backend how many how many salespeople what does that look like going forward.

Yeah, I mean right now we it's sales is definitely.

In engineering or the two largest teams in the company and when you look at what has now happened exponentially not just with mob crush but then.

Bringing in mob crushed came with a healthy strong sales team, but now when you add in this fresh new exciting inventory with boxes and banner <unk> you.

You will see us continue to grow our sales team I think what I would do want to really emphasize for investors.

Is and I said it a couple of different times in different ways and the call is the other key is around the automation of our tech stack.

As you can see if we're selling a very small percent of our inventory and the inventory is not static it's continuing to grow one of the material ways that we can continue to sell more and more of our inventory, but not exponentially have to grow our sales team is through automation.

And so.

Whether that is through campaign method tools that can create and deliver a campaign.

Extract real time reporting so that we don't have human bodies, putting those reports together, that's probably the thing that I'm.

Maybe it wasn't as obvious.

Through just the press releases alone, but you know blocks present banner five did not just bring a new piece of AD inventory and a chunk of new creators to the platform. They brought some tech behind it and its exactly the kind of tack that we knew we were gonna have to build for ourselves.

And so we got a jump ahead on the automation curve and some pretty exciting work and the product roadmap and for Q.

So now this automation journey, it's it's it will be marching through that through a lot of next year or two so this isn't something that's an easy switch to flip, but ultimately it means that while we will continue to to grow our sales team and our efforts. We don't have to every time, we get a new chunk of that inventory add bodies against it.

That's great. Thank you guys. So I was kind of looking for like the sales efficiency exactly.

Going forward Yeah, no. We're definitely right now I mean, you know where.

We're seeing that our sales team is is strong and performing we think best in class that you know every single salesperson should could be at their optimal efficiency selling you know two and a half 3 million of sales a year.

And so we know that right now worried about like call it 25% to 30% efficiency, but again, we're still absorbing all of this new inventory. The other thing is is that we are also really taking a look at not just fill rate, but just our overall C. P. M. Now that we've got some real case studies of how our.

AD units are performing we recognize we can be pushing CPM is up and so a big piece of the work that Mike won the former CEO of mob crush is leading for us as he leads our sales team and all of those efforts.

Is how do we think more about yield management and how do we get the optimal amount of of revenues and cpm's out of our inventory how do we improve sales force efficiency and the use of resellers I talked about how do we use indirect sales as a complement not to cannibalize our direct sales.

But as a complement to them.

To make sure we don't leave any inventory on the table you know inventories ultimately.

Perishable and so we think theres, a smart way to through the use of our sales teams other sales teams like screen vision media.

And continuing to grow the health of our AD inventory will continue to see margins grow and then again automation plays a big piece of that too because it means that some more time, our salespeople can be selling and not delivering campaigns.

Right. Thanks, Thanks for answering all my questions I appreciate it.

Okay.

At this time. This concludes our question and answer session I would now like to turn the call back over to MS. Han for closing remarks.

Okay, well, we'd like to thank everyone for listening to today's call look for Super League participation at the Masters of the meta versus webinar on December 7th and the Wolfe Research Conference on December 14th and we look forward to speaking with you again, when we report our fourth quarter and full year results in March and with that we wish you guys a great evening take care.

Sure.

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