Q4 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 fourth quarter and full year ended December 31, 20 to anyone joining us to T I Super League's President and CEO , Ann hand, and CFO Clayton Haynes, It's Halloween.

Mike's well open the call for your questions 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.

They've been provides important cautions regarding forward looking statements. The company's remarks during todays conference call will include forward looking statements. These statements along with other information presented that does not reflect historical fact, I subject a number of risks and uncertainties actual.

Actual results may differ materially from those implied by these forward looking statements.

Please refer to the company's recent earnings release and to the Companys reports filed with the Securities and Exchange Commission for more information about the risks 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 March 21st 2022, 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 cheap all W that Super League Dot Com now I would like to turn the call over to the President and CEO of Super League Gaming Ann hand Ann.

Good afternoon, everyone and thank you all for joining US today, we have a lot of great news to report so let's dive in first.

First I would like to run a humble victory lap for Super League's topline ramp we delivered $6 2 million of revenue in Q4, another record breaking quarter.

And we could run a second lap to celebrate the leading position we have built in meta versus gaming.

Not just our reach but also the richness of our products and offers for our gaming creators the brands weak heart and the players themselves the ultimate beneficiary of all we do.

2021 was a transformative year for Super League. We don't look like the same company, we did a year ago due to the integrations of mob crush banner Fi and more recently blocks does and when you look back on our history well we've come a long way in the earliest days, we started with young gamers focusing on youth E Sports and then we got.

Marter, and we went to where the young gamers are because they are gaming in the meta versus two thirds of all U S kids between the ages of nine and 12 play roadblocks games and that is just one segment of our gaming audience.

And this is nothing new.

Gaming has been around for over a decade and we've been in the meta versus for eight of those years. This is where we live.

Well it makes my diverse gaming so powerful so all consuming well it speaks to the next generation thirst for more than just competition. It provides community and also creation with infinite possibilities. They want to make the game change the game and play the game and be entertained by content related to the game.

Because those content creators are their people.

And as we've discussed on prior calls this digital playground is a rich landscape for commerce, as well driving digital and physical crossover in consumption.

Gen Z lives a fidget a life they do not distinguish between physical and digital world, but instead move fluidly between the two and their daily existence.

And they want their full life expressed in both worlds, which means they want the brands they feel an affinity to to be present to be associated with their digital and physical personas.

Our brand strategy for the meta versus not optional not just a line item on a marketing budget, it's a strategic imperative for customer acquisition retention and deepening loyalty.

No I'm sure for some of you when we speak about med averse games, and our business model it might sound a bit foreign ambiguous. So let me use a bit of a metaphor to describe how it works, but what we do is special and differentiate it.

I imagine that Super League operates a large game world or planet and there are other game worlds out there made by our talented creators and together we make for a vibrant connected network that can shuttle players back and forth.

Now imagine there are additional nodes surrounding our game worlds our content network.

This is where our audience live viewers.

Viewers, who we can transport by the millions into our game world to generate new content that flows back out to feed the greater ecosystem.

Coming self sustaining as it scales, a large dynamic med diverse network of game worlds and content.

So who are these gaming world creators inside of our network.

We have said before that the meta versus the next generation of social media and just like social media spawned a whole new class of content creators on platforms like Tech talk on Youtube with self made influencers rivaling the biggest media companies in the world. The meta versus has its own emerging starz creative pioneers, who command an outsized portion of consume.

Attention.

Who inspire engagement that drives the proliferation of self produced content and the building of valuable IP.

So just like there was a democratization of content creation unleashed by social media met averse or open world gaming platforms have democratized game design.

And what about brands, how do they come into play on these worlds well, we can provide immersive brand campaigns by transporting them into our existing game world or creating new game worlds for them and we can deliver the media reach and relevant content to fuel their brand objectives.

So let's come back up high again, we have a galaxy of gaming fanatics supercharged by our talented gaming world creators enhance by vibrant branded experiences and amplified by our omni media content bullhorn, creating a true network effect, because we control the network our gaming.

Fans generating close to 12 billion annual views fueled by the 75 million monthly active players we reach in our game World Network.

That's our evident Super League is a rocket ship to the med averse.

So with that let's turn to some financial highlights and additional business context.

First we announced our preliminary revenue results in February and as you saw in our earnings release. This afternoon, we surpassed both our Q4 and full year 2021 revenue estimates setting new records for quarterly and annual revenue.

As mentioned Q4 revenue was $6 2 million up 695% year over year and full year 2021 revenue was $11 7 million up 465% year over year.

Our three primary revenue streams, each increased significantly and particular advertising and sponsorship revenue in 2020 , one increased 584% over 2020 and made up 69% of total company revenue.

In Q4 advertising and sponsorship made up to 676% of total revenue up from 45% of revenues in the prior year quarter.

Gross margin for full year 2021 was 44%.

Gross margin for Q4 was 45% a seven point increase over Q3 2021 .

I had mentioned in our last earnings call that we saw a temporary dip in margins as we were absorbing the new inventory from our acquisitions and we would work to level set those C. P M and further optimize our inventory as you can see we are doing good work to work those margins back up.

We had $14 5 million of cash on hand as of December 31, 2021, while still investing in our technology and key acquisitions in the back half of the year and our balance sheet remains clean with no debt.

Now for some additional business context, along with the overall health of our advertising side of our business and what it means for our 2022 revenue expectations.

So, let's talk about our team and our products, what we have and what we offer.

First and foremost our acquisitions brought in talent fantastic sales and partnership leaders with hustle and enthusiasm for our innovative AD products close.

Close to 30% of our team is now revenue facing a best in class industry benchmark.

And we've deepened our product and engineering bench with very specific expertise in meta versus game design AD Tech creator tool development and data and analytics.

We are one of the only companies operating at scale in mind Hutton roadblocks with ambitions to port our products and know how into other meta versus gaming platforms.

So first let's talk about our consumer reach.

We have a library of dozens of our own Minecraft game engines that we can leverage across our main hut mindful and pixel Paradise properties and.

In addition through our game creative partnerships, we have access to 150 popular vetted roadblocks game world and that number keeps growing.

And there was content from live gameplay and entertainment broadcast to on demand clips for social distribution and Influencer partnerships, we have the ability to reach gaming audiences in the hundreds of millions through the combination of our own and our creators social media reach.

And embedded in these consumer properties or a variety of innovative AD products developer tools and analytics as we've mentioned as well as our technology to support content production and broadcasting and feed our content network and support our brands campaign objectives.

We offer a suite of meta versus gaming and content products from custom meta versus integrations inside existing games or the creation of new bespoke world supported by dynamic endgame AD units and custom content to drive amplification.

Imagine an immersive world of all things spiderman, or perhaps you bump into a minion, while you're playing a robot blocks game that you love and you were able to strike up a conversation.

Or be attracted to and entertaining Spongebob mean on a digital Billboard that provides advertisers with a 10 second impression these.

These are the kinds of innovative AD products, we have and why we are so unique why we command top dollar C. P M.

Now, adding content, perhaps a live stream of the spiderman gameplay world to support along with custom web and social content and now we've delivered a true end to end med adverse solution for advertisers.

This is becoming a shape of most of our deals brands want the whole package, which is why our deal sizes are growing.

A recent example is M T V.

We created their head wrapped up that'll game show called Wild and out in Minecraft and attracted over 6 million visits to the game along with 375000 views of the live broadcast and we do more for their their family Paramount, we work with Nickelodeon MTV and others, but.

But we don't stop there for advertisers and how we are different better we layer performance management on top of those innovative AD products, our advanced meta versus tools and analytics offer a deeper cut on geographic gender and device audience breakdowns.

Valuable insights not just for the brands engaging in our platform, but for the game creators as well to improve their player experience and engagement.

A couple of decades ago, the Internet offered the hope of a Holy Grail for advertisers, but in many ways. It fell short from a targeting and measurement point of view and it create attention and animosity with the consumer a feeling they were being interrupted shout it out.

The matter of ours has an opportunity to solve for that integrating brands and authentic ways, giving them a way to create a conversation a two way street with the audiences they seek.

Ported with targeted measurement for those for which the internet could not deliver in my view Super League is on the cutting edge of this.

And there was another critical component safety and compliance.

We are not only one of the most capable firms to jettison brands into the meta versus but we also offer a safer path.

Super League's trusted brand safe and Copa compliant inventory is one of the very few certified by the trusted kids Safe Seal program.

Recently, Robert Gay the CEO of bananas, one of our global reseller sales partners was quoted in desert day, stating that when Hasbro comes to him and he has spoken to them specifically about activations and roadblocks. He can assure them that Super League inventory is safe that's quite the testimony.

So as you can see this offer to brands as ground, we can offer premium engagement with their targeted audiences in a safe trusted and measurable way through deep multifaceted campaigns, leading to growth in the size and scope of our ideals and attracting a larger share of advertisers wallets.

So that's a good segue to the health of our advertising and sponsorship business from which the bulk of our revenues are derived and where we continue to see strong growth as evidenced in our Q4 performance our pipelines growing and we already are seeing good visibility into Q2 and Q3. Our average one deal size is now north.

100000, but more importantly, we have over 20 deals under pursuit at 250000 or higher and even some seven figure opportunities in the pipeline, while still upholding our premium and games C. T M. In the 10 to $25 range.

And we're winning deals with a growing diverse cross section of tier one advertisers from entertainment automotive CPG electronics toys and fashion to named several verticals.

Brands like Disney Paramount, Netflix Hyundai General Mills, Samsung Mattel Nike and more are our current customers.

Finally, another proof point on the health of our AD model are repeat percentages stay strong at.

At 70% the advertisers are coming back for more.

Yeah, we have a positive type of challenge on our hands are valuable inventory is expanding fast and it is covenant and different.

So the question, we wrestle with is how we can get it in front of more advertisers faster.

We spoke on the last call about the opportunity to forged strategic partnerships to create a global reseller network to augment our direct sales force efforts.

We have grown a bench of eight partners in just a few short months companies like bananas are global agency focused on gaming entertainment, which I referenced earlier to bring our inventory into the campaigns that are delivering for brands.

These partners have breadth and depth across all the big verticals, you would expect along with global geographic coverage to speed up the awareness for our innovative AD products and the structure of these partnerships preserve our premium C. P M and nice margin profile.

Finally, and I will add while growing our topline revenue is still our top priority in this rapid growth phase I want to ensure investors we are thinking about the bottom line as well.

Through strong revenue growth margin delivery and a strategy for judiciously controlling cost we intend to narrow our operating losses.

While still early in the year, we were off to a good start with a strong pipeline and backlog as mentioned, we believe Q2 will be stronger than Q1, and we see rapid value kicking in in the second half of the year when seasonal advertising starts to spend cut.

Coupled with our continued ramp in our sales capability and reach we predict another big year for Super League targeting 2022 annual revenue in the range of 20 million to $22 million.

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

Yeah.

Thank you Anne and good afternoon, everyone.

I would also like to express how pleased we are with our record financial results, we delivered in Q4 and full year 2021.

The trajectory of our future growth.

We continue to generate synergies from the properties, we acquired in 2021 as we further expand our reach into the meta burst.

And empower creators to create distribute and monetize their content.

First I would like to provide a summary, and analysis of our Q4, 'twenty 'twenty 2021 results and financial position.

Then a high level summary of the accounting impact of our M&A activities in Q4, 2021, and then lastly, a summary of our full year 2021 results.

As summarized in our earnings release filed this afternoon fourth quarter 2021 revenues were a record $6 2 million compared to 779000 for the fourth quarter of 2020.

The 695% 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.

Fourth quarter, 2021 advertising and sponsorship revenues, which include direct sales advertising and brand sponsorships as well as programmatic display and video advertising revenues.

Increased $4 4 billion to $4 7 million for the fourth quarter of 2021 up from 351000 in the fourth quarter of 2020 and comprised approximately 76% of revenues for the fourth quarter of 2021 as compared to 45% of revenues in the fourth quarter of 2020.

The increase in advertising and sponsorship revenues, primarily reflects a 154% increase in the number of revenue generating advertisers and a 429% increase in revenue per advertiser, reflecting in part the impact of our 2021 acquisitions on quarterly advertising direct.

Sales revenues as well as organic growth revenue.

Organic revenue growth across all of the components of our advertising and sponsorship revenue category.

Content related revenues increased 172% over the prior year quarter to 991000 up from 364000 in the fourth quarter of 2020.

Mounted for approximately 16% of revenue for the fourth quarter of 2021 compared to approximately 47% of revenues in the prior year quarter.

Content sales revenue is generated in connection with our curation that 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 and 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 wireless remote production of broadcast technology, which he merged has emerged as a strong component of revenue in the second half.

'twenty 'twenty, partly in response to some of the challenges presented by the COVID-19 pandemic.

The increase in content revenues for the fourth quarter of 2021 was driven by an approximately 500% increase in our livestream remote production broadcasting gameplay related content sales in the fourth quarter of 2021.

Reflecting a 100% increase in related customers and a 206% increase in revenue per customer.

Direct to consumer revenues, which consist of sales of digital goods and subscriptions across our owned and operated mine type digital property and our mine building pixel Paradise official Minecraft servers and partnership with Microsoft.

Rose, 645% to 477000 compared to 64000 in the comparable prior year quarter and accounted for approximately 8% of revenues for the fourth quarter of 2021 and fourth quarter of 2020.

Fourth quarter 2021 cost of revenues were $3 4 billion compared to 296000 in the comparable prior year quarter.

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

As a result of our 2021 M&A activities that we have described today and on prior earnings calls our advertising inventory has increased fivefold as compared to the prior year period and the first half of 2021.

Our sales and product teams have been and continue to absorb and optimize the significant increase in premium high quality advertising inventory.

From a detailed review of rate card pricing for our increasing array of high quality ad products.

To further technology automation and other cost factors that we believe will provide strong opportunities for us to drive up margins across our AD inventory in future periods.

As we have previously noted 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 of our advertising and content sales activities that occur in each period.

Fourth quarter 2021, operating expenses were $9 9 billion compared to $5 2 million in the comparable prior year quarter.

Noncash stock compensation charges included in operating expenses for the fourth quarter of 2021 were 772000 compared to 434000 in the comparable quarter comparable prior year quarter.

Operating expenses for the fourth quarter of 2021 also included significant noncash intangible asset amortization charges, primarily resulting from the application of acquisition accounting for our 2021 M&A related activities.

Total noncash amortization charges included in operating expenses for the fourth quarter of 2021 were $1 3 billion compared to 246000 in the fourth quarter of 2020.

Fourth quarter, 2021 sales marketing and advertising expense increased over the comparable prior year quarter, primarily reflecting an increase in personnel costs in connection with the acquisition of mob crush and the strong mob crushed 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 in connection with the acquisitions of <unk> crusher blocks bids totaling 525000, and an increase in digital marketing I guess marketing expenses, which were low rate.

The fourth quarter of 2020 due to due to the continued impact of the COVID-19 pandemic and the prior year quarter.

Fourth quarter of 2021 engineering technology and development expenses increased relative to the prior year comparable quarter, primarily due to an increase in engineering personnel in connection with the acquisition of mob crush and an increase in cloud services and platform infrastructure costs totaling $1 1 billion.

The impact of the surgeon engagement across our digital properties, beginning in 2020, and continuing into 2021 as well as incremental costs related to our 2021 acquisitions.

The increase in engineering technology and development expenses also included the amortization of developed technology related intangible assets acquired in connection with the acquisitions of mob crushed banner five blocks is totaling 337000.

The increase in general and administrative expenses in the fourth quarter of 2021 was primarily due to a slight increase in personnel costs and related stock based compensation compared to the fourth quarter of 2020 totaling 268000.

And increased professional fees, including legal audit and advisory service related costs related to our 2021 acquisitions.

The change also reflects noncash trademark influencer in developer related intangible asset amortization charges related to intangible assets acquired in connection with the mob fresh in blocks of business acquisitions totaling 163000.

On a GAAP basis, which includes the impact of noncash charges and credits net loss in the fourth quarter of 2021 was $7 1 billion or <unk> 19 per share compared to a net loss of $4 7 million or <unk> 31 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 fourth quarter of 2021 was $5 1 million or <unk> 14 per share compared to $4 1 million or <unk> 26 per share in the comparable prior year quarter.

The change primarily reflects the significant increase in top line revenues and gross profit.

And the expense related relationships and fluctuations described earlier.

The weighted average diluted share count for the fourth quarter of 2021 was $36 7 million shares compared to $15 5 million for the fourth quarter of 2020.

The weighted average diluted share count for the fourth quarter of 2021 reflects the impact of the issuance of a total of $13 5 million shares of our common stock in connection with the combined acquisitions of mob crushed benefiting in blocks is in 2020 one.

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.

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 December 31, 2021, we reported $14 5 million in cash $16 1 million of working capital no debt and total shareholders' equity of $97 million.

The change in cash balances in the fourth quarter of 2021 included $3 million of cash consideration paid in connection with our acquisition of block space in October 2021.

The initial consideration also included 1.030 million shares of common stock for total initial consideration of $6 million.

Consistent with our outlook discussed during our Q3 2021 earnings call.

Our current monthly net cash burn rate is expected to be in the $1 5 million to $1 7 million range as we continue to focus on and control costs in connection with the integration of our 2021 acquisitions.

Next I wanted to provide some information regarding the Q4 2021 balance sheet impact of October 2021 acquisition of blocks as we discussed the impact of the accounting for the mob crush and <unk> acquisitions on our financial statements on our Q2 and Q3 earnings calls. So my comments today will address our accounting for the blocks news transat.

King.

As previously reported we closed blocks of this transaction on October four 2021.

Our results released today include the results of operations for block space from the closing date to December 31 2021.

As summarized earlier the initial closing consideration for box based transaction totaled 6 million comprised of $3 million in cash and $3 million in common stock.

With the remaining consideration up to $11 5 million being subject to an earn out based on the achievement of future revenue targets in fiscal year 2022.

Fiscal year 2023.

Our balance sheet impact of the blocks. This acquisition as of December 31, 2021 was comprised primarily of the capitalization of developed technology developer relationships and customer relationship related to intangible assets acquired totaling approximately $1 7 million.

The blocks this transaction was structured as an asset purchase however, under the applicable accounting guidance was required to be accounted for as the acquisition of a business.

Accordingly, we recorded approximately $4 1 million of goodwill in connection with applying the acquisition method of accounting to the box based transaction.

Next I would like to provide a summary of our full year 2021 operating results.

Fiscal 2021 revenues were a record $11 7 million compared to $2 1 million in fiscal year, 2020, reflecting a $9 6 million or 466% increase in year over year revenues.

Similar to the fourth quarter trend described earlier the increase in revenues was driven by strong increases on an annual basis in each of our three primary revenue streams.

Fiscal 2021 advertising and sponsorship revenues increased $6 8 million or 584% totaling 8 million for fiscal 2021 up from $1 2 million in fiscal 2020 and comprised approximately 69% of revenues for fiscal 2021 as compared to 57.

Percent of revenues in fiscal 2020.

The increase in advertising and sponsorship revenues, primarily reflects a 95% increase in our direct sales advertising revenue generating advertisers.

And a 250% increase in revenue per advertiser, reflecting in part the impact of our 2021 acquisitions as well as organic revenue growth across each of the components of our advertising and sponsorship revenue category.

<unk> also reflects a 111% increase in programmatic display and video advertising revenues, primarily within our Minecraft digital property might not.

Content related revenues in fiscal 2021 increased to $1 5 million or 208% year over year to $2 3 billion accounting for approximately 19% of revenues in fiscal 2021 compared to approximately 36% of revenues in fiscal 2020.

The increase in content revenues for fiscal 2021 was driven by a 481% increase in our lifestream remote production broadcast and gameplay related content sales during fiscal 2021, reflecting a 90% increase in the number of related customers and a 206% increase in revenue per customer for fiscal 2020.

One compared to fiscal 2020.

Direct to consumer revenues in fiscal 2021 increased to $1 2 million or 782% year over year to $1 4 million compared to 159000 in fiscal 2021.

Direct to consumer revenues accounted for approximately 12% of company revenues in fiscal 2021 compared to approximately 8% of revenues in the prior fiscal year the.

The increase in direct to consumer revenues, primarily reflects the impact of mine built and pixel Paradise digital good sales revenues for the stub period since the acquisition of mop crushed totaling approximately 1 billion along with organic growth of subscription revenues from our main hub platform.

Fiscal 2021 cost of revenues were $6 5 million compared to 856000 in the prior fiscal year.

The increase was primarily driven by the significant increase in related revenues in fiscal 2021.

So greater than proportionate increase in cost of revenues in fiscal 2021 was primarily due to the inclusion of seven months.

Press related direct sales advertising revenues, which have higher direct cost profiles.

While we continue to demonstrate a strong margin profile during fiscal 2021 as noted earlier in today's call our sales and product teams have continued to absorb and optimize the significant increase in premium high quality advertising inventory driven by our 2021 acquisitions and other organic activities, including the detailed review of <unk>.

Rate card pricing for AD products for their technology automation and other cost factors that we believe will provide strong opportunities for us to drive up margins across our AD inventory in future periods.

Fiscal 2021 operating expenses were $30 2 million compared to $20 million in fiscal 2020.

Selling marketing and advertising expenses increased 76% year over year due primarily to an increase in personnel costs associated with the acquisition of Mark crush and the integration of the related direct Salesforce acquired and net organic increases in marketing fulltime employees focused on monetization.

The increase in selling marketing and advertising expense also included the amortization of partner partner customer and advertiser related intangible assets acquired in connection with our fiscal 2021, 21 acquisitions totaling $1 2 million.

Engineering technology and development expenses increased 63% year over year due to an increase in cloud services and other technology platform costs totaling $2 7 million, which reflected the surgeon engagement across our digital properties and the impact of incremental cloud platform costs related to our 2021 acquisitions.

The increase in engineering technology and development expenses also reflects noncash amortization of developed technology related intangible assets acquired totaling 631000, and an increase in product and engineering personnel in connection with our 2021 acquisitions.

General and administrative expenses increased 23% year over year, primarily due to increased legal tax and valuation and other professional fees incurred in connection with our 2021 acquisitions as well as an increase in amortization of intangible assets acquired totaling 319000.

The increase in G&A expense also included an increase in stock based compensation in connection with our board approved compensation and retention programs.

Non cash stock compensation charges for fiscal 2021 increased to $2 4 million as compared to $2 million in fiscal 2020.

On a GAAP basis, which includes the impact of noncash charges and credits net loss in fiscal 2021 was $20 7 million or 69 per share compared to a net loss of $18 7 million.

$1 64 per share in fiscal 2020.

Excluding noncash stock compensation charges and noncash amortization of intangibles, our pro forma net loss for fiscal 2021 was $19 5 million or <unk> 65 per share.

Third to pro forma net loss of $15 1 million or $1 32 per share in fiscal 2020.

The year over year change primarily reflects the increase in top line revenues and gross profit in the year over year expense related relationships and fluctuations described earlier.

This concludes our summary of the financial results for the fourth quarter and full year 2021 again. Thank you for joining us today and I look forward to being with you all for our Q1 'twenty two 2022 earnings call in May with that I will turn the call back over to Ann for some additional remarks.

Thanks Clayton.

So to summarize 2021 was a game changing year for Super League, we continue to deepen our reach in meta versus gaming and our overall offer empowering gaming creators we.

We acquired companies that truly move the needle for us significantly expanding our AD inventory and building up our world class team.

Augmenting our AD Tech stack.

More heft to our product offerings, and enhancing and advanced analytics suite.

In short, we are making terrific progress in our business and excited about our 2022 strategy and plan.

To close I'll circle back to the universe metaphor I used in explaining our meta versus network game worlds and content.

We have achieved this by being pioneers by igniting connections with creators brands and players. This isn't an idea or concept. This is real it's established and we have the capability to create it for others, because we have and will continue to operate and grow it for herself the headline we live where we.

Play.

With that Clayton and I will now take your questions operator.

Thank you ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

And your first question will come from the line of Scott Berg of H C. Wainwright. Your line is now open you may ask your question.

Hi, good afternoon, and thank Clayton. Thank you for taking my questions.

First and I was wondering on.

On advertising revenue in the fourth quarter, a really nice step up there.

Is there a way to kind of disaggregate, what is just seasonal benefit to the quarter versus you know more kind of underlying trends.

Yeah, I think that obviously as we know <unk> is always going to be the biggest quarter because of that seasonal spend Scott so, but I would say that that's why I take comfort that this trend line as something that's carrying through into this new year is if you look at him right now.

Now our estimates for Q1 relative to prior year Theyre stronger if you look at right now what visibility we have into Q2 for this year, it's stronger than prior year and we even have some decent visibility into Q3, which we think will be better so while you're still going to see that seasonal shape.

I expect that all of our quarterly performances are going to continue to beat kind of same period. Prior year and then as I mentioned on the call you know other things that they tell us a lot about health is average deal size you know, it's it's it's becoming increasingly rare that we're going back to advertise.

There's pitching five figure deals six figure deals are now becoming almost the norm and the fact that we have a handful of seven figure deals I think is really tally those were things we couldn't even imagine a year ago.

You know, we even had situations recently, where we had an advertiser say great I. Appreciate the 750 K proposal, but what could you do with $1 2 million.

So those are the type of the way the nature of the conversations have changed.

And then of course, I'll point back to as well the 70% repeat number you know when you listen to those tier one advertisers that are spending money with us. The fact that we still continue to see repeat quarter on quarter in the 65 to 70 north of 70% range I think really establishes that were being.

Coming.

None to the brand and in the agencies that we work with them and that we are giving them something that's unique and something that is really performing well and so in those respects I think that we can only assume that that you know what happened in Q4.

And for 2021 is obviously has that extra like seasonal boost to it but the continued ramp we're going to see and and like quarters across all of our four quarters I think we will expect.

Great that's really good color on.

On gross margin again kind of nice step back up this quarter from from third quarter lows.

You know I know the expectation is to continue to walk that up but you know.

Maybe in terms of a longer medium or long term range can we get that back to where we were in 2020 and that kind of mid to high 50% range.

Yeah, we've always talked consistently about targeting kind of 50%.

I would say, though that I think that we have a window here, we have such a unique inventory and the reality is there is so much more AD dollars being put to work out there and we just can't get to these brands and advertisers fast enough. So I will say this I'm I'm happy that we were able to walk them.

Margins back up.

The team did a lot of hard work on that to really understand where we're outperforming for advertisers so and so.

Some cases, we just had natural opportunities to just increase our rate card and really get what these AD units are worth, but I would say as well if I cared about something more than anything I just want more people being introduced our inventory and if that means that there are opportunities to to kind of get out in front of brands.

And let them sample our inventory at a and tasted a little bit at a lower margin I'd be willing to do that because I think that when you look at the amount of inventory we have available.

Just if it stayed static which is not right, but if it was just static and you took a snapshot of it today and we were selling the majority of it out we're talking about not at in this case, you know what I'm projecting to be at $20 million to $22 million revenue year, you were talking about $200 million revenue here and so what I wanted.

Be careful of on margin is we are very focused on improving the bottom line performance of the company, but I definitely don't want to be as well kind of shortsighted.

Because I still think top line is is job number one.

Great I think that makes a ton of sense and then last one from me just curious about employee retention in the hiring environment, having spoken to some other companies this quarter. It sounds like the hiring environment, especially for for engineers is awfully tough. So just kind of curious what your experience has been there.

Yeah, No. That's a great question you know.

I've actually been pleasantly surprised you know we just yesterday was the two year anniversary of Super League, becoming a remote first company.

And when you look at the quality of the talent that we have across the board and especially in our product and engineering team. We've taken a giant leap from where we were two three years ago, and we have had kind of little to no churn.

And I've talked to other kind of see them OS at Big brand names that you would you all know and love and we've talked about why is that happening for Super League and I think a lot of it is the trust.

And.

Depreciation and flexibility, we've given to our staff because where remote first we no longer are just focused on finding the best talent local to the L. A market.

What we found for the amount of employees that we have that have either we hired from out of state or we've allowed to move out of state that they are just if not more productive and that we're able to get our business done faster smarter better and so I think that we've created a little.

Bit more of a.

Positive two way street with our employees and I think that it's actually made our retention stronger in a pandemic world and we're not gonna go back right. This formula is working for us and so we're going to continue to be remote first and to again. The keyword here is a lot of just trust and respect.

To hire good people and kind of get out of the way and let them do do the job they were hired to do and do it well.

Great. That's helpful and thank you again, guys for the time and congrats on the quarter.

Thank you.

Thank you again, if anyone would like to ask a question you May press star one on your telephone keypad. They had the next question comes from the line of Jack Vander <unk> of Maxim Group. Your line is now open you may ask your question.

Great.

And I quit and congrats on the solid results in exceptional guidance outlook.

Thanks for taking my questions. So.

A lot of my questions have been already touched on by the first speaker, but maybe a question on block and roblox.

I believe blocked has reached over 60 million active users or so in the month of October .

And with blocked is I think Super league's portfolio include more than 75 Roblox game titles. Just wondering do you have an updated count on blocks. There is monthly users and maybe number of roadblocks games in the portfolio.

Yeah, So it's about 150 roadblocks games and growing.

And when we talk about that 75 million monthly players that we are able to reach and met a first gaming.

Close to 65 million or more roughly are coming through roadblocks and the remainder through minecraft and minecraft. The reach we have is two fold.

Our owned and operated property mine hut, which has over 5 million registered users and then we also by extension.

Each we operate two servers on behalf of Microsoft inside Minecraft, that's mindful in pixel Paradise. So by extension, we're reaching minecraft additional audience is there, but we are not rolling those into into our numbers.

Got it that's very helpful. Yeah, that's great to hear too.

Maybe a question on the average deal size on some of the larger deals in the pipeline.

Nice to see these.

The scale quickly picking up so these seven figure size opportunities in only for comfortable providing more color on this but are these from existing customers that maybe started small or they are they new customers altogether, maybe a mix of both just maybe some more color on the source of those seven figure deals.

Yeah, absolutely they.

There are a little bit of both I'm thinking right now top of mind that there's two that have been brands and advertisers. We've done business with you know one about two years ago, one pretty consistently over the last four or five years.

It's just that we can offer so much more and then in some cases, it's new brands, who are saying, hey, I want to get into the meta versus and I kind of trust you guys to do it because you're not just an outside consultant you actually operate in the med adverse and you've proven what you can do for yourself. So I want you to do it for us and both of those cases, though Jack they are.

They're really beautiful rich multifaceted deals as I've mentioned, a little bit in today's call.

There are people, who are first saying advise me I'm trying to I'm trying to make sense of this as a brand then they're asking us to either built the met averse game for them.

And operate it or to find one of our great talented creators that's already a part of our network.

To help do that for them.

That theyre than asking us to continue to make that that matter versus game experience vibrant and then to augment it with you know rich social media live stream or or or video on demand content things that then can live for the brand on their social channels and <unk>.

Reach and start to kind of create more of like a 360 marketing campaign for them. The other thing with some of these larger deals as.

They kind of can be temporal it can be it's a it's a two to three month program for call. It north of a million dollars or they are deals where they're saying no I want you to create a persistent.

The diverse world I don't want it to Cott turn on and off I want it to live.

Can you imagine you know I'll I'll pick a name.

Like Barbie you.

Barbie shouldn't just be plastic.

She should live digitally she shouldn't just be a one time movie or or or streaming program. She should have a place where people who are real got barbie enthusiasts can live in their meta versus world and engage twenty-four seven with Barbie.

One example of what I mean, when I say, creating persistent worlds that that remain and are constantly ways to keep that deep kind of loyalty and engagement going with enthusiasts to love you know these these various brands or or or there, they're kind of characters or products.

I mentioned earlier that Nike has advertised in our platform.

You know you've seen as well in the news at Nike went out and create a meta versus world for themselves.

We're able to go to brands and say, we can do it all.

And again, we can do it all because not only have we've done it for ourselves, but you can imagine if you go out and just create a med averse world is still aren't gonna be sure people will go to it.

Power of this network of game worlds and content is that we can drive people to it. So what we can say to our brand as we can build it we can run it but we can also guarantee you're going to get great engagement, because we're going to leverage the massive network, we built behind it to make that that whether it's a temporal are long.

Standing campaign or brand experience, we can sustain it and keep it vibrant and healthy and and engaged so that's what we can do really differently that that others, who are pretending to say that they can represent France in the meta versus they can only do small pieces, but they can't guarantee.

That type of vibrancy and engagement you know I would say, where we're second only to the people who make the games of roadblocks and Minecraft himself and what we can offer to brands.

Great I appreciate the added color.

That's it for me again, congrats on the solid results and outlook.

Okay.

Thank you 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.

Thank you Mel well, we'd like to thank everybody for listening to today's call Clayton and I will be at the Roth Conference Tomorrow, we'll be holding a fireside chat presentation at Maxim virtual growth conference on March 30th and another fireside chat with Mike Crawford of B Riley on April 4th for their esports Investor day.

We look forward to speaking with you again, when we report our first quarter results in May and wish you all a lovely evening.

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

Okay.

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