Q1 2024 Super League Enterprise Inc Earnings Call
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Operator: Greetings and welcome to the Super League First Quarter 2024 conference call. Please note this conference is being recorded.
Speaker Change: Greetings and welcome to the Super League first quarter 'twenty 'twenty four conference call. Please note. This conference is being recorded before we begin I'd like to caution listeners that comments made by management. During this call may include forward looking statements within the meaning of applicable security laws.
Operator: Before we begin, I'd like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of applicable security laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statements due to numerous factors. For a description of these risks and uncertainties, please see Super League's financial statements and MD&A for the First Quarter 2024 ending March 31st, 2024, available on EDGAR.
Operator: Important qualifications regarding forward-looking statements are also contained in Super League's earnings release distributed earlier this afternoon and also available on EDGAR. Furthermore, the content of this conference call contains time-sensitive information, accurate only as of today, May 15, 2024. Super League undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I'd now like to turn the conference over to Ann Hand, Chief Executive Officer.
These statements involve material risks and uncertainties and actual results could differ from those projected in any forward looking statements due to numerous factors.
Speaker Change: For a description of these risks and uncertainties. Please see super weeks financial statements and M. D N. A for the first quarter 'twenty 'twenty four ended March 31st 2024 available on Edgar.
Speaker Change: Important qualifications regarding forward looking statements are also contain it's Super League's earnings release distributed earlier. This afternoon and also available on Edgar. Furthermore, the content of this conference call contains time sensitive information accurate only as of today may 15th 2024.
Speaker Change: <unk> undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances. After the date of this call.
Ann Hand: I'd now like to turn the conference over to Ann hand, Chief Executive Officer.
Ann Hand: Well, thank you so much and good afternoon, everyone. I'm delighted to report on Super League's first quarter financial results and provide an update on our company's continued operational progress. But before I go there, I want to draw your attention to our logo behind me. That is right.
Ann Hand: Well. Thank you so much and good afternoon, everyone I'm delighted to report on Super League's first quarter financial results.
Ann Hand: And provide an update on our Companys continued operational progress, but before I go there I want to draw your attention to our logo behind me that has right Super League recently rebranded to better convey the pioneering bowl and dynamic work that we did and reflect our powerful team of strategists builders innovators creators and story.
Ann Hand: Super League recently rebranded to better convey the pioneering, bold, and dynamic work that we do and reflect our powerful team of strategists, builders, innovators, creators, and storytellers that sit behind this brand, our league, and the proven partner for over 100 brands who trusted us last year alone to help them learn to speak the new language of 3D engagement. Super League has consistently been the torchbearer in guiding brands through the intricacies of 3D engagement, empowering them to ignite business growth among Generation Z and Alpha, who live on these immersive social platforms.
Colors that sit behind this brand our league and the proven partner for over 100 brands, who trusted us last year alone to help them learn to speak the new language of three D engagement.
Ann Hand: <unk> has consistently been the torch bearer and guiding brands through the intricacies of three D engagement empowering them to ignite business growth among generation Z and ALPA, who live in these immersive social platforms. Our hard work in 2023, a record revenues and streamlined operations have put us in a position of escape velocity and we wanted our burn.
Ann Hand: Our hard work in 2023 of record revenues and streamlined operations has put us in a position of escape velocity, and we wanted our branding to fully reflect our vision and this new stage of the company's life. Super League generated solid first quarter 2024 revenue of $4.2 million, an increase of 26% when compared to the same quarter the previous year and in line with the consensus forecast.
Ann Hand: Rounding to fully referral reflect our vision and this new stage of the company's life.
Kimberly: Kimberly generated solid first quarter 2020 for revenue of $4 2 million, an increase of 26% when compared to the same quarter prior year and in line with consensus forecast.
Ann Hand: And this resilience in revenue during the first quarter falls in line with our record fourth quarter and full year 2023 revenue performance. As you all know, our revenues, for now, continue to reflect the traditional seasonality expected from an advertising model. Yet we continue to increase the seasonal low point each year, and we'll discuss more trends that are leading to larger deal sizes and more recurring revenues that will ultimately smooth out the seasonality down the road.
Kimberly: And this resilience in revenue during the first quarter falls in line with our record fourth quarter and full year 2023 revenue performance.
Kimberly: As you all know our revenues for now continue to reflect the traditional seasonality expected from an advertising model.
Kimberly: Yes, we continue to increase the seasonal low point each year, and we will discuss more trends that are leading to larger deal sizes and more recurring revenues that ultimately will smooth out the seasonality down the road.
Ann Hand: And while top-line growth is important to us, I am most proud of the acceleration of our path to profitability through more aggressive proctization, which will drive up margins in the 2nd half of the year, coupled with the hard work to reduce operating costs over the last year on a pro forma basis. Our operating expenses were 22% lower than the same quarter last year.
And while top line growth it is important to us I am most proud of.
That will accelerate our path to profitability through more aggressive proposition, which will drive up margins in the second half of the year, coupled with the hard work to reduce operating costs over the last year on a pro forma basis, our operating expenses were 22% lower than the same quarter prior year that is a.
Kimberly: $1.5 million quarterly cost savings and that flowed through to the bottom line with a pro forma net loss improvement of 26% relative to first quarter 2023.
Ann Hand: That is a 1.5 million dollar quarterly cost savings, and that flowed through to the bottom line with a pro forma net loss improvement of 26% relative to 1st quarter 2023. So before we get into the operational highlights, I'd like to speak to some of the macro trends. We believe in the unstoppable secular shift in digital advertising towards immersive engagement. There have already been massive audience shifts into these 3D immersive platforms, such as Roblox, effectively requiring brands as an imperative to engage in these modern marketing channels.
Kimberly: So before we get into the operational highlights I'd like to speak to some of the macro trends, we believe in the unstoppable secular shift in digital advertising towards immersive engagement.
Kimberly: There has already been massive audience shift there into these <unk> immersive platforms, such as roadblocks effectively requiring brands is an imperative to engage in these modern marketing channels.
Ann Hand: Immersive engagement allows brands to speak to young consumers in highly customized and personalized ways. And importantly, in this significant pivot towards the digital world, this is the language the younger consumer speaks. The average Roblox user spends 156 minutes a day on the platform as compared to an average of 95 minutes a day by TikTok users.
Kimberly: Immersive engagement allows brands to speak to young consumers and highly customized and personalized ways and importantly in this significant pivoted towards the digital World. This is the language to the younger consumer speaks the average ROE box users spend 156 minutes a day on platform as compared to an average of 95 minutes.
Kimberly: A day by tick tock users.
Ann Hand: This truly digitally native audience has grown up with digital immersion, and this is how they expect to meet brands. This is where we live in threat, offering scalable solutions through our deep strategic and creative capability, coupled with our suite of proprietary products and measurement tools that guide brands to appropriately position and capture 3D engagement and ultimately digital and physical conversion and a loyal customer. We are the leaders in this new chapter of brand marketing, digital advertising, and e-commerce that can transform business models. Recently, investors have inquired about Roblox's recent earnings announcements. And this is what I tell them, my personal view. I've said it before, and I will say it again. They are a sleeping giant.
Kimberly: It's truly digitally native audience has grown up with digital immersion and this is how they expect to meet brands.
Kimberly: This is where we live and thrive offerings scalable solutions through our deep strategic and creative capability, coupled with our suite of proprietary products and measurement tools that guide brands to appropriately position and capture three D engagement, and ultimately digital and physical conversion and a loyal customer.
Kimberly: We are the leaders in this new chapter of brand marketing digital advertising and e-commerce that can transform business models.
Kimberly: Recently investors have inquired about roadblocks as recent earnings announcements and this is what I tell my personal view I've said it before I'll say it again they are sleeping giant while their share price has seen some pressure there quarterly revenues are up 22% and daily active users are up 17% relative to the same quarter.
Ann Hand: While their share price has seen some pressure, their quarterly revenues are up 22%, and daily active users are up 17% relative to the same quarter last year. So why does this matter? Because the primary way, pretty much the only way today that Roblox makes the bulk of its revenues is through consumer and player monetization. That's really where they started as a company. As one of a handful of strategic advertising partners, we are in a prime position to ride this next wave as they accelerate, and turn up the volume as they move into this foray into this very untapped revenue opportunity.
Kimberly: Prior year. So why does this matter because the primary way pretty much the only way today that robotics makes the bulk of their revenue is through consumer player monetization, that's really where they started as a company as one of a handful of strategic advertising partners. We are in a prime position to run.
Kimberly: This next wave as they accelerate they turn up the volume as they move into this foray into this very untapped revenue opportunity. There is so much tremendous upside in my view it is hard to even imagine how to quantify the value of advertising on the robotics platform alone.
Ann Hand: There is so much tremendous upside, in my view; it is hard to even imagine how to quantify the value of advertising on the Roblox platform alone. So let's talk about what we've built and how we innovate, and why our capability to build immersive experiences and products, along with creator and advertiser tools and analytics, has uniquely positioned us as an end-to-end solution for brands wanting to enter these 3D realms and create their next great digital marketing channel.
Kimberly: So let's talk about what we've built and how we innovate and why our capability to build immersive experiences and products along with creators and advertisers tools and analytics has uniquely positioned us as an end to end solution for brands wanting to enter these three D realms and create that their next great digital marketing channel.
Ann Hand: We currently reach over 150 million monthly active users on immersive platforms with over 5000 virtual realms or many worlds in our network. This is real scale and allows us to more than fulfill a brand's campaign objective. We continue to productize repeatable elements of our custom experiences to convert across brands and key verticals. For example, one of our newest offers, Super League Pop-Ups, are drag-and-drop modules that can be easily reskinned for use by a wide breadth of brands and IP owners.
Kimberly: We currently reach over 115 million monthly active users an immersive platforms with over 5000 virtual realms or many worlds in our network. This is real scale and allows us to more than fulfill our brands campaign objectives.
Kimberly: We continue to product ties repeatable elements of our custom experiences to convert across brands and key verticals. One of our newest offers Super League pop ups are a drag and drop module that can be easily reschedule for used by a wide berth of brands and IP owners.
Ann Hand: From turnkey fashion runways and makeup counters to kitchens and concert stages, experiential products allow us to accelerate the brand adoption curve, collapse the development cycle time, and that ultimately leads to more brands coming into the funnel and higher margins. One such example is the recent launch of a virtual drivable car demo that allows consumers an easy accessible entry point to begin their car buying journey without the physical world limitation of in real life test driving.
Kimberly: From turnkey fashion runways, and makeup counters to kitchens and concert stages experiential products allow us to accelerate the brand adoption curve collapsed development cycle times and that ultimately leads to more brands coming in the funnel and higher margins.
Kimberly: One such example is the recent launch of a virtual drivable car demo that allows consumers an easy accessible entry point to begin their car buying journey without the physical world limitation of in real life test driving.
Ann Hand: We can help an automotive partner introduce a new vehicle to tens of millions of customers over the course of days in an affordable, scalable way that physical experiential marketing, a $50 billion advertising category in its own right, cannot achieve. Super League continues to be a leader in thinking about a brand's overall business objectives beyond just marketing, as evidenced by our work with Chipotle, Kraft Lunchables, and more. We think about driving real commerce and conversion beyond massive engagement. For example, our Lunchables program drove not only in-game engagement but also physical crossover. Lunchables physical packaging with the Roblox Gameplay QR code had a 6.3% higher purchase rate.
Kimberly: We can help in automotive partner introduced a new vehicle to tens of millions of customers over a course of days and an affordable scalable way the physical experiential marketing a $50 billion advertising category in its own right cannot achieve.
Kimberly: Separately continues to be a leader and thinking about our brands overall business objectives beyond just marketing as evidenced by our work with Chipotle craft Lunchables and more.
Kimberly: We think about driving real commerce and conversion beyond massive engagement, our lunchables program drove not only endgame engagement, but also physical crossover lunchables physical packaging with the roadblocks gameplay QR code had a six 3% higher purchase rate and the endgame program delivered 10 million hours of it.
Ann Hand: And that leads to another new product we're super excited about, a White Label Rewards Module, again, it's like plug and play, that offers in-game player badges and rewards, along with a connection to a brand's offline objectives, whether it be app downloads and loyalty programs, or perhaps it's signups and foot traffic and like for likes. We are not just a digital ad agency. We're not just a game studio. We are so much more.
Kimberly: Engagement with players collecting seven 4 billion and game reward points.
Kimberly: And that leads to another new product, we're super excited about a white label rewards module. They forget it's like plug and play that offers in game player badges and rewards along with a connection to our brands offline objectives, whether it be app downloads and loyalty programs.
Kimberly: Or perhaps the sign ups.
Kimberly: In foot traffic and like for likes were not just the digital AD agency. We're not just a game studio. We are so much more in innovation and proposition are in our DNA.
Ann Hand: And innovation and productization are in our DNA. Now, before we get into the pipeline trend, a reminder of the brand journey from our vantage point as it underpins how we scale. Today, most brands meet us through a one-off campaign. We know we are doing our job well as we continually have new brands entering our funnel. Next, we become a standard component of their marketing objectives annually. We know we are successful here by the number of repeat advertisers and advertisers spending larger and larger aggregate annual amounts on us.
Ann Hand: Then we guide brands to create persistent, immersive strategies and presence. This is proven with more brands engaging in long-term programs that include not just immersive experience development investment but also recurring operational fees flowing back to Super League to keep those experiences vibrant. Finally, living into our vision as an enterprise solution, the premier builder of a brand's omni-channel immersive strategy, is when we get a brand to cross over and allow us to create multiple immersive social platform channels and, inevitably, lead back to a more immersive web presence on their own dot com experience. That is really the result of the next generation of the Internet, one that has more of a 3D feel, even if you're engaging in it on a traditional 2D flat screen.
Kimberly: Now before we get into the pipeline trends a reminder of the brand journey from our vantage point as it underpins how we scale to.
Kimberly: Today, most brands meet us through a one off campaign.
Kimberly: We know we are doing our job well as we continually have new brands entering our funnel.
Kimberly: Next we have become a standard component of their marketing objectives annually, we know where you're successful here by the number of repeat advertisers and advertiser spending larger and larger aggregate annual amounts with us.
Kimberly: Then we guide brands to create persistent immersive strategies and presences.
Kimberly: This is proven with more brands engaging in long term programs that include not just immersive experience development investment, but also recurring operational feeds flowing back to Super League to keep those experiences vibrant.
Kimberly: Finally, the fourth step living into our vision as an enterprise solution. The premier builder of our brands Omnichannel immersive strategy is when we get a brand to crossover and allow us to create multiple immersive social platform channels and inevitably to lead back to a more immersive web presence on their own.
Kimberly: <unk> dot com experience.
Kimberly: That is really the result of the next generation of in of our Internet one that have more of a three D feel even if you're engaging in it on a traditional two D flat screen.
Ann Hand: Each quarter, I like to discuss key pipeline trends that help us measure our traction and grow operating leverage. Our average deal signed in the pipeline remains in the mid six figures, with increasing demand for larger programs, as exemplified by the nearly $4 million Kraft Lunchables deal. Last year, we closed six seven-figure deals, which was a six-fold increase when compared to 2022, where we had just one six-figure deal. And I'm pleased to report that year-to-date in 2024, we have already hit the same number of seven-figure deals that we delivered in the full year of 2023. We have six seven-figure deals in motion, and we're just five months into the year.
Kimberly: Each quarter I like to discuss key pipeline trends that help us measure our traction and grow operating leverage our average deal size in the pipeline pipeline remains in the mid six figures with increasing demand for larger programs as exemplified by the nearly 4 million dollar crafts Lunchables deal.
Kimberly: Last year, we closed on six seven figure deals, which was a six fold increase when compared to 2022, where we had just 167 figure deal.
Kimberly: And I'm pleased to report that year to date in 2024, we have already hit the same number of seven figure deals that we delivered in the full year of 2023, we have six seven figure deals in motion and we're just five months into the year and that's with the likes of Big brands Blue Chip brands like visa and Toyota.
Ann Hand: And that's with the likes of big brands, blue-chip brands like Visa and Toyota. As that trend continues, it will take a fraction of the partner programs to deliver yet another record-breaking revenue year. The larger programs are also indicative of another positive trend. To date, we have seven branded programs that have recurring operational revenue attached to the experience, with brands like Dave & Buster's and Claire's. Now think about that.
As that trend continues it will take a fraction of the partner programs to deliver yet another record breaking revenue year.
The larger programs are also indicative of another positive trend to date, we have seven branded programs that have recurring operational revenue attached to the experience with brands like Dave and Busters and Claire's.
Ann Hand: They're paying us to build the experience, to drive traffic to that experience through our own and Roblox's media products. But on top of it, they're paying us a monthly fee to again keep that an attractive and vibrant experience to continue to have a permanent, somewhat virtual billboard in those spaces. So let's just pause there because this is how the business model for us evolves over time. That's recurring revenue from us, and it demonstrates the shift from brands spending smaller amounts for short-term campaigns towards leveraging the experiences we create for them into more persistent programs, or better said, persistent marketing channels, and persistent investment on these game-changing social digital platforms. And there is a simple analogy for that.
Kimberly: Now think about that they're paying us to build the experience to drive traffic to the experience through our own and roadblocks as media products, but on top of that they are paying us a monthly fee to again keep that at an attractive and vibrant experience to continue to have a permanent somewhat virtual billboard in those spaces.
Kimberly: So, let's just pause there because this is how the business model for us evolved overtime, that's recurring revenue for us and it demonstrates the shift from brand spending smaller amounts for short term campaigns towards leveraging the experiences we create for them into more persistent programs or better said persistent marketing channels.
Kimberly: And persistent investment on these game changing social digital platforms.
Kimberly: And there is a simple analogy for this brands today have persistent strategies on traditional social media like Instagram and Facebook as a CMO it would be unthinkable today to not speak to to not invest in those communities consistently.
Ann Hand: Brands today have persistent strategies on traditional social media, like Instagram and Facebook. As a CMO, it would be unthinkable today to not speak to, or not invest in, those communities consistently. Well, the C-suite is just beginning to wake up to this new modern marketing channel and the imperative to meet young consumers in these environments where, again, they already live and speak the language that they're speaking in these environments. Further, as we continue to have a high percentage of repeat advertisers, I'm also excited to report that we have 48 new brands in our pipeline for certificates year to date. That is alongside 35 repeat brands.
Kimberly: Well the C suite is just beginning to wake up to this new modern marketing channel and the imperative to meet young consumers in these environments, where they again, they already live and to speak the language that they're speaking in these environments.
Kimberly: Further as we continue to have a high percentage of repeat and advertisers I'm also excited to report that we have 48, new brands and our pipeline for <unk> year to date.
Ann Hand: Retention of existing customers is, of course, a vital metric, but new entrants are equally as critical. As I stated earlier, we served over 100 brands last year, so we are only scratching the surface of the opportunity in front of us as brand dollars inevitably catch up to the audience migration that's already moved towards immersive social platforms. As we grow and deliver on these larger programs, it verifies our unique position as the domain expert and end-to-end solution for brands to implement that multi-channel marketing and commerce strategy I mentioned earlier across a variety of immersive platforms, ultimately driving customers back to a brand's own more engaging, immersive website and commerce experience.
Kimberly: That is a long side 35 repeat brands retention of existing customers is of course, a vital metric, but new entrants are equally as critical as I stated earlier, we served over 100 brands last year. So we are only scratching the surface of the opportunity in front of us as brand dollars inevitably ketchup.
Kimberly: To the audience migration, that's already moved towards the most immersive social platforms.
Kimberly: As we grow and deliver on these larger programs. It verifies our unique position as the domain expert in ending solution for brands to implement that multichannel marketing and commerce strategy I mentioned earlier across a variety of immersive platforms, ultimately driving customers back to our brands Oh and more engaged.
Kimberly: <unk> immersive website and commerce experience and yes, we can build out for our brand partners as well.
Ann Hand: And yes, we can build that for our brand partners as well. That is step four of the brand's journey I spoke about earlier. And again, that is the vision for Super League and the opportunity to grow tremendous shareholder value. So now on to some operating highlights.
Kimberly: That is step four of the brand's journey I spoke about earlier and again that is the vision for Super League and the opportunity to grow tremendous shareholder value.
Kimberly: So now onto some operating highlights.
Ann Hand: Just recently, we joined forces with Skechers to open the company's first virtual store through an immersive experience in Roblox, a popular game called Lifetopia, and their new mall-like experience. As the inaugural retailer, the Skechers shop is designed to build community and engage young consumers in a world that brings the Skechers brand to life. As a visitor, you can participate in a treasure hunt to win exclusive Skechers digital items, as well as create stylish looks inspired by select Skechers products.
Kimberly: Just recently, we joined forces with Skechers to open the company's first virtual store through an immersive experience of roadblocks.
Kimberly: <unk> game called life, Tobia, and their new mall like experience as the inaugural breathe tailor. The Skechers shop was designed to build community and engage young consumers in a world that brings the skechers brand to life as the visit or you can participate in a treasure hunt to an exclusive skechers digital items as well as create stylish looks.
Kimberly: Inspired by select Skechers products.
Ann Hand: In the first five weeks, there were 3.4 million visits to the store, 4 million try-ons, and nearly 45 million marketing impressions generated. Additionally, we expanded our offerings to consumers and brands of Fortnite by partnering with Chardis, allowing us to develop comprehensive end-to-end integrations into more than 100 top Fortnite creative maps with nearly 1 billion impressions per month. Together, we can provide unparalleled opportunities for brands to launch new customer Fortnite custom integrations fast.
Kimberly: In the first five weeks there have been $3 4 million visits to the store 4 million try ons and nearly 45 million marketing impressions generated.
Kimberly: Additionally, we expanded our offerings to consumers and brands of fortnite by partnering with charters, allowing us to develop comprehensive end to end integration into more than 100 top fortnite creative maps with nearly 1 billion impressions per month together, we can provide unparalleled opportunities for <unk>.
Kimberly: Brands to launch new customer Fortnite custom integrations faster.
Ann Hand: And a prime example of how brands are creating more persistent, long-term strategies is our new engagement with leading retailer Claire's for their transformative digital world, Shimmerville. Shimmerville is a persistent world that serves as a hub for the discovery of amazing new avatar items, as well as original character-driven IP.
Kimberly: And a prime example of how brands are creating more persistent long term strategies as our new engagement with leading retailer clearers for their transformative digital world Shimmer Bill.
Kimberly: <unk> is a persistent world that serves as a hub for the discovery of amazing new avatar items as well as original character driven IP.
Ann Hand: Super League has been brought in to revitalize the virtual realm over the coming months with gameplay designed to inspire both digital and in-store community engagement and growth among Claire's Gen Z and Alpha audience. And we're always looking for new sources of advertising revenue beyond our core suite of products. Our new partnership with GSTV, a national video network providing entertainment to targeted audiences and fuel stations and convenience stores, reaching 115 million unique adults a month across more than 29,000 locations, offers gaming-centric video content on its screens.
Kimberly: Super League is brought in to revitalize the virtual realm over the coming months with gameplay designed to inspire both digital and in store community engagement and growth among players Gen Z and alpha audience.
Kimberly: And we're always looking for new sources of advertising revenue beyond our core suite of products, our new partnership with G. S. T V and National video network, providing entertainment to targeted audiences and fuel stations and convenience stores, reaching 115 million unique adult a month across more than two.
Kimberly: <unk> 9000 locations offered gaming centric video content on their screens.
Ann Hand: By leveraging GSTV's sales force, we unite the physical consumer with the expansive digital world of gaming, enabling brands to achieve a full funnel conversion. Consumers filling their fuel tanks will be entertained and driven into a convenience store and online for relevant promotions.
Kimberly: By leveraging G F. Tvs Salesforce, we unite the physical consumer with the expansive digital world of Gaby, enabling brands to achieve a full funnel conversion consumers filling their fuel tanks will be entertained and driven into convenience store and online relevant promotions.
Ann Hand: As well, Super League was honored to be a part of a broad collaboration with Boombox, the first scaled music product across the Roblox platform. Boombox offers a true pioneering opportunity for music labels to curate, distribute, and monetize their offerings on Roblox. Players can share and collectively enjoy music, with each instance of music playback being a monetizable event for the contributing labels and artists. This industry milestone was the result of a year-long collaboration that included Super League, Universal Music Group, Stinger, and, of course, Roblox, and changes the way that fans engage with their favorite music, artists, and labels.
Kimberly: As well as Super League was honored to be a part of a broad collaboration with boom box. The first scaled music product across the roadblocks platform boom box offers a true pioneering opportunity for music labels to curate distribute and monetize their offerings on robotics players.
Kimberly: Players can share and collectively enjoying music with each instance of music playback being a monetize it below that for the contributing labels and artists. This industry milestone was the result of a year long collaboration that included Super League Universal Music Group Stinger and of course, roadblocks and evolves the way that.
Kimberly: Fans engage with their favorite music artists and labels.
Ann Hand: Connecting and communicating with young consumers in a safe, appropriate, and compliant manner is one of our core values at Super League. To that end, in the first quarter, we partnered with Common Sense Networks, a singular leader in age-appropriate content moderation and standards, to further enable brands to connect with younger audiences on a global scale in safe and suitable ways across major gaming and video platforms. By combining Super League's custom and scalable content experiences in immersive entertainment platforms with Common Sense Network video channels, applications, and proprietary child-safe data distribution tools, we offer an unrivaled safe solution for kids.
Kimberly: Connecting and communicating with young consumers in a safe appropriate and compliant manner is one of our core values at Super League to that end in the first quarter, we partnered with common sense networks, a singular leader and age appropriate content moderation and standards to further enable brands to connect with younger audiences.
Kimberly: On a global scale and safe and suitable ways across major gaming and video platforms.
Kimberly: By combining Super league's custom and scalable content experiences immersive entertainment platforms with common sense networks video channels applications and proprietary child safe data distribution tool, we offer an unrivaled safe solution for kids.
Ann Hand: And we continue to be recognized for our leadership and excellence in creating innovative, immersive experiences. Once again, we were honored at this year's Webby Awards, winning the People's Choice Best Performance Award with Hulu, Interscope Records, and Imagine Dragons for the Live in Vegas experience. The groundbreaking Live in Vegas event was the first ever music documentary Watch Party on Roblox to promote the Hulu film release, offering an opportunity for admirers to engage with the band with live Q&A and to really get a chance to talk to this massive, best-selling rock artist of the last decade. I mean, imagine what an experience—truly interactive for the fans.
Kimberly: And we continue to be recognized for our leadership and excellence in creating innovative immersive experiences. Once again, we were honored at this year's Webby Award winning the People's Choice Best Performance Award with Hulu, Interscope Records and imagine Dragons for the live in Vegas experience.
Kimberly: The groundbreaking live in Vegas event was the first ever music documentary Watch party on roadblocks to promote the Hulu film or at least offering an opportunity bird Myers to engage with the band with live Q&A.
Kimberly: And to really get a chance to talk to this massive best selling rock artist of the last decade, I mean imagine wouldn't experience truly interactive for the fans.
Ann Hand: So I can take another bit of a breather here, right? That's a lot of exciting partner development in a short amount of time. And I hope you can glean from that how we think. We go broad and deep with our own innovation and productization and build the types of alliances around us that leverage their talent and distribution to augment our offerings and accelerate our success. Now, before we jump to Q&A, I want to mention one more significant milestone.
Kimberly: So I can take another bit of a breather here right. That's a lot of exciting partner development in a short amount of time and I Hope you can glean from that how we think we go broad and deep with our own innovation and product position and build the types of alliances around us that leverage their talent and distribution to all.
Kimberly: And our offerings and accelerate our success.
Kimberly: Now before we jump to Q&A I want to mention one more significant milestone at the end of March we disposed of our Minecraft server community asset main hub to gamers safer a security in online Gamer experience startup.
Ann Hand: At the end of March, we sold our Minecraft server community asset, Minehut, to Gamer Safer, a security and online gamer experience startup. The sale of Minehut offers an additional $2 million in annual operating expense reductions and a critical move on our path to profitability. So while we're doing a lot, we are equally hyper focused on the products that provide the highest return and margin and a lean and efficient organization to support that growth. So with that operator, let's move to Q&A.
Kimberly: The sale of mine HUD offers an additional $2 4 million in annual operating expense reductions.
Kimberly: And a critical move to our path to profitability. So while we're doing a lot. We are equally hyper focused on the products that provide the highest return and margin and a lean and efficient organization to support that growth.
Kimberly: So with that operator, let's move to Q&A.
Speaker Change: Okay. Thank you so much.
Operator: Great, thank you so much. We will now begin the question and answer session with Super League's commentating analysts. Please raise your hand using the raise hand icon at the bottom of your screen. If you joined by phone, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. We will now begin the question and answer session with Super League's covering analysts. Our first question comes from Jack Codera with Maxim Group. Please proceed.
Speaker Change: We will now begin the question and answer session with Super League's covering analysts. Please raise their hand on the with the raise hand icon at the bottom of your screen. If you joined by phone. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if he would like to remove your question from the queue.
Speaker Change: Okay.
Speaker Change: Our first question comes from.
Speaker Change: With Jack Cordero with Maxim Group. Please proceed.
Speaker Change: Okay.
Operator: Hi, thank you. This is Jack Aarde. I'm calling in for Jack Vanderaarde.
Jack Vander Aarde: Alright. Thank you this is Jack on Erik calling in for Jeff Android.
Jack Vander Aarde: You know, congrats on the awesome quarter. I think there were some really exciting developments in terms of pipeline size and deal size. I was wondering if you could provide an update on the overall sales team. I think it was previously, I think it was like eight direct sales members and then some business development partners. How are you thinking about the overall capacity of your sales team now?
Jack Vander Aarde: Congrats on the awesome quarter.
Jack Vander Aarde: There are some really exciting developments in terms of pipeline size and deal size I was wondering if you could provide an update on the overall sales team I think it was all previously I think it was eight direct sales members and then some business development partners. How are you thinking about the overall capacity of your sales team now.
Ann Hand: Yeah, it's a good question. Thank you for asking.
Speaker Change: Yeah. It's a good question. Thank you for asking we talked about how in 2022, our top two performing.
Sales leaders delivered about two and a half million and and annual revenue.
Ann Hand: We talked about how in 2022, our top 2 performing sales leaders delivered about $2.5 million in annual revenue. And then, as we reported at the end of year 2023, we saw that those same top 2 performers were pushing into that $4.5, close to $5 million range. And so, that has actually allowed us to be much more aggressive in sales team performance management. We now know what the capability is or what that new ceiling is.
Speaker Change: And then is we reported on end of year 2023, we saw that those same top two performers were pushing into the four and a half close to $5 million range and so that has actually allowed us to be much more aggressive in sales team performance management, we now know what the capability is.
Speaker Change: Or what that new ceiling is and so we're very focused on identifying hitting performance faster and harder.
Ann Hand: And so, we're very focused on identifying and hitting performance faster and harder so that we can start to have a higher average across the sales team. Right now, we've actually gone so far as to churn out a couple of our sales people since the last time we had a call, because we've just become more aggressive on that performance management side, as I said. And so, the good news is that we're going to continue to high-grade the sales team and make sure that that new kind of benchmark that's been set is where we're trying to grow all the sales people.
Speaker Change: So that we can start to have a higher average across the sales team right now we've actually gone so far as to churn out a couple of our salespeople since the last time, we've had a call because we've just become more aggressive on that performance management side as I said and so.
Speaker Change: The good news is is that we're going to continue to high grade the sales team and make sure that that new kind of benchmark. That's been said is where we're trying to grow all salespeople now there is a ramp up curve. So it does take a little bit of time to build up that sales pipeline and again as youre doing larger deals sizes, they inevitably have longer sales cycles to them.
Ann Hand: Now, there is a ramp-up curve, so it does take a little bit of time to build up that sales pipeline. And again, as you're doing larger deal sizes, they inevitably have longer sales cycles to them, but they also have more revenue spread across more quarters. And you can see further into future quarters, which is a nice thing, we think, for investors. So, right now, we are down to about six sellers, but in making that choice to high grade and to find two new sellers, to get back to that eight and possibly that 10 number for the year, we don't think that we took any hits in our expectations of our revenue target for the year.
Speaker Change: But they also have more revenue spread against more quarter. Then you can see further into future quarters, which is a nice things I, we think for investors.
Speaker Change: So right now we are down to about six sellers, but in making that choice to high grade and to find two new sellers to get back to that eight impossibly that 10 number for the year. We don't think that we took any hits in our expectations of our revenue target for the year. So we felt that it was.
Ann Hand: So, we felt that it was a low-risk decision to really kind of get to this next level of Salesforce effectiveness. The other thing too that's happening is, you know, as you see these larger deal sizes, the fact that we already have six, seven-figure programs that we've won this year, that as well tells you that you're going to inevitably, it's almost more like a biz dev sale. And so even though we have some sellers at that four and a half to five million mark last year, you know, you could have won one Lunchables and hit four million. And so we think we're just scratching the surface on what that ceiling could ultimately be with bigger and bigger programs.
Speaker Change: Our low risk decision to really kind of get to this next level of sales force effectiveness.
Speaker Change: The other thing too that's happening is.
Speaker Change: You know as you see these larger deal sizes, you know the fact that we already have six seven figure programs that we've won this year.
Speaker Change: That is well tells you that.
Speaker Change: You're going to inevitably it's almost like more like a biz Dev sale and so even though we have some sellers out that four and a half to 5 million Mark last year. You know you could have won one lunchables and <unk> 4 million and so we think we're just scratching the surface on what the ceiling could ultimately be with bigger and bigger programs.
Jack Vander Aarde: Okay, that's helpful. And that makes sense.
Speaker Change: Okay, that's helpful and that makes sense.
Jack Vander Aarde: I think I also heard you mention there are seven recurring experiences now, and obviously, your new immersive world with Sketchers on Roblox has generated a lot of impressions very quickly. I'm wondering, is there a framework we should be thinking about to understand, you know, the revenue potential for these recurring experiences? Is it about the complexity of the actual creation? Is it about the number of experiences? Any color would be helpful there.
Speaker Change: Oh, Yes, I think I also heard you mentioned theres seven recurring experiences now and obviously your new immersive world with discussions on robots has generated a lot of impressions very quickly I'm wondering is there a framework we should be thinking about to understand the revenue potential for these recurring experiences is it about the complexity of accretion.
Speaker Change: About the amount of experiences.
Speaker Change: Color would be helpful. There yeah, yeah. Typically when were you know there's two types of persistent experiences theres, a persistent integration and an existing world.
Ann Hand: Yeah, typically when we're, you know, there are two types of persistent experiences. There's a persistent integration into an existing world that has one set of development costs to it. So, when we were building Barbie's dream house inside a world that was happening inside an existing game world, right? It was a pop-up experience that then went away.
Speaker Change: And that has one set of development cost to it. So when we were building you know Barbie's Dream House inside of World that was happening inside an existing game world right. It was a pop up experience. It then went away.
Ann Hand: Typically, those types of development programs can cost anywhere from $200,000 to $500,000 to create just the pop-up experience. Now, we know from that program and others that it was a temporal campaign-based one, but they still didn't spend another few hundred grand buying platform media from us. So, we have a way, just with pop-up temporal experiences and our media products and roblox, to take those deals and grow them much larger beyond just what they're going to pay us for the pop-up experience.
Speaker Change: Typically those types of development programs can cost anywhere from two to $500000 to create just be the pop up experience now we know from that that program and others that was a temporal campaign based one but they still this then another few hundred grand buying on platform media from us.
Speaker Change: So we have a way just with pop up temporal experiences and our our media products and roadblocks as two to take those deals and to grow them much larger beyond just what theyre going to pay us for the pop up experience. That's why when I mentioned earlier the pop up products is so important because instead of spending two months building.
Ann Hand: That's why when I mentioned earlier the pop-up products, it's so important because instead of spending two months building Barbie's dream house, once we build a house once, we can reskin it, and we can have a pop-up other home experience for another brand in a matter of a few weeks. And again, less development time, more margin. But to your question about recurring revenues, that's where a brand has said, I want to have a permanent billboard either inside an existing game world like the Barbie one, but imagine if Mattel had left the Barbie dream house up all year, or they want us to create their own dedicated node, their own dedicated game world.
Speaker Change: <unk> Dream House once we build a house once we can re skin it and we can have a pop up other home experience for another brand in a matter of a few weeks and again less development time more margin, but to your question about recurring revenues, that's where either a brand who said I want to have a permanent <unk>.
Speaker Change: <unk> board either inside an existing game world like.
Speaker Change: Like the Barbie, one, but imagine of Mattel has left the Barbie Dream House up all year.
Speaker Change: Or they want us to create their own dedicated know their own dedicated game world.
Ann Hand: There is a difference in the development cost of those two things, but the pop-up experience is still going to be in that same $250K to $500K range. If you want a permanent node made, it's going to be at the higher end of that range that I just mentioned. That said, in both instances, if it's going to be permanent or persistent in nature, there will be a monthly operating fee that that brand will pay to Super League to continually update the game and keep the activity very vibrant.
Speaker Change: There is a difference in the development cost of those two things the pop up experience is still going to be in that same 250 to 500 K range. If you want a permanent node made it's going to be at the higher end of that range that I. Just mentioned that said in both instances, if it's going to be permanent or persist.
Speaker Change: And in nature, there will be a monthly operating fee that that brand will pay to Super League to continually update the game and keep the activity very vibrant because you don't want it to have a big splash and then for people to go away right and that's why even things like our in game rewards plug.
Ann Hand: Because you don't want it to have a big splash and then for people to go away, right? And that's why even things like our in-game rewards plug-and-play module are so interesting. Because if we can plug in a white-label game loop of rewards, that's another mechanism to drive continued engagement. But the headline still remains that a brand pays us the upfront cost and is paying us a monthly fee that can be anywhere from $25K to $50K a month to maintain that game world and keep it vibrant and performing.
Play module is so interesting because if we can plug in and white label game loop of rewards. That's another mechanism to drive continued engagement, but the headline still remains that a brand pays us the upfront cost and is paying us a monthly fee that can be anywhere from 25 to 50.
Speaker Change: K a month to maintain that game world and keep it vibrant and performing.
Speaker Change: That's amazing taller and I had one more question if possible.
Ann Hand: Amazing color. And I have one more question, if possible. You know, kind of given your comments around, you know, deal size increasing, kind of have a lot. And, you know, prior comments, and there was a longer-term goal for kind of 100 million plus revenue and gross margin expansion. Are you still expecting to see that gross margin expansion given that the deal size is getting a bit larger? Do you think that is kind of a headwind that will compete with one another? Any comments there? Yeah, it is.
Speaker Change: Just kind of given your your comments around deals.
Speaker Change: Deal size increasing costs.
Speaker Change: I have a lot.
Speaker Change: Prior comments I know there was a longer term goal for kind of a 100 million plus revenue gross margin expansion are you still expecting to see that gross margin expansion.
Speaker Change: Given like the deal size is getting a bit larger do you think that is kind of a headwind or compete with one another any commentary.
Jack Vander Aarde: Yeah, it's a great point because, as we talked about in the last call, you know, we made a very strategic decision to take down that larger Craft Lunchable $3.9 million deal. And we would do it again.
Speaker Change: Yeah, It's it's a great point, because as we talked about in the last call. You know we made a very strategic.
Speaker Change: Strategic decision to take down that larger craft Lunchables $3 9 million dollar deal and we would do it again, but we knew we were doing it.
Ann Hand: But we knew we were doing it at a lower margin than we would typically do. Some of that was more the nature of how it was contracted, because it was partially contracted before Publicis came to us and said, well, you run this program for us. So we inherited some elements that were more kind of markup-like in nature.
Speaker Change: At a lower margin than we would typically do some of that was more the nature of how it was contracted because it was partially contracted before <unk> came to US and said well you run this program for us. So we inherited some elements that were more kind of mark up like in nature.
Speaker Change: So yes, there is a risk that bigger deal sizes as they become a more competitive that it'll be a little bit of a headwind, but really craft is a one off because again the way we inherited that deal. If we had been the primary owner of that program from the start we could've designed that program in a way for a stronger margin.
Ann Hand: So yes, there is a risk that bigger deal sizes, as they become more competitive, that'll be a little bit of a headwind. But really, Craft is a one-off because, again, the way we inherited that deal. If we had been the primary owner of that program from the start, we could have designed that program in a way for stronger margins. That said, the way that we can tackle and grow margins is through this productization strategy.
Speaker Change: That said the way that we can tackle and grow margins is through that proposition strategy.
Ann Hand: When you look at some of our proprietary products, those products can have 45, 50, up to 60% margins on them. Usually, if we're building a custom, bespoke, one-off experience for a brand, we're in the 25, 30% range. Well, if we productize elements of an experience, that concert stage, or that fashion runway, the next time a fashion company comes to us and wants a fashion experience, we can take that reusable product and re-skin it, as I mentioned during the call.
Speaker Change: When you look at some of our proprietary products those products can have $45 50 up to 60% margins on them, usually if we're building a custom bespoke one off experience for our brands. We're in the 25, 30% range well, if we product ties elements of an experience that concert.
Speaker Change: Page or that fashion runway. The next time, a fashion company comes to us and wants a fashion experience, we can take that E reusable product and re skinned it as I mentioned during the call that again gets more brands into market faster, but allows us to start grabbing more product like margins on something that still has the feel.
Ann Hand: That again gets more brands into the market faster but allows us to start grabbing more product-like margins on something that still has the feel of a very custom experience for the brand. And so that move of productization is that sliding scale as more and more of what we do is productize is the sliding scale as well as how we grow our margins kind of beyond the 40 to 45% range.
Speaker Change: Of a very customer experience for the brand and so that move a privatization is that sliding scale as more and more of what we do is product type is the sliding scale as well on how we grow our margins kind of beyond kind of the 40% to 45% range.
Jack Vander Aarde: Thank you for the call, Eric, and congrats again on the solid results. I'll hop back into queue. Thanks, Jack.
Speaker Change: Thank you for the color and congrats again on the solid results I'll hop back in queue.
Jack: Thanks Jack.
Speaker Change: Thank you.
Operator: Our next question comes from the line of Howard Halpern. Please proceed with your question.
Speaker Change: Our next question comes from the line of Howard Halpern.
Please proceed with your question.
Speaker Change: You hear me I can now yes.
Howard Allen Halpern: I can now, yes. Hi Howard. Congratulations on the start of the year. And I guess my first question is with regard to, you know, the data and analytics that are going into them and that you're able to accumulate from the Skechers to the Lunchables to Claire's. How do you view that, and how do your customers view that in terms of monetization down the road? Yeah, it's a good question because right now, it's often the icing on the cake.
Howard Allen Halpern: Congratulations on the start to the year and I guess my first question is just with regards to you know the data and analytics that are going into and that you're able to accumulate from skechers queued up from the Lunchables declares.
Speaker Change: How do you view that and how does your customer's view that in terms of monetization down down the road yeah. It's a good question because right now it's often the icing on the cake.
Ann Hand: You know, when we're able to show how we can build, engage, amplify, and measure for that end-to-end solution, that measurement piece is definitely a kind of added bell and whistle that really excites the brands and their agencies, that deeper layer of insights that we can provide. That has inspired another item that is on our product roadmap that we are deeply in development on, which is an actual portal for brands to be able to come in and get those deeper insights on campaigns, but also to look across multiple campaigns that they're running. That right now, again, continues to be a way we win because it's our distinction. It's one of our many distinctions when we go in and go up against others.
Speaker Change: We're able to show how we can build engage amplify and measure for that end to end solution that measurement piece is definitely a kind of added kind of bell and whistle that really excites the brands and their agencies that deeper layer of insights that we can provide that houses as well.
Speaker Change: [noise] inspired another item that is on our product roadmap that we are deeply in development on which is an actual portal for brands to be able to come in and to get those deeper insights on campaigns, but also to look across multiple campaigns that theyre running that right now again continues to be.
Speaker Change: A way we win because it is our distinction is one of our many distinctions when we go in and in and go up against others that said, we do right now in the business case for that we do believe it is a revenue generating stream down the road and so we're already right now testing when we go out and put together a package.
Ann Hand: That said, we do, right now, in the business case for that, we do believe it is a revenue-generating stream down the road. And so we're already right now testing, when we go out and put together a package for a brand, when we're responding to an RFP, we're testing the notion of, can we extract, even if it's small, a little bit of fees for our additional kind of data lens? Can we get a little additional fees for the strategic advisory role we're playing?
Speaker Change: For our brand when we're responding to an RFP. We're testing the notion of can we extract even if it's small a little bit of fees for our additional kind of data lens can we get a little additional fees for the strategic advisory role, we're playing because often we're sitting down with brands and we're first does.
Ann Hand: Because often we're sitting down with brands and we're first describing to them this landscape, and we're giving them very educated recommendations on how they should play in it. So that kind of front-end piece and then the data piece are two areas where we do think that those are emerging revenue streams for the company.
Speaker Change: Scribing to them this landscape and we're giving them you know very.
Speaker Change: Vacated recommendations on how they should play in it so that kind of front end piece and then the data piece are two areas, where we do think that those are emerging revenue streams for the company.
Ann Hand: Okay, and now with the success of Skechers and Claire's, are you seeing a pipeline develop from retailers that want to jump on the bandwagon, and how is that going to help improve margins down the road?
Speaker Change: Okay and have you seen now with the success of Skechers and players are you seeing a pipeline develop from retailers that want to jump on the bandwagon and how is that going to help improve margins down the road.
Howard Allen Halpern: Yeah, we have just, I mean, we've just brought on Claire's account. So we're just starting all of that work. Shimmerville's an existing game, but we've been hired to come in and revitalize it. But to your point, we now have several case studies. Craft Lunchables is one, Chipotle is one as well, of the digital to physical crossover and the ways, as I mentioned earlier, that we can drive digital app downloads, foot traffic, and likes for likes.
Speaker Change: Yeah, we have just I mean, we've just brought on declares accounts and we're just starting all of that work, it's shimmer bills and existing game, but we've been hired to come in and and revitalize it.
Speaker Change: But to your point, we now have several case studies.
Crap Lunchables is one chipotle is one as well of digital to physical crossover.
Speaker Change: And the waves as I mentioned earlier that we can drive digital app downloads foot traffic like for likes and so that's becoming a bit of our hallmark of it is those case studies, where we can point to the the real world P&L effects, we gave to that brand beyond just checking the box of a great engaging.
Howard Allen Halpern: So that's becoming a bit of our hallmark, those case studies where we can point to the real world P&L effects we gave to that brand beyond just checking the box of a great engaging marketing campaign. That's not what we want to be known for.
Ann Hand: We want to be known as people who are thinking about that brand's bottom line. And so the thing that I think could happen over time, right now, when we're being hired to do these things, we're certainly getting more retailers in. I can't really name some of the retailers right now because it's not announced that we're digging in, but I do believe we'll convert into paying consumers or brands with us this year. But there's an exciting list of retailers, because once you have a good QSR case study or fashion retail case study, you can go out and leverage that for repeats inside that vertical.
Speaker Change: Marketing campaign, that's not what we want to be known for we want to be known as people who are thinking about that brands bottomline.
Speaker Change: And so the thing that I think could happen over time right now when we're being hired to do those were certainly getting more retailers in them I can't really named some of the retailers right now because it's not announce that we're digging in and I do believe will convert into pain consumers our brands with us this year.
Speaker Change: But but theres an exciting list of retailers because once you have a good Q S. Our case study or you know fashion retail case study you know you can go out and leverage that for repeats inside that vertical but the one thing that I think is a huge opportunity.
Howard Allen Halpern: But the one thing that I think is a huge opportunity, today when we're paid for those activations, we're still paid to kind of do the work with our kind of margin markup on it, right? But what if we got one retailer to allow us to structure a contract differently, where we got a small royalty for everything that we were able to achieve on the physical crossover? So, you know, if right now a brand would pay, you know, $30, $50 to get marketing dollars to get a consumer to download an app on their phone, you know, what if they were willing to give us $1 for every one of those digital app downloads that we received on their behalf?
Speaker Change: Today, when we're paid for those Activations were still paid them to kind of do the work with our kind of margin markup on it right.
Speaker Change: But what if we got one retailer.
Speaker Change: To allow us to structure, our contract differently, where we got a small royalty for everything that we were able to achieve on the physical crossover.
Speaker Change: So you know if right now our brand would pay you know 30 $50 to get end to end marketing dollars to the consumer to download an app on their phone you know what if they were willing to give us one dollar for every one of those digital app downloads that we received on their behalf.
Speaker Change: Or maybe a small small royalty for any online sales.
Howard Allen Halpern: Or maybe a small, small royalty for any online sales. You know, I do think, especially like with the mobile app download example, I don't think that's too far-fetched that you could get a brand to say, you know, I'm going to, you're already costing me less for that mobile app download. Instead of me paying $30, $50 for acquisition, this program, you know, with the metrics we've identified, we'll be able to do it for $15 or $10.
Speaker Change: You know I do think I think especially like with the the mobile App. Download example, I don't think that's too far fetched that you could get a brand to say you know I'm gonna, you're you're already costing me less for that mobile app download instead of me paid 30 $50 for acquisition. This program you know with the metrics we've.
Speaker Change: Identified we'll be able to do it for $15 or $10. So I don't think it's a big stretch that we could then say what if we got a one dollar a kicker for every one of those downloads and so I think this is going to be the opportunity that digital to physical space as the opportunity for us to kind of changed just the way we price programs.
Howard Allen Halpern: So I don't think it's a big stretch that we could then say, "What if we got a $1 kicker for every one of those downloads?" And so I think this is going to be the opportunity that digital to physical space is the opportunity for us to kind of change just the way we price programs and get a piece of not just the revenues that come downstream, but it goes back to, again, smoothing out seasonality, more things that feel recurring in nature. So again, it changes this current highly seasonal advertising model. Okay, well, thanks, and keep up the great work. Thank you, Howard.
Speaker Change: And get a piece of not just the the revenues that further downstream, but it goes back to again smoothing out seasonal seasonality more things that feel recurring in nature. So again it changes.
Speaker Change: This current highly seasonal advertising model.
Speaker Change: Okay, well, thanks, and keep up the great work. Thank you Howard.
Speaker Change: Thank you.
Operator: Our next question comes from the line of Scott Buck. Please proceed with your question.
Speaker Change: Our next question comes from the line of Scott.
Please proceed with your question.
Scott Christian Buck: Hi Ann, thanks for taking my questions. I'm curious, the seven-digit deals you have in the pipeline now for the remainder of the year, are any of those repeat customers?
Scott: Hi, and thanks for taking my questions.
Scott Christian Buck: You're talking about the ones that are 7-figure and have the 7-figure deals that I spoke about, correct? Yeah. So of those deals, I'm just looking at them right now. 3 of them are repeats.
Scott: I'm curious with the seven digit deals you have.
Scott: The pipeline now for the remainder of the year already of those repeat customers.
Scott: Youre talking about the ones that are seven figure.
Scott: And have the.
Speaker Change: Seven figure deals that I spoke about correct, yes, yes, so of those deals I'm just looking right now at them three of them are repeat.
Ann Hand: And can you give us a sense of where you were a year ago for 2023 since you had kind of a similar number of deals?
Speaker Change: And could you give us a sense of where you were a year ago for 2023. Since you had kind of a similar number of a view of that.
Ann Hand: Yeah, I would say probably one, maybe two of the six. Yeah, so we had six, seven-figure deals last year; we have six this year, five months into the year. And as a comparable, I'd say one at most two, probably realistically one, just it almost has to be by nature because of how our revenue distribution is, right? You know, as you know, the advertisers put all their money to work and for back-to-school and holidays. So as you've seen in the last few years, 65% or more of our revenues are in Q3 and Q4. And so that's inevitably where you're typically going to see those larger deals land.
Speaker Change: Yeah, I would say probably at one maybe two of the six.
So we have six seven figure deals last year.
We have a sixth this year five months into the year and as a comparable I'd say.
Speaker Change: One at most two probably realistically one just what the house has to be by nature because of how our revenue distribution is right you know and as you know you know the advertisers put all their money to work and for back to school and holiday. So as you've seen the last few years you know 65.
Speaker Change: Per cent or more of our revenues are in Q3, and Q4, and so that's inevitably where you're typically going to see those larger deals on land.
Scott Christian Buck: Yeah, no, that's helpful. And I was really impressed with OPEX this quarter. But how much of that has to do with being in kind of the seasonal trough versus, you know, hey, this is the new run rate on a go forward basis?
Speaker Change: No that's helpful and I was really impressed with the Opex. This quarter is that how much of that has to do with being in kind of the seasonal trough versus you know hey. This is the new run rate on a go forward basis, Yeah. I mean, the we don't have a lot of variable workforce and so.
Ann Hand: Yeah, I mean, we don't have a lot of a fluctuating workforce. And so that has more to do with the, the hard kind of slog of really almost 18 months of reducing, you know, several, several layers of layoffs, tightening our product strategy, really only investing in product lines where we don't just see significant growth but also profitability. And then, of course, tackling our infrastructure costs.
Speaker Change: So that has more to do with the the hard kind of slog of really almost 18 months of reducing you know several several layers of layoffs tightening up our product strategy I'm really only investing in product lines, where we don't just see significant growth, but also profitability.
Speaker Change: And then of course of tackling our infrastructure cost, we got about 50% of our infrastructure costs down our cloud based costs.
Ann Hand: We got about 50% of our infrastructure costs down on our cloud based costs prior to selling MineHut, and MineHut was the final big chunk of that. So there were 12 full-time equivalents that left the company with that divestment as well. The kind of final big chunk. We have a little bit of cloud services left for our own use, but it's, it's very minor. And so I would say the majority of the Q1 cost reduction is all of those levers we've been pulling over the last several quarters, and you're starting to see those flow through consistently. And that's before we now add in the additional 2.4Million on a full year basis from the MineHut.
Speaker Change: Prior to selling mine heart and mind that was the final big chunk of that so there were 12 full time equivalents that left the company with that divestment as well the kind of final big chunk, we have a little bit of cloud services left for our own use but it's very minor and so.
Speaker Change: I would say the majority of Q1 cost reduction is all of those levers we've been pulling over the last several quarters.
Speaker Change: And you're starting to see those flow through consistently and that's before we now add in the additional $2 4 million on a full year basis from the mine Hutt sail.
Scott Christian Buck: Okay, so you still have some mine hunt costs in the first quarter. Oh, yeah, because we didn't, that sale was completed at the end of March. Okay, so yeah, between that and you know, some very minor kind of severance packages, there's a little bit of spillover into Q2. Okay, fantastic. And then, last one for me, I just want to ask you about cash and runway and how you're thinking about that as you move into, you know, the stronger part of the year.
Speaker Change: Okay. So you still have some mind high costs in the first quarter Oh, yeah, because we didnt win that sale was completed at the end of March.
Speaker Change: Okay, Hello, yeah between between that and you know Oh.
Speaker Change: Some very minor kind of severance packages.
Speaker Change: Yeah, Theres, a little bit of of spillover into Q2, Okay Fantastic and then last one for me I just wanted to ask you about cash and runway and how youre thinking about that as you move into the stronger earlier.
Ann Hand: Yeah, I mean, look, you know, we had a cash balance of $3.3 million at the end of Q1, no debt, and we're operating with a conservative lens. So, you know, we'll continue to be strategic and proactive to address any kind of longer-term capital requirements. But we want to stay transparent with updates to the market. Obviously, capital raising, the challenges around it can continue to be, you know, tough with the kind of cyclical macroeconomic landscape that we all are sitting in in the small cap world.
Speaker Change: Yeah, I mean look you know.
Speaker Change: We have a cash balance of $3 3 million at the end of Q1 no debt.
Speaker Change: And we're operating with a conservative lens. So you know where it will continue to be strategic and proactive to address any kind of longer term capital requirements.
But we wanted to stay transparent with updates to the market.
Speaker Change: Obviously, you know capital raising you know the challenges around it can continue to be you know.
Speaker Change: With the kind of cyclical macroeconomic landscape that we all are sitting in and small cap world.
Ann Hand: But I do feel that the campaigns that we've secured in Q1, the line of sight we see into Q2, 3, and 4, I still feel very bullish and confident that we are cutting our losses very fast and that in the second half of the year, we're going to see that break-even point for the first time in our history. And so we haven't lost our faith that we're going to run the business conservatively.
But I do feel like the campaigns that we secured in Q1 the line of sight, we see into Q2, three and four.
Speaker Change: I still feel very bullish and confident that we are cutting our losses very fast and that in that second half of the year, we're going to see that breakeven point for the first time in our history and so we haven't lost our faith that where we're going to run the business conservatively, we do not want to do any.
Ann Hand: We do not want to do anything in the market that puts more pressure on our stock. And so that's the attitude that we march forward with, and we will do what it takes to get to profitability by Q3. Great. Well, I appreciate you answering my questions. Thanks for your time.
Speaker Change: And market that puts more pressure on our stock and so that's the attitude that we March forward with and that we will do what it takes to get to profitability.
Speaker Change: By Q4.
Scott Christian Buck: Great. Well, I appreciate you answering my questions. Thanks for your time. Thank you.
Speaker Change: Great well I appreciate you answering my questions. Thanks for your time. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Operator: We've reached the end of our question and answer session. I would like to turn the floor back over to Ann for any further comments. Well, great.
Ann Hand: We've reached the rent end of our question and answer session I would like to turn the floor back over to Ann for any further comments.
Ann Hand: Well, great. Well, thank you so much everyone for joining today. With secular tailwinds behind us and brand awareness of 3D engagement growing daily, we are set to electrify this space and scale our business, with an unwavering focus on being trusted partners that brands turn to to speak the language of 3D engagement as their own omni-channel strategies exist and emerge. That is also how we will exceed our own ambitious goals and further cement Super League's position as strategic leaders in the immersive web while creating long-term sustainable value for our
Ann Hand: Well, great well. Thank you so much all for joining today with secular tailwind behind us and brand awareness of three D engagement growing daily we're set to electrify this space and scale our business with an unwavering focus on being trusted partners that brands turn to to speak the language of three D engagement as their own omnichannel.
Ann Hand: <unk> exist in emerge that is also how we will exceed our own ambitious goals and further cement Super league's position as a strategic leaders in the immersive web while creating long term sustainable value for our shareholders and with that I do encourage you to visit Super League Dot Com checkout, our new branding immerse yourself.
Ann Hand: And with that, I do encourage you to visit superleague.com. Check out our new branding, immerse yourself in the beautiful experiences that we create for our brand partners, and we wish you a great day. Thank you. That will conclude today's telecast.
Ann Hand: And the beautiful experiences that we create for our brand partners and we wish you a great day.
Ann Hand: Thank you.
Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.
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Speaker Change: That does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Speaker Change: Goodbye.
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