Q1 2025 Enthusiast Gaming Holdings Inc Earnings Call
Operator: Good day and welcome to the Enthusiast Gaming Holdings, Inc. first quarter 2025 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Good day and welcome to the enthusiast Gaming Holdings, Inc. First quarter 2025 financial results Conference call.
All participants will be in a listen only mode.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded.
After todays presentation, there will be an opportunity to ask questions.
To ask a question you May press Star then one on a touchtone phone.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
JB Elliott: I would now like to turn the conference over to JB Elliott, Chief Strategy Officer and General Counsel. Please go ahead. Thank you, operator.
Speaker Change: I would now like to turn the conference over to J, B Elliott Chief strategy Officer, and General Counsel. Please go ahead.
Speaker Change: Thank you operator, good afternoon, everyone and welcome to the enthusiast gaming first quarter 2025 results conference call I'm.
JB Elliott: Good afternoon, everyone, and welcome to the Enthusiast Gaming first quarter 2025 results conference call. I'm JB Elliott, Chief Strategy Officer and General Counsel. With me today is Interim Chief Executive Officer Adrian Montgomery and our Chief Financial Officer Alex Macdonald.
Speaker Change: J D Elliott Chief strategy Officer, and General Counsel with me today is interim Chief Executive Officer, Adrian Montgomery, and our Chief Financial Officer, Alex Macdonald.
JB Elliott: We'll begin with some prepared remarks and then open the floor to questions.
Speaker Change: I'll begin with some prepared remarks, and then open the floor to questions before we begin I'd like to remind everyone that today's presentation contains forward looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future.
JB Elliott: Before we begin, I'd like to remind everyone that today's presentation contains forward-looking information that involves known and unknown risks and uncertainties and other factors that could cause actual events to differ materially from current expectations. These statements should not be read as assurances of future performance or results. Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from those implied by such statements.
Speaker Change: <unk> or results such statements involve known and unknown risks uncertainties and other factors that may cause actual results performance or achievements to be materially different from those implied by such statements a more complete discussion of the risks and uncertainties facing the company appears in the company's management discussion and analysis for the three months ended March 31 two.
JB Elliott: A more complete discussion of the risks and uncertainties facing the company appears in the company's Management Discussion and Analysis for the three months ended March 31, 2025, which are available under the company's profile on CDAR Plus, as well as on the company's website at enthusiastgaming.com. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation.
Speaker Change: $1 25, which are available under the company's profile on SEDAR, plus as well as on the company's website and enthusiast gaming Dot com.
Speaker Change: You are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date of this presentation.
JB Elliott: The company disclaims any intention or obligation, except to the extent required by law, to update and revise any forward-looking statement as a result of new information, future events, or for any other reason.
Speaker Change: The company disclaims any intention or obligation except to the extent required by law to update or revise any forward looking statement as a result of new information future events or for any other reason now I'd like to turn the call over to Adrian Montgomery Adrian Nicole is yours.
JB Elliott: Now I'd like to turn the call over to Adrian Montgomery. Adrian, the call is yours. Thanks, JB. And thank you to everyone joining us today for Enthusiast Gaming's first quarter earnings call.
Adrian Montgomery: Thanks J b.
Adrian Montgomery: And thank you to everyone joining us today for enthusiast gaming first quarter earnings call.
Adrian Montgomery: We began the year with a renewed and streamlined structure. We're operating leaner and more effectively monetizing our owned and operated properties than ever before. We've laid the groundwork for direct sales to rebound, and we continue to invest across our portfolio with focus and distance.
Adrian Montgomery: We began the year with a renewed and streamline structure or operating leaner and more effectively monetizing our owned and operated properties than ever before.
Adrian Montgomery: We've laid the groundwork for direct sales to rebound and we continue to invest across our portfolio with focus and discipline.
Adrian Montgomery: Our strategy is simple. Focus on what we own, operate it efficiently, and extract more value from every user. and every engaged.
Adrian Montgomery: Our strategy is simple focus on what we own and operate it efficiently and extract more value from every user in every engagement.
Adrian Montgomery: Our goal for 2025 and beyond is to spend more time with more gamers. This mantra informs everything we do, from product development, to content strategy, to how we engage advertisers. Serve gamers anytime and anywhere through communities, content, creators, and experiences.
Adrian Montgomery: Our goal for 2025 and beyond it.
Adrian Montgomery: It's just spend more time with more gamers. This.
Adrian Montgomery: This mantra informs everything we do from product development to content strategy, how we engage advertisers, we serve gamers anytime and anywhere through communities content creators and experiences.
Adrian Montgomery: These four pillars form the foundation of our ecosystem. And with a leaner and more effective monetization model in place, deepening engagement across our properties is our clearest path to long-term value.
Adrian Montgomery: These four pillars form the foundation of our ecosystem.
Adrian Montgomery: And with a leaner and more effective monetization model in place deepening engagement across our properties as our clearest path.
Adrian Montgomery: So long term value.
Adrian Montgomery: This goal is underpinned by a much more efficient business model. We've made meaningful progress across all revenue. Higher Yield in our Programmatic Business, Growing Subscriber Base. an expanding events footprint, and a re-energized direct sales team now regaining momentum.
Adrian Montgomery: This goal is underpinned by a much more efficient business model.
Adrian Montgomery: Made meaningful progress across all revenue streams higher yield in our programmatic business growing subscriber bases and expanding events footprint and a reenergized direct sales team now regaining momentum.
Adrian Montgomery: While revenue was lower year over year, the quality of our earnings has materially improved. Our core operations are more profitable, and our refined cost structure has fundamentally reshaped our financial profile. In Q1, cash-based operating expenses were down over $3 million year-over-year, a direct result of disciplined cost control and our focused operating model.
Adrian Montgomery: While revenue was lower year over year, the quality of our earnings is materially improved.
Adrian Montgomery: Our core operations are more profitable and a refined cost structure has fundamentally reshaped our financial profile in.
Adrian Montgomery: In Q1 cash based operating expenses were down over 3 million year over year, a direct result of disciplined cost control and our focused operating model.
Adrian Montgomery: Let us now turn to our key assets, where we continue to focus our investments and growth. Icy Veins continued its exceptional performance in Q1, emerging as one of our strongest contributors across both traffic and profitability, despite the lack of any significant macro-level events or releases in the quarter. Overall yield on Icy Veins has improved by more than 100% year-over-year, driven by a combination of strategic ad-tech optimization. and expanded coverage of new high demand titles such as Monster, Hunter, Wild. Path of Exile 2, additions which were carefully selected to align with existing user interests while capturing new segments of the gaming community.
Adrian Montgomery: Let us now turn to our key assets, where we continue to focus our investments in growth initiatives.
Adrian Montgomery: Vans continued its exceptional performance in Q1 emerging as one of our strongest contributors across both traffic and profitability. Despite the lack of any significant macro level events of releases in the quarter.
Speaker Change: Overall yield on IC beans has improved by more than 100% year over year, driven by a combination of strategic AD Tech optimizations and expanded coverage of new high demand titles, such as Monster Hunter Wild and path of exile too.
Speaker Change: Additional which were carefully selected to align with existing user interests, while capturing new segments of the gaming community.
Adrian Montgomery: We also broadened the site's editorial footprint. to cover General Gaming News and Tools, an initiative that has helped increase session length and repeat visits. with its trusted brand, high SEO authority, and rapidly growing.
Speaker Change: We also broadened the site editorial footprint.
Speaker Change: <unk> General gaming news them tools and initiatives that has helped increase session lengths and repeat visits with its trusted brand high steel authority and rapidly growing reach AC veins is well positioned to remain a cornerstone of our content strategy in 2025 and beyond.
Adrian Montgomery: Icy Veins is well positioned to remain a cornerstone of our content strategy in 2025 and beyond.
Adrian Montgomery: The SIMS resource delivered another strong quarter. TSR grew both subscription revenue and paid subscriber counts quarter over quarter while also improving the quality of its subscriber base. This past year has focused on an intentional shift towards premium annual subscriptions, which carry better retention. The results of which have created a stable and growing base of high-value subscribers serving as the cornerstone of the company's subscription office.
Speaker Change: The Sims resorts delivered another strong quarter GSR groups grew both subscription revenue and paid subscriber counts quarter over quarter, while also improving the quality of its subscriber base.
Speaker Change: This past year has focused on an intentional shift towards premium annual subscriptions, which carry better retention and significantly higher lifetime value. The results of which have created a stable and growing base of high value subscribers, serving as the cornerstone of the company's subscription offering.
Adrian Montgomery: Looking ahead, we are preparing to launch a major product update that we believe will redefine the user experience, a feature that we are calling Dress to Impress. This new feature allows users to try on custom Sims content, clothing, hair, and more, in browser, with real three-time with real-time 3D rendering, giving players the ability to engage directly with our library of over 5 million pieces of content, all while increasing time on site and driving We expect to launch this in Q2 or Q3 of this year.
Speaker Change: Looking ahead, we're preparing to launch a major product update that we believe will redefine the user experience a feature that we are calling dress to impress.
Speaker Change: This new feature allows users to try on custom Sims caused that clothing hair and more in browser with real three time.
Speaker Change: With real time, three D rendering giving players the ability to engage directly with our library of over 5 million pieces of content, all while increasing time on site and driving conversion, we expect to launch this in Q2 or Q3 of this year.
Adrian Montgomery: With respect to UGG, Q1 marked the beginning of a new phase of growth as we accelerate its evolution from a leading League of Legends platform to a broader category-defining destination for gamers across the gaming ecosystem. We launched support for Marvel Rivals, NetEase's new competitive team shooter that surpassed 600,000 peak concurrent players during P1, with UGG now providing Marvel Rivals players with essential gameplay analytics. bringing the same level of performance optimization and meta-analysis that has made our platform a staple in legal education. We also expanded into Rainbow Six Siege, launching global leaderboards, detailed player profiles, and match history analytics for one of Ubisoft's most iconic tactical shooters prior to the game's shift to a free-to-play model this summer.
Speaker Change: With respect to UGG Q1 marked the beginning of a new phase of growth as we accelerate.
Speaker Change: Its evolution from a leading league of legends platform to a broader category defining destination for gamers across the gaming ecosystem.
Speaker Change: We launched support for marble rivals that eases, new competitive team shooter that surpassed 600000 peak concurrent players during Q1.
Speaker Change: With UGG now, providing marvell rivals players with essential gameplay analytics, bringing the same level of performance optimization and meta analysis that doesn't meet our platform a staple in legal legends.
Speaker Change: We also expanded into Rainbow six each watching global leaderboards detailed player profiles and match history analytics for one of <unk>, most iconic tactical shooters prior to the game shift to a free to play model. This summer.
Adrian Montgomery: We plan to launch support for several additional high-interest titles in the month ahead and remain focused on expanding both our audience and our high-engagement desktop app experience. where user retention and monetization are particularly strong.
Speaker Change: We plan to launch support for several additional high interest titles in the months ahead and remain focused on expanding both our audience and our high engagement desktop.
Speaker Change: Experience, where user retention and monetization are particularly strong.
Adrian Montgomery: We continue to see strong momentum across both the consumer and event side of the Pocket Gamer platform. Pocketgamer.com more than doubled its audience year-over-year in Q1 and has significantly improved session times and engagement. The site has become a trusted authority in mobile.
Speaker Change: We continue to see strong momentum across both the consumer and event side the pocket Gamer brand.
Speaker Change: Pocket game or dot com more than doubled its audience year over year in Q1 and has significantly improved session times and engagement.
Speaker Change: The site has become a trusted authority in mobile gaming news Chairlifts and guides and is rapidly scaling as a leading destination for mobile first players.
Adrian Montgomery: Care Lists, and Guides, and is rapidly scaling as a leading destination for mobile first. On the event side, Pocket Gamer Connects hosted two major events in Q1. PGC London in January, which was our largest and most successful event to date by every relevant metric, and PGC San Francisco in March, the 50th event in PGC history, which ran alongside GDC and delivered strong year-over-year growth in attendance, sponsorship, and revenue.
Speaker Change: On the event side pocket Gamer connects hosted two major events in Q1.
Speaker Change: P. G C. London in January which was our largest and most successful event to date by every relevant metric and P. G E. San Francisco in March 15th event in <unk> history, which ran alongside G. D C and delivered strong year over year growth in attendance sponsorship and revenue.
Adrian Montgomery: We also announced a major international expansion of the Pocket Gamer Connect series with new events scheduled in Barcelona in June, Shanghai in July, and Bangkok later this year. With over 55,000 industry professionals having attended PGC events globally to date, we believe this franchise has only begun to realize its full potential.
Speaker Change: We also announced a major international expansion of the pocket Gamer connect series with new events scheduled in Barcelona in June.
Speaker Change: Hi in July and Bangkok later, this year with over 55000 industry professionals, having attended P. G. C events globally to date. We believe this franchise has only begun to realize its full potential.
Adrian Montgomery: In addition to our core O&O properties, our direct sales team continues to recover and strengthen. While Q1 revenue was impacted by a lower count of fully ramped sellers, total closed dollars grew to $2.4 million, up from $2.1 in Q4, and our 12-week trailing book dollars began to climb again in February, marking a key trend reversal. We're onboarding new sellers, increasing RFP activity, and converting deals from both new and returning clients. Notable campaigns in Q1 included new campaigns with Ford and a multi-phase launch for SNK's Fatal Fury, City of the Wolves. in partnership with Petrol Advertising.
Speaker Change: In addition to our core Owen old properties, our direct sales team continues to recover and strengthened.
Speaker Change: While Q1 revenue was impacted by a lower count fully ramped sellers total closed dollars grew to $2 4 million up from $2. One in Q4, and our 12 week trailing book dollars begin to climb again in February marking a key trend reversal.
Speaker Change: We're onboarding, new sellers, increasing RFP activity and converting deals from both new and returning clients. Notable campaigns in Q1 included new campaigns with Ford and a multi phase launch for F. N case, Beadle theory city of the walls.
Speaker Change: In partnership with petrol advertising.
Adrian Montgomery: as well as repeat business from major brands including Amazon, State Farm, Paramount, Lego, Nintendo, Samsung, and Disney. Additionally, our Rising Stars campaign continues to deliver high-impact results. The 2025 edition generated over 500 million live stream banner impressions. Engaged over 5,800 community members in its first week. and produced thousands of organic creator posts, all while serving as a compelling sponsorship vehicle. Securing deals from the likes of Elgato, Cash App, Corsair, and many others.
Speaker Change: As well as repeat business from major brands, including Amazon State Farm, Paramount Lego, Nintendo Samsung and Disney.
Speaker Change: Additionally, a rising stars campaign continues to deliver high impact results.
Speaker Change: Thousand twenty-five addition generated over 500 million livestream banner impressions.
Speaker Change: Gauged over 5800 community members in its first week.
Speaker Change: And produced thousands.
Speaker Change: Organic creator posts, all while serving as a compelling sponsorship vehicle.
Speaker Change: Hearing deals from the likes of Eldorado cash App Corsair and many others.
Adrian Montgomery: This is a perfect example of our ability to execute complex, creator-led campaigns efficiently and at scale, and a formula we intend to repeat through our Luminosity-branded events and programs, as well as through our partnerships like NHL Puck & Play slated to launch this fall.
Speaker Change: It's a perfect example of our ability to execute complex creator led campaigns efficiently and at scale and a formula we intend to repeat through our luminosity branded events and programs as well as through our partnerships like NHL Potkin play slated to launch this fall.
Adrian Montgomery: As we move through 2025, our priorities are clear. One, grow our audience through SEO, referral partnerships, new product features, and user flow optimization. 2. Increase monetization yields through product innovation, ad tech optimizations, and promoting our most profitable offerings like our desktop applications. 3, continuing to build on the momentum of our Rebuild Direct Sales team to deliver bespoke campaigns to the world's largest brands.
Speaker Change: As we move through 2025, our priorities are clear one grow our audience through S. T O referral partnerships, new product features and user flow optimization.
Speaker Change: To increase monetization yield through product innovation AD tech optimizations, and promoting our most profitable offerings like our desktop applications.
Speaker Change: <unk> continuing to build on the momentum of our rebuilt direct sales team to deliver bespoke campaigns, so the world's largest brands.
Adrian Montgomery: 4. Expand our Pocket Gamer Connects event series into new geographies and markets.
Speaker Change: Four expand our pocket game or connect event series into new geographies and markets.
Adrian Montgomery: 5. Maintain our cost discipline while unlocking further Six, scale our subscription and e-commerce offerings, particularly across TSR and our other owned products. We have the model, the properties, and the right team in place. And while external pressures remain, the foundation we've built is strong and it's getting stronger.
Speaker Change: By maintaining our cost discipline, while unlocking further efficiencies.
Speaker Change: Fix scale, our subscription e-commerce offerings, particularly across CSR and our other owned properties.
Speaker Change: We have the model of the properties and the right team in place and while external pressures we remain.
Speaker Change: And found Asian, we built is strong and it's getting stronger.
Adrian Montgomery: Thank you to our shareholders, our partners, and our team of dedicated enthusiasts for your continued support.
Speaker Change: Thank you to our shareholders our partners and our team of dedicated enthusiasts for your continued support I will now hand, the call over to Alex for a deeper dive into the financials.
Alex Macdonald: I will now hand the call over to Alex for a deeper dive into the financials. Thank you, Adrian. I'm happy to be back on this call to report on our first quarter. It's been an eventful start to the year, and I want to thank the team for their effort and support through it. The meaningful progress we made in 2024 has continued into 2025 and is beginning to take hold, setting us up for what will be a strong year ahead. We're operating leaner and more efficiently than ever. Our focus remains squarely on what we own and what we operate.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Thank you Adrian.
Speaker Change: I'm happy to be back on this call to report on our first quarter, it's been an eventful start to the year.
Speaker Change: Want to thank the team for their effort and support through it the meaningful progress we made in 'twenty 'twenty. Four has continued into 2025 and is beginning to take hold setting us up for what will be a strong year ahead.
Speaker Change: We're operating leaner more efficiently than ever our focus remains squarely on what we own and what we operate and the structure. We have built is starting to show its strength.
Alex Macdonald: And the structure we've built is starting to show its strength. The improvements made last year to streamline the business, concentrate on high margin areas and exit lower value operations have carried forward and are reflected in our operational momentum. Today, we have a Healthy Monetization Foundation. Higher yield and margin from our programmatic business, growing subscribers, and expanding event revenue are all driving improved contribution from every part of our business. As these revenue streams grow, incremental dollars are coming in at over 70% gross margin. When combined with our low cost base, this structure positions us to unlock meaningful adjusted EBITDA gains through 2025.
Speaker Change: Movements <unk> made last year to streamline the business concentrate on high margin areas and exit lower value operations have carried forward and are reflected in our operational momentum.
Speaker Change: Today, we have a healthy monetization foundation.
Speaker Change: Your yield and margin from our programmatic business growing subscribers and expanding event revenue are all driving improved contribution from every part of our business. As these revenue streams grow incremental dollars are coming in at over 70% gross margin when combined with our low cost base the structure position us positions us.
Speaker Change: To unlock meaningful adjusted EBITDA gains through 2020 five.
Alex Macdonald: In respect of our more detailed financial results, I would first note that our results are presented in Canadian dollars. The significant majority of our revenues and expenses are measured in U.S. dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the U.S. dollar and our presentation currency of the Canadian dollar should be monitored and considered when analyzing or forecasting results.
Speaker Change: In respect of our more detailed financial results I would first note that our results are presented in Canadian dollars. The significant majority of our revenues and expenses are measured in U S dollars and are translated into Canadian dollars for presentation in our financial statements. The exchange rate between the U S. Dollar in our presentation currency of the Canadian dollar should be monitored and.
Speaker Change: Considered when analyzing our forecasting results. Additionally, it's important to note that the historical financial results specifically the comparative period of Q1 2024 does not fully reflect the changes in revenue mix as well as the cost reductions enacted throughout last year, and therefore may not bear a strong resemblance.
Alex Macdonald: Additionally, it's important to note that the historical financial results, specifically the comparative period of Q1 2024, does not fully reflect the changes in revenue mix as well as the cost reductions enacted throughout last year and therefore may not bear a strong resemblance to current or future results. And I know that our business is affected by seasonal trends in digital advertising with sequential increases each quarter throughout the year driven by increasing ad prices and demand, which peaks in Q4. The seasonality is isolated to our media and content advertising revenue streams. Q1 is the slowest seasonal period.
Speaker Change: To current or future results.
Speaker Change: And I know that our business is affected by seasonal trends in digital advertising with sequential increases each quarter throughout the year, driven by increasing AD prices and demand, which peaks in Q4. This.
Speaker Change: This seasonality is isolated to our media and content advertising revenue streams Q1 is the slowest seasonal period.
Alex Macdonald: Now let's speak about the numbers. Total revenue in Q1 was $12.2 million, down from $23.3 million in Q1 2024. The breakdown of Q1 revenue is as follows. Median content revenue was $5.6 million, down from $15.9 million in Q1 2024, primarily due to the deprioritization of below-margin Omnia Video Networks. Esports and entertainment revenue was $3.6 million in Q1, up from $3.4 million in Q1 2024, primarily driven by increased event revenue. Subscription revenue was $3 million, down from $4 million in Q1 2024, primarily due to the sale of certain legacy casual gaming assets under the Addicting Games portfolio.
Speaker Change: Now, let's speak about the numbers total revenue in Q1 was $12 2 million down from $23 3 million in Q1, 'twenty 'twenty four the breakdown of Q1 revenue was as follows media and content revenue was $5 6 million down from $15 9 million in Q1 2024, primarily due to the de prioritization of below margin.
Speaker Change: Near video network.
Speaker Change: E Sports and entertainment revenue was $3 6 million in Q1 up from $3 4 million in Q1, 2024, primarily driven by increased event revenue subscription revenue was $3 million down from 4 million in Q1 2024, primarily due to the sale of certain legacy casual gaming assets under the addicting games portfolio.
Alex Macdonald: Paid subscribers were $251,000 as of March 31, 2025, down from $259,000 as of March 31, 2024, due to the sale of the legacy assets, but up from $238,000 as of December 31, 2024. The majority of subscription revenue is sourced from the SimsResource web property. Paid subscribers in the SimsResource had periods of decline during 2024, but were fully recovered and up year-over-year to record highs as of March 31. Our gross margin improved significantly to 74%, up from 60% in Q1 2024. This is largely due to the mixed shift in revenue, as revenues from owned and operated properties now make up the majority of media and content revenue.
Speaker Change: Paid subscribers with 251000 as at March 31, 2025 down from 259000 as at March 31, 2024, due to the sale of the legacy assets, but up from 238000 as at December 31, 2020 for the majority of subscription revenue is sourced from <unk>.
Speaker Change: Resource web property paid subscribers and the resource had periods of decline during 2024, but were fully recovered and up year over year to record highs as of March 31.
Speaker Change: Our gross margin improved significantly to 74% up from 60% in Q1 2024. This is largely due to the mix shift in revenue as revenues from owned and operated properties now make up the majority of media and content revenue and events and entertainment and subscription account for an increased percentage of overall revenue.
Alex Macdonald: And events and entertainment and subscription account for an increased percentage of overall revenue. With those two categories combined, we're approximately 54% of revenue in Q1. Quarterly cash-based operating expenses decreased by well over 3 million year-over-year Q1, primarily driven by decreases of 2.2 million in salaries and wages and 1.2 million in consulting. This new cost structure in Q1 more accurately represents the go-forward operating expenses of the company, with additional cost savings expected in 2025. Adjusted Evil loss was $2.6 million, compared to a loss of $1.8 million in Q1 2024. From a balance sheet perspective, we ended the quarter with $1.9 million in cash.
Speaker Change: With those two categories combined for approximately 54% of revenue in Q1.
Speaker Change: Quarterly cash based operating expenses decreased by well over 3 million year over year in Q1, primarily driven by decreases of $2 2 million in salaries and wages and $1 2 million in consulting this new cost structure in Q1 more accurately represents the go forward operating expenses of the company with additional cost savings expected in two.
Speaker Change: 25.
Speaker Change: Adjusted EBITDA loss was $2 6 million compared to a loss of $1 8 million in Q1 2024.
Speaker Change: Our balance sheet perspective, we ended the quarter with $1 9 million in cash working capital. Excluding current portion of long term debt current portion of deferred payment liability and contract liabilities or deferred revenue was a deficit of approximately $4 5 million current portion of long term debt includes $20 5 million under the credit.
Alex Macdonald: Working capital, excluding current portion of long-term debt, current portion of deferred payment liability, and contract liabilities, or deferred revenue, was a deficit of approximately $4.5 million. Current portion of long-term debt includes $20.5 million under the credit facility, amounts which are not due until July 2028, but are presented as a current liability as of March 31st, 2025, due to the company not being in compliance with certain covenants under the facility. Current portion of long-term debt also includes $17.1 million under the term and operating credit facilities, down from $18.5 million as of December 31st, 2024, due to principal payments made during the quarter.
Speaker Change: Facility amounts, which are not due until July 2028, but are presented as a current liability as of March 31st 2025, due to the company not being in compliance with certain covenants under the facility current portion of long term debt also includes $17 1 million under the term and operating credit facilities down from 18.
Speaker Change: <unk> 5 million as at December 31, 2024, due to principal payments made during the quarter. These amounts are currently set to mature in June 2025. The company is working closely with its lenders to amend the terms of each of the facilities, including an intent to extend the maturity dates under the <unk> letter and revised.
Alex Macdonald: These amounts are currently set to mature in June 2025.
Alex Macdonald: The company is working closely with its lenders to amend the terms of each of the facilities, including an intent to extend the maturity dates under the commitment letter and revise covenants to better reflect the company's current structure and 2025 outlook. Accounts Payable and Accrued Liabilities decreased in Q1 from $15 million to $14 million.
Speaker Change: Covenants to better reflect the company's current structure and 2025 outlook.
Speaker Change: Accounts payable and accrued liabilities decreased in Q1 from 15 million to 14 million.
Alex Macdonald: Looking ahead for the rest of the year. We expect to maintain gross margins at or around Q1 levels for the remainder of the year. Additional cost efficiencies are expected to come from technology support, web development, and content costs, and salaries and wages, with those savings materializing in Q2 and for the remainder of the year. We continue to build our direct sales capabilities. As of March 31st, we had five unramped sellers, and we expect them to become fully productive through Q2 and Q3. Closed dollars were up in Q1 versus Q4, a positive early signal, and we're encouraged by the opportunity ahead.
Speaker Change: Looking ahead for the rest of the year.
Speaker Change: We expect to maintain gross margins at or around Q1 levels for the remainder of the year additional cost efficiencies are expected to come from technology support web development and content costs and salaries and wages with those savings materializing in Q2 and for the remainder of beer.
Speaker Change: We continue to build our direct sales capabilities as of March 31, we had five on ramped sellers and we expect them to become fully productive through Q2 and Q3.
Speaker Change: Those dollars were up in Q1 versus Q4, a positive early signal and we're encouraged by the opportunity ahead. We also continue to push forward on our owned and operated properties. Our monetization engine is running efficiently with stronger programmatic yield higher subscription activations and lower churn, we're actively positioning for growth.
Alex Macdonald: We also continue to push forward on our owned and operated properties. Our monetization engine is running efficiently, with stronger programmatic yield, higher subscription activations, and lower churn. We're actively positioning for growth, expanding game title coverage across platforms like UGG and ICBanes, enhancing SEO, and developing new referral partnerships. These investments are designed to grow our audience, and importantly, each new user acquired today can be monetized more effectively than ever. TSR continues to hit record subscriber levels, and we're excited about upcoming product improvements that we believe will help expand its reach beyond just Sims players and deeper into adjacent creator and simulation communities.
Speaker Change: Expanding game title coverage across platforms, like UGG, and IC veins, enhancing SCO and developing new referral partnerships. These investments are designed to grow our audience and important Lee each new user acquired today can be monetize more effectively than ever.
Speaker Change: <unk> continues to hit record subscriber levels and we're excited about upcoming product improvements that we believe will help expand its reach beyond just tennis players in deeper into adjacent to creator and stimulation communities.
Alex Macdonald: We continue to be cautious about macro conditions, particularly around CPMs. While digital advertising broadly is expected to strengthen in 2025, there remains some uncertainty, especially regarding potential tariff related impacts in North America, which is our largest market. CPMs remain an important factor in our revenue mix. Any increase in CPMs from the current levels would be an incremental tailwind. One that would be especially impactful heading into the second half of the year. We still expect a strong seasonal lift in the second half and particularly in Q4.
Speaker Change: We continue to be cautious about macro conditions, particularly around C. P. M. While digital advertising broadly is expected to strengthen in 2025, there remains some uncertainty, especially regarding potential tariff related impacts in North America, which is our largest market G. P. M remain an important fact.
Speaker Change: <unk> and our revenue mix and the increase in C. P. EMS from the current levels would be an incremental tailwind.
Speaker Change: One that would be especially impactful heading into the second half of the year, we still expect a strong seasonal lift in the second half and particularly in Q4, our focus remains on cash flow disciplined resource allocation and improved proving profitability at every level of the P&L as we pursue revenue growth again this year, we're doing it.
Alex Macdonald: Our focus remains on cash flow, disciplined resource allocation, and improving profitability at every level of the P&L. As we pursue revenue growth again this year, we're doing so in ways that protect our margins and support long-term value creation.
So in ways that protect our margins and support long term value creation.
Alex Macdonald: In closing, Q1, historically our seasonally softest quarter, landed generally where we expected it to. We remain optimistic of 2025. The structural improvements made last year are in place, our monetization is stronger, and we're now well positioned to focus on audience expansion and sales growth. There's more work to do, but the building blocks are solid. With a stable high margin foundation in place, our attention turns to growth. Our strategy is clear, scale across more game titles, roll out impactful new products, expand our reach and engage our users more deeply. Our mission is to spend more time with more gamers and each new user adds value across our monetization channels from programmatics to subscriptions to our revitalized direct sales business, which is showing strong momentum and is well positioned to rebound from recent lows.
Speaker Change: Closing Q1, historically, our seasonally softest quarter landed generally where we expected it to we remain optimistic about 2025. The structural improvements made last year are in place our monetization is stronger and we're now well positioned to focus on audience expansion and sales growth, there's more work to do but the building blocks are salt.
Speaker Change: With a stable high margin foundation in place our attention turns to growth our strategy is clear scale across more game titles rollout impactful new products expand our reach and engage our users more deeply our mission is to spend more time with more gamers and each new user adds value across our monetization channels from programmatic to subscriptions to our.
Speaker Change: Revitalized direct sales business, which are showing strong momentum and is well positioned to rebound from recent lows.
Alex Macdonald: With the structure in place, we have a clear path forward towards scaling revenue, expanding profitability, and delivering long-term value for our business.
Speaker Change: With this structure in place we have a clear path forward towards scaling revenue expanding profitability and delivering long term value for our business and of course, ladies and gentlemen, our business is the business of game. Thank.
Alex Macdonald: And of course, ladies and gentlemen, our business is the business of gaming.
Operator: Thank you, operator. I kindly turn it back. Thank you.
Speaker Change: Thank you operator, I kindly turn it back to you.
Speaker Change: Thank you.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: We'll now begin the question and answer session.
Speaker Change: Ask a question you May press Star then one on your Touchtone phone.
Speaker Change: If you are using a speakerphone please pick up your handset before pressing the keys.
Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our rafting.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Yeah.
Robert Young: The first question today comes from Robert Young with Canaccord Genuity. Please go ahead. Hi, good evening. I guess best place, first place to start would just be around the covenants and the current status of the debt. If you could just give us a summary of the I guess there's the. June Maturity, and there's the, maybe just give us a summary of the near-term movements and things that you need to accomplish to keep the debt in good standing.
Speaker Change: The first question today comes from Robert Young with Canaccord Genuity. Please go ahead.
Robert Young: Hi, Good evening I guess, that's the first place to start would just be around the covenants and the current status of the W. Just give us a summary of.
Speaker Change: The.
Speaker Change: I guess, there's the.
Speaker Change: June maturity and there's the maybe just give us a summary of the near term movements and things that you need to accomplish there to keep the debt in good standing.
Alex Macdonald: No problem, Rob. This is Alex. In summary, there are two facilities. One of them matures in June 2025, the other not for many years, but both are presented as current due to being offside with certain covenants. What needs to be accomplished is we need to continue to work closely with our lenders. We are working on amendments to those facilities. We want to do a number of things. One, we want to extend the maturity date of the amounts provided under the commitment letter. That is the facility that is coming due June 2025. We want to also amend the covenants to reflect the new kind of and our current outlooks to bring those covenants back on side.
Speaker Change: No problem, Rob this is Alex.
Speaker Change: Yeah, I mean in summary, there are in fact, the two facilities one of them.
Speaker Change: Matures in June 2025.
Speaker Change: The other not not for many years, but both are presented as parents.
Speaker Change: Due to being upside where certain covenants.
Speaker Change: It needs to be accomplished is we need to continue to work closely with our lenders.
Speaker Change: We are working on amendments to those facilities.
Speaker Change: We want to.
Speaker Change: Do a number of things one we want to excel.
Speaker Change: Extend the maturity date all of the amounts provided under the commitment letter that is the facility that is coming due June 2025.
Speaker Change: We want to also amend.
Speaker Change: The covenants to reflect the the new kind of structure.
Speaker Change: All of the business.
Speaker Change: And our current outlooks.
Speaker Change: To bring that those covenants back onside.
Alex Macdonald: We do expect that all of this will be done certainly in advance of the maturity date at the end of June. We have been working very closely. We are very grateful for the partnership with each of our lenders. We are working very closely with them. We think we will have those amendments announced soon.
Speaker Change: Hum.
Speaker Change: And we do expect that that all of this will be done in.
Speaker Change: And it certainly in advance of the of the maturity date at the end of June we've been working very closely we're very grateful for the partnership.
With each of our lenders are working very closely with them.
Speaker Change: And we think we will have those amendments about soon.
Speaker Change: Okay now.
Adrian Montgomery: Now, in the worst case, I mean, you have a lot of really valuable assets probably not reflected in the current valuation. Maybe it would just give us a sense of some of the... The things you could do in the worst case, like are there assets which you could sell or put in some way to reduce the debt if you needed to go down that path?
Speaker Change: Now.
Speaker Change: And in the worst case I mean, you have a lot of really valuable life, that's probably not reflected in the current valuation.
Speaker Change: Maybe you could just give us a sense of some of the.
Speaker Change: Things you could do in the worst case like are there assets, which you could sell or put.
Speaker Change: In a play and in some way that tend to reduce the debt. If it were needed to go down that path.
Adrian Montgomery: Hey, it's Adrian. I think Yes, the short answer is yes, and There are a lot of. a lot of assets that are. a very attractive in the portfolio. We believe that you can transact on them in the worst case scenario, and we get inbound expressions of interest all the time, which points to the... you know, to the competitive advantages that a lot of these assets have. You know, I would point out that there's probably a number of assets that we have in our portfolio that are not even household names to people that follow the company.
Adrian Montgomery: Hey, it's Adrian I think.
Speaker Change: Yes.
Speaker Change: Short answer is yes and.
Speaker Change: There are a lot of.
Speaker Change: A lot of assets that are.
Speaker Change: A very attractive in the portfolio and.
Speaker Change: We believe that you can transact on.
Speaker Change: In the in the worst case scenario.
Speaker Change: And you know, we get inbound expressions of interest all the time, which points to the.
Speaker Change: You know to the competitive advantages that a lot of these assets have and.
Speaker Change: You know I would point out that there's probably a number of assets that we have in our portfolio that are not even household names to the people that follow the company and so we think we're from an asset mix in a worst case scenario to answer your question directly that we're in a very advantageous position to deal with that.
Adrian Montgomery: And so we think we're from an asset mix in a worst case scenario to answer your question directly that we're in a very advantageous position to deal with that. Sure.
Okay. Okay. Thanks for that.
Speaker Change: The the changes you made to the Sims I know you you mentioned some of this in the prepared remarks, but I mean, one of the areas.
Speaker Change: Isn't there an opportunity for growth is in the subscription.
Cause I know the vast majority of that is <unk>. So like the changes you're making to our this new part product that you're rolling out maybe just talk about the outlook and the opportunity.
Speaker Change: Around subscription, particularly with T. S are another areas.
Adrian Montgomery: I'd be happy to.
Speaker Change: Sure I'd be happy to this is Alex again, yeah. Our focus has been on premium subscription packages in a way what we label premium they are we view it more from a.
Alex Macdonald: This is Alex again. Yeah, our focus has been on premium subscription packages and the way what we label premium, we view it more from a It's a bit of a time commitment, our annual package. We've been trying to shift the audience into annual. We do that through pricing and packaging, we've been doing that through launching pre-trials which convert into annual packages, things of that nature, and we have had a lot of success. Annual subscribers now account for more than 50% of all the subscribers. The benefits of this are they have a much longer life and also a much higher LTV.
Speaker Change: It's a bit of a time compared with our annual packages and we've been trying to shift the audience intangible.
Speaker Change: We do that through pricing and packaging, we've been doing that as we launch them free trials, which convert into annual packages and.
Speaker Change: Things of that nature, and we have.
Speaker Change: <unk> had a lot of success annual subscribers now account for more than 50% of all the subscribers. The benefits of this are they have a much longer life and also a much higher LTV.
Alex Macdonald: It creates a huge store of value that can be predicted. These are customers that on average will stay with us for many years and that can be predicted and creates a very stable long-term base. That's the one side. It also significantly reduces churn and you can probably see in the subscriber count a nice gain in Q1. I think it was a $13,000 increase in Q1 alone which is nice to see with the new product. This is 3D rendering of custom content objects in a browser, which is, you know, very technologically advanced. It sets us aside.
Speaker Change: So it creates a huge store of value.
Speaker Change: That can be predicted a these are customers that on average well will stay with us for many years.
Speaker Change: And that and that can be predicted and creates a very stable long term base now.
Speaker Change: So that's the one side. It also significantly reduces churn and of course, you can probably see it in the subscriber count.
Speaker Change: Oh nice a nice gain in Q1, I think about 13000.
Speaker Change: Increase in Q1 alone, which is nice to see.
Speaker Change: What's the new product.
Speaker Change: This is three D rendering of.
Speaker Change: Of our custom content objects in a browser, which is which is <unk>.
Speaker Change: Very technologically advanced it sets us aside nobody else is doing this in the industry. So it has two advantages for us.
Adrian Montgomery: Nobody else is doing this in the industry. So it has two advantages for us. One, TSR is the biggest in the industry, but there is another half of that market for it to conquer. And this advancement will really further set it apart and allow it to capture more of that market share. Secondly, the tool can allow that property and that approach, that business model to expand outside of just the Sims. That application can be applied to other games, to other communities. You know, we have teams of 3D artists there, and it's a pathway for TSR to become more than just TSR.
Speaker Change: One O T. A S. R is the biggest in the industry.
Speaker Change: But there is another half of that market for it to conquer and and this advancement.
Speaker Change: Really further Saturday apart and allow us to capture more of that market share secondly, the tool can allow that property and that approach that business model to expand outside of just the Sims that application can be applied to other games two other communities.
Speaker Change: You know we have teams of all three artists there are and it's a pathway for Tia start to become more.
Speaker Change: And then just GSR for example, it can game of by itself become its own dressed to impress.
Adrian Montgomery: For example, it can gamify itself, become its own dress to impress genre, which I would point out is one of the top two or sometimes top played genres on Roblox. And now we're able to do something very similar in a web browser. So I think those are the key points that we're excited for that product. And that's going to help bolster subscription further.
Genre, which I would point out is one of the one of the top two or sometimes top play genres on roadblocks and now we're able to do something very similar in a web browser. So I think I think those are the key points out we're excited for that product.
Speaker Change: That's gonna help bolster our subscription further.
Matthew Maus: Okay, look forward to trying that out.
Speaker Change: Okay look forward to trying out of them.
Matthew Maus: Maybe just to clarify one of your comments, Alex, I think you said that you expect to maintain gross margins that are around QN levels. I think also you might have said that you expect it to expand previously, so I'm just curious about, you know, modeling gross margins for the remainder of the year. I mean, should we expect this level kind of flattish for the remainder of the year or should we expect expansion? Stabilized. And then, yeah, stabilized from Q1 levels. Maybe, yeah, in the mid-70s, at various levels, what we expect? We expect that gross margins have stabilized.
Speaker Change: Maybe just to clarify one of your comments, Alex I think you'd said that you expect to maintain gross margins at or around Q1 levels.
Speaker Change: Hum.
Speaker Change: Right.
Speaker Change: Also you might have said that you expect it to expand previously so I'm just curious about modeling gross margins for the remainder of the year I mean should we expect this level of kind of flattish for the remainder of the year should we expect expansion.
Speaker Change: Stabilized.
Speaker Change: And then yeah cause stabilized from Q1 levels, maybe yeah in the mid seventies and raised those levels. What we expect we expect that gross margins have stabilized.
Matthew Maus: at this level, and likely will for the remainder of the year. Okay, thank you.
Speaker Change: At this level.
Speaker Change: And likely well for the remainder of the year.
Speaker Change: Okay. Thank you I'll pass the line.
Matthew Maus: I'll pass the line.
Matthew Maus: The next question comes from Matthew Maus with C. Reilly Securities. Please go ahead.
The next question comes from Matthew masked with B Riley Securities. Please go ahead.
Matthew Maus: Hi, this is Matthew Young from Mike Crawford. Thanks for taking my questions. I guess to start off, you said the macro remains uncertain, but have you generally seen less uncertainty as 2Q has progressed? And do you think that'll lead to another sequential decline in the media business? Or will a ramp in the previously five unramped sellers offset some of that?
Speaker Change: Hi, This is Matthew on for Mike Crawford, Thanks for taking my questions.
Speaker Change: I guess to start off you said the macro remains uncertain, but have you seen less uncertainty as to do you have the rent and do you think that'll lead to another sequential decline in the media business or will ramp in the previously five onramp sellers.
Speaker Change: Some of that.
Alex Macdonald: Hey, Matt. This is Alex. So what we've seen, yeah, we do remain cautious. You know, there is volatility and volatility is not good for the market. Of course, digital ads are one of the most liquid. Traded Units in the entire world, right? So these are real-time markets that trade every day and uncertainty is not a good thing. But what we have seen this year, it actually is Q2, Q2 has held up reasonably well. We saw more volatility in Q1, certainly in January. I think a number of other companies, lots of large companies expressed similar on their Q1 results.
Speaker Change: Hey, Matt This is Alex.
So what we've seen yeah. We do remain cautious you know there is volatility and volatility is not good for the market of course did.
Speaker Change: Digital ads are one of the most liquid.
Speaker Change: Traded units in the entire world right. So these are real time markets trade every day and uncertainty is not a good thing.
Speaker Change: But what we have seen this year.
Speaker Change: He is Q2 Q2 has held up reasonably well we saw more volatility in Q1, certainly in January I think a number of other companies lots.
Speaker Change: Lots of large companies.
Speaker Change: Express similar on their Q1.
Speaker Change: Their Q1 results. So we were certainly impacted by.
Alex Macdonald: So we were certainly impacted by that in Q1. Some impacted Q2, but I'm not seeing the volatility. So that's why I said, for example, in my remarks that we are still expecting your typical seasonal lifts into Q3 and particularly into Q4, the high season for the industry, of course. As far as the sellers, yes, we have five unramps. Now it's in addition to our ramps, of course, but that is a good, healthy pipeline. For us, the way we measure internally, of course, there's a delay, right? When we add to the sales team, it takes time for those leads to generate, for the RFPs to come in, the RFPs to convert, and of course, for the campaigns to serve and revenue to be booked.
Speaker Change: By that in Q1.
Speaker Change: Some impact in Q2, but not.
Speaker Change: But I have not seen the volatility. So that's why I said for example in my remarks that we are still expecting your typical seasonal lifts into.
Speaker Change: Into Q3, and particularly into Q4 that the high season for the industry of course.
Speaker Change: As far as the sellers.
Speaker Change: Yes, we have five unwrapped nuts. In addition to our ramp of course, but that is a good healthy pipeline for us the way we measure internally of course, there's a there's a delay right when we add to the sales team. It takes time for those leads to generate the rfps to come in the Rfps to convert and of course with the campaigns to serve and revenue to be booked.
Alex Macdonald: We expect them to ramp into Q2 and Q3 and start contributing. I can tell you, Q1 was interesting. Obviously, a low point for direct sales and it is seasonally the slowest, but booked dollars were actually higher than Q4. So that's a very promising indicator for me, our closed dollars. And now we have these unramped sellers coming online into Q2 and into Q3. And another thing that we've been able to maintain recently is average number of closed dollars per seller is a KPI that we monitor, and that's been consistent. So we do expect this pipeline of new sellers to impact direct sales positively, of course, into Q3, Q4, Q2, Q3, and of course, into Q4.
Speaker Change: We expect them to ramp into Q into Q2, and Q3 and start contributing I cannot tell you.
Speaker Change: Q1 was interesting all the CLO for quite for direct sales and it is seasonally the slowest but booked dollars were actually higher than Q4. So that's a very promising indicator for me closed dollars and now we have these out these are unmanned sellers coming online into Q2 and into Q3.
Speaker Change: And another thing that we've been able to maintain recently is the average number of close dollars per seller does it keep you either we monitor and that's been consistent so so we do expect this.
Speaker Change: This pipeline of new new.
Speaker Change: New sellers to two impact direct sales positively of course into Q3 Q4 in Q2 Q3 and of course into Q4.
Matthew Maus: Very helpful, thank you. And I guess similar to that, so given less volatility recently and normalization from January, do you think 1Q, I mean not 1Q, well I guess yeah, do you think 1Q represents an overall trough going forward, setting aside, you know, typical seasonality, just a trough in general? Yes. Yeah, sure.
Speaker Change: Very helpful. Thank you and I guess similar to that so given less volatility recently in normalization from January do you think once you referenced I mean, not one here well I guess, yeah do you think <unk> represents an overall cross going forward setting aside you know typical seasonality.
Speaker Change: And you're just a trough in general.
Speaker Change: Yes.
Speaker Change: Yeah certainly.
Alex Macdonald: All right, and then given, so I mean that covers the revenue side, but on the expenses side, advertising and promo costs, as well as some of the office and general expenses, were a bit higher than we expected for the quarter. Could we expect these to follow a similar cadence to last year, where they declined sequentially throughout the year? Or how would you sort of contextualize and project them? Yes, they would follow a similar cadence generally, well, OPEX will generally be consistent, so this Q1 level is generally what we expect to see is a breakdown in the structure for the remainder of the year, however, we do expect further synergies.
Speaker Change: Alright, and then <unk>.
Speaker Change: Even still I mean that covers the revenue side, but on the expense side.
Speaker Change: Advertising and promo costs as well as some of the office and general expenses were a bit higher than we expected for the quarter. Two we expect these to follow a similar cadence to last year, where they declined sequentially throughout the year or how would you sort of contextualize and predict that.
Speaker Change: Yes are they were they would follow a similar cadence generally operate well opex will.
Speaker Change: Generally be consistent so this Q1 level.
Speaker Change: Is generally what we expect to see as a breakdown in a structure for the for the remainder of the year. However, we do expect further synergies I will point out that that.
Alex Macdonald: I will point out that... The NFL show was retired in Q1. You'll notice when you do your analysis, of course, you'll see there's a big drop in, for example, prepaids. There were a lot of non-cash items that with the retirement of the show needed to be written off, of course, stages, sets, that sort of thing. As they were retired, they are taken off the books. That impacted some of those lines. But generally, and some details are in the MD&A, but generally, we expect these generally to be flat on OPEX with certain further efficiencies, particularly in tech support and content and in salaries and wages to begin materializing in Q2 and for the rest of the year.
Speaker Change: You know the NFL show.
Speaker Change: Sure. It was retired in Q1. So there are you'll notice when you do your analysis of course, you'll see there's a big drop in for example, prepaid they're worse.
Speaker Change: Lot of noncash items that with the retirement of the show are needed to be written off of course stages sets that that sort of thing as they were retired they are taken off the books that that impacted some of those some of those lines but.
Speaker Change: But generally and did some details in the MD&A.
Speaker Change: But generally.
Speaker Change: We expect these are generally to be flat on opex with certain further efficiencies, particularly in tech support and content and in salaries and wages to begin materializing in Q2 and for the rest of the year.
Speaker Change: Okay.
Matthew Maus: Got it. Thank you.
Speaker Change: Got it. Thank you and you kind of touched on this earlier. This is my last question, but on the direct sales side is the total closed dollars figure basically a bookings number and what's the timeline do you expect to recognize that.
Alex Macdonald: And you kind of touched on this earlier. This is my last question, but on the direct sale side, is the total closed dollars figure basically a booking number? And what's the timeline you expect to recognize that as revenue? Yes, closed dollars in a period is, yeah, it's a booking. It's the bookings for that period, which of course, doesn't necessarily line up with revenue recognition. With that said, those are generally . . We're also booking Q2 campaigns, Q3, and of course Q4. We've seen a lot of strong interest for back to school. We had a lot of bookings for Q3.
Speaker Change: Yeah.
Speaker Change: Yes close dollars in a period is as a yeah. It's the bookings the bookings for that period, which of course does.
Speaker Change: Hum.
Speaker Change: Like necessarily line up with revenue recognition.
Speaker Change: With that said.
Speaker Change: Those are generally.
Speaker Change: Throughout the rest of the year, obviously in Q1, we are selling some tier one but we're also book in Q2 campaigns Q3 and of course Q4, we've seen a lot of strong interest for back to school, a we had a lot of bookings for Q3, so, but but generally I'd say the the timeline.
Alex Macdonald: But generally I'd say the timeline is inside the year. There are very few instances where bookings, particularly this eerily in the year, span over the year end. So it's between the last three quarters of the year is when those would expect to be fully recognized. Alright, thank you. I'll hop back in the queue.
Speaker Change: Is is inside the year there were very few instances where bookings, particularly this early in the year span over the year and so it's between the last three quarters of the year as a as when those are we'd expect to be fully recognized.
Speaker Change: Alright, Thank you I'll hop back in the queue.
Operator: This concludes our question and answer session, and also concludes the conference call today. Thank you for attending today's presentation. You may now disconnect your line.
Speaker Change: This concludes our question and answer session and also concludes the conference call today. Thank you for attending today's presentation. You may now disconnect your lines.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: [music].