Super League Enterprise, Inc.

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 ended March 31, 2025, available on EDGAR. 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 15th, 2025. Superleague 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 call over to Matt Edelman, President and Chief Executive Officer. Matt, please go ahead.

Thank you so much, Kevin. Good afternoon and evening, everybody. I am pleased to be here to report on Super League's first quarter financial results and provide you with a company update. First and most important, as outlined in our Q4 conference call just a little over a month ago, we are on track with our plan to be EBITDA positive in Q4 2025. We are committed to that result and diligently implementing the operational changes to ensure we get there. While we plan to hit our revenue and gross margin goals, as I will explain we have achieved in Q1, I assure you that if we stumble, we will work to make the necessary adjustments that keep us on track and demonstrate that our day-to-day business can be financially healthy. SuperLeague sits at the thriving intersection of interactive entertainment and advertising. Consumers spent extraordinary amounts of time at that intersection, consuming playable content, or in other words, playing video games. Average daily time spent by members of Generation Z and Generation Alpha, you could think of it as everyone under the age of 30, is 88 and a half minutes across mobile games, Roblox, Fortnite, and Minecraft combined. that exceeds the combined 59.6 daily minutes spent across TikTok, YouTube, Instagram, Facebook, and X. To us and our clients and partners, people who play video games are not just gamers. They are audiences, audiences who play. They're teenagers who love the outdoors. They're 20-somethings who are just starting out in their careers. They are millennial parents trying to make summer plans for their kids. There are even grandparents who want to connect with their grandchildren. Audiences who play are as ubiquitous and broad as audiences who binge shows on streaming platforms, listen to podcasts, go to concerts, and follow sports teams. A quick shout out to New York Knicks, by the way. Almost everyone you know is a player. 85% of consumers game. 94% of Gen Alpha, 92% of Gen Z, 88% of Millennials, even 60% of Gen X. Super League knows how to reach and engage audiences who play because we understand the importance to these audiences of playability. When a person is in play mode, they are focused, they are active, their content consumption has a purpose. They don't want to be interrupted with a video ad or a billboard or a text alert about a product that's on sale or a politician looking for donations. That's why we focus on playable media, ads and content that are an extension of the play experience. And it works. The average time a consumer spends with a brand through ads on TikTok is 15 seconds. On Roblox, for example, the average time spent with playable media and content ranges from one and a half to 11 minutes. Our playable mobile ads generate a click-through rate that is seven to 10 times higher than standard digital video ads in the same type of ad inventory. Hearing all this powerful data, I would be asking why Super League or perhaps why the intersection of interactive entertainment and advertising is not already accelerating at warp speed. While it will sound cliche, the answer is that the industry is still in an early stage of development. Brands and media agencies have grown accustomed to specific types of measurement and attribution to justify which advertising and customer acquisition strategies deserve more investment. Gaming platforms do not yet deliver the complete suite of capabilities that are available in other digital channels. Although the industry is making impressive progress, marked most recently by Roblox's announcement that their new rewarded video ad format will soon be able to be purchased through Google's ad solutions. Marketing dollars always follow consumers, but brands do not move quickly. Thankfully, Super League continues to gain the trust of dozens of iconic brands every year, which puts us at the forefront of this important space. We are one of the leaders in making brands playable and we will be one of the winners. I'd like to share some of our recent successes, starting with one of our longest standing partners who remains a pioneer in making their brand playable, Chipotle. Our partnership with Chipotle is in its fourth year and is rooted in our hands-on strategic approach. We have delivered seven projects, including five consumer-facing campaigns, some of which have won innovation awards. We have delivered multiple firsts, captured in headlines such as Chipotle being the first QSR to launch a new ingredient in the metaverse, or the first QSR to debut a new television ad in the metaverse. Our most recent experience became the number one trending game on the Roblox platform and broke into the top 75 most visited games with consumers rolling 1.27 million virtual burritos in the first day and redeeming 50,000 codes for free real world burritos in less than three hours. Consistent with our past efforts, the program contributed to mobile app downloads and mobile food order revenue for Chipotle. Players spent 15 minutes in the experience on average, which we've been told is longer than the average amount of time spent per visit to a Chipotle restaurant. Another super fun program and one of our most ambitious so far this year is with Go Go Squeeze. We could not ask for a brand with a more perfect message. There is no right way to play, just like there is no right way to snack. Based on that statement, it is fitting that this campaign is running across multiple platforms, including mobile games, Minecraft, TikTok, and YouTube. Primary features include go-go squeeze mini games, interactive characters in Minecraft, as well as playable mobile ads. Most exciting is that this is the first time go-go squeeze is running a program to reach younger audiences, with all previous campaigns having been parent focused. In Q1, we also delivered a mini game arcade for Logitech and multiple Roblox experiences and reached Gen Alpha and Gen Z audiences through mobile playable ads for brands as diverse as Hasbro and Accounting Plus. Yes, we ran a playable media campaign to inspire accounting as a career choice. Perhaps most interestingly, the opportunity to build a Roblox world for Google's Be Internet Awesome campaign, based on the largest curriculum taught globally on internet safety for young students that was recently demoed in person to congressional staffers in Washington, DC. Now I'd like to talk about SuperLeague's Q1 results. As I mentioned at the start, we are implementing the realignment plan articulated during my discussion with our executive chair and hand on our Q4 2024 earnings call. It consists of three main pillars, reducing and controlling our costs. Our Q1 operating expense decreased approximately 25% compared to Q1 in the prior year. This has continued into Q2 with staff reductions and a decrease in executive team compensation. Collectively, we have further reduced our operating costs this year by approximately 30%. Number two, increasing and maintaining our gross margin by focusing on higher margin programs. Our Q1 gross margin increased to 44% from 38% for fiscal year 2024. Number three, diversifying our revenue to reduce exposure to strategy or policy changes instituted by major platforms or the unpredictable pace of advancement in the efficacy of their advertising solutions. Our expansion into mobile continues to excite partners with mobile representing a steady 15% of our revenue in Q1. We expect mobile to grow to at least 25% of our total revenue in 2025. The good news about our Q1 revenue is that we met our internal goals. The goals that give us ongoing confidence in becoming EBITDA positive in Q4. The less good news is that our goals were self-aware following the shift in our Roblox business in the second half of 2024, which as a reminder, resulted from the changes in how Roblox determined they needed to grow their advertising revenue directly. Despite the revenue decline, our Q1 2025 net loss decreased 20% compared to Q1 2024. Looking ahead, our revenue pipeline remains strong with approximately $20 million in active opportunities across 97 unique programs, evenly split between new and returning partners with an average deal size of approximately $200,000. We continue to deploy various strategies to secure financing, both to support operational needs and to advance targeted strategic opportunities. As you may know, we recently acquired SuperSocial, an award-winning Roblox studio with clients including Gucci, Elf Beauty, Walmart, Universal Music, and more. With just that one deal, we now have a Roblox business that has delivered 49 immersive builds, racking up more than 390 million visits and 3 billion impressions on the platform. We believe there will be further industry consolidation and see additional exciting opportunities with companies that can accelerate our path to EBITDA positive through clear revenue and cost synergies. We will remain disciplined in our focus only on opportunities that are accretive and that can also reinforce SuperLeague's position as a leader in the playable media space. Kevin, let's now please move to Q&A.

Thank you. And now we'll be conducting a question and answer session. If you'd like to ask a question, you may do so by using the raise your hand function over the web or over the phone. Please press star 1 to be placed into question queue. Once again, that's star 1 to be placed into question queue or use the raise your hand function on the webcast. Our first question today is coming from Howard Halpern. Your line is now live.