Super League Enterprise, Inc.

Greetings and welcome to the Super League fourth quarter and full year 2025 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 securities 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 description of these risks and uncertainties, please see Super League's financial statements and MD&A for the fourth quarter and full year 2025 ended December 31st, 2025 available on EDGAR. Important qualifications regarding forward looking statements are also contained in Super League's earnings release distributed yesterday afternoon and is also available on EDGAR. Furthermore, the content of this conference call contains time-sensitive information, accurate only as of today, March 27, 2026. Duke League undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call. I would now like to turn the conference call over to Matt Edelman, President and Chief Executive Officer. Matt, please go ahead.

Thank you very much. Good morning. Thank you to all for joining us. I'm pleased to share our quarterly and annual results, business updates and operational highlights for the fourth quarter and fiscal year 2025. And our strategic outlook and priorities for 2026. Super League today is a fundamentally different company than it was a year ago, with a strong foundation positioned to scale. Super League helps businesses grow by executing advertising and branded content programs designed to reach and influence people who play video games, one of the largest and most under-monetized consumer segments in modern media and culture. We generate revenue by delivering these programs for brands and agencies across gaming and digital platforms. combining proprietary interactive ad formats, immersive experiences, creator content, strategic campaign services, and data-driven insights to improve marketing performance. 2025 was a defining year. From April through December, we simplified our capital structure, streamlined our cost base, strengthened our balance sheet, and refined our operating model. With a debt-free balance sheet, more than $14 million in capital as of December 31, and the removal of the going concern language from our auditor's report, we have established the stability to execute with focus and the flexibility to pursue meaningful growth. Building on this, we recently announced the execution of a definitive agreement to acquire the Misfits Ads division from Misfits Gaming Group. a profitable unit we expect to increase revenue, expand margins, and cement our path towards cash basis EBITDA profitability. Closing remains subject to stockholder approval. With this strategic move, we will be supersizing SuperLeague's ability to drive measurable marketing outcomes for our partners. Our advantage lies in our understanding of both the gaming ecosystem and the player mindset. enabling brands and media agencies to connect with the right consumers through the right creative at the right time in the right places. That customer demand is reflected through our continued successes with iconic brands. During the fourth quarter, we initiated programs with Regal Cinemas and H&R Block, both of which launched in the first quarter of 2026, and expanded our relationship with Panda Express following a successful multi-quarter engagement. We also supported key launches for Paramount+, including Starfleet, and for Paramount Games with SpongeBob Patty Pursuit 2, and continued our in-game work with partners such as Google, Logitech, Juicy Drop from Bazooka, and the USGA. In addition, we collaborated with Tiffany around the theatrical release of Zootopia 2. This activity includes both new client demand and returning business and is beginning to revive our financial performance. Q4 2025 was our strongest revenue quarter of the year, up 32% over Q3 2025 and close to the prior year quarter's revenue level, despite operating with a significantly reduced team. Quarterly gross margins were higher than one year prior, and cash basis pro forma OPEX costs were down 44% year over year. For the full year, we improved pro forma cash basis EBITDA by 31% compared to 2024, including a 56% improvement in Q4 alone. pro forma cash basis OPEX decreased by 5.3 million, or 29% from the prior year period, reflecting positive impact of strategic cost reduction and optimization efforts in fiscal year 2025. At the same time, we improved gross margin to 40% for the year, up from 38% in 2024, reflecting a more disciplined approach to how we structure and deliver programs. Net operating results for 2025 improved by 23%. Gap net loss for Q4 2025 and fiscal year 2025 were impacted by significant one-time accounting-related non-cash debt fair value to market and extinguishment charges primarily associated with our debt and capitalization table restructuring. totaling $6.3 million and $8.5 million respectively. Based on our cash position and current plans, we do not expect to raise capital to fund operations in the foreseeable future. While we have not yet achieved our most important financial objective, cash basis EBITDA profitability, these results demonstrate that the work we undertook in 2025 has established a stronger and more durable operating foundation. We expect the progress made over the past year to translate into more visible benefits beginning in Q2 2026 with cash basis EBITDA profitability within reach by year end. Among our most impactful advances have been the diversification of our revenue base and the increased clarity in how the business is structured and delivered. A year ago, the majority of our business was concentrated in a single platform. Today, that concentration has been reduced with our revenue mix more balanced across Roblox, Minecraft, Fortnite, and mobile playable ads. The strategic deals we completed earlier in 2026 helped establish a more integrated operating framework, bringing together a platform and data function, advertising and marketing solutions, and a new strategic properties initiative into a cohesive model. Each reinforces the others, forming the early stages of a growth flywheel. Taking a step back, the opportunity in front of us remains significant. We operate at the intersection of a $316 billion U.S. digital advertising market and a 200 million person U.S. gaming population. In the U.S., according to Newzoo and eMarketer, consumers spend approximately 11.8 hours per week playing video games, nearly as much time as they spend on social media and watching television and streaming. Yet while annual advertising in these channels exceeds $150 billion combined, total yearly spend in gaming remains under $10 billion. That gap, the under-monetized gaming demographic, represents Super League's opportunity. Equally important, a growing share of marketing decision makers now comes from a generation that grew up playing online video games, millennials. That shift is already influencing how brands think about engaging consumers, and we believe it creates a long-term tailwind for our business. A core tenet of our strategy is that when people play video games, they are their most authentic selves. They act with agency, express identity more freely, and engage in ways that reveal what motivates them. That informs our data advantage as we combine gameplay-derived behavioral signals with broader market intelligence and psychographic insights to better understand how and why consumers respond to content. That understanding allows us to help brands design more effective campaigns, not just within gaming environments, but across the full digital landscape. We expect this audience intelligence to become an important driver of scale and profitability, as we shift toward more repeatable and transactional forms of revenue. Over the past six months, we've demonstrated growing demand for these solutions. The next phase is improving unit economics while continuing to increase volume. The acquisition of the Misfits Ads division will be a natural extension of this strategy. A profitable business already, it will add programmatic revenue capabilities, rewarded video technology, and preferred access to inventory across a growing portfolio of popular Roblox games. In 2026, we have the opportunity to generate approximately 50% of the amount of our 2025 net revenue solely from the Misfits Ads Division pipeline, customer base, and capabilities. Additionally, when we have collaborated with Misfits on brand programs that cross over our combined offerings, deal size has increased 20% to 30%. Looking at 2026, we are encouraged by what we're seeing so far. We expect Q1 2026 revenue to be ahead of Q1 2025. During the quarter, we closed eight returning clients and initiated discussions with 17 new accounts. Our pipeline remains consistent with where it was one year ago, with our average deal size remaining above 200K, despite operating with a smaller team. At the same time, we want to be clear that the full financial impact of the changes we've made is not yet reflected in our reported results. We expect Q2 2026 to begin to show more meaningful progress as the benefits of the transformation we began one year ago and completed in October 2025 truly take hold. As a final note, we continue to actively evaluate opportunities related to digital assets. Given market developments in Q4 2025, we are approaching this thoughtfully while remaining optimistic about the long-term potential. In closing, 2025 was the year we set out to reshape Super League and delivered on that commitment. As we look ahead, our focus is on translating that progress into consistent financial performance. This is the new Super League. We plan to maintain a lower cost structure, expand scalable, repeatable revenue streams, and remain in a position that enables disciplined execution. Against that backdrop, our market value represents approximately one-third of our year-end cash position. We believe that does not fully reflect our capital strength or the progress we've made. We appreciate your continued support as we move forward on a more credible path. Thank you. I'll turn it back to the call operator.

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of James Kisner with Water Tower Research. Please proceed with your questions.