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spk00: Good afternoon, everyone, and thank you for your participating in today's conference call to discuss Super League Gaming's financial results for the first quarter ended March 31st, 2021, as well as an update from this morning's annual shareholder meeting and the proposed acquisition of MobCrush. Joining us today are Super League's President and CEO Anne Hand and CFO Clayton Haynes. Following their remarks, we'll open the call for your questions. Before we go further, please take note that the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995. The statement provides important cautions regarding forward-looking statements. The company's remarks during today's conference call will include forward-looking statements. These statements along with other information presented that does not reflect historical fact are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by this forward-looking statement. Please refer to the company's recent earnings release and to the company's reports filed with the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ. I would like to remind everyone that this call will be available for replay through 8 p.m. Eastern Time on June 3rd, 2021, starting at 8 p.m. Eastern Time tonight. A webcast replay will also be available via the link provided in today's press release, as well as on the company's website at www.superleague.com. Now, I would like to turn the call over to the President and CEO of of Super League Gaming, Anne Hand. Anne?
spk01: Thank you, and good afternoon, everybody. We're so delighted to have you joining us. We have great news to discuss today on so many fronts. We issued a press release on May 17th detailing the very strong growth we saw in our first quarter in all of our revenue sources and most notable KPIs. Today we will talk about that growth, but more importantly, we want to talk about the new Super League, Thanks to our shareholders' support today, we are moving forward with the acquisition of MobCrush. But first, let's table set. As many of you know now already as followers of Super League and the greater gaming category, gaming is the dominant form of entertainment worldwide. It is a gravitational force. The new playground where Gen Z culture is created. As the metaverse plays out, it is introducing seismic trend shifts, that speak to not only how new generations want to connect in virtual worlds, but also how they want brands to communicate with them and the style of content they wish to consume. The democratization of content creation, meaning it is no longer five or ten big studios serving down content, but hundreds of millions of individuals serving up content from anywhere, means everyone can produce and distribute entertainment and participate in the economy. And then there is the entire advertising model, which is being upended as well. From the disaggregation of content and move away from linear TV through to the thirst for live stream content and adoption of ad blocking technologies, the advertising world will never be the same again. The big ad dollars going to lucrative prime time TV ad spots, for the most part, is a thing of the past. Another mega trend has emerged around creator economies. I mentioned on our last call that this is at the heart of the Roblox model, which recently IPOed. And finally, on the trend front, it can never be stated enough as it changes how we all evaluate the greater opportunity for the gaming ecosystem. Most avid gamers watch games more than they play games. So the headline, Gaming is Entertainment, Gaming is the New Content, and Gaming is Culture, and Super League and Mob Crush fit squarely in each of these game-changing trends. So first I want to provide a high-level recap on Super League's performance as a standalone entity for 1Q. Clayton will go more into the details, but first on the financial front. Our first quarter 2021 revenues more than tripled relative to 1Q 2020, with 70% of our revenues coming from repeat advertisers. and nice trend lines in the newer revenue streams of direct-to-consumer and content monetization. Second, we continue to uphold our strong margin profile while holding operating expense relatively flat, challenging ourselves to absorb our material growth and our current infrastructure as best we can. And we are adding diversity into our ad portfolio by introducing quality programmatic inventory and new partners to our ad stack, to serve as a complement to our more premium direct sales approach to scale our inventory faster and introduce yield management. As for our KPIs, our momentum from 2020 continues. Through April 30th, everything has more than doubled relative to the performance of our first four months of 2020. Registered users are seen at 3.9 million versus 1.6 million through April of last year, and up 30% relative to 4Q 2020. This translates to nearly 500,000 monthly active users. Engagement hours sit at 46 million for the first four months of 2021 versus 17 million through April of 2020. And finally, viewer impressions, which is at the top of the funnel and a feeder into our advertising inventory. We reached 698 million viewing impressions through April 2021 relative to $332 million for the first four months of the prior year. When we saw the surge of engagement on our platform in March and April last year, many of you asked us how durable it would be. That was a logical concern. If this surge in viewers and users was driven by COVID, what would happen once COVID got under control and consumers had more alternatives for entertainments? We believe the subsequent growth in Q3 and Q4 last year that endures into this year further validates the view that the increases are sticking. But that just tells you about the Super League we were last month and last year. We are proud of our strong organic growth and the monetization that is beginning to flow. Yet we indicated in the original S-1 that it would take bold inorganic growth as well. So today is a new chapter after receiving your support to acquire Mobcrush at today's annual shareholder meeting. I believe we laid out a strong case for why this deal right now is the right opportunity for us. I can speak for the executive team, the board, and for me on a very personal level that we have never wavered on this decision. It just all adds up. First as a reminder, Mobcrush is primarily a live streaming platform used by hundreds of thousands of gaming influencers who generate and distribute almost 2 million hours of original content annually to their own social audiences. These streams reach over 4 billion of their own fans and subscribers across the most popular live streaming and social media platforms, including Twitch, YouTube, Facebook, Instagram, and Twitter. At the simplest level, the two companies are about the same thing, providing gaming experiences and entertainment for what we will call mid-tier gaming enthusiasts, or the middle of the pyramid, so to speak. What does that mean? They are avid. They represent over half of the world's 3 billion gamers, and they like to create gameplay experiences, they love to compete, and they like to share, meaning to broadcast or stream their own gameplay content. So we share the same target market. And our offers converge. The avid player, in many cases, is also the streamer. They want the tools and experiences to level up the competition, along with the tools to share that same gameplay with their friends and their social audiences. As I mentioned on the last call, the combined company has a suite of offers that mirrors the gamer's journey. Today's young gamer and creator is tomorrow's streamer, tomorrow's influencer, and maybe even tomorrow's esports star. And we monetize in the same three ways. The primary revenue stream for both companies has historically been advertising. And the way we can embed premium, high CPM ad inventory in game, in experience, and in stream to connect brands right to their target. And where are these coveted, cord-cutting consumers spending the bulk of their time? Well, they're gaming. We know media is all about scale. This merger made sense just by examining the last two points alone. The complementary demographic of Gen Z and millennial gamers plus the combination of premium ad inventory and reach means we have heft. We can take a larger share of advertisers' wallets. Together, we provide a formidable and highly scalable gaming-centric media platform, reaching one of the largest addressable audiences of gamers in the United States. Our second leg of revenue is direct-to-consumer, monetizing the players themselves. And Super League and Mob Crush do so through their brands, Minehut and Mineville, respectively, which specifically target a younger gaming demographic in the 12- to 18-year-old range, focused on Minecraft, a top-five game globally in terms of player count. Together, we reach over 20 million players annually, offering great gaming with a built-in marketplace to purchase game modes, skins, and in the case of Minehut, expanded services on a subscription basis, all to enrich their overall gameplay experience. This is a real point of differentiation. Super League and Mob Crush have a material foothold on the young gaming demographic, and Marketing 101 is get them young. We have opportunities to cross-fertilize our two communities and to stay with them longer as they grow and advance in their Minecraft journey and into other games beyond. And then there is the third leg of monetization, content, with so much additional upside. Super League generated over 30% of their revenue last year from content through syndication and selling our content technology as a service. The pandemic brought on a global void in content and put a spotlight on both the value of our content library and a bit of Super League's diamond in the rough, our patented cloud-based remote video production and broadcast technology, Virtual Studios, which is beginning to show promise as a pure technology licensing play in itself and beyond gaming applications. With close to 3 million hours of combined package content on our two platforms in 2020 alone, we are only scratching the surface of where this compelling library of competitive gameplay and entertainment content can live. But if you go a layer deeper, there is more. Our technology stacks have tremendous synergy. Virtual Studios' live stream tech stack is aimed at the high-quality broadcasters and storytellers for professional sports teams like Gen.G through to top studios like Indemol Shine, who recently used our technology to produce the TV game show Lego Masters. Mob Crush's technology provides an advanced set of tools for the up-and-coming broadcaster and storyteller. Put our technology stacks together, and we can provide content producers at all levels, streamers, creators, digital and television production companies, branded content studios, and more, with an exciting suite of tools and capabilities designed for the unique needs of today's production and distribution realities, as well as a forward opportunity to combine and cross-sell our technologies and tools to existing and new customers down the road. Now, before I hand it over to Clayton, I would like to remind you of some of the compelling metrics that come from this combination. First, we reach a U.S. viewing audience of over 75 million monthly, equivalent to a top 100 U.S. Nielsen Medium property, and per annum have over 7 billion video views across our own and others streaming platforms. This is a scale that will command the attention of brands and advertisers, and that has already begun winning us our first combined deal with a notable top three global media powerhouse. Again, think about that. Already, before we even merged today, we've already been able to go out and jointly sell and win a lucrative deal together because of the power of our ad inventories coming together. Second, on our last call, I reported that MobCrush's unaudited 2020 revenue was approximately $6 million, with roughly $4 million coming from the advertising model and $2 million coming from direct-to-consumer revenue. As combined companies, this means we would have had a split of 65% ad revenue, 25% direct to consumer, and 10% from the burgeoning content monetization revenue stream. While the ad model has historically been both companies' bread and butter, we like the healthy balance began to emerge across our three points of monetization. I can share that the pro forma revenues of the combined new company for the first quarter of 2021 were 3.2 million, all the while maintaining a strong margin profile. Because this is where the story is headed. Early on, we spoke to you mostly about the growth KPIs as the leading indicators and have now started our charge towards top line acceleration. But margins matter too, as we continue a steady march to become sustainably cash flow positive. So this is where the new we sits on this new day. We are a modern media company placed in a prime position for the transformation of the advertising model as we've known it. We are a modern consumer company leveraging the power of our tools and community to drive a shared economy where both sides can win. And we are a modern entertainment company focused squarely on where the younger generation's content thirst lies with gaming because, again, they're all gaming. At this point, I will turn the call over to the CFO, Clayton Haynes, who will provide an overview of first quarter financial results, after which I will come back on with some closing remarks. Clayton?
spk02: Thank you, Anne, and good afternoon, everyone. I would first like to echo Anne's sentiments expressed earlier regarding our excitement about the support that we received from shareholders in connection with our acquisition of MobCrush. and we are eager to get to work on integration as we move forward as a combined force in the gaming and creator ecosystem. To summarize Super League's standalone results for the first quarter of 2021, we've recorded another record quarter of revenues, which were slightly higher compared to our strong fourth quarter of 2020, and more than tripled compared to the first quarter of 2021. as we saw strong revenue increases across our three primary revenue streams. Our cost of revenue was 192% higher compared to the prior year quarter as compared to the 224% increase in revenues for the same period with our average margin well above the Q1 2020 level and our operating expenses relatively flat on a gap basis, leading to a lower gap operating loss when compared to the prior year quarter. As summarized in our earnings release previously filed on May 17, 2021, first quarter 2021 revenues were $788,000 compared to $243,000 for the first quarter of 2020. The 224% increase was driven by strong triple-digit increases for all three of our primary revenue streams, including advertising and sponsorships, content sales, and direct-to-consumer revenues. Advertising and sponsorship revenues, which includes traditional advertising, including programmatic display and video, and brand sponsorships of our owned and operated properties, along with our more customized brand partner programs, increased 170% compared to the prior year quarter to $558,000 as compared to approximately 70% and comprised approximately 71% of revenues for the first quarter of 2021 and as compared to 85% of revenues in the first quarter of 2020. Content sales, which includes our esports and entertainment content-related revenues and third-party content licensing, were up 690% over the prior year quarter to $166,000 and accounted for approximately 21% of revenue for the first quarter of 2021, compared to approximately 9% in the prior year quarter. Direct-to-consumer revenues, which primarily consisted of subscription and digital goods revenues related to our Mine Hut digital property, rose 327% to $64,000 compared to the prior year quarter and accounted for approximately 8% of revenues compared to 6% in the prior year quarter. First quarter 2021 cost of revenue increased 192% to $342,000 compared to $117,000 in the comparable prior year quarter, a lower increase than the 224% increase in revenues for the same period. The less than proportionate increase in cost of revenue was driven by the increase in lower cost advertising and third-party content sales revenues during the first quarter of 2021 as compared to the prior year quarter. As noted previously, cost of revenues fluctuate period to period based on the specific programs and revenue streams contributing to revenues each period and the related cost profile of our physical and digital experiences and advertising and content sales activities occurring each period. First quarter 2021 operating expenses were $5.1 million compared to $5.3 million in the comparable prior year quarter. Non-cash stock compensation charges for the first quarter of 2021 decreased to $411,000 as compared to $702,000 in the first quarter of 2020. Excluding non-cash stock compensation, our operating expenses increased slightly from $4.6 million to $4.7 million, reflecting net higher selling marketing and advertising expense in support of the increase in revenues and to drive future monetization. This increase was partially offset by a decrease and technology platform and infrastructure expenses, which included a reduction in engineering-related personnel costs and platform-related intangible asset write-downs, which was partially offset by an increase in cloud services and other technology platform costs, primarily reflecting the impact of the surge in engagement across our digital properties occurring subsequent to the first quarter of 2020 and continuing into fiscal year 2021. Operating expenses for the first quarter of 2021 also included approximately $217,000 of mob-crush acquisition transaction-related expenses. Acquisition costs are expensed as incurred in the period incurred pursuant to U.S. GAAP requirements. On a GAAP basis, which includes the impact of non-cash charges, net loss in the first quarter of 2021 was $4.6 million, or 23 cents per share, compared to a net loss of $5.1 million, or 60 cents per share, in the comparable prior year quarter. Excluding non-cash stock compensation charges and other non-cash charges, our pro forma net loss was $4.2 million, compared to $4.1 million in the comparable prior year quarter. As described in our earnings release and 8K filed with the SEC on May 17th, Proforma net income or loss is a non-GAAP measure that we believe investors can use to compare and evaluate our financial results, along with other applicable KPIs and metrics discussed by Ann earlier. Please note that our earnings release contains a more detailed description of our calculation of proforma net loss, as well as a reconciliation of proforma net loss with the most directly comparable financial measure prepared in accordance with U.S. GAAP. Looking at the balance sheet as of March 31, 2021, we had $36.7 million in cash, no debt, and total shareholders' equity of $40.2 million. Our current monthly net cash burn rate continues to be in the $1.3 to $1.4 million range. In response to the uncertainty associated with COVID-19, we executed certain cost-cutting activities in 2020, as discussed on previous calls. that we expect will serve to keep our standalone monthly burn relatively consistent with past levels. As previously reported, during the first quarter of 2021, the company raised approximately $33.4 million in net proceeds from the sale of approximately 7.5 million shares of common stock at a weighted average price of $4.47 per share. As Anne described earlier, we announced today that shareholders have approved the issuance of approximately 12.6 million shares of our common stock as merger consideration in connection with our acquisition of MobBrush. The transaction is expected to close on or about June 1st, 2021, subject to various administrative closing conditions as outlined in the merger agreement as amended previously filed with the SEC. As such, Super League's first quarter 2021 financial results, as discussed here today, are presented on a standalone basis and do not include any financial results related to MobCrush. Upon closing, MobCrush's financial results will be included in our reported results on a consolidated basis from June 1, 2021, the anticipated transaction closing date forward. As a result, our financial results for the second quarter of 2021 will include approximately one month of MobCrush-related operating results, including approximately one month of revenues and expenses, along with the impact of other acquisition-related accounting entries, as estimated and summarized on a pro forma basis in our definitive proxy filed with the SEC on April 30, 2021. Please note, as Anne mentioned, we did include first quarter 2021 comparative unaudited standalone financial information for MobTrush in our definitive proxy statements filed with the SEC. In summary, as disclosed in our definitive proxy, MobTrush's first quarter 2021 results included revenues of $2.4 million, up 43% from the prior year quarter, net margins of approximately 34%, total operating expenses of $2 million, down 21% from the prior year quarter, and a net loss of $1.2 million, down 37% from the prior year quarter. Based on the first quarter 2021 results for MobCrush, the net quarterly burn rate was in the approximately $400,000 per quarter range. Again, thank you for joining us today, and I look forward to being with you all for our Q2 2021 earnings call. With that, I will turn the call back over to Ann for some additional remarks. Ann?
spk01: Thank you, Clayton. In closing, we're proud of the continued growth that the Super League team has demonstrated in the first quarter of 2021, both in revenue and KPIs. We're thrilled our shareholders have approved the highly synergistic merger with MobCrush and have already begun to work as one company to build scale and create a highly sought-after solution for advertisers targeting gamers. We look forward to providing more details on the combined company, the new Super League, on upcoming calls. And with that, Clayton and I are now happy to take your questions.
spk00: Thank you. And to ask a question, you will need to press star 1 on your telephone. To withdraw the question, press the pound or hash key. Again, that is star 1 to ask the question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jacob Silverman with Alliance Global. Please proceed.
spk05: Hi, Anne. Hi, Clayton. This is Jacob on for Brian. Thanks for taking our questions. Obviously, not all views have an ad unit. What is the annualized revenue for all available ad inventory that was filled not including mob crush?
spk01: Yeah, no, it's a good question. So, you know, keep in mind that when we're talking about views, we're aggregating views on our own owned and operated channels, and then we're also aggregating all of the reach that we get through our social channels. So that's Instagram, that's TikTok. Now, obviously, with Snapchat and our strategic partnership, we've shown that we can provide them content and that we can kind of clear and add revenue off of that. That was $400,000 last year. and well over 100,000 in just one queue this year. But when we're talking about Instagram views and TikTok views, we do have ways to try to embed some branded content in that. Clearly, that's something Mobcrush does really well with the way they can embed premium ad inventory and stream. So we believe their capability on the social ad inventory side will really be powerful to help Super League optimize more of them. But right now, You know, when we talk about those big viewership numbers, we're really talking about only about 10% of them today have an ad unit against them. And so, you know, we've got a couple things we're working on. One is how do we add and optimize more ad units in our owned and operated? How do we start to embed and think more about the right now, the viewership where we don't have an ad unit available to sell? And then it's sell through rate, right? So, One of the reasons that I talked a little bit about programmatic today is because, you know, I did get some great comments from analysts previously who said, hey, you know, every view is perishable. So is there a way you can start to turn on programmatic? Don't have it cannibalize your direct sales, but do add ad units that can start to create a little bit of a higher sell-through rate for those ad units that still extract a decent CPM. We're talking about video ad units in the programmatic space. that have maybe a $5 to $10 CPM, but they're not taking away from our direct sales effort. And we're starting to see about 40% sell-through on programmatic as a complement to a lower percent right now that we're selling out on direct sales. Now that said, where I see direct sales going is I think we're getting really clever on our owned and operated about starting to almost be the driver of what the advertising promotion is. So you'll see things like us talking about Winter Wonderland or Spring Break. We have an upcoming activation around Moon Jam. Those are all things where we're creating a beacon property instead of ad inventory, and then we're luring the advertisers in to join it. And so it really is one of those things where it goes both ways. They're coming to us with their campaigns online, but we're also starting to create these beacon projects to sell through more of that ad inventory. And what I will do in future calls is try to break out a little bit more of the color about the ad inventory because the end game, the end stream, the end experience, and then programmatic are really four unique legs that have different metrics around them, different targets, and they take on different shapes as we try to optimize the whole portfolio.
spk05: Great. And on the topic of programmatic, did you generate any programmatic revenue during the first quarter? And if not, when do you expect to start generating some programmatic revenue? And when do you think it will become a meaningful contributor?
spk01: Yeah, so we definitely started building out some of that programmatic ad inventory in 4Q. We do now have several units we've built out. an ad partner advertising tech stack that has several different partners participating in that marketplace. And right now we're averaging about $1,200 to $1,500 a day in just programmatic alone. And again, that really is kind of like gravy or icing on the cake because we're not really taking those ad units away from the direct sales effort, so it's supplemental.
spk05: And then just one last one for me. If advertising budgets strengthen considerably, what does that mean for Super League Gaming? Better ad fill rates, higher CPM, or is there no major short-term impact?
spk01: What I think it really means, obviously, Salesforce effectiveness is a big driver, right? We want, you know, you can't sell out all of your ad inventory. You know, best-in-class teams sell out 75%, 80%. But, you know, even combined Super League Mod Crush, we've got a ways to go, right? So if we're selling out, you know, 10% to 20% of our ad inventory, we've got so much opportunity to just sell what we have. Now, that said, I really do think the biggest trends that I'm looking at when we do our weekly pipeline calls is size of deal. You know, we have seven deals in one queue that are six-figure deals. You know, so, you know, that's up from, you know, in three queue, four queue, just a few deals that were six-figure deals. And the important note that I mentioned in the script is just the fact that over 70% of our 1Q deals for Super League as a standalone were repeat buyers. I think that bigger deal sizes, repeat buyers, is probably the two most important pipeline trends that tell you that you're really going to become a go-to. Once they've put their money to work with you once, if they're a Netflix or Disney+, and you've been able to deliver them the ROI and the reach that they're looking for, The next time they come to you for that next big release, they're coming with more dollars to put to work, and you become almost a go-to, like a staple inside their kind of ad partner portfolio. So those are the things we're looking at when we try to measure what tells us that the ad model is about to take off. It's really deal size repeats. And inevitably with repeats, too, ideally you're closing things faster, right? because you're now very familiar with that ad partner. They understand how you work, what you can offer. And so I think the third thing that I would look at in the overall health of the pipeline is just speed to close.
spk05: Thanks so much, Anne.
spk01: Thank you.
spk00: Thank you. Our next question comes from Scott Buck with HC Wainwright. Please proceed.
spk03: Good afternoon, guys. I'm curious, Ann, on the increased size in the advertising deals, do you have a sense of whether or not you're actually taking share of advertiser wallets or it's simply the size of the wallet is just getting bigger versus what it was a year ago?
spk01: Yeah, I think it's a little bit of both, right? I think because we have so much repeat, you know, we're clearly going to be putting a lot more money, you know, or I should say the advertiser, is that repeat buyers pay more money to work with Super League than they did last year. A good example, if you go into Minehut over the last six months, is you'll see that in a recurring basis we're doing more and more work with Moose Toys. We've always had a long-term partnership with Logitech, and that's continued to increase, especially over the last year. And so I think that we are taking a greater share of a specific brand's wallet, because now, especially when you put our ad inventory with Mob Crush, there's really no type of competitive gamer we can't reach. I mean, we speak to such a broad range of age ranges and genres of games and skill levels that there's a good program for everyone. Now, what I would say, too, is advertisers are coming back, right? Advertising classically always has a heavier back half of the year than the front half. It's just It's just how it's always been. They're putting more money to work when it's back to school and holiday. But certainly, advertising's picked up well. I thought Super League and Mob Crush did an exceptional job really responding to the pandemic last year. I mean, every advertiser stopped spending money. Even if you could put money to work against gaming properties, you still froze a little bit. And so I will say that I think both companies recovered well, repositioned themselves in front of advertisers and agencies, and so I see us having a really strong year, and I expect similarly that you'll see our revenues improve as we march in later into the year because that's just when the ad model in general, pandemic or not, picks up.
spk03: That's helpful. Second one from me, can you give us some color on where MobCrush has been, I don't want to say more successful, but maybe a little bit ahead of you guys on the direct-to-consumer side and how you might be able to layer some of that strategy into the legacy Super League business?
spk01: Yeah, it's a great question. So, you know, what Mineville is is it's one of six dedicated servers inside the game of Minecraft. And so that's where Microsoft, who publishes Minecraft, they are the people that hire companies like MobCrush to run one of these gaming servers. So that means if you have a son or daughter who turns on their iPad or phone and they want to play the mobile version of Minecraft, this is one of six dedicated gaming servers that they can jump into. And what the team at MobCrush does is is under their great kind of dedicated Minecraft leadership, they spin up great gaming experiences in Mineville that really lure kids into wanting to go in there because the games are fun and exciting. Now, once you're in Mineville playing that game, again, in a mobile version, so you're playing on a tablet or phone, if you choose to make purchases in that game, it's still on the back of the Microsoft or Minecraft marketplaces. But what it means is that every time a kid's in there making purchases, you get a rev share off of it. And so the slight difference with Mineville is they don't solely own the customers, the kids who are playing in that universe, because it's Microsoft in a B2B relationship asking them to run one of those gaming servers and to really know what that community wants. But, wow, it's a great amount of revenue. Like I said, $2 million last year. But then where it gets interesting for us is When we talk about Minehut, that's our own owned and operated universe. We are the number two server farm globally, private server farm for Minecraft, number one server farm in North America. So when we talk about aggregating these millions of players, they're people we have a direct relationship with. We have their email. We're in communication with them. We've now introduced a marketplace as well, which has that kind of shared economy feel, but this time the creator isn't the guys at Mob Crush making games. The person that we're going to partner with to make the experiences in games cool are actually the 12- to 18-year-olds using our service. A small little difference with Minehut is Minehut is mostly today – based on the Java software. What that means in Minecraft is that's the kid playing on a laptop, effectively. So it's a little bit more of an advanced player. So when I talk about cross-fertilizing the communities, but also cross-fertilizing the learning, the game modes, we have a tremendous amount of expertise in MobCrush that really knows a lot about that earlier stage Minecraft player who's just getting started on tablet. And then what we have in Minehut is exceptional leadership and knowledge about that more advanced player. And, you know, the truth is the two gentlemen who run those two businesses for us, they've known each other for 10 years because that's how small the world is when you are a real avid Minecraft enthusiast. So these are two gentlemen, Neeraj and Trent, who really are friends. and they know a lot about each other's communities. So you put those two, you know, powerful knowledge bases together, and we can start owning a Minecraft player's journey and understanding, you know, really to your original question, how to monetize them in all different kinds of ways, leveraging all the capability and the tools already been built independently with both. We just started introducing Marketplace in 4Q. We had never tried to really in a formal way, monetize our direct-to-consumers. Clearly, the guys at Mineville and their partnership with Microsoft have been doing it longer, and we are so excited to see how we can accelerate what we're doing on the Minehut side faster. But synergies go way beyond just top line.
spk03: That's really helpful. I appreciate the time, guys.
spk00: Thank you. Our next question comes from Jack Vanderaarde with Maxim Group. Please proceed.
spk04: Great. Hi, Anne. Hi, Clayton. Congrats on the MobCrush. Congrats on the acquisition, or at least sounds like it's almost going to be closed. A couple questions. Anne, maybe I'll just start with, you mentioned that the first Core 21 pro forma revenues were about $3.2 million. which Clayton kind of dug into this a little bit too. It implies, you know, $2.4 million of mob crush revenue. Just a couple follow-up questions on that. Can you just break out maybe what that, or even just roughly break out what that mob crush revenue of $2.4 was between category or type, or is it just like 100% advertising-related revenues?
spk01: No. I would call it about 70-30 advertising to direct-to-consumer revenue.
spk04: Got it. That's helpful and nice and concise, 70 to 30. DTC is about 30. Okay. And then is this 2.4 million? And I saw that there was a bunch of performance statements released and a filing at the end of April, as Clayton mentioned. Is this sort of a good way to think about – I'm not sure what the seasonality might be related to this business. So as you look at the remaining normalized, you know, full quarters of contribution from MobCrush, is 2.4 a good base to work off? Or was 1Q seasonally stronger or slower? Any color there would be helpful.
spk01: Yeah, you know, we don't give guidance. But certainly I do think that, you know, right now we're – while we know that advertising is historically very seasonal in the first half of the year, I think that the companies are early enough that, you know, what I would say is I think using, you know, 1Q with some very – So reasonable, modest growth is probably a good place to start if you want to think about the shape of revenues for the year.
spk04: Okay. That's helpful. And then just a housekeeping question, just so I understand. You know, I think you said in your prepared remarks the combined company will have 75 million monthly U.S. viewership audience and $7 billion annually. And then in the press release, I think it was, like, Super League had 578 million viewers in the first quarter of 21. So am I comparing apples to oranges with all these various viewership numbers here? Yeah.
spk01: Okay.
spk04: If you could clear that up, that would be helpful.
spk01: It's a good question. It does kind of get confusing, and some of it is how these different social media partners, how people count viewership. I mean, when we're talking about the 579 million, that's just Super League standalone. But the powerful thing is that when you look at, all the gaming influencers that are using Mob Crush's tools, these free tools, to multicast their live stream gameplay to their own personal channels. So if it's gaming streamer A, it's him streaming to his Twitch and his Instagram and Facebook live account simultaneously. So we can count all of those people, those nodes audiences as well. So it's not a pure mob crush or Super League branded node, but we get to count that reach. And that matters because when we go to advertisers, that reach is legitimate. We can say, look, you're not just going to reach our influencer, you're going to reach everybody else that they reach. And so that amplification effect does start to change the nature of the conversations we can have with advertisers. Both companies were starting to have a decent amount of materiality on their own so that we could sit there and have those conversations with the big brands and prove to them that we could deliver the reach that they need. But you put the things together, and as I said on the call, you know, media is all about scale. And so, you know, when we talk about being able to reach, you know, 75 million Americans monthly, that's a big number. And that's a number that wakes advertisers up and really goes back to a previous question about you know, that's a number that legitimately can grab a bigger share of advertisers' wallets. But what we will be doing, you know, one thing I think we did well in Super League over the course of the last couple years of being public is we just kept really simplifying our story because we know you guys are sitting there saying, how do I model this? So what I would say is when we are able to talk as a newly combined company at our next call, we're going to really think about how to just stay on that simple track here are the few KPIs that you need to care about, and here's how they relate specifically to each revenue stream. So that it starts to become a bit more way that you guys can start thinking about modeling. Because it does also go back to an earlier question about how do I think about programmatic? So what we're going to do once we get the companies integrated is really think about how we can present that narrative to you so it just makes it a little more simple.
spk04: Okay, great. No, that would be very helpful. And then just maybe a follow-up question, just kind of unrelated. Maybe can you talk about the advertising revenue mix between your owned and operated channels versus the third-party channels, you know, excluding MobCrush? So where is that mix today for Super League? And then where do you see that heading one to two years down the road and then longer term from a –
spk01: It's almost entirely direct sales on our owned and operated. Because that is really, you know, at the heart of it, it is the most premium ad inventory we have. The way that we can integrate an advertiser authentically in-game is very compelling, you know, to have an interactive activation. And so the majority of it is in owned and operated sales. We haven't pushed too hard on selling the ad units of the extended social reach we have, but that's really where the strength lies with MobCrush is how to kind of embed ad units and sell that kind of extended social reach through partners channels. So it's almost predominantly for Super League direct sales. And then the beginnings of the programmatic, which, like I said, they're decent CPMs. And it's becoming, you know, a nice kind of chunky amount of revenue that is not cannibalizing the direct sales ad units. But as I mentioned earlier, you know, we're seeing, you know, days where we're doing $1,200 to $1,500 a day in pure programmatic.
spk04: Got it. Fantastic. That's very helpful. And, again, congrats on the progress of the acquisition. And that's it for me. Thanks.
spk01: Thanks.
spk00: Thank you. And as a reminder, to ask for questions, simply press star 1 on your telephone. Our next question comes from Bill Morrison with National Security. Please proceed.
spk06: Hi, Ann and Clayton. Congrats on the shareholder vote. And I have just a couple of questions. Number one, what do the CPMs look like, you know, comparable between companies? Are they roughly similar or much difference? Hello?
spk01: Oh, I'm sorry. I'm here. The Mob Crush CPMs are very similar. So, you know, because what is happening in their stream is the streamer is holding up a Logitech mouse and speaking about why they love to play with it. Or they're taking a break and saying, hey, I'll be back and stream with you in 30 seconds, but watch this video for this new, you know, a new car that's coming out, a new model, or it could be a new movie release. And so because it's almost like a branded product placement, it has a same kind of rich CPM in that kind of $10 to $15 range that we see with our Super League efforts. And, you know, look, it is a direct sales effort like ours, right? We're going out to brands and we're matching brands up with inventory. The difference is just this kind of high-end product placement inventory is sitting inside someone else's gaming stream that happens to use the MobCrush tools for free.
spk06: Good. Okay, that's great. And then what's the take rate roughly for the MobCrush DTC?
spk01: The take rate on DTC?
spk06: Like the split with Microsoft.
spk01: Oh, oh. It's generous. It's generous. I don't know if it's appropriate that we disclose it, but it's a generous split. And so it certainly makes it more than attractive from a margin perspective for us to invest the money that the Mob Crush team does in making new games and those game experiences great. And that's the nice thing about their business. We're seeing with a little bit better of a margin profile, And some of it is because we've started to really get a boost on margin coming out of our content side of the house. We're making 50% to 70% margin as we repackage and sell some of this derivative content. So that's why you're seeing Super League's margins go from what we already thought was quite healthy in that 50% range to, as Clayton reported, high 50% for this quarter. Now, we don't want you to start modeling that as a target, But certainly mob crushes margins are strong and healthy when you look at their ad and DTC model combined. Not quite as strong as ours, but when you look at them on a weighted basis, we think the narrative that this is still a strong margin model, good top line growth, and as I mentioned, you know, starting to march towards cash flow positive. That's really the rally cry for us over the next kind of 12 to 18 months.
spk06: Beautiful. All right. And then is it too soon to know, or do you have any idea of what the near-term goals are for the team and tools on the sales side?
spk01: Yeah, I think it would probably be best for us to just take the beat and integrate the two companies and teams. I mean, certainly with Securities Council support, we were able to start getting our sales teams together over the last few weeks. their point of view was, hey, you guys could commercially go out and sell together even if you don't receive shareholder approval. And we said, yes, that would be true. We would go out and sell together because if we can sell more together than apart, why wouldn't we? And so what that has been a great exercise in doing is a couple things. First of all, fantastically complimentary sales teams. And that's what you want, right? We want more of our people to be revenue-facing. We said to you guys a year ago we wanted to increase the percent of revenue-facing talent. Well, we just inherited a wonderful, very talented sales team in MobCrush that just gels perfectly with our team. And they've been at it a little longer too, so they bring just a lot of great experience and wealth. The second thing that happened is we compared pipelines. And to our delight and surprise, there wasn't a ton of overlap And so that was interesting that we thought, gosh, we're not really going to cannibalize each other. We're real strong in kind of toys and entertainment, you know, but we had really no penetration in automotive. Well, they've had some fantastically successful deals in mob crush and automotive and other categories. So lots of overlap and synergy there. And then the third thing, as I mentioned in the script, is You know, we've already gone out and pitched together. Our heads of sales for both companies pitched at the New Front eSports event a few weeks back. And, you know, just the exercise of putting our two sales pitch decks together and seeing how seamlessly they merge. And then the fact that last week we were made aware that we won a deal with a very notable big media company that is buying inventory from both. It's buying inventory outside of Super League and it's also going to pick up some Mob Crush inventory. Again, it just shows that some of these programs cut right across both companies' inventory that is now one. It's the same inventory.
spk06: That's great. So what does the profile of the team look like, you know, upon closing? Roughly how many are you going to have, and what will their productivity level be roughly?
spk01: Well, productivity level I hope is high, Bill. My heavens. We're all remote workers, so, I mean, I think we live and breathe our jobs these days. But, yeah, we'll have a headcount of about 80 people. There's some real good synergies, I mean, in sales and in engineering, as I mentioned. Because MobCrush had done a lot of work to lean themselves out over the last year, they didn't have an internal finance team. marketing team so it's not a classic you know M&A event where the first thing you're doing is trying to slash cost in fact if anything I think it's going to be notable if we can just hold cost because both companies are growing and you know when we start to turn our marketing talents on to mob crush who has been deprived of marketing capability we're going to see growth in their platform as well And I think it's going to say a lot if we can just absorb that growth, whether it be through headcount or infrastructure with the current levels of spend we have. But where I do know we are going to see acceleration is on the top line. There's no doubt in my mind it was the whole reason that we felt so confident in the opportunity was that we did see a one plus one equals, call it three, four, or five, just on the ad model alone, but you're going to see it on direct-to-consumer and content, I'm certain as well. So we will have a higher percent of people that are revenue-facing. They had a larger percent of their overall headcount that was focused on sales and direct-to-consumer. And so we like that healthy balance that we'll have a healthy one-third of the staff that are purely revenue-facing, one-third engineering, and then one-third dispersed amongst you know, biz dev, which, again, is revenue-facing, but then a lot of the corporate functions as well.
spk06: Beautiful. Very exciting. Thanks a lot. Talk to you later.
spk01: Okay. Take care, Bill.
spk00: Thank you. And at this time, this concludes our Q&A session. I would like to turn the call back to Ms. Hans for closing remarks.
spk01: Yeah, what I wanted to do right before we close out is, you know, we had our annual shareholder meeting today. And we did get a few questions that were asked, and I want to be sure that we have satisfied those passionate investors we have. There were two questions that really related to technology stack, the broadcasting technology stack, so Virtualis Studios for Super League, and then the broadcasting technology and monetization technology that MobCrush offers up to its mid-tier streamers. And so I hope this script has express that we do see a lot of synergies in that tech stack. If you put their technology and our technology together, all kinds of things start to emerge. Right now, the MobCrush model is a free model, so you get to use the tools for free. But some of the more premium broadcast aspects of technology that fit in Virtualis for more of those high-end storytellers, broadcasters, could become could help MobCast turn into more of a freemium model where you get a basic set of tools for free, as you do now, but maybe for that really advancing creator who's starting to build out larger and larger social audiences and really aspires to be the next ninja, maybe for them they can upgrade and they can start to access some of that higher-end, kind of higher-quality broadcasting tech. So we think there's a lot of synergies there. We also think, you know, when we put those pieces of tech together, it changes all the B2B conversations we can have. You know, whether we want to go talk to, you know, a high-end studio like Indemol Shine about using more of the premium aspects of our tech stack, but there's all kinds of devices that sit out there that have streaming technology on it, like your cell phone. So when you put the power of the two technologies together, I think the business development partnerships conversations are going to get really interesting. And that opens up more of like a B2B licensing SaaS model that almost becomes a fourth leg of revenue that sits outside of the three legs that we have now. And then there was a question about potential rumors about, you know, other M&A. You know, obviously we are not in a position where we can comment on any other M&A. What we've always told you is very openly that we are seeking opportunities to accelerate the growth of the company, and that continues. And when those things advance to a place that they require disclosure, you know, we will disclose that, and you'll be the first people to know. And then the last question was about NFTs. And, look, certainly it's a hot space, and it has some interesting intersections with esports and wagering. It is just an area that we continue to become more educated on and keep a close eye on, but we don't have any material announcements on the NFT side to make at this time. So I hope that that attempts to answer some of the questions that our investors posed at the AGM. So with that, we'd like to thank everyone for listening to today's call, and we look forward to speaking with you at upcoming conferences and when we report our second quarter results in August. Thanks again for joining.
spk00: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
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