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spk01: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Super League Gaming's financial results for the third quarter ended September 30, 2021. Joining us today are Super League's President and CEO, Anne Head, and CFO, Clayton Haynes. Following their remarks, we'll open the call for your questions. Before we go further, please take note of 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, does not reflect historical facts are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements. 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 recent 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 November 22, 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 Super League Gaming, Anne Hunt. Anne.
spk00: Thank you, Mary, and good afternoon, everybody. We have lots of fantastic progress to report, from material expansion in our creator and audience reach through to another record-breaking revenue quarter. But before we dive in, I would be remiss to not mention the metaverse, as it seems to be the buzzword of the quarter, thanks in part to Facebook's rebranding. According to Digiday, Google searches for metaverse stock have increased by nearly 18,000% from this time last year. But this isn't news to us or to any of you as investors in Super League. We've been talking about the metaverse for some time. And it's not just an aspirational statement. We are already there. We are in it. And it is bigger than a buzzword. It is a persistent, user-defined digital layer of our physical world. It is limitless and enables relationships, commerce, experiences, and self-expression. And most of all, it is not controlled by just one or a few. It is built by creators and developers and it generates real human interaction and real-world dollars. And that brings us right back to Super League. We are a creator-centric platform, a league of creators, who create and share with their audience their metaverses, their gameplay, and their live streams. Our talented creators are the sun in our universe, and by empowering them with our tools and economies, their content and their audiences become a part of our universe as well. Before I get into the business context for the quarter, let me provide a quick recap of our financial performance in Q3. Our third quarter revenues reached a record $3.6 million, up 402% compared to Q3 2020 and up 233% compared to Q2 2021. Our three primary revenue streams each increased significantly. Notably, advertising and sponsorship revenue made up 65% of our third quarter revenue, up from 42% of revenues in the prior year quarter. The reduction in our margins to 37% for Q3 2021 is still healthy and in line with our expectations as the newly combined inventory has a lower weighted CPM, but this is just part of the transition as we continue to absorb and optimize our premium ad units. Our balance sheet remains strong with $24.5 million of cash on hand as of September 30th, 2021, And our balance sheet remains clean. We continue to have no debt. And as always, there are leading indicators that represent the health of our growing ecosystem. We currently have 1.1 million creators on our platform. And as I said earlier, creators bring in players and viewers through their engaging content that they develop and share. Through those over 1 million plus creators, we reach nearly 70 million monthly active players. and our owned and operated properties have generated 90 million hours of gameplay through October. And this leads us to spectators, the audience viewing our creators' content. We are currently trending to surpass 10 billion views this year, five times our views from 2020, reaching a U.S. audience of over 119 million as verified by Creator IQ. Now, this in itself is worth a pause. The company we are today is profoundly different than 2020. Our type of business model requires critical mass for scale. Today we have way more heft and have laid a foundation this year for real scale in 2022 and beyond. We aren't just a small player anymore. Now I'd like to shift to other business updates. So first a refresher on why we exist. Today Super League is a leading metaverse and creator economy platform at the intersection of gaming and pop culture, dedicated to empowering everyday creators. Content creation is no longer the purview of big media companies. It's democratized. Anyone with an active social media account is in the content business. We want to support those creators that are looking to monetize their content and the new creator-based economy with tools that enable them to build their audience and entertain their fans. Moreover, people are consuming content in vastly different ways than they used to, whether it's on Instagram, TikTok, Snap, YouTube, or Twitch. The traditional advertising model is no longer sufficient to create brand awareness and deliver marketing campaigns. Brands and advertisers need to go where this new generation plays, and that's online and in the metaverse. And since we control in-game and in-stream advertising inventory, we can help brands reach this elusive audience of passionate, highly engaged gamers in a seamless, authentic way. So let's move on to our recent M&A. In the third quarter, we made moves that enrich our offer to creators and deepen our reach into the metaverse, and in doing so, expand our differentiated inventory for advertisers. Most recently, we acquired a very exciting company called Bloxbiz, an acquisition perfectly aligned with our strategy. Bloxbiz enables Roblox game developers to monetize their games through in-game ads that take the form of creative billboards that complement the gaming experience, allowing for natural discovery without interrupting gameplay. Our portfolio includes more than 75 popular brand-safe Roblox game titles and growing, and provides brands with measurable advertising through BloxBiz's advanced technology, which verifies viewability in the 3D space and provides aggregated audience geographic language and device data. And the creator benefits from our technology as well, through dashboards providing monetization, updates, and game analytics. BloxBiz reached over 60 million monthly active users in October, representing 30% of all Roblox users. And in October, ad exposure time equated to 142 years of gameplay. Needless to say, we are bullish on the potential for this product. As well, we are two months into the integration of BannerFi, which we spoke about on our last earnings call. BannerFi extends our creator base and social media audience through a creator economy that overlays premium, scalable, custom ad placements into our creators' native streams. This industry-leading and friction-free solution delivers a seamless way for advertisers to reach BannerFi's 65 million strong audience of social fans on YouTube. This inventory, now merged into our suite of ad products, is allowing us to bring more international eyeballs for advertisers and boost the size of our campaigns to grab a greater share of advertisers' wallets. And this is just phase one. By year end, we'll be integrating our technology to expend the BannerFi product to all of our Mobcrush social media creators to further unlock their audiences and, in turn, making them our audience. And it is now five months since Super League and Mobcrush joined forces. As you may recall, Mobcrush enables live streamers to multicast their gameplay streams across Twitch, Facebook, and more, and monetize their content with custom ad placements similar to Bannerify. Mobcrush not only brought us the lion's share of our current U.S. audience reach, but also a super skillful and passionate set of colleagues across all disciplines. I believe we have demonstrated to the market that we are judicious when it comes to putting our cash and equity to work for inorganic growth, that we identify smart opportunities that are on strategy and deliver on the integration of those opportunities. We are not about short-term revenue pops. We are building a differentiated position in the media and gaming ecosystem. And I would be remiss to not underscore again what M&A has brought us when it comes to our talent pool, our people. From the breadth and depth of the capability I cited earlier, the way we've been infused with talent from Mobcrush, through to the very bright minds behind Bloxbiz and Bannerfight that are now a part of our team, Super League is punching above its weight thanks to brilliant progressive thinkers focusing on delivering superior products and results. And with all of this M&A, it is about more than the expansion of our in-game and in-stream ad inventory. What might not be as obvious to the everyday investor just yet is the emerging common thread, a connected technology backbone across our suite of Super League products. And this is a big deal. It is as important as the valuable expanding ad inventory. We are on a path toward automation of our tech stack, from ad unit delivery to campaign management tools and reporting and analytics for ourselves, our creators, and our advertisers. It's what will enable us to scale. to increase our fill rates while protecting our margins, and expand into different games, metaverses, and to reach new creators and influencers even beyond gaming. And it's just not the technology that links us. It is our brand, too. And our brand is Super League. While we have a suite of products and offers that speak to different types of creators and players, we are not a holding company. We are a platform, a platform that can stay with a creator throughout their gaming and content creation journey. a platform that enables our business model to scale, and a platform under the badge of the Super League brand that promises empowerment, inclusion, and community. Before turning the call over to our CFO, Clayton Haynes, for a deeper dive on our financials, I'd like to take a few minutes to review the solid progress we made this quarter across our three primary revenue streams. So, as we've said, the heart of our business model is advertising, how we connect our creators and their audiences, our supply side, to brands and advertisers, the demand side of the equation. Brands are becoming more progressive, more sophisticated. We are no longer educating them on the basics of how to reach cord cutting ad blocking gamers. They get it. But now we can do so much more for them than just achieve short-term campaign objectives. We can provide them an even richer opportunity to create a new digital expression of their brand through persistent metaverses and social influencers that is authentic and engaging. This is where meaningful brand affinity, customer loyalty is built. We are currently working across verticals from CPG to automotive to retail to introduce their brands to new audiences and drive digital to physical consumption crossover. And the statistics prove it. 76% of Gen Z say it is easier to relate to brands with a digital presence and 60% say they feel affinity to brands as a result. Our advertising and sponsorship business, from which the bulk of our revenues are derived, continues to see strong growth. Our pipeline of potential opportunities has quadrupled over the last six months, and our average deal size in Q3 was just over $200,000. Premium in-game and in-stream CPMs continue to be in the $10 to $25 range, and our advertisers are validating the marketing performance we deliver with over 74% of our deals in Q3 coming from repeat buyers. We also continue to build out our programmatic advertising tech stack to automate and optimize the sale of our unused video and display inventory, and are seeing some nice recurring programmatic revenue coming through with healthy upside. As well, you might have seen our announcement about an expanded sales partnership with ScreenVision Media, a national leader in cinema and premium out-of-home video advertising. We launched Super League Spotlight as pre-roll in over 2,000 theaters across the country, giving our own direct sales team and theirs a new property to sell against. But there's more here. The use of an indirect sales force of resellers is another critical part of our 2022 sales strategy. Through Blocks Biz and BannerFi, we now have a significant amount of international ad inventory, and currently our fill rates across our network are a modest 10%. So you should expect to see us smartly expand our indirect sales channel to help us optimize the yield of our abundant growing inventory. While premium game for dicing, as it's called, is our central source of revenue, we have products that go further downstream. Direct-to-consumer, which accounted for 17% of our revenue mix this quarter, was up 900% over the prior year quarter and is a meaningful part of our revenue growth. Our three direct-to-consumer properties, Minehut, Mineville, and Pixel Paradise, draw in millions of players on a monthly basis. And through subscriptions and microtransactions, our creators and players can expand their server features and enhance their gaming experience. Finally, there is our content revenue stream. As we've described so far, we are finding creative ways to distribute and monetize the trove of proprietary gameplay content created by our users. Content made up 17% of our overall revenue mix in the third quarter. We continue to derive revenue from distribution partnerships with Snapchat, Cox Media, and others, as well as a recently announced partnership with Clix TV, a streaming OTT network that will tap into our existing short-form programming library. But it's more than just the content. There is value in the technology that sits behind it. As you know from previous calls, we continue to see increased revenue opportunities for Virtualis. our virtual studio technology for esports, original gaming entertainment, and beyond. And the proof is in the numbers. Technology as a service revenue, as a subset of our content revenue line, represented 86% in the third quarter of 2021, up 68% from the prior year comparable quarter, fueled by industry needs for remote production capability, along with our expanding partnerships with big-name companies like Twitch and Topgolf. To wrap, dare I say the word metaverse one more time? But seriously, it feels so energizing to be able to communicate to our ardent institutional and retail investors that we're on the move, that we're making things happen, that we believe will make this a great investment decision for all of you. I mentioned on our last call that you should expect at least $7 million in revenue for the second half of the year because at the end of the day, top line is still our number one priority in this rapid growth stage. Well, hitting 3.6 million in Q3 is a great start, and we have enough line of sight to predict that we will deliver over 4 million in Q4 to beat our original estimate. At this point, I'll turn the call over to our CFO, Clayton, who will review our third quarter financial results, after which I will come back on with some closing remarks. Clayton?
spk04: Thank you, Anne, and good afternoon, everyone. I'd like to start by also expressing how excited we are to have added Blocked Fizz and Bannerfy to the Super League roster. Moreover, we continue to make significant progress on fully integrating the ModPress team across sales, engineering, and other areas. We are delighted to see the synergies that we are generating from all of these new properties as we further expand our reach into the metaverse and enable creators to create, distribute, and monetize their content. Jumping right into the results for the third quarter, As summarized in our earnings release file this afternoon, third quarter 2021 revenues were $3.6 million compared to $718,000 for the third quarter of 2020. The 402% increase in revenues was driven by strong increases for all three of our primary revenue streams, including advertising and sponsorships, content sales, and direct-to-consumer revenues. Third quarter 2021 advertising and sponsorship revenues, which includes direct sales advertising and brand sponsorships, as well as programmatic display and video advertising revenues, increased 2.1 million, or 689 percent, totaling 2.4 million for the third quarter of 2021, up from 299,000 in the third quarter of 2020, and comprised approximately 65 percent of revenues for the third quarter of 2021, as compared to 42% of revenues in the third quarter of 2020. The increase in advertising and sponsorship revenues primarily reflects the first full fiscal quarter of integrating MobCrush ad products to our platform that our sales team can take to market. Content sales revenues increased 63% over the prior year quarter to 618,000 and accounted for approximately 17% of revenue for the third quarter of 2021, compared to approximately 53% of revenues in the prior year quarter. Content sales revenue is generated in connection with our curation and distribution of esports and entertainment content for our own network of digital channels and our media and entertainment partner channels. This includes the syndication of licensing of original programming content, user-generated content, including online gameplay and gameplay highlights, and the creation of content for third parties utilizing our Virtualis remote production and broadcast technology, which emerged as a component of revenue in the back half of 2020. The increase in content revenues for the third quarter of 2021 was driven by a 106% increase in our live stream, remote production, broadcast, and gameplay-related content sales activities in the quarter. Direct-to-consumer revenues, which consists of sales of digital goods and subscriptions across our owned and operated Minehut digital property and Mineville and Pixel Paradise official Minecraft server products in partnership with Microsoft, rose greater than 900% compared to the prior year quarter to $627,000 compared to $41,000 in the comparable prior year quarter and accounted for approximately 17% of revenues compared to approximately 6% of revenues in the prior year comparable quarter. The increase in direct-to-consumer revenues primarily reflects the first full fiscal quarter of Mindville and Pixel Paradise digital goods sales revenues in the third quarter of 2021, totaling $545,000. Third quarter 2021 cost of revenues was $2.3 million compared to $327,000 in the comparable prior year quarter. The increase was primarily driven by the strong increase in related top line revenues in the third quarter of 2021, as well as the impact of a lower margin on mob-crush related ad products. As a result of our 2021 M&A activities, as we have described today and on prior earnings calls, our ad inventory has increased fivefold as compared to the prior year periods and compared to earlier this year. Our sales and product teams have been and continue to be in the process of absorbing and optimizing this significant increase in premium, high-quality advertising inventory. From the detailed review of rate card pricing for our increasing array of ad products to technology platform automation in other cost areas that we believe will provide strong opportunities for us to drive up margins across our ad inventory in future periods. As we have noted on previous calls, 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 relative to pricing of our advertising and content sales activities that occur in each period. Third quarter 2021 operating expenses were $8.3 million compared to $4.7 million in the comparable prior year quarter. non-cash stock compensation charges for the third quarter of 2021 increased to $636,000 as compared to $472,000 in the third quarter of 2020. The increase in sales, marketing, and advertising expense primarily reflects an increase in personnel costs in connection with the acquisition of MobCrush and the talented MobCrush sales team, and also reflects an organic increase of approximately five sales and marketing full-time employees in support of the increase in revenues since the end of the prior year quarter, and who focus on driving future monetization. The increase in sales, marketing, and advertising expense also included non-cash amortization expense related to sales and marketing related intangible assets, acquired in connection with the acquisition of MOP for a total of $503,000, and an increase in digital marketing expenses, which were lower in the third quarter of 2020 due to the impacts of COVID-19. The increase in engineering, technology, and development expenses was primarily due to an increase in engineering personnel costs related to the MobCrush acquisition and the related integration of the MobCrush engineering team, as well as cloud services and other technology platform costs related to the overall surge in engagement across our digital platforms, as well as a full quarter of platform costs related to MobCrush. The increase in engineering, technology, and development expenses also included the amortization of developed technology-related intangible assets acquired in connection with the acquisition of MobCrush, totaling $195,000. The increase in general and administrative expenses in the third quarter of 2021 was primarily due to a slight increase in personnel costs and related stock-based compensation quarter over quarter. The increase in G&A expense also included an increase in professional fees related to the acquisitions of MobCrush, Vanify, and BloxBiz, totaling $124,000, including legal, audit, and advisory service-related costs. The change also reflects non-cash, trademark, and influencer-related intangible asset amortization charges related to intangible assets acquired in connection with the MobCrush acquisition, totaling $118,000. On a GAAP basis, which includes the impact of non-cash charges and credits, net loss in the third quarter of 2021 was $7 million, or 20 cents per share, compared to a net loss of $4.3 million, or 36 cents per share, in the comparable prior year quarter. Excluding non-cash stock compensation charges and non-cash amortization of intangibles, our pro forma net loss for the third quarter of 2021 was $5.5 million, or 15 cents per share, compared to 3.8 million or 32 cents per share in the comparable prior year quarter. The quarter over quarter change primarily reflects the increase in top line revenues and gross profit and the expense related relationships and fluctuations described earlier. The weighted average diluted share counts for the third quarter of 2021 was 35.5 million shares compared to 12.1 million shares for the third quarter of 2020. The weighted average diluted share count for the third quarter of 2021 reflects the impact of the issuance of the 12.1 million shares of our common stock in connection with the acquisition of MobCrush as merger consideration in the all-stock transaction which closed on June 1, 2021. As disclosed in our earnings release and a case filed with the SEC this afternoon, pro forma net income or loss is a non-gap measure that we believe investors can use to compare and evaluate our financial results. Please note that our earnings release contains a more detailed description of our calculation of pro forma net loss, as well as a reconciliation of pro forma net loss with the most directly comparable financial measures prepared in accordance with U.S. GAAP. Looking at the balance sheet, as of September 30, 2021, we reported $24.5 million in cash, no debt, and total shareholders' equity of $94.1 million. Our current monthly OPEX gross cash burn rate is expected to be in the $2.1 million to $2.3 million range, excluding the impact of non-recurring M&A-related transaction costs and including incremental estimated costs related to our Vanify and BloxBiz acquisitions. Lastly, I wanted to provide some information regarding the Q3 2021 financial statement impact of our Q3 2021 and our more recent acquisition activities. We discussed the impact of the accounting for the Mod Crush acquisition on our financial statements on our Q2 earnings call, so my comments today will address our Banify and Bloxbiz transactions. As previously reported, we closed the Banify acquisition on August 24, 2021. The Super League results released today include the results of operations for Banify from the closing date, which was August 24, 2021, to September 30, 2021. Vanify did not have a material impact for the approximately one-month stub period included in our Q3 2021 financials. However, as Anne mentioned, Vanify expands the size and reach of our ad inventory, as well as our advertising and sponsorship partner base, and we look forward to Vanify's technology platform being a revenue accelerator for us, similar to MobBrush going forward. The initial closing consideration for the Vanify transaction totaled $2.4 million, comprised of $525,000 in cash and $1.9 million in common stock, subject to a customary holdback, with the remaining consideration up to $4.5 million being subject to an earn-out based on the achievement of future revenue targets. The balance sheet impact of the Banner Fire acquisition as of September 30, 2021, was comprised primarily of the capitalization of developed technology and tangible assets acquired, totaling approximately $3.1 million which included a non-cash deferred tax liability-related gross up totaling $556,000. The Vanify transaction was accounted for as an asset purchase under the applicable accounting guidance. Hence, no new goodwill was recorded in connection with the accounting for the transaction. In addition, we closed the Blocksbiz transaction on October 4th, 2021. Since the Blocksbiz transaction closed subsequent to the 930 quarter end, The Q3 2021 financial results do not include any of the operational results of BlocksBiz. BlocksBiz will be included in our financial results for the fourth quarter of 2021 from the closing date of October 4 to December 31, 2021. Again, thank you for joining us today, and I look forward to being with you all for our Q4 and year-end 2021 earnings call. With that, I will turn the call back over to Ann for some additional remarks. Ann?
spk00: Thanks, Clayton. Well, I hope you can all sense the enthusiasm we feel for what we have built to date and where we're headed as a company. Our solutions provide incomparable access to talented creators and their highly engaged audiences, along with millions of players in the metaverse. We will continue to expand our metaverse reach and suite of tools to further empower our creators to grow and monetize their fan base, and as a result, continue to grow our differentiated advertising inventory to enable brands to achieve impactful marketing outcomes with gamers of all ages. And as I mentioned earlier, Q4 is looking very, very bright. And with that, Clayton and I will now take your questions. Operator?
spk01: Thank you. As a reminder, if you wish to ask a question, please press star followed by one on your touchtone telephone. If your question has been answered or you wish to withdraw your question, press the pound key. Again, if you wish to ask a question, please press star followed by one on your touchstone telephone. Your first question comes from the line of Jack Vander Ardy from Maxing Group. Your line is open.
spk03: Great. Hi, Anne. Hi, Clayton. Congrats on the solid momentum and the latest acquisition of Blockbiz. It's pretty exciting stuff. Thanks for taking my questions. I'll just jump into it. First, let me just start with Super League and Mob Crush and their performance during the core Super League and Mob Crush during the quarter. And just how did Mob Crush and Super League and the integration process, just how did that all play out? And the results, which were on the top line, are clearly noticeable, those upticks. Just how did that perform relative to your expectations from the last time we talked a couple months ago?
spk00: Yeah, I mean, I would say very candidly that we delivered, we proved a point. We had said all along that, you know, you put together the powerful sales teams, the powerful inventory, and one plus one equals three, four, five. And what we knew even before we closed on the transaction is that we had already started sharing our pipelines and realized we weren't chasing the same deals. We were kind of had strengths in different verticals. And more importantly, that when you put the inventory together, that now we can start really boosting the campaigns. We can be selling a lot more, putting a lot more ad inventory to work for these advertisers. And so you see that represented not in the way our deal size has grown. I mean, we used to pat ourselves on the back when an average deal size was in the 50, 60, 70,000 range. Now we're talking about deal sizes that are over 200,000 on average. And even when you look at what we're selling, Jack, I mean, we, you know, multiple RFPs are going out, and they are truly, depending on whether the brand or advertiser wants to reach a young gamer audience or an older gamer audience, we're picking across widely, across the inventory, and then these RFPs are bringing together lots of ad units that really not only out-deliver for that campaign, but they're coming from legacy parts of Mob Crush and Super League combined. And so you really can't anymore look at any of our campaign deals and the advertising deals we're pitching and say, well, that was a Mob Crush one. You know, that's a legacy Super League one. That's kind of the power, whether we're grabbing young or older social influencers, whether we're touching into, you know, SuperLeague's owned and operated Metaverse property with MineHut, or now all the reach that BlocksBiz gives, you're seeing us reach across all those ad properties to really give the advertiser a really unique blended campaign that none of us could have done independently. If I had to put a number on it, I would say that I think at least $1 million of the revenue that we delivered in 3Q, again, this is just a guess estimate, is really through the synergies and driving the deal size up because not only the teams but the inventory came together.
spk03: Excellent. I appreciate the added color there. And just speaking of which, maybe a follow-up to that is on the advertising sponsorship side, I believe I heard correctly that average deal size was around 200K and ad inventory opportunities were up fivefold or five times over the prior year. which is great to hear, can you maybe just talk about how that average deal size and ad inventory relates to your expectations maybe for this same time next year and where that compares?
spk00: Yeah, I mean, I can't really predict. What I would say is that just like we're seeing a step change in the revenue of Super League from last year to this year, We would expect a similar kind of step change as well. We really think that we've laid a lot of foundational work for 2021 and that 2022 is a year where we're going to show investors that we can really start ramping up again, continuing this trajectory ramp on revenues. And so with that, one of the things you need to do is make sure you have a healthy pipeline to supply and to deliver those revenue streams. So if we want to grow our revenues at some some rate we're going to have to see a corresponding growth in the pipeline size. I do believe we're going to continue to see the average deal size grow as well. We are already winning pieces of business or bidding on pieces of business that now are more in the $400K, $500K range. We have a couple of those under our belt for the second half of this year, and so I believe that's a trend line that will continue. And, again, it means that as we also see that other healthy metric that I spoke about earlier, 70% repeat. That's so important because that means that we're delivering the outcomes the advertisers need. But as I already said, too, when you now look across all the verticals that we're chasing these ad deals on, You know, the richness of, you know, now a, you know, for the second year in a row, a rich deal that we've secured with Hyundai in the automotive category, the way we're expanding into retail and consumer products, we want to see both the breadth and the depth in those verticals continue to grow. And that's how the pipeline is going to grow. And then the more ad inventory we have to sell that's compelling, the more that we can drive up the overall deal size as well.
spk03: Excellent. And then just let me switch gears then. That covers the advertising side quite a bit. Just speaking of the creator side, you mentioned you currently have over 1 million, I guess 1.1 million creators on your platform already, which in my view is rather impressive, something that probably sneaks under a lot of investors' radars. Just given this new age of the metaverse economy and given the emphasis on creators, just a couple things here. Does this creator number include Virtualis? And then secondly, In general, can you speak on why having one million-plus careers is so important to your business and how that kind of compares to your longer-term plans for how many more careers you're going to add?
spk00: Yeah, the key is that, and I'll take the latter question first. I mean, it is the core driver that brings in community and content and audience and ad inventory into our flywheel, right? So as I said, if the creators are the son of our universe, Every time we add a creator, there is an exponential new set of eyeballs or audience that comes with that creator. There's that creator's engaging content as well, which we can find derivative homes and monetization for just like we do with Snapchat and others. And so the creator is kind of the way every time you add one into the flywheel, there is this amplification effect. that happens around our community audience and kind of content engine, so to speak. What I would say about the breakdown of that 1.1 million creators, right now a significant of them are around the metaverse. So I would say that roughly probably at least 50% are people who are creating their own games or realms inside a Metaverse property. Now, that can either be creating their own Roblox game titles for which then they become a business partner of BloxBiz, using the BloxBiz technology as a way to sell ad units and to monetize their exciting Roblox game. Or they're people who are earlier. They're kind of the future Roblox game developers. They're the people on our property mine hut where they're creating their own private realms and gameplay for their friends and growing audiences. And keep in mind on Minehut, we can have everything from a very young gamer who maybe just has 10 friends inside their game to very sophisticated Minecraft game developers who are reaching thousands and thousands of players. Now, keep in mind, too, we're not done with just those metaverse properties, right? So if anybody thinks we're just focused on Minecraft and Roblox, we're not. When I talked about that connected technology stack, the way that we can start to to drop ad units in in a highly automated way, to deliver campaigns in an automated way, to extract analytics and reporting. Those things are now a backbone that we can start adding more and more metaverse properties onto. Now, the other half of that 1.1 million creator base, about let's call it 600,000, so a little more than 50%, are those social media influencers. They are the social content creators that use our various tools, whether they have signed up for BannerFi because they want the ability to have that very seamless custom ad placement drop into their YouTube videos and as a way to monetize their gaming-centric content, or they're using Mob Crush's multicast tools so that instead of me having to do one unique live stream to Facebook and then jump on and do a second one for Twitch, I can multicast across all my social channels, my live stream gaming content, and then again participate in the ad economy, which is a way to kind of take that gaming interest and all that hard work building your audience and your audience nodes across your various social channels and start to make a bit of a livelihood off of it. So every time we add somebody who is a game maker or is streaming their game-centric content, that is an injection into the flywheel of audience growth, of compelling content growth, and really kind of enlivens the whole universe in the way that a creator can amplify our growth overall. Now, I did mention the fact that we do go downstream. If you imagine that the creator... and the creator tools is that son of the universe. Well, yes, we do have these direct-to-consumer nodes, right, where we go further downstream. Those things feed the universe, too. You know, when we're engaging with players in Minecraft, we can tell them about ways that they can start streaming their Minecraft content through Mob Crush tools. So we can bring and draw links between those players back into some of our creator offerings as well, And so there are feedback loops as well. These aren't just adjacent separate businesses. They are interconnected to the kind of primary reason that we exist.
spk03: Okay, great. I think I've asked enough questions, so I'll hop back in the queue. Again, great quarter. Great to see you. Thank you.
spk00: Thanks, Jack.
spk01: Again, if you wish to ask a question, please press star followed by one on your touchtone telephone. Again, that star followed by 1 on your touchtone telephone. Your next question comes from the line of Bill Morrison with National Securities. Your line is open.
spk02: Hi, Ann and Clayton. Congrats on the significant revenue growth and the latest deals and transactions. Just my first question, I've not heard a lot about social media influencers on your platform, Ann. Can you remind me what percentage of your users and revenues derive from social media influencers?
spk00: Well, keep in mind what I'm talking about there, Bill, is we're talking about the fact that when that streamer, let's take that live streamer who's using the suite of tools for Mob Crush, right? So they use the free set of tools for this multicasting, and then they can opt in if they want to participate in the ad model. The moment they do that, when I talk about us reaching 119 million U.S. audience a month as verified by Creator IQ, that 119 million is is for every one of those people using our Mob Crush tools or using some of our other creator tools, we get to add up the audiences, how many people follow them on Facebook or Twitch. We get to add up all their nodes and aggregate that as our audience reach. And so when we talk about creators, social media influencers, it's really the same group in that case. It's these people who are streaming content to their social media channels And in turn, by using our tools, we get to control the eyeballs and ad inventory on that distributed set of nodes of their audiences across all of their channels. So whether we call them social media creators or influencers, they're really the same thing. Now we do focus, Bill, more on what we call the mid-tier creator. So while we have very sophisticated tools and ad models that we think over time will attract those big mega-creators, We've always been about kind of entering and starting a relationship with creators when they're earlier in their journey and just starting to add to build those audience so that we can kind of grow with them as they become more and more powerful influencers. But again, all that said, the fact that if you add up the social media audiences of all of our social media creators alone that we're talking about almost 120 million Americans as an audience a month, it's material. And we would also take a point of view, which we say to advertisers and they agree, which is that that kind of real kind of stickiness, brand affinity, real community happens at that middle tier where these are audiences that really are invested in this kind of up-and-coming creator and want to follow their compelling content.
spk02: Great. Interesting. And was there a number you put on as far as percentage of inventory and ad revs for that slot?
spk00: Well, I mean, you know, look, I think the easiest way that we do try to talk about our reach is I think it's best to say we really divide our inventory into two buckets. There are things that we do, as I mentioned earlier, for that under-18 gamer. We call that our Young Gamer Network, and we pull from properties, you know, the games that we reach through Bloxbiz for Roblox with Minehut through Minecraft, our other Minecraft properties in Mineville, Pixel Paradise, plus what we would call under 18 of these social influencers and creators. So if a brand wants to reach a, call it, 14- to 16-year-old demographic, we're going to pull from all that different ad inventory and and say, here's a package for you of a really compelling full circle campaign to reach this young gaming audience. And then when we talk about the older demo, that over 18 kind of more competitive gamer, we're going to pull from our mob crush kind of influencers, which tend to be more of an 18 to 30-year-old demographic of social media influencers, creators. We'll also look at properties and offers like Super League Arena, our branded Super League social channels under frame rate, those audiences tend to overlap. And so when we're going for an older demographic, we will be pulling from those types of properties. I would put BannerFi as well for now in that kind of older gamer demographic. But here's what's great. We can start cross-fertilizing. We can start offering you know, Mob Crush and Bannerfy products to younger gamers and start to build out more kind of social reach with young gaming audiences too to package that into our young gamer campaign RFPs. So that's really the way I would think about it. And, you know, I think the point is I don't know if it's so important to split. Let's call it, you know, 60-40 young to older gamer, the split of the inventory. I think what's more important is that we're barely selling out 10%. Now, some of that you'd say, well, gosh, Ann, does that mean that you guys just aren't good at selling? No, obviously not. Look at the step change of 402% increase in revenue relative to prior year. It's because at the same time as we're doing these acquisitions and we're organically growing, our growth of our inventory is faster than we can sell it. And so we've got to work on that. And that's why selling bigger campaigns is good. That'll up our fill rates. But we're kind of almost playing catch-up right now because the overall inventory is growing so exponentially so fast in very exciting ways, which is good for the investors. It means that this picture only gets better.
spk02: Yeah, it sounds great. And along those lines, you know, the you know, big bump up in average deal size. Can you give me, like, a little more color on what the advertiser pipeline looks like, you know, like the number of different industries and the number of different logos that are now interested versus, say, six months ago?
spk00: Yeah, I mean, you know, I mentioned earlier the automotive sector is an exciting sector where we've seen a lot of growth. When I talk about CPG, I'm talking about kind of the big-name companies you'd expect, whether it's kind of talking to companies like the P&Gs of the world or the Nestles. It's about what are ways that they can start thinking about the metaverse as a way to drive people into physical conversion. You've even seen it, Bill, with fashion recently. You know, at first it looks like a gimmick when you see that a brand like Gucci, you know, high-end luxury, you know, retail brand is selling virtual Gucci fashion accessories and video games. But think about it. The first thing is, well, it's very affordable to buy a $5 Gucci cape for your digital avatar. So first you're introducing a brand that it seems very exclusive to an audience that maybe you would never reach in a game. And you're also starting not just a brand awareness journey, but a legitimate interest in that brand. So not only is it maybe a revenue stream selling digital goods that Gucci never imagined would be, even if it's small, on their P&L, but now that person who has their digital avatar wearing these products is now going to have a much higher likelihood to actually want to bring a little bit of that brand into their physical life as well, to perhaps shop online for physical goods or even walk into one of those stores. And so when I talk about digital to physical crossover, you even saw it in our Moon Jam concert that we ran this summer in Mine Hut. You know, we had GameStop in there, and there were ways that people could get educated on products, that could drive people to GameStop's website or to their physical stores to do what GameStop needs, which is to drive like-for-like sales online and in real life. And so that digital-to-physical crossover is going to be a game-changer for brands. And I'll be even more direct. I used to run a lot of brands globally for BP. And what I would love to go back and tell that former self, when I thought about digital marketing, I saw it as a compliment, as just a small subcomponent to my overall campaign spend in dollars. And I really believe that any CMO who's not thinking right now about the fact of what is my metaverse play, no matter what vertical I'm in, and how am I going to make that central? Because, see, the metaverse doesn't ever go away. You can think about all the campaigns you want to run all next year as a big brand, and you could have a living, complete expression, a home for all those campaigns all year long, and you can be building a different layer of customer interest and loyalty with it. And so those are the kinds of conversations I'm now having with CMOs across tons of verticals, Bill, because I've stood in their shoes, and this is what I wish – my former self could have seen ahead of my competitors.
spk02: And when you talk about Metaverse and your relationship with Snap, are you going to tie into their augmented reality e-commerce product, or how does that work?
spk00: You know, we already have a very healthy kind of strategic partnership with them. I do not know of any specific plans to do that just yet, but there's just really no reason. If we're supplying them content, certainly they're going to want that to integrate with the augmented reality e-commerce that they're building. So while I can't say we have an active conversation on it right now, given its work in progress, I would not be surprised that they would be taking that content that they are asking us to make for them where we do already today share a really healthy ad revenue share split when they're out promoting that content. I can't imagine we wouldn't be over time tying some of those advertisers into ways that they can click on that content and buy whether it be in stream or inside the content or in the advertising that gets overlaid on top of it. So I think the key here is our relationship with Snap and with Twitch. We're at a place where now we are doing business with them every month. So in both cases, we've become strategic partners. And so I think we're becoming a central part of continuing to be heavily integrated in their strategies going forward.
spk02: Interesting. And my last question, given the recent deals, what does the ad platform look like going forward? How many screens? How many back ends? How many sales people? What does that look like going forward?
spk00: Yeah. I mean, right now, sales is definitely, and engineering are the two largest teams in the company. And when you look at what It's now happened exponentially, not just with MobCrush, but then, you know, bringing in MobCrush came with a healthy, strong sales team. But now when you add in this fresh, new, exciting inventory with BlockVis and BannerFi, you will see us continue to grow our sales team. I think what I would, though, want to really emphasize for investors is, and I said it a couple different times in different ways in the call, is the other key is around the automation of our tech stack. As you can see, if we're selling a very small percent of our inventory, and the inventory is not static, it's continuing to grow, one of the material ways that we can continue to sell more and more of our inventory but not exponentially have to grow our sales team is through automation. And so, whether that is through campaign metatools that can create and deliver a campaign, extract real-time reporting so that we don't have human bodies putting those reports together. That's probably the thing that maybe it wasn't as obvious through just the press releases alone, but Bloxbiz and Bannerify did not just bring a new piece of ad inventory and a chunk of new creators to the platform, they brought some tech behind it. And it's exactly the kind of tech that we knew we were going to have to build for ourselves. And so we got a jump ahead on the automation curve and some pretty exciting work in the product roadmap in 4Q. So now this automation journey, it will be marching through that through a lot of next year too. So this isn't something that's an easy switch to flip But ultimately, it means that while we'll continue to grow our sales team and our efforts, we don't have to, every time we get a new chunk of that inventory, add bodies against it.
spk02: That's great. So, yeah, so I was kind of looking for like a sales efficiency. Exactly. Like going forward.
spk00: Yeah, no, we definitely right now, I mean, you know, we're seeing that our sales team is strong and performing. You know, we think best in class that, You know, every single salesperson could be, you know, at their optimal efficiency selling, you know, 2.5, 3 million of sales a year. And so we know that right now we're at about, like, call it, you know, 25%, 30% efficiency. But, again, we're still absorbing all this new inventory. The other thing is that we are also really taking a look at not just fill rate but just our overall CPMs. Now that we've got some real case studies of how our ad units are performing, we recognize we can be pushing CPMs up. And so a big piece of the work that Mike Wan, the former CEO of MobCrush, is leading for us as he leads our sales team in all of those efforts is how do we think more about yield management and how do we get the optimal amount of revenues and CPMs out of our inventory, how do we improve sales force efficiency, and the use of resellers I talked about. How do we use indirect sales as a complement, not to cannibalize our direct sales, but as a complement to make sure we don't leave any inventory on the table. You know, inventory is ultimately perishable. And so we think there's a smart way to, through the use of our sales teams, other sales teams like ScreenVision Media, and continuing to grow the health of our ad inventory. We'll continue to see margins grow. And then, again, automation plays a big piece of that, too, because it means that's more time our salespeople can be selling and not delivering campaigns.
spk02: Nice. Thanks for answering all my questions. Appreciate it.
spk01: At this time, this concludes our question and answer session. I would now like to turn the call back over to Ms. Hand for closing remarks.
spk00: Okay, well, we'd like to thank everyone for listening to today's call. Look for Super League's participation at the Masters of the Metaverse webinar on December 7th and the Wolf Research Conference on December 14th. And we look forward to speaking with you again when we report our fourth quarter and full year results in March. And with that, we wish you guys a great evening. Take care.
spk01: Ladies and gentlemen, this does conclude today's teleconference. You may now disconnect your lines at this time. Thank you for your participation.
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