Super League Gaming, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Super League Gaming's financial results for the fourth quarter and full year ended December 31, 2021. 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 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 that does not reflect historical fact, 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 risks and uncertainties that could cause actual research to differ. I would like to remind everyone that this call will be available for replay through 8 p.m. Eastern Time on March 21, 2022, 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 Han. Anne?

Good afternoon, everyone, and thank you all for joining us today. We have a lot of great news to report, so let's dive in. First, I would like to run a humble victory lap for Super League's top-line ramp. We delivered $6.2 million of revenue in Q4, another record-breaking quarter. And we could run a second lap to celebrate the leading position we have built in metaverse gaming. Not just our reach, but also the richness of our products and offers for our gaming creators, the brands we court, and the players themselves, the ultimate beneficiary of all we do. 2021 was a transformative year for Super League. We don't look like the same company we did a year ago due to the integrations of Mobcrush, Bannerfy, and more recently, Bloxbiz. And when you look back on our history, well, we've come a long way. In the earliest of days, we started with young gamers focusing on youth esports. And then we got smarter, and we went to where the young gamers are because they're gaming in the metaverse. Two-thirds of all U.S. kids between the ages of 9 and 12 play Roblox games, and that is just one segment of our gaming audience. And this is nothing new. Metaverse gaming has been around for over a decade, and we've been in the Metaverse for eight of those years. This is where we live. What makes Metaverse gaming so powerful, so all-consuming? Well, it speaks to the next generation's thirst for more than just competition. It provides community and also creation with infinite possibilities. They want to make the game, change the game, and play the game, and be entertained by content related to the game because those content creators are their people. And as we've discussed on prior calls, this digital playground is a rich landscape for commerce as well, driving digital to physical crossover and consumption. Gen Z lives a fidgetal life. They do not distinguish between physical and digital worlds, but instead move fluidly between the two in their daily existence. and they want their full life expressed in both worlds, which means they want the brands they feel an affinity to to be present, to be associated with their digital and physical personas. A brand strategy for the metaverse is not optional, not just a line item on a marketing budget. It's a strategic imperative for customer acquisition, retention, and deepening loyalty. Now, I'm sure for some of you, when we speak about metaverse games and our business model, it might sound a bit foreign, ambiguous. So let me use a bit of a metaphor to describe how it works, why what we do is special and differentiated. Imagine that Super League operates a large game world or planet, and there are other game worlds out there made by our talented creators. And together we make for a vibrant, connected network that can shuttle players back and forth. Now imagine there are additional nodes surrounding our game worlds, a content network. This is where our audience lives. viewers who we can transport by the millions into our game worlds to generate new content that flows back out to feed the greater ecosystem, becoming self-sustaining as it scales, a large, dynamic metaverse network of game worlds and content. So who are these gaming world creators inside of our network? We have said before that the metaverse is the next generation of social media. And just like social media spawned a whole new class of content creators on platforms like TikTok and YouTube, with self-made influencers rivaling the biggest media companies in the world, the metaverse has its own emerging stars, creative pioneers who command an outsized portion of consumer attention, who inspire engagement that drives the proliferation of self-produced content and the building of valuable IP. So just like there was a democratization of content creation unleashed by social media, metaverse or open-world gaming platforms have democratized game design. And what about brands? How do they come into play in these worlds? Well, we can provide immersive brand campaigns by transporting them into our existing game worlds or creating new game worlds for them, and we can deliver the media reach and relevant content to fuel their brand objectives. So let's come back up high again. We have a galaxy of gaming fanatics, supercharged by our talented gaming world creators, enhanced by vibrant branded experiences, and amplified by our omni-media content bullhorn, creating a true network effect because we control the network. Our gaming fans generating close to 12 billion annual views, fueled by the 75 million monthly active players we reach in our game world network. The stats are evident. Super League is a rocket ship to the metaverse. So with that, let's turn to some financial highlights and additional business context. First, we announced our preliminary revenue results in February, and as you saw in our earnings release this afternoon, we surpassed both our Q4 and full-year 2021 revenue estimates, setting new records for quarterly and annual revenue. As mentioned, Q4 revenue was $6.2 million, up 695% year over year, and full-year 2021 revenue was $11.7 million, up 465% year over year. Our three primary revenue streams each increased significantly. In particular, advertising and sponsorship revenue in 2021 increased 584% over 2020 and made up 69% of total company revenue. In Q4, advertising and sponsorship made up to 76% of total revenue, up from 45% of revenues in the prior year quarter. Gross margin for full year 2021 was 44%. Gross margin for Q4 was 45%, a seven-point increase over Q3 2021. I had mentioned in our last earnings call that we saw a temporary dip in margins as we were absorbing the new inventory from our acquisitions, and we would work to level set those CPMs and further optimize our inventory. As you can see, we are doing good work to walk those margins back up. We had 14.5 million of cash on hand as of December 31st, 2021, while still investing in our technology and key acquisitions in the back half of the year. And our balance sheet remains clean with no debt. Now for some additional business context, along with the overall health of our advertising side of our business and what it means for our 2022 revenue expectations. So let's talk about our team and our products, what we have and what we offer. First and foremost, our acquisitions brought in talent, fantastic sales and partnership leaders with hustle and enthusiasm for our innovative ad products. Close to 30% of our team is now revenue-facing, a best-in-class industry benchmark. And we've deepened our product and engineering bench with very specific expertise in metaverse game design, ad tech, creator tool development, and data and analytics. We are one of the only companies operating at scale in Minehut and Roblox, with ambitions to port our products and know-how into other metaverse gaming platforms. So first, let's talk about our consumer reach. We have a library of dozens of our own Minecraft game engines that we can leverage across our Minehut, Mineville, and Pixel Paradise properties. In addition, through our game creator partnerships, we have access to 150 popular vetted Roblox game worlds, and that number keeps growing. And there's content. From live gameplay and entertainment broadcast to on-demand clips for social distribution and influencer partnerships, we have the ability to reach gaming audiences in the hundreds of millions through the combination of our own and our creators' social media reach. And embedded in these consumer properties are a variety of innovative ad products, developer tools, and analytics, as we've mentioned, as well as our technology to support content production and broadcasting and feed our content network and support a brand's campaign objectives. We offer a suite of metaverse gaming and content products from custom metaverse integrations, inside existing games, or the creation of new bespoke worlds, supported by dynamic in-game ad units and custom content to drive amplification. Imagine an immersive world of all things Spider-Man, or perhaps you bump into a minion while you're playing a Roblox game that you love, and you're able to strike up a conversation. or be attracted to an entertaining SpongeBob meme on a digital billboard that provides advertisers with a 10-second impression. These are the kinds of innovative ad products we have and why we are so unique, why we command top dollar CPMs. Now adding content, perhaps a live stream of the Spider-Man gameplay world to support, along with custom web and social content. And now we've delivered a true end-to-end metaverse solution for advertisers. This is becoming the shape of most of our deals. Brands want the whole package, which is why our deal sizes are growing. A recent example is MTB. We created their hit rap battle game show called Wild and Out in Minecraft and attracted over 6 million visits to the game, along with 375,000 views of the live broadcast. And we do more for their family paramount. We work with Nickelodeon, MTV, and others. But we don't stop there for advertisers and how we are different better. We layer performance management on top of those innovative ad products. Our advanced metaverse tools and analytics offer a deeper cut on geographic, gender, and device audience breakdowns. Valuable insights not just for the brands engaging in our platform, but for the game creators as well to improve their player experience and engagement. A couple decades ago, the Internet offered the hope of a holy grail for advertisers. But in many ways, it fell short from a targeting and measurement point of view. And it created tension and animosity with the consumer, a feeling they were being interrupted, shouted at. The metaverse has an opportunity to solve for that, integrating brands in authentic ways, giving them a way to create a conversation, a two-way street with the audiences they seek, supported with targeted measurement for those for which the internet could not deliver. In my view, Super League is on the cutting edge of this. And there's another critical component, safety and compliance. We are not only one of the most capable firms to jettison brands into the metaverse, but we also offer a safer path. Super League's trusted brand-safe and COPA-compliant inventory is one of the very few certified by the trusted Kids Safe SEAL program. Recently, Robert Gay, the CEO of Vinatis, one of our global reseller sales partners, was quoted in Digiday stating that when Hasbro comes to him, and he has spoken to them specifically about activations and roadblocks. He can assure them that Super League inventory is safe. That's quite the testimony. So as you can see, this offer to brands has grown. We can offer premium engagement with their targeted audiences in a safe, trusted, and measurable way through deep, multifaceted campaigns, leading to growth in the size and scope of our ad deals and attracting a larger share of advertisers' wallets. So that's a good segue to the health of our advertising and sponsorship business, from which the bulk of our revenues are derived, and where we continue to see strong growth as evidenced in our Q4 performance. Our pipeline's growing, and we already are seeing good visibility into Q2 and Q3. Our average one deal size is now north of 100,000, but more importantly, we have over 20 deals under pursuit at 250,000 or higher. and even some seven-figure opportunities in the pipeline, while still upholding our premium in-game CPMs in the $10 to $25 range. And we're winning deals with a growing, diverse cross-section of Tier 1 advertisers, from entertainment, automotive, CPG, electronics, toys, and fashion, to name several verticals. Brands like Disney, Paramount, Netflix, Hyundai, General Mills, Samsung, Mattel, Nike, and more are our current customers. Finally, another proof point on the health of our ad model. Our repeat percentages stay strong at 70%. The advertisers are coming back for more. Yet we have a positive type of challenge on our hands. Our valuable inventory is expanding fast, and it is coveted and different. So the question we wrestle with is how we can get it in front of more advertisers faster. We spoke on the last call about the opportunity to forge strategic partnerships to create a global reseller network to augment our direct Salesforce efforts. We have grown a bench of eight partners in just a few short months. Companies like Venatus, a global agency focused on gaming entertainment, which I referenced earlier, to bring our inventory into the campaigns they're delivering for brands. These partners have breadth and depth across all the big verticals you would expect, along with global geographic coverage. to speed up the awareness for our innovative ad products. And the structure of these partnerships preserve our premium CPMs and nice margin profile. Finally, and I will add, while growing our top-line revenue is still our top priority in this rapid growth phase, I want to ensure investors we are thinking about the bottom line as well. Through strong revenue growth, margin delivery, and a strategy for judiciously controlling cost, We intend to narrow our operating losses. While still early in the year, we were off to a good start with a strong pipeline and backlog, as mentioned. We believe Q2 will be stronger than Q1, and we see rapid value kicking in in the second half of the year when seasonal advertising starts to spend. Coupled with our continued ramp and our sales capability and reach, we predict another big year for Super League. targeting 2022 annual revenue in the range of $20 million to $22 million. At this point, I will turn the call over to our CFO, Clayton Haynes, who will review our fourth quarter and full-year financial results, after which I'll come back with some closing remarks. Clayton?

Thank you, Anne, and good afternoon, everyone. I would also like to express how pleased we are with the record financial results we delivered in Q4 in full year 2021 and the trajectory of our future growth. We continue to generate synergies from the properties we acquired in 2021 as we further expand our reach into the metaverse and empower creators to create, distribute, and monetize their content. First, I would like to provide a summary and analysis of our Q4 2021 2021 results and financial position, then a high-level summary of the accounting impact of our M&A activities in Q4 2021, and then lastly, a summary of our full-year 2021 results. As summarized in our earnings release filed this afternoon, fourth quarter 2021 revenues were a record $6.2 million compared to $779,000 for the fourth quarter of 2020. The 695% 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. Fourth quarter 2021 advertising and sponsorship revenues, which include direct sales advertising and brand sponsorships, as well as programmatic display and video advertising revenues, increased $4.4 million, to 4.7 million for the fourth quarter of 2021, up from 351,000 in the fourth quarter of 2020, and comprised approximately 76% of revenues for the fourth quarter of 2021, as compared to 45% of revenues in the fourth quarter of 2020. The increase in advertising and sponsorship revenues primarily reflects a 154% increase in the number of revenue-generating advertisers and a 429% increase in revenue per advertiser, reflecting in part the impact of our 2021 acquisitions on quarterly advertising direct sales revenues, as well as organic growth revenue, organic revenue growth across all of the components of our advertising and sponsorship revenue category. Content-related revenues increased 172% over the prior year quarter to $991,000, up from $364,000 in the fourth quarter of 2020, and accounted for approximately 16% of revenue for the fourth quarter of 2021, compared to approximately 47% of revenues in the prior year quarter. Content sales revenue is generated in connection with our curation and distribution of e-sports and entertainment content for our own network of digital channels and our media and entertainment partner channels. This includes the syndication and 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 strong component of revenue in the second half of 2020, partly in response to some of the challenges presented by the COVID-19 pandemic. The increase in content revenues for the fourth quarter of 2021 was driven by an approximately 500% increase in our live stream, remote production, broadcast, and gameplay-related content sales in the fourth quarter of 2021, reflecting a 100% increase in related customers and a 206% increase in revenue per customer. Direct-to-consumer revenues, which consists of sales of digital goods and subscriptions across our owned and operated Minehut digital property and our Mineville and Pixel Paradise official Minecraft servers in partnership with Microsoft, rose 645% to $477,000 compared to $64,000 in the comparable prior year quarter. and accounted for approximately 8% of revenues for the fourth quarter of 2021 and fourth quarter of 2020. Fourth quarter 2021 cost of revenues were 3.4 million compared to 296,000 in the comparable prior year quarter. The increase was driven primarily by the strong increase in related top line revenues in the fourth quarter of 2021, as well as the impact of a lower margin on MobCrush related ad products. As a result of our 2021 M&A activities that we have described today and on prior earnings calls, our advertising inventory has increased fivefold as compared to the prior year periods in the first half of 2021. Our sales and product teams have been and continue to absorb and optimize this significant increase in premium, high-quality advertising inventory from the detailed review of rate card pricing for our increasing array of high-quality ad products to further technology automation and other cost factors that we believe will provide strong opportunities for us to drive up margins across our ad inventory in future periods. As we have previously noted, 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 advertising and content sales activities that occur in each period. Fourth quarter 2021 operating expenses were $9.9 million compared to $5.2 million in the comparable prior year quarter. Non-cash stock compensation charges included in operating expenses for the fourth quarter of 2021 were $772,000 compared to $434,000 in the comparable prior year quarter. Operating expenses for the fourth quarter of 2021 also included significant non-cash intangible asset amortization charges, primarily resulting from the application of acquisition accounting for our 2021 M&A related activities. Total non-cash amortization charges included in operating expenses for the fourth quarter of 2021 were $1.3 million compared to $246,000 in the fourth quarter of 2020. Fourth quarter 2021 sales, marketing, and advertising expense increased over the comparable prior year quarter, primarily reflecting an increase in personnel costs in connection with the acquisition of MobCrush and the strong 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 monetizations. 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 acquisitions of Mod Crush and Bloxbiz, totaling $525,000, and an increase in digital marketing expenses, which will lower in the fourth quarter of 2020 due to the continued impact of the COVID-19 pandemic in the prior year quarter. Fourth quarter 2021 engineering, technology, and development expenses increased relative to the prior year comparable quarter, primarily due to an increase in engineering personnel in connection with the acquisition of MobCrush, and an increase in cloud services and platform infrastructure costs totaling 1.1 million, reflecting the impact of the surge in engagement across our digital properties beginning in 2020 and continuing into 2021, as well as incremental costs related to our 2021 acquisitions. The increase in engineering, technology, and development expenses also included the amortization of developed technology-related intangible assets acquired in connection with the acquisitions of ModPrush, BannerFi, and BloxViz, totaling $337,000. The increase in general and administrative expenses in the fourth quarter of 2021 was primarily due to a slight increase in personnel costs and related stock-based compensation compared to the fourth quarter of 2020, totaling $268,000, and increased professional fees, including legal, audit, and advisory service-related costs related to our 2021 acquisitions. The change also reflects non-cash trademark influencer and developer-related intangible asset amortization charges related to intangible assets acquired in connection with the ModFresh and Blocksbiz acquisitions, totaling $163,000. On a GAAP basis, which includes the impact of non-cash charges and credits, net loss in the fourth quarter of 2021 was 7.1 million, or 19 cents per share, compared to a net loss of 4.7 million, or 31 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 fourth quarter of 2021 was 5.1 million, or 14 cents per share, compared to 4.1 million or 26 cents per share in the comparable prior year quarter. The change primarily reflects the significant increase in top line revenues and gross profit and the expense related relationships and fluctuations described earlier. The weighted average diluted share count for the fourth quarter of 2021 was 36.7 million shares compared to 15.5 million for the fourth quarter of 2020. The weighted average diluted share count for the fourth quarter of 2021 reflects the impact of the issuance of a total of 13.5 million shares of our common stock in connection with the combined acquisitions of MobCrush, Vanify, and BloxBiz in 2021. As disclosed in our earnings release in 8K Files 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 December 31, 2021, we reported $14.5 million in cash, $16.1 million in working capital, no debt, and total shareholders' equity of $90.7 million. The change in cash balances in the fourth quarter of 2021 included 3 million of cash consideration paid in connection with our acquisition of Blocksbiz in October 2021. The initial consideration also included 1,030,000 shares of common stock for total initial consideration of 6 million. Consistent with our outlook discussed during our Q3 2021 earnings call, Our current monthly net cash burn rate is expected to be in the $1.5 million to $1.7 million range as we continue to focus on and control costs in connection with the integration of our 2021 acquisitions. Next, I wanted to provide some information regarding the Q4 2021 balance sheet impact of our October 2021 acquisition of BlocksBiz. We discussed the impact of the accounting for the Mobcrush and Bannerfly acquisitions on our financial statements on our Q2 and Q3 earnings calls, so my comments today will address our accounting for the BlocksBiz transaction. As previously reported, we closed the BlocksBiz transaction on October 4th, 2021. Our results released today include the results of operations for BlocksBiz from the closing date to December 31, 2021. As summarized earlier, the initial closing consideration for the blocks-based transaction totaled $6 million, comprised of $3 million in cash and $3 million in common stock, with the remaining consideration, up to $11.5 million, being subject to an earn-out based on the achievement of future revenue targets in fiscal year 2022 and fiscal year 2023. The balance sheet impact of the blocks-based acquisition as of December 31, 2021, was comprised primarily of the capitalization of developed technology, developer relationships, and customer relationship-related intangible assets acquired, totaling approximately $1.7 million. The block space transaction was structured as an asset purchase. However, under the applicable accounting guidance, it was required to be accounted for as the acquisition of a business. Accordingly, we recorded approximately $4.1 million of goodwill in connection with applying the acquisition method of accounting to the block space transaction. Next, I would like to provide a summary of our full year 2021 operating results. Fiscal 2021 revenues were a record 11.7 million compared to 2.1 million in fiscal year 2020, reflecting a 9.6 million or 466% increase in year-over-year revenues. Similar to the fourth quarter trend described earlier, the increase in revenues was driven by strong increases on an annual basis in each of our three primary revenue streams. Fiscal 2021 advertising and sponsorship revenues increased $6.8 million, or 584%, totaling $8 million for fiscal 2021, up from $1.2 million in fiscal 2020, and comprised approximately 69% of revenues for fiscal 2021 as compared to 57% of revenues in fiscal 2020. The increase in advertising and sponsorship revenues primarily reflects a 95% increase in our direct sales advertising revenue generating advertisers, and a 250% increase in revenue per advertiser, reflecting in part the impact of our 2021 acquisitions, as well as organic revenue growth across each of the components of our advertising and sponsorship revenue category. The increase also reflects a 111% increase in programmatic display in video advertising revenues, primarily within our Minecraft digital property, Minehut. Content-related revenues in fiscal 2021 increased 1.5 million, or 208% year-over-year, to 2.3 million, accounting for approximately 19% of revenues in fiscal 2021, compared to approximately 36% of revenues in fiscal 2020. The increase in content revenues for fiscal 2021 was driven by a 481% increase in our live stream, remote production, broadcast, and gameplay-related content sales during fiscal 2021, reflecting a 90% increase in the number of related customers and a 206% increase in revenue per customer for fiscal 2021 compared to fiscal 2020. Direct-to-consumer revenues in fiscal 2021 increased 1.2 million or 782% year-over-year to 1.4 million compared to 159,000 in fiscal 2021. Direct-to-consumer revenues accounted for approximately 12% of company revenues in fiscal 2021 compared to approximately 8% of revenues in the prior fiscal year. The increase in direct-to-consumer revenues primarily reflects the impact of Mineville and Pixel Paradise digital goods sales revenues for the stub period since the acquisition of Mock Crush, totaling approximately $1 million, along with organic growth of subscription revenues from our Minehut platform. Fiscal 2021 cost of revenues were $6.5 million compared to $856,000 in the prior fiscal year. The increase was primarily driven by this significant increase in related revenues in fiscal 2021. The greater than proportionate increase in cost of revenues in fiscal 2021 was primarily due to the inclusion of seven months of mob crush related direct sales advertising revenues, which have higher direct cost profiles. While we continue to demonstrate a strong margin profile during fiscal 2021, as noted earlier in today's call, our sales and product teams have continued to absorb and optimize the significant increase in premium, high-quality advertising inventory driven by our 2021 acquisition and other organic activities, including the detailed review of rate card pricing for ad products, further technology automation, and other cost factors that we believe will provide strong opportunities for us to drive up margins across our ad inventory in future periods. Fiscal 2021 operating expenses were $30.2 million compared to $20 million in fiscal 2020. Selling, marketing, and advertising expenses increased 76% year-over-year due primarily to an increase in personnel costs associated with the acquisition of MobCrush and the integration of the related direct sales force acquired and net organic increases in marketing full-time employees focused on monetization. The increase in selling, marketing, and advertising expense also included the amortization of partner, customer, and advertiser-related intangible assets acquired in connection with our fiscal 2021 acquisitions, totaling 1.2 million. Engineering, technology, and development expenses increased 63% year-over-year due to an increase in cloud services and other technology platform costs, totaling 2.7 million. which reflected the surge in engagement across our digital properties and the impact of incremental cloud platform costs related to our 2021 acquisitions. The increase in engineering technology and development expenses also reflects non-cash amortization of developed technology-related intangible assets acquired, totaling $631,000, and an increase in product and engineering personnel in connection with our 2021 acquisitions. General and administrative expenses increased 23% year-over-year, primarily due to increased legal, tax, valuation, and other professional fees incurring connection with our 2021 acquisitions, as well as an increase in amortization of intangible assets acquired, totaling $318,000. The increase in G&A expense also included an increase in stock-based compensation in connection with our board-approved compensation and retention programs. Non-cash stock compensation charges for fiscal 2021 increased to $2.4 million as compared to $2 million in fiscal 2020. On a GAAP basis, which includes the impact of non-cash charges and credits, net loss in fiscal 2021 was $20.7 million or 69 cents per share compared to a net loss of $18.7 million or $1.64 per share in fiscal 2020. Excluding non-cash stock compensation charges and non-cash amortization of intangibles, our pro forma net loss for fiscal 2021 was $19.5 million, or $0.65 per share, compared to pro forma net loss of $15.1 million, or $1.32 per share, in fiscal 2020. The year-over-year change primarily reflects the increase in top-line revenues and gross profit in the year-over-year expense-related relationships and fluctuations described earlier. This concludes our summary of the financial results for the fourth quarter and full year 2021. Again, thank you for joining us today, and I look forward to being with you all for our Q1 2022 earnings call in May. With that, I will turn the call back over to Ann for some additional remarks. Ann?

Thanks, Clayton. So to summarize, 2021 was a game-changing year for Super League. We continued to deepen our reach in metaverse gaming and our overall offer, Empowering Gaming Creators. We acquire companies that truly move the needle for us, significantly expanding our ad inventory and building up our world-class team, augmenting our ad tech stack, adding more heft to our product offerings, and enhancing an advanced analytics suite. In short, we are making terrific progress in our business and excited about our 2022 strategy and plan. To close, I'll circle back to the universe metaphor I used in explaining our metaverse network game worlds, and content. We have achieved this by being pioneers, by igniting connections with creators, brands, and players. This isn't an idea or a concept. This is real. It's established. And we have the capability to create it for others because we have and will continue to operate and grow it for ourselves. The headline? We live where we play. With that, Clayton and I will now take your questions. Operator?

Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. And our first question will come from the line of Scott Beck of H.C. Hainwright. Your line is now open. You may ask your question.

Hi. Good afternoon, Anne and Clayton. Thank you for taking my questions. First, Ann, I was wondering, on advertising revenue in the fourth quarter, a really nice step up there. Is there a way to kind of disaggregate what is just, you know, seasonal benefit to the quarter versus, you know, more kind of underlying trends?

Yeah, I think that obviously, as we know, 4Q is always going to be the biggest quarter because of that seasonal spend, Scott. But I would say that why I take comfort that this trend line is something that's carrying through into this new year is if you look at right now our estimates for Q1 relative to prior year, they're stronger. If you look at right now what visibility we have into Q2 for this year, it's stronger than prior year. And we even have some decent visibility into Q3, which we think will be better. So while you're still going to see that seasonal shape, I expect that all of our quarterly performances are going to continue to beat kind of same period prior year. And then as I mentioned on the call, you know, other things that tell us a lot about health is average deal size. You know, it's becoming increasingly rare that we're going back to advertisers pitching five-figure deals. Six-figure deals are now becoming almost the norm. And the fact that we have a handful of seven-figure deals I think is really telling. Those were things we couldn't even imagine a year ago. You know, we even had situations recently where we had an advertiser say, great, appreciate the 750K proposal, but what could you do with 1.2 million? So, you know, those are the way the nature of the conversations have changed. And then, of course, I'll point back to as well the 70% repeat number. You know, when you listen to those tier one advertisers that are spending money with us, the fact that we still continue to see repeat, you know, quarter on quarter in the 65, 70, north of 70% range, I think really establishes that we're becoming known to the brand and the agencies that we work with and that we are giving them something that's unique and something that's really performing well. So in those respects, I think that we can only assume that, you know, what happened in Q4 for 2021 is obviously has that extra like seasonal boost to it, but the continued ramp we're going to see in like quarters across all of our four quarters I think we will expect.

Great, that's some really good color. And on gross margin, again, kind of nice step back up this quarter from third quarter lows. You know, I know the expectation is to continue to walk that up, but, you know, maybe in terms of a longer, medium or long-term range, can we get that back to where we were in 2020 in that kind of, you know, mid to high 50% range?

Yeah, we've always talked consistently about targeting kind of 50%. I would say, though, that I think that we have a window here. We have such unique inventory, and the reality is there is so much more ad dollars being put to work out there, and we just can't get to these brands and advertisers fast enough. So I will say this. I'm happy that we were able to walk the margins back up. The team did a lot of hard work on that to really understand, you know, we're outperforming for advertisers. So in some cases, we just had natural opportunities to just increase our rate card and really get what these ad units are worth. But I would say as well, if I cared about something more than anything, I just want more people being introduced to our inventory. And if that means that there are opportunities to kind of get out in front of brands and let them sample our inventory and taste it a little bit at a lower margin – I'd be willing to do that because I think that when you look at the amount of inventory we have available, just if it stayed static, which it's not, right? But if it was just static and you took a snapshot of it today and we were selling the majority of it out, we're talking about not a, in this case, you know, what I'm projecting to be a $20 million to $22 million revenue year. You're talking about a $200 million revenue year. And so what I want to be careful of on margin is we are very focused on improving the bottom line performance of the company, but I definitely don't want to be as well kind of short-sighted because I still think top line is job number one.

Great. I think that makes a ton of sense. And then last one for me, just curious about employee retention and the hiring environment. Having spoken to some other companies this quarter, it sounds like the hiring environment especially for engineers, is awfully tough. So, you know, just kind of curious what your experience has been there.

Yeah, no, that's a great question. You know, I've actually been pleasantly surprised. You know, we just yesterday was the two-year anniversary of Super League becoming a remote-first company. And when you look at the quality of the talent that we have across the board, and especially in our product and engineering teams, We've taken a giant leap from where we were two, three years ago. And we have had kind of little to no churn. And I've talked to other kind of CMOs at big brand names that you all know and love, and we've talked about why is that happening for Super League. And I think a lot of it is the trust and appreciation and flexibility we've given to our staff. Because we're remote first, we no longer are just focused on finding the best talent local to the L.A. market. What we found for the amount of employees that we have that have either we've hired from out of state or we've allowed to move out of state, that they are just, if not more, productive and that we're able to get our business done faster, smarter, better. And so I think that we've created a little bit more of a – a positive two-way street with our employees. And I think that it's actually made our retention stronger in a pandemic world. And we're not going to go back, right? This formula is working for us. And so we're going to continue to be remote first. And again, the key word here is a lot of just trust and respect to hire good people and kind of get out of the way and let them do the job they were hired to do and do it well.

Great, that's helpful. And thank you again, guys, for the time, and congrats on the quarter.

Thank you.

Thank you. Again, if anyone would like to ask a question, you may press star 1 on your telephone keypad. We have the next question comes from the line of Jack Vander Aard of Maxim Group. Your line is now open. You may ask your question.

Great. Hi, Anne. Hi, Clayton. Congrats on the solved results and exceptional guidance outlook. Thanks for taking my questions. So a lot of my questions have been already touched on by the first speaker, but maybe a question on Blockbiz and Roblox. I believe Blockbiz reached over 60 million active users or so in the month of October. And with Blockbiz, I think Super League's portfolio included more than 75 Roblox game titles. Just wondering, do you have an updated count on BloxBiz monthly users and maybe number of Roblox games in the portfolio?

Yeah, so it's about 150 Roblox games and growing. And when we talk about that 75 million monthly players that we are able to reach in metaverse gaming, close to 65 million or more roughly are coming through Roblox. and the remainder through Minecraft. And in Minecraft, the reach we have is twofold. We have our owned and operated property, MineHut, which has over 5 million registered users. And then we also, by extension, reach, we operate two servers on behalf of Microsoft inside Minecraft. That's Mineville and Pixel Paradise. So by extension, we're reaching Minecraft's additional audiences there, but we are not rolling those into our numbers.

Got it. That's very helpful. That's great to hear, too. Maybe a question on average deal size on some of the larger deals in the pipeline. It's nice to see the scale quickly picking up. So these seven-figure size opportunities, and only if you're comfortable providing more color on this, but are these from existing customers that maybe started small? Are they new customers altogether, maybe a mix of both? Just need some more color on the source of those seven-figure deals.

Yeah, absolutely. They're a little bit of both. I'm thinking right now, top of mind, that there's two that have been brands and advertisers we've done business with, you know, one about two years ago, one pretty consistently over the last four or five years. It's just that we can offer so much more. And then in some cases it's new brands who are saying, hey, I want to get into the metaverse. and I kind of trust you guys to do it because you're not just an outside consultant. You actually operate in the metaverse, and you've proven what you can do for yourselves, so I want you to do it for us. In both of those cases, though, Jack, they're really beautiful, rich, multifaceted deals, as I mentioned a little bit in today's call. They're people who are first saying, advise me. I'm trying to make sense of this as a brand. Then they're asking us to either build the metaverse game for them and operate it or to find one of our great talented creators that's already a part of our network to help do that for them. They're then asking us to continue to make that metaverse game experience vibrant and then to augment it with you know, rich social media, live stream or video on demand content, things that then can live for the brand on their social channels and reach and start to kind of create more of like a 360 marketing campaign for them. The other thing with some of these larger deals is they kind of can be temporal. It can be. It's a two-, three-month program for call it north of a million dollars. Or they are deals where they're saying, no, I want you to create a persistent metaverse world. I don't want it to turn on and off. I want it to live. You imagine, I'll pick a name like Barbie. Barbie shouldn't just be plastic. She should live digitally. She shouldn't just be a one-time movie or streaming program. She should have a place where people who are real Barbie enthusiasts can live in their metaverse world and engage 24-7 with Barbie. That's just one example of what I mean when I say creating persistent worlds that remain and are constantly ways to keep that deep kind of loyalty and engagement going with enthusiasts who love these various brands or their kind of characters or products. You know, I mentioned earlier that Nike has advertised in our platform. You know, you see as well in the news that Nike went out and created a metaverse world for themselves. We're able to go to brands and say, we can do it all. And again, we can do it all because not only have we done it for ourselves, but you can imagine if you go out and just create a metaverse world, you still aren't going to be sure people will go to it. The power of this network of game worlds and content is that we can drive people to it. So what we can say to a brand is we can build it, we can run it, but we can also guarantee you're going to get great engagement because we're going to leverage the massive network we've built behind it to make that, whether it's a temporal or a long-standing campaign or brand experience, we can sustain it and keep it vibrant and healthy and and engage. So that's what we can do really differently that others who are pretending to say that they can represent brands in the metaverse, they can only do small pieces, but they can't guarantee that type of vibrancy engagement. You know, I would say we're second only to the people who make the games of Roblox and Minecraft themselves in what we can offer to brands.

Great. I appreciate the added color. That's it for me. Again, congrats on the solid results and outlook. Thanks.

Thank you. 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.

Thank you, Mel. Well, we'd like to thank everybody for listening to today's call. Clayton and I will be at the Roth Conference tomorrow. We'll be holding a fireside chat presentation at Maxim's Virtual Growth Conference on March 30th and another fireside chat with Mike Crawford and Bea Riley on April 4th for their eSports Investor Day. We look forward to speaking with you again when we report our first quarter results in May and wish you all a lovely evening.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.