Super League Enterprise(SLE) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2023, the company recorded revenues of $3.3 million, which is down compared to the previous year but up 17% on a normalized basis due to prior year adjustments [32][34] - The company successfully completed a $23.8 million capital raise, which included $9.9 million after the end of Q1, allowing for debt extinguishment and M&A earn-out payments [5][58] - The gross margin goal is projected to be in the high 50s to low 60s, supported by the acquisition of Melon and the introduction of innovative products [67] Business Line Data and Key Metrics Changes - The reseller or global sales network contributed close to 15% of total annual revenue in 2022, with $3 million of the $20 million revenue coming from these partners [2][10] - The company has a strong pipeline with 42 six-figure deals, including 17 deals over $500,000 and six over $1 million, indicating a robust sales environment [61] Market Data and Key Metrics Changes - The company serves over 100 brands, with seven customers spending more than $1 million through its platform in 2022 [14] - Gen Z spends over seven hours a week in immersive spaces, surpassing five hours on social media, highlighting a shift in digital interaction preferences [60] Company Strategy and Development Direction - The company is focused on building a premier publishing and monetization engine for the immersive web, moving beyond traditional gaming platforms [38][67] - The acquisition of Melon is seen as a strategic move to enhance the company's capabilities in immersive experiences and improve margins [4][41] - The company aims to diversify revenue streams, moving towards high-margin direct-to-consumer models and reducing dependency on traditional advertising [20][67] Management's Comments on Operating Environment and Future Outlook - Management noted that Q1 was softer than expected due to market headwinds, but Q2 shows strong signs of recovery with advertisers returning [58][12] - The company is optimistic about achieving its $100 million revenue target in three years, supported by a strong pipeline and improved sales force effectiveness [36][67] - Management emphasized the importance of adapting to the changing digital landscape, where immersive experiences are becoming essential for brand marketing [31][60] Other Important Information - The company has cut approximately 35% of its operating expenses on an annualized run rate while continuing to invest in high-growth revenue areas [42] - The company is actively recruiting to expand its sales team, with a focus on optimizing the performance of new hires [22][43] Q&A Session Summary Question: What to expect for the second quarter directionally? - Management expressed confidence in Q2 performance, citing a strong pipeline of deals and a shift in advertiser interest towards immersive experiences [23][24] Question: How does the company measure its pipeline and deal visibility? - The pipeline is measured based on deal size and probability, with larger deals providing visibility further out, especially with annual contracts [25][51] Question: What is the current status of the sales team and their performance? - The company currently has seven direct sellers, with top performers generating significant revenue, and plans to optimize and expand this team [68][69]