Super League Enterprise(SLE) - 2020 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - First quarter 2020 revenues were $243,000, down from $249,000 in the first quarter of 2019, reflecting the impact of COVID-19 on advertising spending [41] - Cost of revenue increased 58% to $117,000 compared to $74,000 in the prior year quarter, driven by a higher number of live events [44] - Operating expenses decreased to $5.3 million from $6.3 million in the prior year quarter, primarily due to a reduction in non-cash stock compensation expenses [46] Business Line Data and Key Metrics Changes - Sponsorship and advertising revenues comprised approximately 94% of revenues for Q1 2020, down from 96% in Q1 2019 [42] - Direct-to-consumer revenues, including subscription and digital goods, are being emphasized to increase monetization [43] - The company launched micro transaction marketplaces, generating record high days of $1,500 in revenue from paying players [24] Market Data and Key Metrics Changes - Registered users reached 1.6 million, up over 60% year-to-date, with engagement hours at 16 million, surpassing the full year of 2019 [16] - Viewer impressions totaled 225 million in the first four months of 2020, compared to 120 million for all of 2019 [16] Company Strategy and Development Direction - The company is focusing on increasing direct-to-consumer monetization and expanding its advertising inventory [20][43] - There is a strategic emphasis on building partnerships and alliances to capitalize on the growing power of the platform [61] - The company aims to leverage its proprietary technology for content production and distribution beyond esports into traditional sports [37] Management's Comments on Operating Environment and Future Outlook - Management noted that gaming has proven to be recession resilient and is experiencing accelerated growth due to COVID-19 [5][15] - The company is optimistic about its ability to monetize gamers through direct-to-consumer offers and micro transactions [37] - Management expressed confidence in the company's position to capitalize on the current content void left by COVID-19 [33] Other Important Information - The company secured over $6 million in new equity capital to fund growth and maintain a clean balance sheet with no debt [8][9] - As of March 31, 2020, the company had $4.8 million in cash and a current monthly net cash burn rate of $1.1 to $1.2 million [53] Q&A Session Summary Question: Update on Wanda Cinema Games partnership in China - Management confirmed ongoing weekly meetings with partners in China, with excitement about market planning and engagement despite the pandemic [64][66] Question: Industry metrics for micro transactions - Management noted that average gamers in North America spend between $50 to $130 a month on gaming content, with potential for monetization through micro transactions [68][70] Question: Key advertising milestones for 2020 - Management highlighted the focus on viewership impressions, registered users, engagement hours, and top-line growth as critical metrics for the year [86][87] Question: Revenue from platform as a service and brand sponsorship - Approximately 80% of revenues for Q1 2020 were categorized as platform-as-a-service, consistent with previous year trends [90] Question: Details on micro transactions in Minehut - Management provided examples of micro transactions, such as upgrading virtual rooms and purchasing decorations [97][98] Question: Patent monetization timeline - Management discussed the significance of a recently approved patent and its potential to enhance monetization through innovative content production [100][106] Question: Monetization strategies for tournaments - Management acknowledged the potential for monetizing tournaments through nominal fees and emphasized the focus on larger subscription models in the future [120][123]