Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Super League Enterprise Inc (SLE, Financial) reported a 25% decrease in Q2 pro forma operating expenses and a 23% decrease in operating losses compared to the same quarter last year.
- The company has seen a 3x increase in dedicated build revenues since acquiring Melon Studios.
- Super League Enterprise Inc (SLE) has established strong partnerships with major global brands such as Visa, Google, and Universal Pictures, leading to significant immersive experiences.
- The company has a robust pipeline featuring 51 repeat customers and 68 new brand entrants, indicating strong future revenue potential.
- Super League Enterprise Inc (SLE) is focusing on productization, which is expected to improve margins and reduce costs for new brand entrants.
Negative Points
- Top line revenues were flat sequentially, with approximately $1.8 million in expected revenues deferred due to delayed advertiser launch dates.
- The company is operating with approximately 15% less headcount than last year, which may impact its ability to scale quickly.
- Prolonged inflation and softening consumer spend have created macroeconomic challenges, affecting ad sales.
- There is a significant learning curve for new sellers, which has led to a temporary loss of momentum in Q2.
- Despite the positive outlook, the company has yet to achieve its first profitable quarter, which is targeted for Q4 of this year.
Q & A Highlights
Q: Of the $1.8 million of revenue deferred to Q3, has that program started now in the third quarter?
A: Yes. These programs should have launched in Q2 but now have Q3 launch dates, extending some into Q4. We have about $2.2 million in total revenues deferred, with $1.8 million impacting Q3 revenues.
Q: Can you give more color on the Meta-Stadiums partnership and its benefits?
A: The partnership allows us to create dedicated events off-platform, like a Bebe Rexha concert, driving people to a dedicated URL. Meta-Stadiums controls part of the economy, getting a rev share from virtual goods sold. We will participate in consumer monetization and data, enhancing our offerings.
Q: How much of the revenue growth in '25 and '26 can the current cost infrastructure support?
A: Productization is key to scaling without proportionally increasing costs. While costs will rise with significant revenue growth, the ratio of revenue to cost will improve. We are hyper-focused on profitability and cost control.
Q: Of the 68 new customers in the pipeline, how many are from internal sales versus agency relationships?
A: Historically, 80% came from agencies and 20% from direct relationships. We are improving this ratio, with more direct relationships with brands like Chipotle and Google, leading to quicker conversions and larger repeat programs.
Q: Can you give more color on the delayed advertiser launch dates? Are they dialing back spend or preparing for a higher ROI holiday season?
A: The delays are not due to budget cuts but rather internal preparations and creative excitement. Advertisers are keen on getting their campaigns right, especially for meaningful programs like Google's Internet literacy initiative.
Q: Can you provide additional color on the sales force and its scope?
A: We have 8 sellers, with additional support from senior leaders. Recent reorganization aimed to reduce the learning curve for new sellers, bringing in experienced leaders to drive big deals and improve sales efficiency.
Q: What's the growth in spend from repeat customers year-over-year?
A: Repeat customers are generally spending more. For example, Chipotle has three new engagements this year compared to two over the past two years. The goal is to move from one-time campaigns to persistent, always-on strategies.
Q: Can you talk more about the opportunity in data analytics over the long term?
A: Currently, we offer advanced analytics and reporting for brands. The partnership with Meta-Stadiums will enhance our consumer monetization and data capabilities, allowing us to build direct relationships with consumers and capture more data.
Q: Have new customers started coming from the Roblox program?
A: Yes, Roblox has recommended us for several educational programs, funding deals for us to launch education campaigns. Our product approach, like pop-ups, accelerates brand entry into immersive experiences, making us a preferred partner.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
