Super League (Nasdaq: SLE), a
global leader in providing immersive experiences across the world's
largest digital social platforms, today announced preliminary
fourth quarter revenue grew 32% year over year to a company record
of approximately $9.4 million. In association with the announcement
of preliminary fourth quarter 2023 revenue, the Company has issued
the below letter to shareholders from Chief Executive Officer, Ann
Hand.
Dear Fellow Shareholders,
2023 turned out to be a year of strong momentum
for Super League, highlighted by accelerated growth, streamlined
operations, and the largest contract in the company’s history
leading to record annual revenues of approximately $25.0 million.
With additional cash from our recently secured financings, we are
now, more than ever, in a better position to drive significant
revenue growth leading to profitability in 2024.
Super League’s core mission is to help brands
speak the language of 3D engagement, the new language of the
internet, and the inevitable way the majority of digital
advertising dollars will be directed in the future to reach new
audiences and deepen engagement. We strive to be the leading
provider for brands’ digital advertising as this 3D engagement
materializes, and through years of developing our capability and
proprietary IP, we are creating an operating system for the 3D Web.
During 2023, we further solidified our leadership position as
builders of immersive 3D experiences—a dominant form of digital
social interaction—across world-class platforms including Roblox,
Minecraft and Fortnite, among others where the seismic shift of
audience has already occurred with more than a half a billion users
and growing. These platforms drive the future of advertising and
have enraptured Generation Z and Alpha with the average Roblox user
spending approximately 156 minutes a day on the social platform
(more than 1.5X the time spent on TikTok). With Super League as
their usher, more global brands are following suit with their ad
spending into this transformative nascent marketing channel. While
in-game advertising is expected to reach a market size of $56
billion in 2024, that represents a small slice of the global
advertising addressable market. Our opportunity set is much
larger. Today we compete for traditional internet and
social media advertising dollars because 3D virtual world platforms
like Roblox behave more like the next generations of social media
rather than traditional video gaming.
As well, while Super League brings brands into
virtual environments on other platforms’ turfs, we are also the
strategists and innovators to transform a brand’s home-turf web
domain into 3D experiences that allow for personalized
conversations with consumers to ultimately increase brand loyalty
and conversion. Super League is uniquely poised to be the
omni-channel solution for a brand’s 3D engagement and to be a
primary beneficiary of this growing market that will become the
dominant form of digital advertising.
In 2023, Super League served almost 100 brands
and IP owners with astounding highlights:
- 11 custom builds
with peak engagement times as high as 30.5 minutes
- 15 custom
integrations into popular experiences on Roblox, Minecraft &
Fortnite, generating more than 330 million visits
and peak engagement times of 25 minutes
- 180+ media
campaigns on Roblox & Minecraft ranging in size from mid-5 to 7
figures
- 40+ supportive
media campaigns across digital and OTT video, mobile, social media,
and influencer, also ranging in size from mid-5 to 7 figures
- 340 pieces of
video content generating tens of millions of views across Tik Tok,
YouTube, & Snap
- 81 million Try-ons
of Branded Avatar Items
As a gold standard with a vertically integrated
one-stop shop suite, every week we create powerful, high-impact
immersive experiences for brands with our proprietary technology
and capabilities. As an example, during the year we launched the
Hamilton Simulator presenting the show’s groundbreaking music
through an interactive discovery of the magic of Hamilton. The
experience went viral with over 1 million visits in the first two
weeks, surpassing top Roblox experiences in terms of average
session time (~21 minutes) and overall rating (97%). Ultimately,
this led to a staggering 429 pieces of media coverage reaching an
audience of 6.5 billion.
As we look ahead, our unique capabilities have
positioned us to transition from an advertising model of short-term
campaigns to larger deal sizes, as evidenced by our record-breaking
approximately $4.0 million deal secured in the third quarter of
2023. Not only are our average deals getting much larger, but they
provide high repeat percentages with revenues that are more
recurring and forecastable with customers such as Visa, Disney,
Mattel, Kraft Heinz, Hershey’s, Wal-Mart, Chipotle, Universal and
Publicis, among others.
Additionally, we have identified four key steps
of a brand’s journey into these new marketing channels that allow
us an opportunity to achieve scale:
- Introduce brands to our 3D
engagement offering to achieve singular campaign objectives
measured by new brands entering our funnel and larger deal
sizes.
- Become the 3D platform of choice
for brands’ various ongoing campaigns measured by repeat percentage
and larger annual advertiser spend.
- Guide brands to create persistent
presences on 3D platforms measured by brand partner revenues that
become more recurring and predictable in nature.
- Build omni-channel 3D strategies
for brands with crossover to their own 3D web experiences measured
by revenues that go beyond advertising including technology
licensing, first party data and direct-to-consumer
monetization.
We have notable brands engaging with us at
various stages of the first three steps with emerging conversations
that will elucidate the potential fourth step of our operating
system to deliver a multi-layered, persistent 3D Web solution for
brand partners:
To support these world-class customers and drive
continued growth, over the course of the year we successfully
raised gross proceeds of $24.8 million and secured a $4.0 million
accounts receivable facility. Ultimately, our significantly
improved balance sheet provides the capital required to drive
meaningful revenue growth and achieve profitability in the near
term.
Looking ahead to 2024, our core focus is to
build upon the operating leverage experienced in 2023. We delivered
an approximate 26% reduction in proforma operating costs over the
course of the last 12 months, and this lean cost structure coupled
with larger, recurring brand and IP programs tees up 2024 to be a
transformational year. As noted above, we will continue to
transition our model from one that is built on short-term,
campaign-based revenue streams to one that supports brands’
persistent, long-term strategies leveraging our 3D Web operating
system. So now, we turn our attention to scaling our business to
achieve the previously mentioned goal of profitability in 2024,
while driving shareholder value over the long-term.
Thank you to all our shareholders, partners, and
talented team of Super Leaguers for your support on our journey as
we step into another exceptional year.
Warm regards,
Ann HandCEO of Super League
About Super League
Super League (Nasdaq: SLE) is a leading
strategically-integrated publisher and creator of games and
experiences across the world’s largest immersive digital platforms.
From metaverse gaming powerhouses such as Roblox, Minecraft and
Fortnite, to the most popular Web3 environments such as Sandbox and
Decentraland, to bespoke worlds built using the most advanced 3D
creation tools, Super League’s innovative solutions provide
incomparable access to massive audiences who gather in immersive
digital spaces to socialize, play, explore, collaborate, shop,
learn and create. As a true end-to-end activation partner for
dozens of global brands, Super League offers a complete range of
development, distribution, monetization and optimization
capabilities designed to engage users through dynamic, energized
programs. As an originator of new experiences fueled by a network
of top developers, a comprehensive set of proprietary creator tools
and a future-forward team of creative professionals, Super League
accelerates IP and audience success within the fastest growing
sector of the media industry. For more, go to superleague.com.
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995. Statements in this press
release that are not strictly historical are “forward-looking”
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. These statements involve substantial risks,
uncertainties and assumptions that could cause actual results to
differ materially from those expressed or implied by such
statements. Forward-looking statements in this communication
include, among other things, statements about Super League’s growth
strategies, the ability to actualize the benefits of the
acquisition of Melon, our possible or assumed business strategies,
new products, potential market opportunities and our ability to
secure adequate working capital. Risks and uncertainties include,
among other things, our ability to implement our plans, forecasts
and other expectations with respect to our business; our ability to
realize the anticipated benefits of events that took place during
and subsequent to the quarter ended September 30, 2023, including
the possibility that the expected benefits, particularly from our
acquisitions consummated in 2021 and 2023, will not be realized or
will not be realized within the expected time period; unknown
liabilities that may or may not be within our control; attracting
new customers and maintaining and expanding our existing customer
base; our ability to scale and update our platform to respond to
customers’ needs and rapid technological change; increased
competition in our market and our ability to compete effectively;
and expansion of our operations and increased adoption of our
platform internationally. Additional risks and uncertainties that
could affect our financial condition and operating results will be
included in the section titled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form 10-K for the year ended
December 31, 2022 and other filings that we make from time to time
with the Securities and Exchange Commission (the “SEC”) which, once
filed, are available on the SEC’s website at www.sec.gov. In
addition, any forward-looking statements contained in this
communication are based on assumptions that we believe to be
reasonable as of this date. Except as required by law, we assume no
obligation to update these forward-looking statements, or to update
the reasons if actual results differ materially from those
anticipated in the forward-looking statements.
Information About Non-GAAP Financial
Measures
As used herein, “GAAP” refers to accounting
principles generally accepted in the United States of America. To
supplement our financial statements included in our annual and
quarterly reports filed with the SEC, which financial statements
are prepared and presented in accordance with GAAP, this earnings
release includes pro forma net loss, a financial measure that is
considered a non-GAAP financial measure as defined in Rule 101 of
Regulation G promulgated by the Securities and Exchange Commission.
Generally, a non-GAAP financial measure is a numerical measure of a
company’s historical or future performance, financial position, or
cash flows that either excludes or includes amounts that are not
normally excluded or included in the most directly comparable
measure calculated and presented in accordance with GAAP. The
presentation of this non-GAAP financial information is not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with GAAP.
We use pro forma net loss, pro forma earnings
per share (EPS) and other non-GAAP financial measures for internal
financial and operational decision-making purposes and to evaluate
period-to-period comparisons of the performance and results of
operations of our business. Our management believes these non-GAAP
financial measures provide meaningful supplemental information
regarding the performance of our business by excluding non-cash
goodwill impairment charges, non-cash stock compensation charges,
non-cash amortization of intangible asset charges, and
non-recurring, non-cash credits, that may not be indicative of our
recurring core business operating results. These non-GAAP financial
measures also facilitate management’s internal planning and
comparisons to our historical performance and liquidity. We believe
these non-GAAP financial measures are useful to investors as they
allow for greater transparency with respect to key metrics used by
management in its financial and operational decision making and are
used by our institutional investors and the analyst community to
help them analyze the performance and operational results of our
core business.
Pro Forma Net Loss and EPS. We define pro forma
net loss as net loss calculated in accordance with GAAP, but
excluding non-cash goodwill impairment charges, non-cash stock
compensation charges, non-cash amortization of intangible assets,
and non-recurring, non-cash credits. Pro forma EPS is defined as
pro forma net income divided by the weighted average outstanding
shares, on a fully diluted basis, calculated in accordance with
GAAP, for the respective reporting period.
Due to the inherent volatility in stock prices,
the use of estimates and assumptions in connection with the
valuation and expensing of share-based awards and the variety of
award types that companies can issue under FASB ASC Topic 718,
management believes that providing a non-GAAP financial measure
that excludes non-cash stock compensation allows investors to make
meaningful comparisons between our recurring core business
operating results and those of other companies period to period, as
well as providing our management with a critical tool for financial
and operational decision making and for evaluating our own
period-to-period recurring core business operating results.
Due to the use of estimates and assumptions
pursuant to the guidance set forth in FASB ASC Topic 805 in
connection with the valuation of assets acquired and liabilities
assumed in connection with business combinations, for merger and
acquisition transactions that include the issuance of common stock
as all or a component of the purchase consideration, management
believes that providing a non-GAAP financial measure that excludes
non-cash goodwill and non-cash amortization related to these assets
acquired for the applicable reporting period allows investors to
make meaningful comparisons between our recurring core business
operating results and those of other companies period to period, as
well as providing our management with a critical tool for financial
and operational decision making and for evaluating our own
period-to-period recurring core business operating results.
There are several limitations related to the use
of pro forma net loss and EPS versus net loss EPS calculated in
accordance with GAAP. For example, non-GAAP net loss excludes the
impact of significant non-cash stock compensation charges that are
or may be recurring for the foreseeable future. In addition,
non-cash stock compensation is a critical component of our employee
compensation and retention programs and the cost associated with
consideration issued in connection with mergers and acquisitions is
a critical component of the cost of those acquisitions over the
useful lives of the related intangible assets acquired. Management
compensates for these limitations by providing specific information
regarding the GAAP amounts excluded from non-GAAP net loss and
evaluating non-GAAP net loss in conjunction with net loss and EPS
calculated in accordance with GAAP.
The accompanying table below titled
“Reconciliation of GAAP to Non-GAAP Financial Information” provides
a reconciliation of the non-GAAP financial measures presented to
the most directly comparable financial measures prepared in
accordance with GAAP.
Investor Relations
Contact:Shannon Devine/ Mark Schwalenberg MZ North
AmericaMain: 203-741-8811SLE@mzgroup.us
Media ContactGillian
Sheldongillian.sheldon@superleague.com
Photos accompanying this announcement are available
at:https://www.globenewswire.com/NewsRoom/AttachmentNg/7a2e138a-f37d-48ef-beef-63e04fb8d8c3https://www.globenewswire.com/NewsRoom/AttachmentNg/27f06f24-429c-4859-a842-6abe47ea06ff
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