Super League Enterprise, Inc. (NASDAQ:SLE) Q3 2023 Earnings Call Transcript

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Ann Hand: No. Actually, on the contrary, we — in Q3, I think, had our largest automotive spend ever. We did a pretty sizable program for Toyota, and that’s a repeat customer with us. And so we’re seeing that, that’s a vertical like fashion and beauty, CPG, food. These are verticals that we weren’t as strong in maybe a year ago. We were heavily skewed towards entertainment and toys, but now we’re seeing some nice signature brands that are coming into those verticals and they’re coming back for more. Fashion and beauty, it’s the L’Oréal and their suite of brands like Maybelline and Urban Decay and others. But specifically to automotive, the way — while we do have a portion of our reach is certainly under 13, we work with a lot of brands that are targeting that over 13 audience, whether it’s State Farm and Visa, financial services.

Certainly, automotive SKUs there, 14 and 15 year olds are thinking about getting their license and that first car. And so we can uniquely help them reach that over 13 audience and very specifically, if they’re trying to reach even when a little older. Roblox talks a lot about the fact that their platform in general is aging up. And there is data to support that they’re watching them start to build a little more presence in that kind of 17-plus as well. And some of that makes perfect sense because that 17-year-old grew up in Roblox. And so as long as the offers and experiences that speak to the 17-year-old are still there, just like the ones are that speak to the under 13, they can keep that stickiness to the platform because it’s more than gaming for them.

It’s their social hangout with the friends they grew up on it. So they’re aging up. We have seen that then respectfully ours have been shifted and aged up a little. And to date, we haven’t had any brand that we can’t deliver the right program to hit the audience they want. Sometimes brands will say, I want an over 18 audience. In the case of Toyota, specifically, it is a family-friendly content activation. It’s not specifically in Roblox. So it is trying to reach a wide net, both the young kind of up-and-coming driver as well as the parents who are maybe making that investment in the next car as well.

Operator: Thank you. We do have a follow-up coming from Scott Buck. The added cost of revenue in this quarter, is that pulled forward? Should we expect some relief in Q4? Thank you.

Ann Hand: I answered this a little earlier. Clayton, do you want to jump in and add anything?

Clayton Haynes : Yeah. So that particular program that Ann mentioned during her remarks earlier is a Q3 and Q4 program. And so we certainly mentioned the importance of that particular program and how delighted we were to take it on. But it is one that spans Q3 and Q4, and we were — and we accepted a lower margin with respect to that. But with respect to that program, on that lower margin should wind up in Q4 of 2023. So it’s not something that we expect to carry and continue into 2024 as we continue to, again, as Ann said, walk up our margins to that 45% to 50% level.

Ann Hand : Yeah. Agree.

Operator: Thank you. And the second follow-up from Scott, is your large $4 million contract coming from an entirely new customer? Is this an existing relationship that the company has?

Ann Hand: It’s a new customer. And we’re really excited to tell you more about it in our next earnings call.

Operator: Thank you. We reached the end of our question-and-answer session. I’d like to turn the floor back over for any further or closing comments.

Ann Hand: All right. So on a final note, we understand it’s been a challenging time for our shareholders in spite of our strong top line growth. We believe the value of our current share price is at a meaningful discount. And consequently, company insiders, including myself, have taken the opportunity to further increase our ownership. Our strategy is continuing to prove itself out. We build a leading vertically integrated immersive innovation engine that’s successfully monetizing the 3D web that exists today with an exciting vision for the opportunity presented by the 3D web of tomorrow. That is why we modified our name recently and took out the word gaming because gaming represents our roots that our future is even bigger and brighter.

And with that, I encourage you to visit superleague.com to immerse yourself with our capabilities and the exciting brand work that we do. We wish you a great day, and thank you, as always, for joining us, along with your continued interest and support.

Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.

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