Super League Gaming, Inc. Aktie

Greetings, and welcome to the Super League First Quarter 2026 Conference Call. Please note this conference is being recorded.

Before we begin, I'd like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of applicable securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statements due to numerous factors.

For a description of these risks and uncertainties, please see Super League's financial statements and MD&A for the first quarter 2026 ended March 31, 2026, available on EDGAR. Important qualifications regarding forward-looking statements are also contained in Super League's earnings release distributed yesterday afternoon and also available on EDGAR.

Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, May 15, 2026. Super League undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.

I would now like to turn the conference call over to Matt Edelman, President and Chief Executive Officer. Matt, please go ahead.

Thank you very much, Darryl. Good morning, and thank you for joining us. I'm pleased to share our financial results and business updates for the first quarter of 2026, along with our perspective on the progress we are making as a company and the opportunities ahead.

As we've discussed during our last earnings call, 2025 was about stabilizing and restructuring Super League. We strengthened our balance sheet, eliminated our debt, simplified our capital structure, reduced operating costs and established a more disciplined operating model. The focus of 2026 is execution. Our first quarter results reflect the early stages of delivery against the commitments we made to shareholders. We are investing strategically to strengthen the business, expand our capabilities and create a more scalable and predictable revenue foundation, all while continuing to preserve capital and maintain financial flexibility.

We believe our liquidity position remains strong. We ended the quarter with $11.4 million in cash. And even with the $1.5 million in cash consideration associated with the closing of the Misfits Ads business acquisition paid earlier this month, we do not anticipate needing to raise capital in the foreseeable future to fund ongoing operations.

At the same time, we are beginning to see encouraging operational signals across the business. Gross revenue for Q1 2026 increased to $3 million, up from $2.7 million in the prior first year quarter. Sequentially, revenue declined only 6% from Q4 2025 despite typical seasonal patterns in which our fourth quarter is materially stronger than the first. We believe this reflects the early establishment of a higher revenue baseline for Super League.

Gross margin improved to 36% in Q1, up from 32% in Q4 2025, reflecting continued improvement in the quality and structure of our revenue mix and the more disciplined delivery model we have implemented across the organization. Cash-based EBITDA improved 11% year-over-year as we continue to balance strategic investment with operational discipline.

We are also seeing positive momentum in our commercial activity. Average closed deal size increased to $157,000, up from $145,000 in the prior-year quarter while weighted pipeline open opportunities per salesperson grew to approximately $1.78 million as of this month, nearly triple the level from 2 years ago. In addition, we have continued to expand our client base, engaging 23 new clients year-to-date, while also increasing activity with returning partners.

We are beginning to see evidence that brands view Super League as more than a campaign execution partner. In an increasing number of cases, relationships that began on one gaming platform, such as Roblox, are evolving into multi-platform programs spanning Fortnite, Minecraft and mobile. Connected TV, PC and web gaming are now entering the mix as well. We are also incorporating more media solutions and amplification strategies through TikTok and YouTube influencers, tapping into the vibrant gaming creator economy. Together, these trends reinforce Super League's role as a strategic partner, helping brands reach consumers across fragmented digital environments.

That progress is supported by a stronger and more connected operating model. Our platform and data capabilities continue to expand through the integration of Bounce, our Solsten partnership and now the addition of rewarded video advertising technology and new programmatic solutions via the Misfits Ads business acquisition. Together, these capabilities strengthen our ability to better understand audiences, improve the return on advertising spend and support more scalable campaign execution.

At the same time, our strategic properties initiative continues to evolve through ownership interests in gaming experiences on Roblox such as Hide or Die! and My Avatar!, along with our commercial partnership with Misfits Gaming Group. These initiatives provide access to differentiated inventory, including more than 100 million users through the Misfits Gaming Group Roblox game portfolio, direct monetization opportunities and gameplay behavior signals that further enhance our understanding of consumer engagement patterns.

The recent closing of the Misfits Ads business transaction reinforces this broader strategy. The addition of profitable programmatic revenue, proprietary technology and expanded brand relationships is expected to contribute to our financial results beginning in the second quarter. More importantly, we believe the transaction strengthens the predictability and scalability of our revenue model while supporting our path to cash-based EBITDA profitability by year-end.

On a pro forma basis, the combined Super League and Misfits pipeline of opportunities reflects approximately $12 million of gross revenue potential in fiscal year 2026. While this should not be interpreted as guidance, we believe it provides a useful illustration of the expanded scale and commercial reach of the combined business as well as a clearer trajectory towards sustained financial stability.

Stepping back, more broadly, we believe the market itself is evolving in ways that further align with Super League's strengths. We've spoken often about the scale and influence of gaming audiences, what is becoming clear, however, is that gaming behavior itself is shaping consumer behavior across the digital economy. Consumers are gravitating toward products and services built around progression-based engagement, participation, identity expression, rewards and continuous interactive feedback loops. We see these dynamics across prediction markets, sports betting, stock trading, collectibles, social commerce, dating platforms and even emerging entertainment formats such as micro dramas. Said simply, we are witnessing the rise of the gamified consumer. With more than 80% of people under the age of 45 playing video games, we believe Super League is uniquely positioned to help brands understand and connect with this highly engaged and undermonetized audience.

The player mindset increasingly shapes consumer behavior well beyond gaming itself. Our opportunity is to help brands apply the principles that drive participation, progression and engagement inside games to marketing programs across digital platforms and channels. We believe this positions Super League to help partners create more relevant, effective and measurable consumer experiences.

A final note, we continue to explore opportunities related to digital assets and are encouraged by recent stabilization and announcements validating the long-term potential of the sector. Examples include Fannie Mae's support of Bitcoin and USDC-backed mortgage products, the SEC's approval of the New York Stock Exchange's tokenized securities framework as well as Nasdaq's proposal to trade and settle securities in tokenized form and broader regulatory support for digital financial infrastructure. While our approach remains thoughtful and disciplined, these developments, combined with the depth of crossover between gaming audiences and digital currency holders continue to reinforce the potential of participation-driven digital economies and related ownership ecosystems.

Most importantly, as we look ahead, we remain focused on disciplined execution across the business. We are doing what we said we would do, strengthening the business, improving the quality and predictability of our revenue model, expanding our capabilities and positioning Super League to participate more meaningfully in large and growing markets.

We still have important work ahead of us. But today, the priority is execution, not stabilization, a phase now behind us. We believe shareholders will increasingly see our continued progress down this path reflected in our operating and financial results in the fiscal quarters ahead.

Thank you. With that, I'll turn it back to the operator for Q&A.

[Operator Instructions] Our first questions come from the line of James Kisner with Water Tower Research.

So just first, 23 new clients year-to-date, that's pretty notable. Can you just kind of drill down a bit on that? Like what's really driving that momentum, particular offerings or customer verticals, or just any other way you'd like to talk about it?

Thanks for the question. Look, I think we have been successful with our education process and helping brands understand the opportunities to get in front of what we are now really emphasizing, our gamified consumers, both within gaming environments and beyond. The industry at large is also getting more attention, and that has been aided by a lot of the work done by platforms such as Roblox. And as a result, there are more agencies and marketing executives who see the opportunity to be in front of an audience that is otherwise hard to influence and reach. And so we are assembling a more clear set of solutions, and it seems to really be paying dividends.

That's helpful. So on gross margin, it looks like you had a nice improvement here sequentially. Just I think you mentioned mix and a more disciplined delivery model. Can you kind of say more about that, like perhaps what mix is improving and maybe what costs you're controlling? What are kind of the biggest levers to improve gross margin from here?

There are really a couple of key items here. One is we are beginning to be more focused on the delivery of turnkey packages. So we have built a handful of reusable elements that help us bring what our brand partners find to be custom solutions, but are not built from scratch each time by our execution team. And so these reusable components allow us to be much more efficient. We also have begun adding more media solutions into our packages, which typically bring us a higher margin because of the minimal execution costs associated with bringing those to life.

And then I would say the increasing breadth of our opportunity to not just bring people into immersive platforms or mobile, but also CTV, PC and web games gives us a chance to weave together a program for a client that meets our margin goals a little bit more consistently without compromising and, in fact, enhancing the potential outcome for our partners.

That's helpful. Last one, and I'll pass it. Just on Misfits, congrats on closing that. Can you talk about the integration plan here and perhaps how soon we might see a positive impact from the opportunities from that acquisition?

I appreciate that. Misfits, the ads business, is a terrific addition to Super League. We have already brought the team on board and are starting to use their capabilities and their tools. Coming with Misfits was a very exciting pipeline of partnerships, both active and in sort of a setup for future business.

We will see an impact in the second quarter. There are revenue-generating deals that have already moved over to Super League as part of the acquisition. And the deals have -- are profitable, as we said, the acquisition itself is a profitable acquisition, an accretive acquisition on an EBITDA -- cash-based EBITDA basis. And so we anticipate being able to share some of that progress and contribution when we report on Q2.

[Operator Instructions] Our next questions come from the line of Rommel Dionisio with Aegis Capital.

I wonder if you could just discuss the progress you made on cross-selling opportunities. Obviously, the Misfits acquisition is new, but in prior acquisitions, I wonder if you could just describe to what extent that's helped benefit the top line and the prospects for that going forward, especially with the Misfits acquisition now closed.

Sure. Thank you, Rommel. I'm very excited. We are seeing an increasing amount of interest from partners in being in more than one channel with their campaigns. And so earlier on in our life cycle, a partner would come to us, a brand would come to us and want to be active in a single platform such as Roblox or Minecraft. And the excitement about the results we've been able to show over the years has emboldened more brand partners to look at cross-channel opportunities. And so they are now coming to us and looking for either a cross-channel media solution, in fact, we had one brand ask us to run a program for them across 5 different channels that is just for media, turnkey media, which is a terrific area for us, as I mentioned earlier, a high-margin opportunity.

But even when partners are coming to us now to activate inside a platform like Roblox or Fortnite, we are bringing influencers from YouTube or TikTok into that program. We are bringing a mobile media buy into that program. And so we're really starting to see that brands understand this gamified consumer lives in multiple places and being able to surround that segment as part of their campaign has an increasingly positive impact on the results we can deliver.

There are no further questions at this time. I'd now like to hand the call back over to Matt Edelman for any closing comments.

Thank you again, everyone, for your time and your questions. As we continue through 2026, our focus is clear: executing against the strategy we laid out, strengthening the quality and predictability of our business and translating operational progress into long-term shareholder value. We are encouraged by the momentum beginning to emerge across the business and believe the coming quarters will increasingly reflect the progress we have made in building the new Super League. Have a happy Friday.

Thank you so much. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Greetings, and welcome to the Super League Fourth Quarter and Full Year 2025 Conference Call. Please note, this conference is being recorded.

Before we begin, I'd like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of applicable securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statements due to numerous factors. For a description of these risks and uncertainties, please see Super League's financial statements and MD&A for the fourth quarter and full year 2025 ended December 31, 2025, available on EDGAR. Important qualifications regarding forward-looking statements are also contained in Super League's earnings release distributed yesterday afternoon and is also available on EDGAR.

Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, March 27, 2026. Super League undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.

I would now like to turn the conference call over to Matt Edelman, President of Chief Executive Officer.

Matt, please go ahead. Thank you very much. Good morning. Thank you to all for joining us. I'm pleased to share our quarterly and annual results, business updates and operational highlights for the fourth quarter and fiscal year 2025 and our strategic outlook and priorities for 2026.

Super League today is a fundamentally different company than it was a year ago, with a strong foundation positioned to scale. Super League helps businesses grow by executing advertising and branded content programs designed to reach and influence people who play video games, one of the largest and most undermonetized consumer segments in modern media and culture. We generate revenue by delivering these programs for brands and agencies across gaming and digital platforms, combining proprietary interactive ad formats, immersive experiences, creator content, strategic campaign services and data-driven insights to improve marketing performance. 2025 was a defining year. From April through December, we simplified our capital structure, streamlined our cost base, strengthened our balance sheet, and refined our operating model. With a debt-free balance sheet, more than $14 million in capital as of December 31 and the removal of the going concern language from our auditor's report, we have established the stability to execute with focus and the flexibility to pursue meaningful growth.

Building on this, we recently announced the execution of a definitive agreement to acquire the Misfits Ads division from Misfits Gaming Group, a profitable unit expected to increase revenue, expand margins and cement our path towards cash basis EBITDA profitability. Closing remains subject to stockholder approval. With this strategic move, we will be supersizing Super League's ability to drive measurable marketing outcomes for our partners. Our advantage lies in our understanding of both the gaming ecosystem and the player mindset, enabling brands and media agencies to connect with the right consumers through the right creative at the right time, in the right places. That customer demand is reflected to our continued successes with iconic brands.

During the fourth quarter, we initiated programs with Regal Cinemas and H&R Block both of which launched in the first quarter of 2026 and expanded our relationship with Panda Express following a successful multi-quarter engagement. We also supported key launches for Paramount+, including Starfleet, and for Paramount Games with SpongeBob: Patty Pursuit 2 and continued our in-game work with partners such as Google, Logitech, Juicy Drop from Bazooka and the USGA. In addition, we collaborated with Tiffany around the theatrical release of Zootopia 2. This activity includes both new client demand and returning business and is beginning to revive our financial performance.

Q4 2025 was our strongest revenue quarter of the year, up 32% over Q3 2025 and close to the prior year quarter's revenue level, despite operating with a significantly reduced team. Quarterly gross margins were higher than 1 year prior and cash basis pro forma OpEx costs were down 44% year-over-year. For the full year, we improved pro forma cash basis EBITDA by 31% compared to 2024, including a 56% improvement in Q4 alone. Pro forma cash basis OpEx decreased by $5.3 million or 29% from the prior year period, reflecting the positive impact of strategic cost reduction and optimization efforts in fiscal year 2025. At the same time, we improved gross margin to 40% for the year, up from 38% in 2024, reflecting a more disciplined approach to how we structure and deliver programs.

Net operating results for 2025 improved by 23%. GAAP net loss for Q4 2025 and fiscal year 2025 were impacted by significant onetime accounting related noncash debt fair value mark-to-market and extinguishment charges primarily associated with our debt and capitalization table restructuring, totaling $6.3 million and $8.5 million, respectively.

Based on our cash position and current plans, we do not expect to raise capital to fund operations in the foreseeable future. While we have not yet achieved our most important financial objective, cash basis EBITDA profitability, these results demonstrate that the work we undertook in 2025 has established a stronger and more durable operating foundation. We expect the progress made over the past year to translate into more visible benefits beginning in Q2 2026 with cash basis EBITDA profitability within reach by year-end. Among our most impactful advances having the diversification of our revenue base and the increased clarity in how the business is structured and delivered.

A year ago, the majority of our business was concentrated in a single platform. Today, that concentration has been reduced with our revenue mix more balanced across Roblox, Minecraft, Fortnite and mobile playable ads. The strategic deals we completed earlier in 2026 helped establish a more integrated operating framework, bringing together a platform and data function, advertising and marketing solutions and a new strategic properties initiative into a cohesive model. Each reinforces the others, forming the early stages of a growth flywheel.

Taking a step back, the opportunity in front of us remains significant. We operate at the intersection of a $316 billion U.S. digital advertising market and a 200 million person U.S. gaming population. In the U.S., according to [indiscernible], consumers spend approximately 11.8 hours per week playing video games, nearly as much time as they spend on social media and watching television and streaming. Yet while annual advertising in these channels exceeds $150 billion combined, total yearly spend in gaming remains under $10 billion. That gap, the undermonetized gaming demographic represents Super League's opportunity. Equally important, a growing share of marketing decision makers now comes from duration that grew up playing online video games, millennials. That shift is already influencing how brands think about engaging consumers, and we believe it creates a long-term tailwind for our business.

A core tenet of our strategy is that when people play video games, they are their most authentic selves. They act with agency, express identity more freely and engage in ways that reveal what motivates them. That informs our data advantage. As we combine gameplay derived behavioral signals with broader market intelligence and psychographic insights to better understand how and why consumers respond to content. That understanding allows us to help brands design more effective campaigns not just within gaming environments, but across the full digital landscape. We expect this audience intelligence to become an important driver of scale and profitability as we shift towards more repeatable and transactional forms of revenue.

Over the past 6 months, we've demonstrated growing demand for these solutions. The next phase is improving unit economics while continuing to increase volume. The acquisition of the Misfits Ads division will be a natural extension of this strategy. A profitable business already, it will add programmatic revenue capabilities, rewarded video technology and preferred access to inventory across a growing portfolio of popular Roblox games. In 2026, we have the opportunity to generate approximately 50% of the amount of our 2025 net revenue solely from the Misfit Ads division pipeline, customer base and capabilities. Additionally, when we have collaborated with Misfits on brand programs that cross over our combined offerings, deal size has increased 20% to 30%.

Looking at 2026, we are encouraged by what we're seeing so far. We expect Q1 2026 revenue to be ahead of Q1 2025. During the quarter, we closed 8 returning clients and initiated discussions with 17 new accounts. Our pipeline remains consistent with where it was 1 year ago with our average deal size remaining above $200,000 despite operating with a smaller team. At the same time, we want to be clear that the full financial impact of the changes we've made is not yet reflected in our reported results. We expect Q2 2026 to begin to show more meaningful progress as the benefits of the transformation we began 1 year ago and completed in October 2025 truly take hold.

As a final note, we continue to actively evaluate opportunities related to digital assets. Given market developments in Q4 2025, we are approaching this thoughtfully while remaining optimistic about the long-term potential. In closing, 2025 was the year we set out to reshape Super League and delivered on that commitment. As we look ahead, our focus is on translating that progress into consistent financial performance. This is the new Super League. We plan to maintain a lower cost structure, expand scalable, repeatable revenue streams and remain in a position that enables disciplined execution. Against that backdrop, our market value represents approximately 1/3 of our year-end cash position. We believe that this does not fully reflect our capital strength or the progress we've made. We appreciate your continued support as we move forward on a more credible path.

Thank you. I'll turn it back to the call operator.

[Operator Instructions] Our first questions come from the line of [ James Kisner ] with Water Tower Research.

I've got a couple for you. So first, just regarding cash-based EBITDA profitability, can you kind of talk about the progression towards that as you move through 2026?

Sure thing, James. Thanks for the question. Nice to talk to you. I would think about 2026 in 3 phases. First, in Q1, we still expect to see some lag from the demands of the restructuring work we did in 2025. We've reset the cost structure, but the revenue engine is still rebuilding. Our numbers likely won't reflect the full benefit of the changes we've made at that time.

And then second, as we move into Q2, we expect to see a more visible inflection. That's when we believe the combination of a stronger pipeline and early contributions from our more scalable offerings. We'll have a better chance of showing up more clearly in our performance. And then in the second half of the year, really, the third phase, it will be all about delivery. We anticipate operating with a lower cost base on an ongoing basis. increasing our repeatable revenue. And then, of course, subject to stockholder approval, we will have the full integration of the Misfits Ads division. And that's when we would expect the business to benefit from accelerating revenue and margin contribution. And that will come from -- get a jolt from the Misfits team, their tech and the pipeline that is really -- we think we can deliver on the promise of the transaction.

So when you -- I guess when you step back, our confidence in the path comes from the fact that the heavy lifting on the cost side is already done. And our focus is now on building revenue from that base from that foundation. So that's what really puts EBITDA profitability in sight by the end of the year.

Very helpful. You mentioned Misfits. My second question regards that acquisition. So can you just kind of give a little more section on how this kind of accelerates or advances your kind of overall strategy? And then if you can maybe quantify in some way the kind of financial metrics around that business, either [indiscernible] revenue or gross margin or cash-based EBITDA profile. Maybe you can help us out there.

Sure. So the business opportunity really is as a result of a lot of collaboration that we've enjoyed with the Misfits Gaming Group over time. And the result has been a nice consistent increase in the size of the deals that we were able to bring into Super League when collaborating with the Misfits Ads team. We had an opportunity to pull the common businesses together. And at the same time, the Misfits Gaming Group will maintain their own and continue to fully own, the Roblox games in their portfolio and be a commercial partner going forward.

So benefits of the transaction are that we are consolidating complementary businesses that bring multiple forms of -- and sources of revenue together that have already proven to work well in the market. And we will also have access to the Roblox game portfolio for the purposes of brand partnerships. And that is an advantage when you are the primary or sole group that can reach such significant audience based on the popularity of those games. The -- while we don't provide full guidance, we do expect the net revenue contribution from the Misfits, people and assets that we're acquiring, again, subject to stockholder approval. We expect the net revenue to equal approximately 50% of the net revenue that we achieved on our own in 2025. And they are a profitable team. So that would be profitable net revenue that drops profitable results to our EBITDA line.

That's helpful. Just last one for me. Just on gross margin, it's up a bit here year-over-year. I'm just kind of wondering how much of that is kind of structural and sustainable and how you're kind of thinking about gross margin progression as you reach cash flow or cash basis EBITDA profitability.

Yes. It's another great question, something we think about and work on regularly. Based on the seasonality in the advertising industry, there's a lot more money spent in Q4 by brands and agencies. And they push partners like Super League and others to really honor volume discounts. And so it's fairly typical for companies on the receiving end of that, to see compressed margins in Q4, which we have seen year-over-year compared to the prior quarters in the same year.

But we do think we will continue to be able to maintain the margins that we have seen in the earlier quarters of the past couple of years, so in between that 40% and 45% range. And we definitely hope that our full year gross margin can get closer to the 45% rather than the 40% that we achieved for 2025. It's a constant focus and something we believe will benefit from some of the scalable offerings and the opportunity to drive up some of the programmatic revenue sources that we're starting to see and that the Misfits Ads division also is bringing into the company with the anticipated and hopeful close of that transaction.

Our next questions come from the line of Rommel Dionisio with Aegis Capital.

Matt, in your prepared comments, you talked about the diversification of your revenue stream. I wonder specifically with regards to mobile gaming. Could you just talk about -- moving back to 2025, the growth that you saw in that business as a percentage of return revenue? And kind of the key factors driving potential further growth in 2026 and beyond?

Absolutely, Rommel. Thanks for the question. Nice to hear your voice. We have been purposefully focused on diversifying our revenue streams really for the past year, and that has a lot to do with being a little bit too dependent on a single platform, which was Roblox back in 2023 and 2024. So mobile gaming is a spectacular large and lucrative category in the advertising space. There are 200 million people in the U.S. who play mobile games. And we have a very strong partnership with a company.

You've heard us talk about named AdArcade. Their patented playable ad solution every other type of ad creative that could otherwise appear in mobile video inventory in mobile games. And it's called rewarded video inventory. It appears in between the levels you're playing. And that product continues to drive a great deal of interest. The demand continues to increase, and that has helped a great deal with diversification. So in Q4, I believe that the mobile playables got up to well over 25% of our revenue and ended the year for 2025 at about 20%. And I -- you may recall that earlier in the year, we really were aiming for 20% to 25% from that product line for the whole year.

At the same time, Roblox revenue diminished to under 40% of our revenue. And the biggest additional piece came from a combination of work across Fortnite and Minecraft, which collectively ended up at about 30%. And so we were able to continue to show steady growth in both of those areas as well. We believe we will have further diversification in 2026. So in addition to those platforms, we are in interesting and encouraging discussions to expand our early entry into the connected TV space, which happens to be another area where the Misfits Ads team has had some success. So we'll help that expansion, another place where we have strong compatibility. We also believe there are opportunities in the web gaming space and in the PC gaming space. And so we're hoping for a nice multi-tiered diverse revenue base that is even stronger in 2026.

Our next questions come from the line of Jack Vander Aarde with Maxim Group.

Matt, congrats on the recent momentum and continued progress towards positive EBITDA. I guess I just want to touch on the first quarter revenue in, I guess, first quarter -- I'm sorry, the fourth quarter revenue and then the first quarter kind of outlook. And just back to the gross margin comments as well. So are we at a point now, I guess it's fair to say that the revenue is coming a lot from mobile, obviously, Roblox as well as plenty of factors in there as well. But are you expecting to see that natural gross margin return back above 40% in kind of in the first half of this year? Maybe you could just speak to the core revenue drivers and then also just at gross margin sort of seasonality, that would be helpful.

Sure. It's a good question. I think consistent with some of my comments, I think the likelihood is that we will start to see the gross margin return to sort of a healthy 40-plus percent, probably more like Q2, less likely in Q1. I suspect we'll have a little bit of a lag in Q1 from some of the kind of remaining challenges of pulling out of the transition period, the corporate transition period last year. But after we get through that sort of part of our history, the way we've designed our offerings going forward is quite encouraging. And we think not only going to be more scalable, but continue to keep us with a healthy gross margin.

And while we still anticipate late year 2026 compression for the reasons I mentioned just a few minutes ago, our hope and our goal is as I said, to really be above 40% for the year, even if we start a little bit slow because of some of the lag.

Got it. Okay. No, that's really helpful color, Matt. And then maybe kind of a larger question here is just shifting on to your acquisition strategy. You recently acquired [indiscernible] so that you have a stake in a Roblox game, and now you've obviously announced plans to acquire Misfits. Maybe just have 2 questions. Can you just speak on your acquisition strategy in general and just what else are you looking at if you're actively opportunistic in the acquisition space? And then also just for Misfits, how does this fit into Super League sort of revenue model specifically, but then also more of the strategic psychology of play model that you've been emphasizing more recently?

I appreciate the question, and you're clearly paying attention, which is always fun to hear that a company's efforts to get our perspective out there is being heard. So thank you for that. So we have -- with the stockholder approval, we are hoping for around the Misfits Ads division. We really want to focus on integrating that team, integrating their capabilities, their pipeline, their partnerships, their technology and stay focused on leveraging the benefits of that transaction to their fullest.

And so while we -- we'll continue to keep our eyes out for potential M&A opportunities. The best thing that we can accomplish over the course of the next several quarters, is to prove that this was a smart acquisition and that the moves we made earlier this year to start to set up our updated operating framework have been the right decisions and the right moves. We do think that they have put Super League in a much stronger position following putting the corporation in a much more stable state. And our goal is to prove that this is the main step that gets us to that point of cash-based EBITDA profitability. And on our way there, as we prove it out and hopefully, the market responds to that progress. That would be a more likely time when we would consider additional M&A opportunities. But right now, we're going to have our nose the grindstone here. And really focus.

As it relates to the fit, which is, I think, a little bit of what you were asking about, the Misfits Ads division has some existing programmatic revenue that they have begun to scale at an early level over the past year. And they're a smaller team than we are, but the package that they've put together is based on specific targeting that requires a good grasp of data and the work we're doing to create that data advantage and the ability to take some of our sales energy and put it towards that same programmatic offering, we think is going to be a particularly exciting growth area for the company. We also have the opportunity to expand a piece of technology that Misfits has been using, including in partnerships with us that runs rewarded video in certain gaming platforms. And that also requires knowing your audience, so that you're putting the right rewarded video in front of the right players in the right channels and platforms.

And so once again, taking what we are starting to develop as the psychology of play and really the psychographic signals that you can pick up from gameplay and that we're pulling in through a terrific data partnership with a company we've talked about named Solsten. That puts us in a really exciting position because not only do we have more signals to direct advertising, but we have more signals to help ensure that the creative we're bringing to market is the right creative.

Thank you so much. That does conclude our question-and-answer session. And with that, I'd like to hand the call back over to Matt Edelman for any closing comments.

Thank you again, everyone, for your time and for your questions. As we move through 2026, as you just heard me share, our focus is clear. executing against the opportunity in front of us and translating the progress we've made into stronger, more consistent results. We are committed to building a business that creates long-term value for our shareholders. and to ensuring that our story is understood by a broader investor audience. You are going to be hearing and -- hearing from me and seeing me a lot this year as we share our exciting progress in the quarters ahead. Have a happy Friday.

Thank you so much. This does now conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.

Greetings, and welcome to the Super League Third Quarter 2025 Conference Call. Please note, this conference is being recorded.

Before we begin, I'd like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of applicable securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statements due to numerous factors. For a description of these risks and uncertainties, please see Super League's financial statements and MD&A for the third quarter ended September 30, 2025, available on EDGAR.

Important qualifications regarding forward-looking statements are also contained in Super League's earnings release distributed earlier this afternoon and also available on EDGAR. Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, November 13, 2025. Super League undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.

I'd now like to turn the conference call over to Matt Edelman, President and Chief Executive Officer. Please go ahead, Matt.

I appreciate it. Thank you very much, and thank you to those who are joining us today. Today marks my third time speaking with shareholders, analysts, partners and others in this forum, and the second time I've reported on Super League's earnings. With confidence, I can say that Super League is in a stronger position to succeed now than at any point since pivoting our business into the gaming media space 4 years ago.

Super League is stable and poised for growth from a fortified foundation. In April, when I started as CEO, Super League was facing a myriad of challenges. Today, we are a different company. In April, we needed to raise capital. As of October 28, we reported a final close on $20 million of financing in a private placement, which was the maximum amount approved by our shareholders. We are fully funded with no plans to go back to market other than for opportunistic growth.

In April, we had a heavy debt load. As of last week, we have eliminated our debt. Our balance sheet is stronger than it has been in years. In April, we had a complex capitalization table with several layers of preferred shareholdings. We have streamlined our capital structure, creating renewed flexibility to be opportunistic towards the future.

In April, we had 3 NASDAQ deficiencies. As of October 29, we are fully compliant with all NASDAQ listing requirements. And we now have a formidable lead investor in Evo Fund, whose strategic backing, including access to its global network and portfolio amplifies our ability to grow our core business and advance a forward looking digital asset strategy designed to unlock new economic value. Achieving profitability and increasing shareholder value remains our highest priority. We recognize that profitability is the foundation for growth and innovation. With the disciplined execution we've demonstrated recently and the new beginning now in place, we are confident in our ability to deliver that result.

How will we get there? It starts by leaning into our expertise, which is enabling iconic brands and IP owners to engage the legions of consumers whose daily content consumption includes playing games. I'm not talking about just hardcore gamers who build their own PCs and spend all night collaborating with friends and strangers through a headset on how to win around or defeat an enemy. We help brands reach the 190 million U.S. consumers who play mobile games, Roblox, Fortnite, Minecraft and more. Our addressable audience enjoys Wordle, Subway Surfers and Candy Crush as much as Madden and Call of Duty. That's why we focus on the importance for brands to understand the cultural dominance of the psychology of play. The average member of Gen Z spends more daily time playing video games than they spend daily on all major social media platforms combined. 68% of Gen Z also watches gaming content on these platforms, representing about 30% of their video diet.

When you see Super League partnership announcements about expansion into TikTok and Connected TV, now you know why. Even when consumers are not playing, those who love to play, engage more deeply with brands who appeal to that joy through playable ads and gamified content wherever it appears, compared to linear video ads and static billboards. This was reinforced when the International Advertising Bureau created a new measurement framework for gaming as well as through the overwhelming success of the first-ever Gaming Summit organized by Super League in partnership with Advertising Week at AWNewYork in October. Super League worked alongside leaders from L'Oreal, Publicis Media, YouGov and others to guide programming for a first of a kind -- first of its kind event spotlighting gaming's role in the marketing mix. Executives from Walmart, PepsiCo, WPP, Dentsu, Dave's Hot Chicken and more participated in a standing room only 4 hour showcase presenting the value effectiveness and scale within the gaming content and media space.

With the Gaming Summit as a backdrop, our recent partnerships have set up Super League for business acceleration that can match our Profound corporate turnaround. With playable media consistently generating superior performance compared to linear ad formats, we partnered with Automatic Worlds, an advisory and investment firm founded by industry veterans, John Rosenberg and Dave Getson, they are the entrepreneurial duo behind g-NET agency, one of the gaming industry's most respected creative agencies. Their expertise in scaling marketing organizations and unlocking growth will elevate the rigor and reach of our go-to-market engine, strengthening client outcomes and creating durable value for our shareholders.

We recently signed an exclusive partnership with ES3, a leading technology and media solutions company specializing in interactive content experiences for Connected TV or CTV, and traditional Pay TV environments. Super League will serve as the exclusive third-party sales partner for nGage, a gamified content module, but is activated through ads on CTV devices and platforms, and is designed to transform how brands and advertisers connect with streaming audiences. Our partnership with ES3 opens access to CTV budgets, with the total ad spend in the category projected to grow from $33 billion in 2025 to $47 billion by 2028, when it is expected to surpass traditional TV advertising for the first time, a nice new source of revenue diversification for Super League, aligned with our core business.

Client highlights from the third quarter included one of our most compelling recent programs in partnership with Google. Together, we launched an update to their Be Internet Awesome world which we then advance further in October to become one of the first ever AI-themed gameplay experiences on Roblox. The new missions bring Google's AI literacy curriculum launched in September, to life through interactive standards aligned gameplay for grades 2 through 8. As an official agency partner to Google since 2024, we're proud to help one of the world's most influential brands lead the conversation around AI education and responsibility through the power of play.

We also delivered a bold first of its kind campaign across both Fortnite Creative and Roblox with Panda Express and their creative agency, The Many. The activation demonstrates the power of playability to drive memorable brand engagement and transform a product launch into a hands-on shareable adventure. It also extends Super League successful track record and expertise within the quick-serve and fast casual restaurant sector, having previously partnered with Dave's Hot Chicken, Dave & Buster's, Freddy’s and of course, Chipotle across the world's largest immersive platforms.

We were trusted and excited to bring Juicy Drop, the candy brand known for bold mashups into its first-ever Roblox activation, the Juicy Drop Pop-Up 2025 Tower Obby, produced in partnership with media agency, Beacon Media Group, Bazooka Brands, the company that makes Juicy Drop became one of the first major candy brands to build a full-scale, multilayered campaign inside of Roblox. With more than 4 million visits to the Juicy Drop Super League Pop-Up, the campaign was a blueprint for what's possible when consumer brands embrace playable media.

Noteworthy within our Roblox and Fortnite business, and in response to a reduction in demand from brands to build custom destinations on the platforms, we made a decision to pursue a scalable strategy leveraging our Super Biz software developer kit on Roblox. At the IAB PlayFronts in April, we've rolled out pop-ups, many interactive experiences that can appear in multiple UGC games simultaneously. We will have launched 12 pop-up programs by the end of 2025, including renewals from 2 partners within the same calendar year. We expect pop-ups to become more meaningful in 2026 with several campaigns already booked. Pop-ups are a higher-margin product for Super League and custom builds, faster to market and more efficient in delivering against the client's objectives.

Additional client partnerships in Q3 included programs with companies across multiple verticals, entertainment with Universal Pictures, Paramount and Lionsgate, Beauty With NYX, Gaming With Sega and Government with the Department of Veteran Affairs and the Food and Drug Administration. Like other brands with a story to tell, even government agencies recognize the power of play, having run in-game and playable ad campaigns with Super League.

Turning to our Q3 financials. Q3 revenues decreased to $2.4 million, impacted by the demanding focus of our corporate turnaround. With the financing and related accomplishments now behind us, all of our attention is on making sure Q3 2025 revenue can be a historical low point. Our gross margin was up at 45%, up from 44% in Q2 and 39% in Q3 of 2024. Our pro forma operating costs, which exclude noncash charges were down 23% at the end of Q2 now they are down 29% compared to the respective prior year periods. We saw a 23% improvement in our operating loss on a cash basis for Q3 2025, even with a decline in revenue compared to Q3 2024, highlighting our improved margins and the positive impact that our extensive cost reduction initiatives will have on our bottom line going forward.

We will deploy capital with discipline, ensuring our cost structure remains lean, growing only as we scale and only as our revenue merits doing so. Revenue diversification continues. Roblox opportunities now represent only 42% of our pipeline, down from 57% of our revenue in 2024. 20% of our pipeline is now attached to playable and in-game mobile advertising, which also held steady at 15% of Q3 revenue. Our pipeline overall has been -- become increasingly healthy as we neared the conclusion of our corporate restructuring process. We have 8, 7-figure opportunities active, an all-time high occurring simultaneously.

Our weighted pipeline has increased by 69% in the past 6 weeks. Perhaps most important, our booked revenue for Q4 is already higher than our Q3 revenue, and our revenue picture for Q1 2026 is already approaching our reported revenue from Q1 2025. With a much stronger balance sheet and a streamlined cost and capital structure, we also have been able to reignite accretive M&A conversations that have the potential to accelerate our path to profitability. Based on recent business momentum, it is even more clear we're bolstering our suite of offerings through inorganic growth will have the greatest positive impact.

We also see new opportunity for Super League in the user-generated gaming space. where player levels on Roblox have eclipsed player levels on any other gaming platform in history and where new monetization features have been released on Fortnite Creative. Growth in revenue for individual games makes it attractive to consider taking ownership positions in select games where gross margins are high and our expertise and brand partnerships could lead to revenue expansion. This type of prospective growth is only possible now because of our solid cash position.

One final area we have referenced actively in recent communications, where we see meaningful and outsized potential for value enhancement is in the digital asset space. That does not mean we are determined to launch a digital asset treasury and sideline our operating business. The market has made it clear that, that model has its challenges, particularly with non-core crypto currencies. It does mean we are determined to explore and hope to pursue a strategy that has enduring growth potential. We believe in the sector and see emerging evidence that a model in which there is a symbiotic relationship between a company's operating business and its digital asset treasury can become fuel for material growth. We will share more information on this initiative as we progress towards a target launch of the strategy in Q1 of next year.

Thank you for listening to our extensive update. It is extensive because of this unique moment in Super League's history. In the past 6 months, we have proven what can be accomplished through a determined executive mission and cohesive team unity. We have taken bold steps to overcome significant challenges, made tough decisions and delivered a structural turnaround that sets the stage for lasting growth and renewed value creation for shareholders. With capital raising now behind us, we can channel the same intensity into scaling operations by recapturing our revenue and partnership momentum, pursuing new avenues for business acceleration and continuing to execute at the highest level. I look forward to celebrating our successes with you on future updates.

And with that, I'll turn it back to the operator to start the Q&A.

[Operator Instructions]

Our first question is from Jack Vander from Maxim Group.

This is Jack Codera calling in for Jack Vander. A couple of questions. First, kind of a housekeeping question. Do you expect the current OpEx levels to be kind of the go-forward base? Or do you expect to see more efficiencies realized over the next few quarters given that it's at just above $4 million now.

Our -- we have really worked diligently to reduce our cost structure. We had 75 people on April 1. We're now down closer to 35 people. And we think there's -- we've hit a good spot and have the right level in order to really accelerate growth with renewed momentum. We don't anticipate increasing our cost structure, but I would say we aren't looking at immediate additional reductions.

Okay. That's helpful. And then I have a more general question. Can you give me a commentary from your view, the sentiment around the broader advertising market over the next 12 months. Are conversations with CMOs, do they seem positive? Or does it seem like it's becoming more challenging? Any content and information there would be helpful.

Marketing and advertising budgets are a constant puzzle, and they're a puzzle for everyone at Meta, Google and Amazon, all the way to companies of our size where we are looking for budgets to come into newer channels. What I will say is that over the past couple of quarters and probably through the end of this year, there has been a bit of a flight to safe havens and very performance-oriented advertising solutions, which I think explains one of the impetuses for growth in the advertising results at Meta, Google and Amazon in their Q3 reports.

And that did have an impact on the breadth of money available to companies like Super League in more experimental channels. It does seem that the budgets have opened back up. As I mentioned, the renewed acceleration of our pipeline and the growth that we've begun to see really just in the past 1 to 2 months gives us a fair degree of confidence that budgets are becoming a little bit less tight. It remains to be seen what will happen with the economy and how any rate adjustment or lack of rate adjustment may impact advertiser and CMO budgets. But right now, we're seeing encouraging signs.

Okay. That's super helpful. And then if I could ask one more. You mentioned a little bit about kind of the key growth initiatives, mobile, immersive experiences, pop-ups. And then kind of the inverse of that is the Roblox kind of diversification given the changes to that structure. Where do you see that Roblox mix getting to? And kind of what are the most important, most significant buckets that are going to fill that difference?

Well, the good news is we're starting to fill the difference now. And Roblox will, I expect, continue to represent a meaningful percentage of our revenue going forward. I would be surprised if it dips below 1/3 in 2026. We do see Fortnite growing, Minecraft has continued to be healthy. But honestly, mobile continues to be the area with the largest growth potential because it is an open platform compared to closed environments where platform policies can shift what's achievable for a brand.

And we're quite excited about the Connected TV partnership we recently announced. Connected TV is growing and the opportunity to activate a video ad as a viewer and go into an interactive content experience that's accessible through your television remote is quite exciting. The engagement times are very encouraging, and we see that as an entirely new bucket of revenue that we haven't even been able to pursue in the past.

Our next question today is coming from Howard Halpern from Taglich Brothers.

Congratulations on the quarter and getting the capital structure where it needs to be, that was very impressive.

Thank you, Howard.

You talked about the digital strategy. Have you tapped anybody? Or are you still going through the process of finding the right person to lead all the different intricacies of that of -- maybe a multifaceted strategy.

That's a great question. So we are in an enviable position from our perspective given Evo Funds experience and the principal from Evo Fund is our direct investor and available really on a moment's notice when we have questions and want to discuss ideas and opportunities. So that is a meaningful part of why we have some confidence in evaluating this area. We also have launched a search to bring a Board member into Super League who has deep experience in the digital asset space, have exciting conversations developing there.

We, in addition, anticipate bringing in a handful of advisers with strong track records in the areas that we find most compelling in the digital asset sector, and should be able to talk about some of those advisory relationships perhaps even before the end of the year.

Okay. And when you talked about pop-ups, is that I know it's a high-margin business and expanding, but is that also leading to new customers, like a lead generation that you can prove yourself and then cross-sell into a larger revenue opportunity.

It's as if you're in our sales strategy meeting with that question, Howard, yes, the answer is absolutely. We see pop-ups as, in many ways, the starter package, that will help a brand get into an immersive platform like Roblox or Fortnite before they're ready to commit larger amounts of money. And it's a very efficient quick-to-market solution that takes advantage of the creativity and interactivity you can deploy on those platforms. And when they go well, as I mentioned earlier, you have a much easier time getting renewal business. We've already had 2 of our 1 dozen customers this year renew in the same year. And so we do see it as a low-friction entry point to get into these channels.

And in terms of gross margin, do you anticipate what you experienced in the third quarter to be somewhat of a 4 and you're going to just strive for revenue that provides expanded gross margins, even if it's -- even if first half seasonality is a little low, you're still going to drive gross margin going forward?

Our focus continues to be on making our way to profitability. And as a result, gross margin is always on our minds. We do also recognize that there are some opportunities that come to us where a client asks us to take on more of a general contractor role. And when that happens, there can be meaningful portions of a campaign that we end up passing through to a third-party who is supporting our work, where we do the principal amount of work, they help on the back-end execution.

And so in those circumstances, while the programs and partnerships are more significant and can really help grow the top line, the margins can be a little bit more challenging. However, we wouldn't want to turn down those significant relationships because they tend to last a long time and bring a lot of rewards as we deliver.

We have reached end of our question-and-answer session. I'd like to turn the floor back over to Matt for any further or closing comments.

I would just like to thank everyone again for joining the discussion today and look forward to being back here to talk about the year-end 2025. Thank you again.

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.

Greetings, and welcome to the Super League Second Quarter 2025 Conference Call. Please note, this conference is being recorded.

Before we begin, I'd like to caution listeners that comments made by management during this call may include forward-looking statements within the meaning of the applicable securities laws. These statements involve material risks and uncertainties, and actual results could differ from those projected in any forward-looking statements due to numerous factors. For a description of these risks and uncertainties, please see Super League's financial statements and MD&A for the second quarter ended June 30, 2025, available on EDGAR.

Important qualifications regarding forward-looking statements are also contained in Super League's earnings release distributed earlier this afternoon and also available on EDGAR. Furthermore, the content of this conference call contains time-sensitive information accurate only as of today, August 14, 2025. Super League undertakes no obligation to revise or otherwise update any statements to reflect events or circumstances after the date of this call.

I'd now like to turn the conference over to Matt Edelman, President and Chief Executive Officer. Please go ahead, sir.

Thank you very much, and thank you to all who are joining us today. I'm pleased to bring you our second quarter 2025 financial results and provide an update on our business.

Super League's second quarter was one of transition. We streamlined our operations, closed a series of important financial transactions, forged new partnerships to support our revenue diversification strategy and reinforced our standing with key brand clients with more than 75% of our closed deals coming from repeat customers. Our accomplishments have realigned the company's focus and put us on a determined path towards sustainable profitability. Importantly, we continue to see a compelling long-term growth opportunity that validates our core mission.

Our expertise is in enabling iconic brands and IP owners to engage the legions of consumers whose daily content consumption includes playing games. Whether within massive platforms such as Roblox, Fortnite or Minecraft or the rich universe of mobile games, our playable media and content solutions help brands capture and keep the attention of these audiences who play.

At Super League, we think of play as a state of mind and body. While playing, people are engaged and physically, emotionally connected, aspirational and deeply focused. There is no form of leisure content that inspires more authentic human behavior than play, which makes it the perfect forum for brands and advertisers to build lasting affinity with their desired customers.

Our research shows that there are more than 5 billion people in the world who play in various forms, spending 8 billion hours per day in active play mode, translating to more than 3 trillion hours of play per year worldwide. Audiences who play video games represent the largest segment at 3.32 billion people globally.

One of the powerhouses in the video game industry continues to be Roblox, a user-generated content platform in which every game is created by the community. Think of it as the YouTube of gaming. Roblox recently posted remarkable second quarter results with record high revenue and strong growth in daily active users, hours engaged and average monthly unique players.

In March 2025, a user-created game named Grow a Garden became the largest Roblox game in history and then the largest video game in history in terms of simultaneous players with at least 21.9 million concurrent users, surpassing Fortnite's record of 15.3 million and nearly matching the size of Netflix's audience for their debut NFL games on Christmas Day last year.

The growth and power of interactive entertainment is undeniable with 85% of the total online population playing video games. That includes 98% of Gen Alpha, 96% of Gen Z and 88% of millennials. It is why the International Advertising Bureau has just announced a new measurement framework.

This is where Super League lives at the forefront of this thriving space, punctuated by our recently announced partnership with Advertising Week to launch the first-ever gaming summit at AW New York in October 2025. This summit will showcase the value, effectiveness and scale available within this underappreciated sector with an expert advisory panel of marketers, creators and gaming platform leads.

Why does this matter? Because the story of the opportunity and case study successes must continue to be told. Despite the data, the shift of advertising dollars to meet consumers where they are the most passionate and attentive within interactive digital entertainment spaces is still in its early stages.

Measurement and attribution capabilities that validate the value of digital advertising spends are advancing, but not yet as well established as within other digital media formats. That's the opportunity for Super League to stay in our leading position, to continue helping to define the future and to bring creativity, products and solutions to our clients that raise the bar. Our opportunity is to be the signature company that makes brands playable.

Turning to our recent operating highlights. While immersive gaming platforms like Roblox, Fortnite and Minecraft have been the backbone of our business historically, mobile gaming has emerged as an exciting growth opportunity, leading to our exclusive partnership with AdArcade, whose patented playable ad format outperformed standard playable ads by 3x. We now have access to the entire U.S. population of mobile gamers, representing more than 56% of the country at 191 million people.

Advancing our ability to deliver scalable, brand-safe solutions to advertisers across every consumer segment while diversifying the company's revenue mix. Non-immersive platform revenue in Q2 remained approximately 15% of our total revenue, keeping pace with Q1, whereas we did not have any meaningful mobile gaming revenue in the first half of 2024.

We are particularly encouraged by recent advancements with programmatic advertising partners that we expect to contribute to broader distribution of this unique playable media product in the second half of the year. With an eye towards further revenue diversification and complementing our current market opportunity, we announced an expansion of our partnership with Meta-Stadiums that propels Super League into the TikTok ecosystem through their Metastars Creator Network, an AI-powered TikTok-centric monetization platform.

This expanded collaboration aligns with our strategy to bring innovative solutions to brands across gamified content systems with TikTok leveraging mobile gaming engagement and monetization best practices that drove more than $6 billion of in-app purchase revenue in 2024, including through the Chinese version named Douyin.

We expect to see revenue from this initiative beginning in Q4 of this year and then scaling across 2026 through content, commerce and campaign activations. With the importance of reliable data only increasing as the fuel powering the engine of businesses, we launched our first subscription product tied to immersive gaming named Roadtrends Pro.

Roadtrends is a Roblox trend intelligence analytics tool, providing actionable Roblox trend insights and unlocking new information for marketers, developers, investors and analysts. The response has been encouraging with a broad array of subscribers already validating the opportunity. We see Roadtrends as another new contributor to revenue that can help accelerate our path to sustainable profitability while underpinning our company's leading position.

While our gross revenue reflected caution from marketers to max out their Q2 budgets due to tariff uncertainty, our client partnerships included programs with an enviable list of companies such as Disney, Mattel, LEGO, Hasbro and Logitech. We broke into the sport of golf with Augusta National and the Masters as well as the USGA, driving more than 120 million impressions with Gen Z and Gen Alpha audiences.

We expanded on our past success in the finance category with Visa through an initial campaign with Ally, and we continued our work with long-time partner, Chipotle. In April, at the IAB PlayFronts, the Advertising Bureau's dedicated marketplace showcasing advertising and sponsorship opportunities in the gaming industry, we introduced new products that have already been brought to life through 2 first-to-market opportunities.

One is the recent launch of a bold first-of-its-kind campaign across both Fortnite Creative and Roblox with Panda Express and their creative agency, The Many. The activation continues to demonstrate the power of playability to drive memorable brand engagement and transform a product launch into a hands-on shareable adventure.

The second is a never-before-seen cross-platform program featuring interactive 3D characters on Roblox, Fortnite Creative and Minecraft, done in partnership with Universal Pictures for their animated film, Bad Guys 2. Just this week, we were proud to partner for the third year in a row with Hiku on a multidimensional Fortnite creative campaign. Their products look like they were designed to live inside video games.

Also in Q2, we acquired Super Social, an award-winning Roblox studio with past clients, including Gucci, e.l.f. Beauty, Walmart, Universal Music, Heidi Klum and others. That addition expanded the brand partnership structure and resulted in a Roblox business that has delivered 49 immersive builds, racking up more than 390 million visits and 3 billion impressions on the platform.

We continue to look at select opportunities within a fragmented industry to consolidate assets and capabilities through attractive accretive acquisitions. In terms of our financial results, our Q2 revenues grew sequentially by 10%, but decreased 27% on a year-over-year basis due to macro headwinds largely attributable to tariff uncertainty and as we complete the process of adapting to the structural shifts in the Roblox ad ecosystem as previously discussed.

With that said, our relentless focus on higher-margin revenue is paying off with Q2 gross margin at 44% compared to 40% in Q2 a year ago and up from 38% in fiscal year 2024. Our cumulative cost reductions, as previously announced, further led to the 23% pro forma operating expense decrease in Q2 2025 compared to the prior year quarter. Most encouraging as we look to the second half of the year with the hard restructuring work behind us, we see promising signs on the revenue front.

Of note is our East Coast sales performance. New York is the largest advertising market in the world and had been under-resourced, leading to the bulk of our revenues coming from West Coast-based brands and relationships. With team members anchored in New York and Chicago and a new regional leadership installed in Q3 2024, we have broken through and begun to unlock the potential of this invaluable market.

Our East Coast sales revenue was up 150% through June 30

Compared to the first half of 2024 with our top seller having achieved almost 100% of his annual $3 million target in just the first 6 months, knowing that more advertising dollars are put to work in the back half of the calendar year, we see this progress as setting a new benchmark for sales force efficacy with annual revenue targets per seller of $5 million or more being possible in the future.

Our strategic work in Q2 was no less ambitious. As part of further streamlining our focus on reducing operational costs, we divested our Minecraft property in PVP to Mineville, through the all-cash transaction, we became Mindville LLC's exclusive partner for brand partnerships and advertising sales, expanding our access to Minecraft audiences.

Simultaneously, much of our effort has been focused on the necessary improvements to our capital structure and balance sheet. We've made substantial progress, curing our annual meeting and $1 bid price NASDAQ deficiencies, securing $6.6 million in cumulative new capital since early May. $4.5 million of which closed in the form of a convertible note with a conversion price premium to market just subsequent to the end of Q2.

We also took steps to reduce our 2025 debt service obligations by 90% from $5.7 million to $600,000, including the conversion of high interest debt facilities into equity, and we established a $20 million equity line of credit. The benefits of these transactions will kick in during the second half of the year with greater operating leverage and corporate flexibility that allows us to pursue a broader range of strategic and capital market opportunities.

Taken together with our continued focus on revenue diversification and gross margin expansion, we remain on track and committed to delivering adjusted EBITDA positive results in Q4 of this year.

Finally, less you think we are unlike so many microcap companies in today's market, we are exploring opportunities in the cryptocurrency space. We are particularly enthusiastic about the recent passes GENIUS Act, which has established a regulatory framework for launching stablecoin-powered programs that have the potential to drive deeper, more consistent and more enduring consumer engagement for brands and advertisers. I'm grateful for your ongoing support and prom never to waver in my determination to lead Super League towards a more successful future.

And with that, I'd like to turn it back to the operator to start the Q&A.

[Operator Instructions] Our first question today is coming from Jack Vander Aarde from Maxim Group.

This is Jack Codera calling in for Jack Vander Aarde.

Can you touch a little bit on the new revenue lines? I think you highlighted mobile has already grown to about 15% of total revenue. You're seeing potentially more programmatic in the future, a new subscription service. From a high level, can you kind of describe the scope of the opportunity of each? And then maybe like a year or 2 ahead from now, what do you expect the mix to look like?

Jack, it's good to have your question. Thank you and a good question. So this year, the real opportunity will likely remain in mobile in terms of diversification. The subscription product and our partnership to move into TikTok will really just be getting started this year and probably not be as material certainly compared to mobile. Our target for mobile has been to get it closer to 25% of our revenue this year. We're still aiming for that target. We'll certainly get closer. And then as we look to next year, I think what we're really hoping is that the immersive platforms in general represent more like 50% to 60% of our revenue with 40% to 50% coming from these other areas that are still connected, of course, to reaching gaming and gamified content platforms.

Okay. That's super helpful. And then given a little bit of efficiencies, do you see your expenses to be -- do you expect this to be kind of like $1.7 million, $2 million-ish to be kind of the quarterly run rate of OpEx? Or do you expect that to kind of on a go-forward basis, maybe creep up? Any commentary there would be helpful.

I mean we are -- we don't have any plans to increase our expense footprint. We think we have rightsized the business for what the company needs to achieve in order to get to profitability.

And that's our determined goal and the outcome that we're working hard to achieve. The actual flow of dollars will continue to be somewhat seasonal with the advertising industry, typically spending more money in certain quarters over others in the back half of the year being stronger, and so while we don't anticipate any growth on the expense side, there will be a bit of a likely dip in sort of our revenue in the first half of next year like there has been historically and then an acceleration in the second half like there has been historically.

Congrats on the solid quarter.

Thank you.

Our next question today is coming from Howard Halpern from Taglich Brothers.

Congratulations on the progress that you've made so far in Q2. In terms of what you're seeing your customer base, has that hesitation started to abate and activity increased in -- so far in Q3?

That's a great question, Howard. Thank you, and good to hear your voice. The answer is yes. The fear we had in late Q1 and early Q2 was that budgets were going to be cut. And thankfully, that's not what occurred. They were just paused. And so a number of campaigns were pushed out a bit further than they had initially been planned to run. And a lot of the budgets that were sort of sitting on the sideline have opened up since then.

And so we are seeing stronger signs than we've seen in the past relative especially to and are very encouraged based on that shift.

And just maybe enlighten us on your thinking, you moved -- you said to New York, Chicago some people and team.

What is the cycle going to be like as they start to get close to their, what you call them max capacity and you're adding new people, what kind of cases could we possibly expect growth from that -- from your sales force?

That's another good question. So from our experience, when you bring somebody new into your sales organization, it's a solid 6 months before they are sort of operating at full throttle.

And so as it relates to the East Coast, the fact that we are seeing some quite encouraging results does reflect that the team across Chicago and New York really did begin to solidify late last year. And so we think that they're -- they've just begun hitting their stride, and it's one of the reasons we're encouraged by the second half of the year.

Okay. And also from your perspective, are you looking for potential partnership or maybe a small acquisition to exploit or trying to way to exploit the GENIUS Act going forward or bringing someone new into the organization that has some experience with stablecoind.

I'm glad you asked about that. We have a handful of ideas as to how the GENIUS Act might open up business opportunities for Super League. We are surrounding ourselves with the right expertise and the right potential partners to make sure if we enter the space, it's from the right starting point with the right foundational elements.

There is no need in today's world to build those elements from scratch. And now that the regulatory framework makes it possible to really put together a compelling consumer-facing proposition, leveraging infrastructure that other companies have built is a pretty profound opportunity.

And do you see that opportunity in terms of payments or more that the consumers of your customers in control of their digital footprint.

So I'm not sure that where we would see the opportunity is about the way that customers would possibly manage their identity through the blockchain or other parts of the crypto ecosystem. I think for us, it's really about looking at new models for consumer engagement and helping our partners understand those models and take advantage of what's achievable, particularly because of the nature of how the GENIUS Act was designed.

Okay. It's interesting. I know it's like plan new for many different industries out there, but I'm glad you're exploring it. And keep up the great work.

Thank you very much, Howard.

We reached our question-and-answer session. I'd like to turn the floor back over for any further closing comments.

Thank you again for joining the call today and hearing about our progress. We are excited to be back here telling you about our achievements in Q3 and hope you will stay tuned to what we're able to talk about between now and then.

Thank you again.

Thank you. That does conclude today's webcast. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.