Exhibit 99.1
SUPER LEAGUE GAMING REPORTS FOURTH QUARTER
AND FULL YEAR 2020 RESULTS
Highest quarterly revenue level in company’s history nearly
triple 2019 level
Proposed acquisition of Mobcrush sets stage for accelerated growth
in 2021
Santa Monica, Calif. – (March 11, 2021) - Super League Gaming
(Super League or the Company) (Nasdaq:
SLGG), a global leader in competitive video gaming and esports
entertainment for everyday players around the world, reported
recent operational developments and financial results for the
fourth quarter and full year ended December 31,
2020.
Highlights and Recent Operational Developments
●
Proposed
acquisition of Mobcrush greatly expands the Company’s
technology and audience platform, positioning Company for
step-function increase in revenues;
●
Fourth
quarter revenues reach record $779,000 in 2020, up 197% compared to
2019;
●
Full
year 2020 revenues of $2.1 million, up 90% from $1.1 million in
2019;
●
Fourth
quarter gross profit margins increased 1300 basis points to
62%;
●
Full
year 2020 gross profit margins rose 600 basis points to
59%;
●
2020 views and
impressions reached 2.03 billion vs. 120 million in
2019;
●
Registered users
nearly tripled to 2.9 million in 2020, up from 1.0 million in
2019;
●
Total engagement
hours climbed to 72 million in 2020 compared to 15 million in
2019.
Management Commentary
“We
are very pleased with the results and developments we were able to
achieve in 2020, not only in the fourth quarter but all
year,” said Ann Hand, Chief Executive Officer of Super League
Gaming. “We were able to turn challenges into opportunities
and deliver very strong revenue growth. More importantly, we have
transformed the company with several strategic moves, especially
our proposed acquisition of Mobcrush, announced earlier today.
With this acquisition we are building
a formidable, highly scalable gaming-centric media and advertising
platform that reaches one of the largest addressable audiences of
gamers in the U.S. The revenue opportunities available through our
combined advertiser solutions, as well as growth in direct gamer
and content monetization, are tremendous. Super League ended
2020 with powerful financial and operating momentum, and we have
built on that momentum so far in 2021. We expect 2021 to be a
break-out year as we capitalize on our position in the dynamic
world of competitive video gaming.”
Fourth Quarter 2020 Financial Results
Revenue in the fourth quarter of 2020 increased 197% to $779,000,
compared to $262,000 in the comparable prior year quarter.
Advertising and content related revenues, which includes brand
sponsorships and customized brand partner programs, traditional
advertising and third-party content licensing, comprised
approximately 92% of revenues for the fourth quarter of 2020, as
compared to 97% for the comparable prior year quarter, and
increased 181% compared to the prior year quarter. The increase was primarily driven by the growth in
advertising revenues on our owned and operated digital channels,
reflecting the significant increase in our advertising inventory
during 2020, and a significant increase in third-party content
sales of our proprietary and user-generated
content. Direct-to-consumer revenues
comprised approximately 8% of revenues for the fourth quarter of
2020, as compared to 3% for the comparable prior year quarter, and
increased significantly compared to the prior year quarter,
continuing our trend of increasing direct-to-consumer monetization
during fiscal year 2020.
Fourth quarter 2020 cost of revenue increased 121% to $296,000
compared to $134,000 in the comparable prior year quarter, compared
to the 197% increase in revenues for the same quarterly periods,
due primarily to the increase in related revenues. As a percent of
revenue, gross profit in the fourth quarter of 2020 rose 1300 basis
points to 62% compared to 49% in the prior year quarter. The
less than proportionate increase in cost of revenue was driven by
the significant increase in lower cost advertising and third-party
content sales revenues in the fourth quarter of 2020 compared to
the prior year quarter.
Total operating expense in the fourth quarter of 2020 was $5.2
million compared to $4.8 million in the comparable prior year
quarter. The increase was primarily due to increased selling,
marketing and advertising expense in support of the increased
revenue, as well as an increase in technology platform
infrastructure costs, partially offset by a decrease in noncash
stock compensation expense. Non-cash stock compensation charges for
the fourth quarter of 2020 and 2019 totaled $434,000 and $951,000,
respectively.
On a GAAP-basis, which includes the impact of noncash charges, net
loss in the fourth quarter of 2020 was $4.7 million or $(0.31) per
share, relatively flat compared to a net loss of $4.7 million or
$(0.55) per share in the comparable prior year quarter. The
weighted average diluted share count for the fourth quarter of 2020
was 15.5 million compared to 8.6 million for the fourth quarter of
2019.
Proforma net loss for the fourth quarter of 2020, which excludes
the impact of noncash charges, was $4.3 million compared to $3.7
million in the comparable prior year quarter. As noted above, the
change was primarily due to an increase in sales, marketing and
advertising expense, as well as higher technology platform
infrastructure costs, partially offset by the increase in higher
margin advertising and third-party content sales revenue in the
fourth quarter of 2020.
Full Year 2020 Financial Results
Revenue for the full year 2020 increased 90% to $2,064,000,
compared to $1,084,000 for the full year 2019. Advertising and
content related revenues, which includes brand sponsorships
and customized brand partner programs, traditional advertising and
third-party content licensing, comprised approximately 92% of
revenues for the full year 2020, as compared to 97% for the full
year 2019, and increased 81% year over year. The increase was
primarily due to an increase in advertising revenues, driven in
part by advertising programs with Netflix and Disney+, as well as a
significant increase in third-party content sales of our
proprietary and user generated content driven primarily by our
sales activities with Snap, Inc. Direct to consumer revenues,
primarily comprised of revenues generated from our Minehut digital
property, increased over 300% year over year, reflecting our
continued focus on the acceleration of our direct to consumer
monetization.
Full year 2020 cost of revenue increased 67% to $856,000 compared
to $513,000 for the full year 2019, compared to the 90% increase in
revenues for the same periods, due primarily to the increase in
related revenues. As a percent of revenue, full year gross profit
in 2020 rose 600 basis points to 59% compared to 53% in
2019. The less than proportionate increase in cost of
revenue was driven by a significant increase in lower cost
advertising and third-party content sales revenues in fiscal year
2020. In addition, as a result of the various shelter in place
orders in connection with the global response to the COVID-19
pandemic, we reduced our physical/in-person gaming activities
during fiscal year 2020, which typically have higher direct cost
profiles, which to a lesser extent, also contributed to the less
than proportionate increase in cost of revenue for the periods
presented.
Total operating expense for the full year 2020 decreased to $20.0
million compared to $21.3 million for the full year 2019. The
reduction was primarily due to a decrease in noncash stock
compensation expense, which
totaled $2.0 million in 2020, compared to $6.2 million in 2019.
Excluding stock-based compensation expense, total operating expense
in 2020 was $17.9 million, up from $15.1 million in 2019. The
change reflects an increase of 18% in selling, marketing and
advertising expense in
connection with the investment in our direct sales force,
a 34% increase in technology and
platform infrastructure costs due primarily to the surge in
engagement across our digital properties in 2020, and a 9% increase
in general and administrative expense due to an increase in
corporate insurance costs and a full year of public company related
costs.
On a GAAP-basis, net loss for the full year 2020 was $18.7 million
or $(1.64) per share, compared to a net loss of $30.7 million or
$(3.89) per share for the full year 2019. In addition to the
non-cash compensation charges described above, net loss for the
full year 2019 included noncash interest expense related to
convertible debt totaling $9.9 million. All principal and interest
related to the Company’s convertible notes was automatically
converted to equity upon the close of the Company’s IPO in
the first quarter of 2019. The weighted average diluted share count
for the full year 2020 was 11.4 million, compared to 7.9 million
for the full year 2019.
Proforma net loss for the full year 2020 was $16.3 million compared
to $14.5 million for the full year 2019. As noted above, the change
was primarily due to higher operating costs which more than offset
the increase in gross profit.
At December 31, 2020, the Company’s cash position totaled
$7.9 million
, compared to $8.4
million at December 31, 2019.
Recent Activities
In January and February 2021, the Company closed registered
direct offerings of an aggregate of 3.1 million and 2.9
million shares of the Company’s common stock, raising gross
proceeds of approximately $8.0 million and $12.0 million,
respectively. Please refer to the applicable Current Reports on
Form 8-K filed with the Securities and Exchange Commission
(“SEC”) for additional information.
On March 9, 2021, the Company entered into an Agreement and Plan of
Merger (the “Merger Agreement”) by and among Mobcrush
Streaming, Inc. (“Mobcrush”), the Company and SLG
Merger Sub II, Inc., a wholly-owned subsidiary of the Company
(“Merger Co”). The Merger Agreement provides for the
acquisition of Mobcrush by Super League pursuant to the merger of
Merger Co with and into Mobcrush, with Mobcrush as the surviving
corporation (the “Merger”). Upon completion of the
Merger, Mobcrush will be an indirect, wholly-owned subsidiary of
the Company. The proposed merger is subject to certain customary
closing conditions, including obtaining approval from a majority of
the Company’s shareholders at a special meeting that we
expect to be held before the end of April 2021. Please refer to the
Current Report on Form 8-K filed with the SEC earlier today for
additional information.
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern
time to discuss its fourth quarter and full year 2020 results and
provide a business update.
Date: Thursday, March 11, 2021
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: (866) 987-6716
International dial-in number: (630) 652-5945
Conference ID: 8866978
Please call the conference telephone number 5-10 minutes prior to
the start time. An operator will register your name and
organization. If you have any difficulty connecting with the
conference call, please contact Gateway Investor Relations at (949)
574-3860.
The conference call will be broadcast live and available for
replay here
and via the investor relations section
of the Company’s website at www.SuperLeague.com.
A replay of the conference call will be available after 8:00 p.m.
Eastern time on the same day through March 18, 2021.
Toll-free replay number: (855) 859-2056.
International replay number: (404) 537-3406
Replay ID: 8866978
About Super League Gaming
Super League Gaming (Nasdaq: SLGG) is a leading gaming community
and content platform that gives everyday gamers multiple ways to
connect and engage with others while enjoying the video games they
love. Powered by patented, proprietary technology systems, Super
League offers players the ability to create gameplay-driven
experiences they can share with friends, the opportunity to watch
live streaming broadcasts and gameplay highlights across digital
and social channels, and the chance to compete in events and
challenges designed to celebrate victories and achievements across
multiple skill levels. With gameplay and content offerings
featuring more than a dozen of the top video game titles in the
world, Super League is building a broadly inclusive, global brand
at the intersection of gaming, experiences and entertainment.
Whether to access its expanding direct audience or the
company’s unique content production and virtual event
capabilities, third parties ranging from consumer brands, video
game publishers, television companies, traditional sports
organizations, concert promoters, and more, are turning to Super
League to provide integrated solutions that drive business growth.
For more: 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 our possible or assumed business
strategies, potential growth opportunities, new products and
potential market opportunities. Risks and uncertainties include,
among other things, our ability to implement our plans, forecasts
and other expectations with respect our business; our ability to
realize the anticipated benefits of events that took place during
and subsequent to the quarter ended December 31, 2020, including
the possibility that the expected benefits 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 on 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 results are 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, 2020 and other filings that we make from time to
time with the Securities and Exchange Commission 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 Report on Form 10-K
for the period ended December 31, 2020, which financial statements
were prepared and presented in accordance with GAAP, this earnings
release includes proforma 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 proforma net loss, proforma 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
stock compensation charges, non-cash interest charges on
convertible debt, and non-cash prepaid in-kind advertising charges
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.
Proforma Net Loss and EPS. We define Proforma Net Loss as net loss
calculated in accordance with GAAP, but excluding non-cash stock
compensation charges, non-cash interest charges on convertible debt
(including accrued periodic interest, periodic or accelerated
amortization of debt discount charges and charges related to
convertible debt related beneficial conversion features), and
non-cash prepaid in-kind advertising charges. Proforma EPS is
defined as Proforma 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.
Non-cash interest charges related to convertible debt outstanding,
if any, including accrued periodic interest, periodic or
accelerated amortization of debt discount charges and charges
related to convertible debt related beneficial conversion features,
primarily reflects the attribution of value to common stock
purchase warrants and the beneficial conversion feature embedded in
the convertible debt instruments, and the expensing of these
amounts on a straight-line basis over the term of the convertible
debt as additional interest cost related to the debt. These
non-cash amounts are reflected in other expense and are not
expenses associated with our core business operations. Management
believes that providing a non-GAAP financial measure that excludes
non-cash interest charges 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 proforma 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 and debt related interest
charges that are or may be recurring, and that may or will continue
to 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
common stock purchase warrants and beneficial conversion features
embedded in convertible debt outstanding is a critical component of
the cost of debt financings. 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:
Sean McGowan and Cody Slach
Gateway Investor Relations
(949) 574-3860
SLG@GatewayIR.com
Media Contact:
Gillian Sheldon
(213) 718-3880
Gillian.Sheldon@superleague.com
SUPER LEAGUE GAMING, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
SUPER LEAGUE GAMING, INC.
Reconciliation of GAAP to Non-GAAP Financial
Information
(Unaudited)
SUPER LEAGUE GAMING, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)