Super League Enterprise, Inc. Q4 FY2025 earnings call

Matt Edelman mentioned 2025 was a defining year with simplifying capital structure, streamlining cost base, strengthening balance sheet, and refining operating model. Established debt-free balance sheet with over $14 million in capital and removed going concern language. Announced acquisition of Misfits Ads division, profitable unit expected to increase revenue, expand margins. Fourth quarter had programs with Regal Cinemas, H&R Block, expanded with Panda Express, supported Paramount+ and Paramount Games launches, collaborated with Tiffany. Diversified revenue base with more balanced mix across platforms. Strategic deals in 2026 helped establish integrated operating framework.

For the fourth quarter of 2025, it was the strongest revenue quarter of the year, up 32% over Q3 2025 and close to prior year quarter's revenue level. Quarterly gross margins were higher than one year prior. For the full year, pro forma cash basis EBITDA improved 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. Gross margin improved to 40% for the year, up from 38% in 2024. Revenue mix is more balanced across Roblox, Minecraft, Fortnite, and mobile playable ads. The acquisition of Misfits Ads division is expected to increase revenue, expand margins, and contribute to cash basis EBITDA profitability.

Expect Q1 2026 revenue to be ahead of Q1 2025. Q2 2026 to show more meaningful progress from transformation. Anticipate cash basis EBITDA profitability within reach by year end. Acquisition of Misfits Ads division expected to contribute net revenue equal to approximately 50% of 2025 net revenue (subject to stockholder approval). Hoping gross margin can get closer to 45% for full year 2026.

Comments made by management may include forward-looking statements with material risks and uncertainties. Actual results could differ due to numerous factors. See Super League's financial statements and MD&A for details. Market developments in Q4 2025 related to digital assets evaluated thoughtfully but uncertainties exist.

Q: Regarding cash-based EBITDA profitability, progression in 2026.

A: 2026 in three phases: Q1 lag from restructuring work, Q2 visible inflection with stronger pipeline and scalable offerings, second half about delivery with lower cost base and Misfits acquisition integration.

Q: Acquisition of Misfits Ads division, texture on strategy and financial metrics.

A: Collaboration with Misfits Gaming Group led to deal size increase, benefits include consolidating complementary businesses, access to Roblox game portfolio, net revenue contribution expected to be 50% of 2025 net revenue (subject to stockholder approval), profitable team.

Q: Gross margins, structural and sustainable, progression to EBITDA profitability.

A: Seasonality in advertising causes Q4 margin compression, expect to maintain 40-45% margins, hope full year gross margin closer to 45%.

Q: Diversification of revenue stream, mobile gaming growth in 2025 and potential in 2026.

A: Mobile gaming revenue in Q4 2025 over 25%, ended 2025 at ~20%, Roblox revenue diminished to under 40%, Fortnite and Minecraft at ~30%, 2026 to have further diversification including connected TV, web gaming, PC gaming.

Q: First quarter revenue, gross margin outlook, core revenue drivers.

A: Q1 likely lag from transition period, Q2 expected to see gross margin return to 40+%, core revenue drivers include mobile playables, Fortnite, Minecraft, and Misfits acquisition.

Q: Acquisition strategy, Misfits fit into revenue model and psychology of play.

A: Focus on integrating Misfits Ads division, keeping eyes out for potential M&A, Misfits has programmatic revenue, rewarded video technology, fits with psychology of play using data from gameplay and Solstin for targeted advertising.