Super League Enterprise, Inc. (SLE) Earnings Call Transcript & Summary

Hello, and welcome to Super League Enterprise Inc.'s Virtual Non-Deal Roadshow. 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, uncertainties, and actual results could differ from those projected in any forward-looking statement due to numerous factors. For a description of these risks and uncertainties, please see Super League's SEC filings available on the company's IR website or sec.gov. Furthermore, [Audio Gap] it contains time-sensitive information accurate only as of today, January 17, 2024. 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 Ann Hand, Chief Executive Officer. Please go ahead, Ann.

Thank you so much, and good morning, everybody. Whether you're new to Super League or you're an existing investor or maybe just somebody who's been taking a look at our SLE stock for some time, we're excited for the new year, in many ways a new day, and a chance to talk to you a little bit more about why we're so excited about what we're building here at the company. As you can see, I have a kind of very inspired background right now, and many of you are looking at me from a computer screen or a phone or maybe on a tablet, but either way, even in simple ways, in a 2D environment, you can feel the depth of interactivity, and that's really what we do so powerfully for brands as we help them speak what we believe is the future of advertising, which is 3D engagement. And then when you get into spatial computing and gaming engines, you can see how we can take that and really turn powerful experiences through a 3D lens into something that creates real meaningful engagement with young consumers. So with that, I'll go ahead and share my screen. It just takes a second to boot up in full screen experience here in Zoom, and we will kick-off. So as I said, we have a strong point of view on where we believe that ad spend is going in the future, and what we've done is we've been building out an operating system for what we like to call the 3D Web. Now, keep in mind, when we talk about 3D Web, virtual world gaming platforms. We're still not talking about things that are dependent on expensive investment and hardware, be our headsets. We're not talking about things that are dependent on the interoperability between various world gardens or platforms or blockchain, right? We're talking about really the existing technology that is already driving some of the most popular gaming platforms in the world that allow a real spatial experience for consumers, one that's quite intimate and sticky. Currently, we continue to reach well over 120 million unique players a month, giving us more than enough scale to deliver any advertiser's objectives, and we're proving that we are a one-stop shop for these global marquee brands. And we'll go a little deeper into who those brands are, but it's really powerful when you look at the size of the deals that we're doing, the more persistent programs we're running for various brands and IP owners. It's proving that we've become a go-to part of their marketing strategies, and as well, they're putting more dollars to work with us, and that's important. When you look at our recent win, a really notable win with Kraft Lunchables that came through Publicis, one of our advertising agency partners, it was a $3.8 million program that we're still running over the course of January on behalf of this powerful client that we have. But $3.8 million that they're putting to work through our operating system is proof that we have built something very unique. Not only do we create powerful, immersive experiences for brand, but we also have a slate of proprietary, immersive media products coupled with the very robust inventory of Roblox ad inventory we sell on their behalf as a strategic partner. And on top of it, additional strategic consulting fees, influencer marketing. We're able to package up full campaigns, full 360 campaigns, and be that single point that the brands come to, to deliver the entire activation. That makes us unique. No one else, in our opinion, can do that. No one else can take that Lunchables program at $3.8 million and deliver it as a single source holistically in such a powerful way. We served over 100 brands in 2023, built 26 immersive, unique experiences. Pretty much every week at Super League, we're launching something really powerful out into the universe to talk to audiences and really engage them with these powerful brands. In some cases, we were reaching peak engagements of 30 minutes or more. So again, that's kind of like product placement on steroids, right? And so really powerful engagement, but also we are showing that we can really powerfully lead to conversion and impact the P&L for the brand, which is ultimately what matters most. And the important message, too, for investors we want to make is that we've done a lot of hard work the last year and a half. It's not been an easy market, right? You've all felt the pain as well as investors, but we really feel like we put the company in a good position. We've shored up our balance sheet. We have no debt. We stripped about 33% of the cost out of the company, which you can see powerfully in the Q3 results we just reported on, that full year impact of that, that pretty significant cost reduction. So we have a lean operating structure and that's put us in a position to make 2024 our year where we can see break-even in our path to profitability. We know you've been waiting for that just like we have. We know that, that will have a really important impact on the performance of our stock and just the overall health of what we've built here. We continue to have step-change revenue growth. That's always been job #1. We believe that this is such a nascent space that we've been in for the last 3 to 4 years and that there's so much opportunity and upside. So we're pleased to report that we went from about $19 million in revenue in 2022 to about $25 million in 2023. Still closing out our books, that number might go up a little bit, but at a minimum, we know that we've hit that 25 plus marker and we think that's a powerful, again, marker to show that consistent year-on-year growth that we've been achieving. So, now let's talk just a little bit about the 3D Web. And we're going to go high just for a minute because again, many of you are new to the stock, and I think it's important that we frame the opportunity set. As I said, we have a point of view that while this in the early days looks like a small piece of the way advertisers communicate, this is the way that young consumers want to engage with brands. And the power is that, when you're inside these 3D or virtual world platforms, it's no longer your mouse that is guiding your experience. The way that your mouse or your finger click is what guides the experience for you on the internet. When you're going through different social media feeds or maybe you're clicking through websites, trying to find certain things that you're looking for. In this case, in the 3D Web, it's personalized. So it's your own avatar that is engaging in a very personalized experience in these environments. Now, so while you know about Super League and you know that we used to have the word gaming in our name and we did because we were rooted in open gaming platforms, platforms like Roblox, Minecraft and Fortnite. And that's still where we do the lion's share of our work. The truth is, is the engines those are built on can be used for all kinds of experiences, including brands and companies own dot-com experiences. And there's lots of different virtual world platforms out there that will gain more traction. And so we like to see ourselves as a company that has built out a tech and capability stack that right now is successfully creating and monetizing in these massive existing game platforms. But with the capability to really build out something that can serve again as an operating system for the 3D Web against multiple channels and omni-channel strategy for brands as they start to just speak this new language to consumers, this language of 3D engagement. So just real quickly, some of the numbers, 3 billion plus gamers on the planet, about 500 million plus are in what we call again, these immersive platforms. And it's astounding the amount of time that they're spending. Again, the biggies continue to be Roblox, Minecraft, Fortnite, but there's up and comers, Rec Room, Zepeto and others. The key here is, and this is what I say often to CMOs, is what you have to understand is the audience has already moved. It's just that your ad dollars haven't caught up yet, but the audience is there. Brands know this, they can see the audience shift. It's just that it's no differently than the onset of the internet or social media. It's just a new marketing channel. And it's one that's just taking them a little bit of a time to understand how the engagement is different. And look, you can look all across the internet and you're going to see tons of big name brands that are already diving in. They're diving in, why? Because it's a really accessible way to build fandom. You can have a pop concert in an arena somewhere physically and only reach 20,000-50,000 people. But if you do something inside an environment like Roblox, you have the potential to reach tens of millions of fans. And so that's powerful, that kind of reach that you can get. Again, the accessibility, the deep engagement, the intimacy as well. But then again, it also leads to new revenue streams and conversion, which is important. We often talk about the total addressable market for Web3, but it's astounding, right? It's $49 billion plus and growing. And it's kind of hard to get your head around that too, because you have to remember, there's all kinds of aspects of Web3 in there. A little bit more of a digestible kind of number there is the amount of money that's being spent in in-game advertising. There's a lot of money being put to in-game advertising, but I often say it's such a small fraction of the trillions of dollars of ad spend out there. And I really believe that we're not competing for the in-game advertising of old. We're really competing in a much bigger way for the powerful competition we create with traditional spend on the internet and social media. And again, often with investors and also with brands, I highlight the importance of noting that, this is just a new extension of your social media or internet spend budget. It should be fighting for that wedge of spend against it. It's just a better use of that spend because you're going to get higher performance from it. But let's talk about why 3D engagement is so powerful. 3D content has a 252% higher engagement rate, and a 40% higher conversion rate. So it performs. And if you look at the numbers again, you can't dispute it. The average Roblox player spends about 156 minutes a day playing Roblox. The next closest engagement is 95 minutes a day on TikTok. So again, the audience is there. The engagement is already 1.5x TikTok or more. The other thing that sometimes is a little kind of shocking to hear, but it's powerful too. And it's a positive thing in my opinion. 70% of U.S. consumers believe their digital identity, that digital avatar is just as important as their real life one. Now keep in mind, that doesn't mean that people are living completely in an immersed land and a fantasy extension of who they are. No, it's different than that. It's actually a positive extension of their real self. In fact, it's a place where you can test the boundaries of self-experimentation and different hairstyles, different ways to enjoy things that you love digitally first before you try them in physical real life. And so it's really a positive thing. And the important thing too is to remember, it's not really separate lives, right? They see this as an extension of their physical selves and so we often talk about that blended life or that digital life. And they're meeting brands first in most cases in these digital environments. And so it's really the new way to introduce a brand to young audiences and then drive them into becoming physical, loyal consumers for life. Now, there's 3 major trends that we drag off of as a company and they're powerful. First is that notion again of digital commerce and that blended life and how you use spatial commerce, that digital experience to create a physical connection or conversion to the world. The other reason that we're here is you can't deny the power of these co-creation platforms. That's been a trend that's been happening now for 10 years, 15 years. Co-creation platforms, TikTok's a co-creation platform, Instagram is. They're giving you the tools for you to be the content creator and make powerful content for yourself. So anybody can be a content creator. Roblox is the same. There are hundreds of thousands of games on Roblox, right? Because anybody can make a game map or a mini game inside. And that's the power because it enables us to make those game maps and worlds for brands. And it allows us to partner. We partner right now with about 3,000 other game maps or worlds as well in Roblox to further expand our extension and reach. So that democratization of content creation is a powerful trend that has fueled our positioning. And then AI led transformation. I mean, people often think of AI as a separate thing to invest in, but AI fuels everything we do as well. The power of the way that we can use AI to speed up our development process. We can use AI to smartly extract information, powerful data out of the consumers that we reach in a fast, smart way, or react to the ways that they want to engage with brands so that we can keep that brand conversation going in a way that is of relevance. So there's so many powerful ways that we can just use smart thinking built-in in a more productized way into what we do so that we can extract more information, more powerfully to turn it into conversion or insights for brands. So, at Super League, what we've done is we've built, again, this powerful engine that we believe is the comprehensive team and solution to address the future of the 3D Web in many ways. It's important that we talk a lot about what we do. We're the immersive experiences we build, our proprietary media products, the creative solutions that we augment programs with. We do have a really powerful analytics suite. And one of the reasons we're often hired is because we can do the power of the full program plus that capability to add that additional layer of measurement and insight for brands so that they can get smarter about the consumers and the engagements that they want to deliver against. But at the end of the day, aside from our tech, it really is about the team, Super League. And it's important to note because what's happening now, and I think Kraft Lunchables is a perfect example of it, is we're getting hired just as much because we're the strategist, first and foremost, that the brand needs in the room. We've been at this in this space for close to a decade. When you look at our earliest days and the work we were doing with Minecraft and then increasingly Roblox and understanding, again, this language of 3D engagement and what these consumers want their relationship to be with brands that they're meeting or deepening connections with. And what we're finding is, is that often these brands are saying, I need you first in the room to explain this to me. And I need you to help me Kraft a relevant appropriate strategy to start walking into this space. That is how we won that Kraft Lunchables $3.8 million deal. It's because Publicis as a partner turned to us and said, we think you guys are the ones who can do this, who can run this large complex program with multiple partners and really deliver something that's powerful. So I never want to undersell the power of the team and the league and the knowledge that we've built up that really is helping to hold the hand of brands through this journey. So let's talk about the brand journey quickly. So how do brands step into this space? And I think it's important here that, again, in that strategist position, we take pride in the fact that we can take them through this journey in a very thoughtful way that helps them learn as they go. And also in many ways, de-risk. You'll see sometimes splashy things, people doing big, bold things in certain gaming platforms. And sometimes you read it and it feels a little bit like a lot of hype. And if you're in a CMO chair, you can't take those giant wild bets that all are hype, right? You still have to deliver on your marketing ROI. So the first thing we say to brand step 1 is, look, just dip your toe in, right? We will show you with a singular campaign and in your campaign, a way that you're able to really deliver strong engagement and in many cases, conversion. That's going to be your proof point into the organization because you're going to be able to show and almost become an educator into your org about the ways that this is going to become the future of every campaign you do. Now, how do we know we're doing that? Well, we talked to, as I said, about 100 brands last year. We're expanding in all kinds of new verticals. Our average deal size continues to grow. Most of our deals now in the system are coming in, in that kind of 6-figure range. That's becoming common. So that's proving that this step 1 is working. More brands in the pipeline, more verticals, deal sizes are growing. The next thing that happens is they say, I get it. And now they want to come back. And when they come back, they're coming back and we're almost becoming a standard part of every one of their campaigns. If you look at clients like Universal Studios, usually anytime they're putting out a family-friendly, kid-friendly, new movie release, we're somehow linked to that. Whether it be Minions or Trolls, we are doing a piece of their marketing campaign. So while they're sprinkling dollars across billboards and TV and all other places, they're doing some kind of 3D engagement as a subset of that campaign. And in the case of Universal, we're becoming that go-to partner. So how do we know we're doing well at that? Well, if you add up all the work we do for the Universal's, the Sony's, the Paramount's alone, for other brands as well, you can see that on an annual basis, they're spending more ad dollars with us. Last year, we had several 7-figure programs, but we also had several 7-figure spenders on our program. And that's the way that we know they're coming back, repeat percentage, and they're spending an annualized larger amount with us. Step 3 is when we then take the brands into saying, you know what? Actually, the smartest thing you can do marketing spend-wise is keep a persistent billboard or presence there. Because if you're coming in and out, we're doing all that spin-up time and development time. Instead, we could leave that tent pole up, so to speak, and rotate your campaigns through it. A good example of that is Cinemark Theatres is one of our investors. What if we built a theatre for Cinemark inside one of our Metaverse worlds? It was always Cinemark all year long. But each month, it's rotating a different movie partner that they're premiering that movie in their theatres. Maybe it's featuring a fun thing you can do with Twizzlers or M&M Mars, tied to one of their very important food and beverage partners. So instead of just doing a pop-up, why not keep that virtual billboard? It just looks different, right? Because it's a 3-dimensional billboard, but leave it up and allow it to be something that you have a persistent presence in. We already do this today. When we built a persistent world for Yas Island, when we created a persistent game experience for Hamilton, we have examples of people who are paying us to run annual, again, programs where we're putting up something and then we're keeping it refreshed and alive throughout the year. What's nice about that is, is if we just stop there alone and we began to just do more of that kind of work, that almost stops looking so much like an ad model, because ad models are always burned with that heavy Q4 seasonality, right? It's a blessing and a curse because you have those kind of lumpy revenues. And so what's really nice about step 3 is that we almost start having more predictable, forecastable, recurring-like revenues. So that's a powerful step in shifting the business model. But step 4 is our future. And that's what we're excited about, is the ways that then we'll be able to go back to those brands and say, you're not just on Instagram, are you? No, you're on Instagram, Facebook, TikTok. You have a multi-channel or omni-channel strategy for social media, right? Well, given the audience shift, you need an omni-channel strategy for these 3D virtual platforms as well. So we need to have a Roblox strategy, a Fortnite strategy, and increasingly other 3D virtual world platforms that will get traction. And more powerfully as well, we don't stop with other people's turfs or other people's platforms. We actually want to do it for your dot-com. Because why shouldn't your website, your owned and operated website, have the same type of immersive personalized experience? And again, we don't have to completely revamp everything about the backend of your dot-com to just simply have a landing page that creates more of a 3D personalized feel, to again, create more of that stickiness with that audience that now once again, the consumer behavior has shifted. This is the way they prefer to engage. They want more intimate conversations that feel more like a brand is talking just to them. The power of that omni-channel strategy is not only that we start to look like an enterprise solution. And sure, there could be a different way to monetize the business model, almost more like a technology as a service licensing model. But the further downstream we go with brands, their IP, creating some of our own IP, the more that then we get to capture additional revenue streams, direct to consumer, first party data and more. So we see a really exciting opportunity for the business model to shift as we walk brands through this journey. Now, a couple of quick case studies and then we'll wrap for some questions. I've talked about Barbie many times. And so for those of you who are more familiar with the company, it was the year of Barbie in many ways. And so it's very relevant. But I think it's an important one because it highlights a couple of things that I want new investors to understand. When we recreated Barbie's dream house inside a Roblox world, it's not about points and winners and losers. Most of the players on Roblox are considered hyper casual. Again, think of Roblox as more as an extension of social media than a traditional video gaming platform. In fact, you won't hear Roblox use the word gaming or refer to their players as gamers in any of their kind of external communications. And that's because what people are doing more is they're socially hanging out and co-creating. In Barbie's Dream House, you could swim in the pool, you could DJ on the roof deck and try on clothes in Barbie's closet, right? It was much more about role-playing and self-expression. During those 30 days, we delivered 60 million visits to Barbie's Dream House. Again, outstanding engagement. Average dwell time, 7 minutes to 8 minutes. Again, that's kind of like the next-generation version of what the Saturday morning cartoon spot on TV used to mean for Mattel. But this is a good example of the brand journey. This was step 1. We put up a dream house for 30 days, we deliver campaign goals, and then we tore it down. And it was replaced with something else inside that game world. This is the point that we try to make with brands like Mattel. Leave Barbie's Dream House up all year. Enjoy that investment you put in, that beautiful thing we built for you. And now let's rotate all of your Barbie-related campaigns and other objectives through it for the full 12 months. Another kind of favorite one is what we did for Chipotle. We recreated a Burrito Builder experience. Now again, it wasn't complicated in many ways. You went in, you built a Burrito, you wrapped it, you unwrapped it, and you ate it. People on average spend about 14 minutes and build a Burrito. Now, I did have a laugh with the Chipotle CMO that that's probably longer that people took to eat a fake or virtual burrito than they eat a burrito in real life. But that just shows you again the power of this. It's not unthinkable that we could work with QSR partners to actually test new products inside a virtual world before they go through the work to build it into their supply chain and operational chain and have to manage inventories and test new products in a physical store. The power of these virtual environments is they can be spun up quickly and you can get fantastic, great feedback. As well with Chipotle, the important thing is, is that we led to real conversion. Aside from the fact that we gave away 130,000 free real Burritos in 30 minutes, it's still to this day is the highest digital app download day they've ever had based on launching this program through Super League and also their second highest digital food sales day. That's where we're really standing out right now with brands. We have increasingly more and more proof points like Chipotle where we're able to say, we're not just here to be able to you to go back in the org and say, we did something in Roblox and got big numbers. We're here to say that we sat with you and understood what drives your P&L, app downloads, digital and real life food sales, foot traffic, like for likes, let's talk about your P&L and then we're going to show you how we're going to take these really powerful virtual engagements and drive them into P&L results. We don't want the CMO to just walk in with splashy engagement numbers. We want the CMO sitting in that boardroom side-by-side with their peers and thinking like the CEO and holding the objectives at the highest level for the whole company. And as I said, the brands are countless. If you just really take these logos in on its own, I mean, this is what I often say to the team, feel proud. Feel proud that the people who are coming back and putting money to work with us and know our name. We may be small, but we anecdotally have all the time people say, I want to work with Super League on that. Only Super League can do that. That's a pretty powerful place for a young brand to be when somebody says only Super League can do that. Again, I believe that's a really important inflection point we just hit with that powerful partnership with Publicis delivering the Kraft Lunchables program. And I think it's just the beginning we're at the tip of the spear. So finally, how we monetize. Primarily today, people are paying us to create beautiful virtual experiences for them and other kind of revenue opportunities for them as we're creating digital goods for them inside these immersive worlds. Think of that as like digital skins, UGC. So there's a really powerful creation that we do and we make money off of that through our publishing capability. We do still have that suite of immersive media products, which, again, it's a 1-2 punch. The experience and the media products together gives a whole program that drives traffic and it's on platform media products. And now, again, through the Roblox partnership, we're one of the few strategic sellers of their powerful inventory of products. And so, again, that's why deal sizes just keep getting bigger because we have more products on the menu slate, so to speak, to pull together and deliver a program that really hits the objectives that the brands laid out from us. We do make some direct-to-consumer revenues. It's a small percent of what we do, but we believe that, again, going further downstream, it continues to be a place where we can continue to grow. Again, nice recurring, predictable revenues, nice margins attached as well. And increasingly, we are being hired to be the strategist, to be the company that uniquely comes with data and insights on the back end of campaigns. And we are right now having, in small ways, brands and agencies pay us for that activity. But we believe that could become a really powerful material lane of revenue for us going forward. And so with that, we'll open it up to questions. But again, the headline is great top line growth, really have leaned out the organization, a clear path to profitability in 2024. And again, Super League exists to help brands speak the language of 3D engagement. And we've got the operating system that is in a leadership position to deliver it. So with that, I'll take questions.

[Operator Instructions] Our first question comes from Howard Halpern.

Ann, great, great description of what you're -- what you're doing and what you're accomplishing, I guess, could you talk a little bit about your sales team and how you see them performing going forward and in terms of, their impact on gaining, recognition with agencies to build other programs like the Kraft program?

Yes. It's -- thank you for asking that, Howard, because it is an important piece of the components of scale is salesforce effectiveness or efficiency. In 2022, our top sellers kind of hit about that 2.5% to 2.8% range in selling. We've pushed that capacity up. Those same top sellers last year were more in that 4.5% to 5% range. And so that's important because in the early days when you're selling again products that didn't really even exist 5 years ago or so in advertising, you need to find that kind of line of what could somebody who's fully up the learning curve, who have those powerful networks in place and where things are really kicking in the repeat buying and all of that. And so we think now a top seller's capacity is about $5 million. So if we have a team of 10 sellers, it's a $50 million a year when all things are humming. Now, I will say that another data point that we have is that we're finding that it takes sellers about 6 months to ramp and in some cases a little longer. A lot of the people that we're pulling in are people who have deep digital marketing experience. But selling an immersive 3D world is, is a different kind of sell. In fact, we've done a pretty significant reorganization in the company. By the way, we have a rock star team. We know who we bump up against when -- we know all the players because there's not a lot of us out there. And frankly, nobody really does the full suite of what we do. They just do pieces of it. They don't have the sales team we have. And so we can see it visually in the pitches, the power of the team we've built. But it still takes time to ramp-up selling these very different products. And the reorganization is important because what we're realizing is this is just as much a BizDev/Sale, right? You're trying to explain to people not just, hey, give me $10,000 you've got a Trolls movie coming up. It's so much bigger than that. We're taking their precious IP and we're recreating a very deep engagement experience for brands. And we're doing it. And it's a $250,000 program. It's a $500,000 program. And so that type of a thoughtful sale, you need salespeople who think like strategists and think like business developers. And so it's an important thing because we have revamped the org to really pay homage, so to speak, in respect to the seller, the account manager, the people who are sitting in these pretty deep, critical client relationship roles. That said, as you asked, Howard, we've got to get people up the learning curve faster. We need to see more sellers than just a couple hitting that kind of $5 million capacity range. That's really our rally cry. I think we can get more out of the New York region. That's a giant ad market. And I think that there's a lot of opportunity there for us to double down on our sales talent and really see how we can shake that market up. And then other ways we measure, no different than the stats I talked about, number of deals in the pipe, number of means a week. There's input metrics. How many RPs did you get? And then there's output metrics, not just top line deliverables, but RFP wins, number of deals closed, et cetera. So I think that you'll see us. We do a meeting every other week with one of our sales executives, our leaders, Nina, and we talk about each one of the sellers. What are those input and output metrics like? So I think you'll see this year that we're going to take Salesforce effectiveness to a new level. The power of that for investors will be great, too, because I think it goes back to what I said at the start is imagine once you have a Salesforce fully functioning and up that learning curve, the power of being able to say every time I add a salesperson, a sales leader, I can add $4 million, $5 million on the top line. Now that's talk about smart investment. We can just start turning that dial, right? And that's the way we want to be a $7,500 million top line company.

One last question. In terms of the Kraft Lunchables, what kind of feedback have you gotten and how important is that this initial program to reach out to other agencies to show what you can do?

Yes. It's -- the campaign is not over. In fact, if it was completed, I would have had a slide on today. So be on the lookout because the next time I come out and talk to investors, you're going to see us talking about the Lunchables program and performance and what we learned. But 100%, this is such a marquee project for us. The way that we can go, first of all, most importantly, how it is strengthening our partnership with Publicis. It's a very exciting multidimensional program. We've built effectively a reward system. So there's a way you can earn lunch points in game and inside that gaming experience. You can also learn, earn lunch points through a QR code. So it's an interesting interconnected digital to physical program where players are earning lunch points or rewards, and then they're able to use those to -- to buy items in game. And so it's a -- it's a beautifully connected program. You can buy skins or clothing for your avatar. You can also buy digital pets that then will follow you around across multiple experiences and digital worlds. So it's got a beautiful complexity to it. And that's why it's a $3.8 million program, right? But again, the rewards link is powerful. The digital to physical, it's really a proof point for all the distinctive things we do. So expect to hear more on it. But to your question about how do we use that? Well, first of all, Publicis, the relationship the team's been working on for a long time and Publicis has told us that when it comes to their U.S. business, we're really going to be their kind of preferred partner. So when they have brands, think about the hundreds of brands they serve. They're going to kind of use us almost as a quasi internal agency to -- to educate brands on 3D engagement and bring opportunities to us. So that is, again, another leverage point for us top line. But then to your point, powerfully the ways we go out and talk to the WPPs and other large holding companies of the world, all of which we do have relationships that we've been building and growing over the last few years with. But when you have that signature win that is often the thing that then allows the others to -- to get on the bandwagon.

Keep up the great work.

Our next question comes from Scott Buck.

Ann, I'm curious, can you use the Kraft Lunchables deal as an example? I mean, how long can these programs last? It sounds like this one is going at least 1.5 quarters at this point?

Yes, yes. Kraft Lunchables, we were winning in that kind of August, September, September timeframe, so it had a fast fuse on it. The good news is, is that we were able to pull in. We have some great partners that are helping us pull that program off. So it kind of takes a village on that one. But again, we were the only real company Publicis felt could kind of manage the entire scope fully end-to-end. In that case, it had a quick fuse because we were building in October and the program, the meat of the program was November, December, but it is still spilling over into January. We are able increasingly to spin up experiences faster. Some of that is, by the way, that we're productizing more of the development time and building out experiences. So we're trying to collapse that sometimes when we're building the experience that can be a 1 to 3 month process. or a really deep engagement experience. But certainly Kraft is a good example of doing it much faster. I think if I were in Kraft shoes, Lunchables shoes, I think the question I would be asking is, is how that digital to physical conversion worked and how it speaks to how young kids who eat Lunchables and the moms who buy Lunchables, how much they were able to deliver powerful conversion there. And I can't imagine deprecating the lunch points reward system if it's working. So I think the power is, is us being able to go back into Lunchables, no different than the Barbie example, and say, what is a way that we can keep some of the tenets of this program alive and make it a persistent, really customer loyalty program for you? It just happens to be a loyalty program that's built specifically around the primary consumer of your product, not the buyer of the product. But if we can show the buying conversion, then that's kind of the holy grail. So it is a campaign, but every one of these campaigns and Lunchables more than most have legs in it that we could then go back to the brand or agency and turn it into more of an annual program.

Great, that's very helpful. And then kind of as a follow-up, what kind of capacity do you guys have as a firm to handle deals like this? I mean, can you run 3, 4, 5 or 6 of these at a time?

It's a great question. We bought MELON in May of last year. That was an independent Roblox game studio based here in Los Angeles nearby. It was a small studio of about 10. So it was very easy for us to ingest. Great pipeline, great people. So it's just a kind of a no brainer. When we bring more of that capacity in-house to build out immersive experiences, either standalone or integrations. Now, often we're integrating into an existing Roblox game. When we're doing that, we can leverage the devs who operate that game. So they're the people who we can leverage to do that building out. But the more that we increase that in-house capacity for more of those dedicated builds that we're doing, the more of that we can bring in-house, the better the margin. And so in the case of Lunchables, we didn't have to put a lot of pressure on that in-house studio team, but we'd like to, wouldn't we, for the margin. So you're going to continue, just as we have been acquisitive historically, you're going to continue to see us be out in front exploring smart, accretive M&A opportunities again, because we aren't getting off that 2024 path to profitability, but smart ways that we can augment more of our internal capacity and grab more margin and never say no to any of these large programs. That said, if we got 3 more Lunchables handed to us next week, we could deliver it. Well, we could figure it out because, again, we have the knowledge, the capability, the technology. The other thing I do want to impress the importance of, especially when it relates not just to capacity, but margin profile is the more that we productize aspects of experiences, a concert stage, a movie theatre, like the Cinemark example, the more that we do that, the less heavy lifting we put on the studio side of the house or our game dev partners. Again, that's more margin, it means quicker development time. But that product team that has built those very clever 3D NPCs and all those other media products that we augment and drive traffic to experiences, they've got a healthy product roadmap in front of them. And so there's a lot of interesting work that we're doing, exploring almost more of a white-label rewards program and other areas where we can productize more offerings to do larger deals and do them faster, again, with higher margin.

Great. And then just the last question for me, Ann, could you touch a little bit on the balance sheet and where you sit today from a cash perspective and what kind of runway that gives you?

I'm going to let our virtual CFO take that one.