Super League Enterprise, Inc. (SLE)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue was $2.718M with gross profit $1.196M and EPS of $(0.25); revenue declined sequentially and YoY, but gross margin improved to 44% as management shifted mix to higher‑margin programs .
• Revenue beat S&P Global consensus ($1.712M*) materially; S&P Primary EPS consensus was -$0.126*, while S&P’s Primary EPS actual was -$0.103* versus company-reported EPS of -$0.25, reflecting differing EPS definitions; revenue was a clear beat, EPS comparison is definition-dependent (see Estimates Context) .
• Management reiterated it is “on track” to be EBITDA positive in Q4 2025, citing cost reductions (~25% YoY in Q1 OpEx, further ~30% reductions continuing), margin expansion, and revenue diversification into mobile ads (15% of Q1 revenue; targeting ≥25% for 2025) .
• Strategic catalysts include the Supersocial acquisition (49 builds, 390M+ visits, 3B+ impressions on Roblox), a ~$20M pipeline across ~97–100 programs, and disciplined M&A to accelerate profitability amid ecosystem changes on Roblox .

What Went Well and What Went Wrong

What Went Well

• Gross margin improved to 44% in Q1 2025 (vs. 38% in FY 2024), reflecting a focus on larger, higher‑margin programs and streamlined operations; management emphasized being “on track” for EBITDA positive in Q4 .
• Revenue diversification into mobile ads reached 15% of Q1 revenue and is expected to be ≥25% for FY 2025, broadening audience reach and opening new agency doors .
• Strategic execution: acquisition of Supersocial expanded brand roster and scale on Roblox (49 builds, 390M+ visits, 3B+ impressions); pipeline of nearly $20M across ~100 programs supports near‑term bookings .

What Went Wrong

• Revenue declined to $2.718M (from $4.209M in Q1 2024 and $3.426M in Q4 2024), driven by structural shifts in Roblox’s ad ecosystem and macro-related budget delays; net loss was $(4.230)M .
• Interest expense surged ($1.402M) in Q1 2025 due to changes in fair value of promissory notes; cash decreased to $0.747M, reflecting operating cash outflow and financing dynamics .
• Mobile mix came in at 15% for Q1 2025, below the “close to 20%” signal discussed on the prior call; management still forecasts ≥25% for 2025, but progress will require continued execution and programmatic scale .

Financial Results

Notes:

• Q1 2025 gross margin was 44% as disclosed by management .
• Operating cash flow in Q1 2025: $(2,203,000); cash at period end: $747,000 .

Revenue Mix KPIs

Liquidity KPIs

Guidance Changes

Earnings Call Themes & Trends

Note: No Q3 2024 earnings documents were available in our repository; we searched 2024-07-01 to 2024-12-31 for earnings materials and found Q2 2024 and multiple 8‑Ks, but not Q3 2024 earnings items –.

Management Commentary

• “We are on track with our plan to be EBITDA positive in Q4 2025… streamlining operations through cost controls, revenue diversification and a focus on larger, higher margin programs.”
• “Our successful entrance into the mobile games arena exemplifies this strategic shift, having already grown to 15% of our revenues.”
• “With… Supersocial… we now have a Roblox business that has delivered 49 immersive builds, racking up more than 390 million visits and 3+ billion impressions.”
• “Our Q1 operating expense decreased approximately 25% compared to Q1 in the prior year… collectively, we have further reduced our operating costs this year by approximately 30%.”
• “Looking ahead, we have a strong pipeline of nearly $20 million in active opportunities across approximately 100 programs.”

Q&A Highlights

• Capital and liquidity: Management will continue to pursue capital raise opportunities while staying on course for EBITDA positivity in Q4 2025 .
• Macro budgets: Advertiser budgets were delayed rather than cut; the team is focused on positioning to capture releases as budgets deploy .
• Mobile growth: Mobile expected to reach at least 25% of FY 2025 revenue; Q1 mix was 15% .
• M&A landscape: Company views industry consolidation as an opportunity; Supersocial integration adds clients and scale, and management remains disciplined on accretive deals .
• Salesforce effectiveness: Reorganization and East Coast emphasis increased efficacy; management continues to monitor cadence and capacity .

Estimates Context

• Revenue: Actual $2.718M vs S&P Global consensus $1.712M* → clear beat on top line .
• EPS: S&P Global Primary EPS consensus -$0.126*; S&P Primary EPS actual -$0.103* indicates a beat versus consensus*, while company-reported EPS was -$0.25 (basic & diluted), reflecting different EPS definitions; investors should anchor on consistent definitions when comparing .

Values with asterisks retrieved from S&P Global.

Key Takeaways for Investors

• Revenue beat versus consensus with margin improvement to 44% supports the path toward EBITDA positivity in Q4 2025 despite a smaller topline; cost discipline is evident in ~25% YoY OpEx reduction .
• Mix shift to higher-margin programs and mobile ads (15% in Q1; ≥25% target in 2025) is a core lever for margin expansion and diversification; watch for programmatic distribution wins .
• Supersocial acquisition expands capacity and brand roster on Roblox (49 builds, 390M+ visits, 3B+ impressions), positioning SLE to benefit as the ecosystem evolves .
• Macro delays rather than cuts in advertiser budgets suggest a stronger H2 setup; pipeline (~$20M across ~97–100 programs) provides visibility into near-term bookings .
• Interest expense and low cash balance underscore ongoing financing needs; management is actively pursuing capital solutions—monitor dilution and debt service implications .
• EPS comparisons require care: S&P Primary EPS shows a beat vs consensus*, while company EPS is more negative; use consistent definitions for trend and valuation work .
• Near-term trading setup: positive revenue surprise and margin expansion are supportive; medium-term thesis hinges on executing mobile scaling, accretive M&A, and delivering EBITDA positive in Q4 2025 .