Jack Vander Aarde: I appreciate the update and congrats on the strong momentum to finish the year. Ann, you kind of touched on this already and I appreciate all your detailed commentary, prepared remarks. You finished 2022 with about $20 million revenue, gross margin on that 43%. The next few years are seeing that organic revenue growing $100 million with gross margins approaching the mid-60s. So just a couple of questions there. First, in 2023, any specific 2023 kind of growth targets or guidance outlook there? And then, on the $100 million target, how do you how do you get there from the gross margin percent? Is that organic growth extension as well for the mid-60s to gross margin? Or is that coming from the M&A?
Ann Hand: Like most companies right now, we feel a little more comfortable getting ourselves a little further into the year before thinking about giving any kind of top line guidance. We’ve had a decent start to the year. But we just feel, gosh, we’ve all just survived the last, like, 18 months of the stock market, right? And so, every time we think that we’ve seen it all, more challenges come. We seem to be pretty resilient. And so, knock on wood, we just keep hustling and keep running smarter and more efficient business for it. That makes me feel good about what we’ve gone through. Really good is the perseverance. But also, again, we’ve never had better product market fit. And we are the healthiest we’ve ever been as a company.
So we haven’t given that kind of 2023 guidance. But when I talk about how we stair step our way to being $100 million top line company over the next few years, we see that we have €“ when we start looking at, again, the diverse €“ going deeper inside the platforms we are today is one, diversifying across other virtual worlds platforms is step two. And then number three, more and more owned and operated or owned IP or third party persistent world where, again, we get that diversification of revenue. So it takes those three steps for us to be able to live into that kind of gold top line number that we’re very motivated by. We know that’s the company that we’ve built and the company that we are today. As far as the margins go, certainly M&A helps in that story.
There’s no doubt about it. Again, the more that we can bring in additional techs or capability to really round out this end-to-end meta innovation engine I’ve mentioned, it means that all of that is ours to capture. And so, first and foremost, margin improvement comes from us selling smarter. Selling smarter means our salespeople more focused on net revenue and higher margin products. The second way is us continuing to innovate our products because we do have some products that are very high margin, very high performing, and so we want to lean more into more of those products in our suite of menu and offerings and pushing brands towards those high performing, high margin products. The third way we grow revenue is building out, as I mentioned, more of that end-to-end inhouse capability, so that we can control all of that margin profile from the start to the finish of virtual world experiences and supporting media.
So it’s about that. And some of that will happen through M&A we think. And then, the fourth way is, again, diversification of revenues. Right now, we don’t talk a lot about our direct to consumer revenues. They’re small, right? They’re $2 m;, $2.5 million of our total revenues for last year. But the more that we start to operate persistent worlds where we participate in the consumer economy, we believe when we look at that $100 million profile future for us in a few years, we won’t just look like a temporal advertising company anymore. That’ll be a piece of our revenue stream, those media products, but there should be a more balanced mix between the direct to consumer side and then, of course, the media side and then the publishing engine or experience side.
And so, we think those three legs of diversification inevitably push our margin up. Because in a lot of these virtual worlds, the direct to consumer margin side is in the high 80s or 90%. So it is very much about, more than anything, getting that good mix of revenues and our future forward-looking profile.
Jack Vander Aarde: A lot of fantastic color there. I appreciate that. Maybe I’ll just ask one more follow-up on the pipeline. You have larger deal sizes, obviously, seven customers were $1 million customers in 2022, 56 were six figures. To me just two questions there. How likely is it that those 56 six-figure customers graduate to $1 million customers in 2023 or 2024? And then, of the 100 brands you served in 2022, how do you see the total number of brands you’re going to serve in 2023 and 2024 kind of tracking? Is it a linear growth? Or what are seeing where you stand today?
Ann Hand: First of all, we 100% see the pattern of, they dip their toe in and then they come back for more. Either the brand directly or their agency. And so, we’re watching that true progression of people trying out maybe a 50k buy €“ and this is €“ examples with like our investor, Paramount, or Universal when they’re doing new family friendly motion picture releases, once they understand how well we performed with, say, the Bad Guys, then it’s time for the Minions release, and they’re coming back and saying, oh, you’re now a core part of my media mix. Every time I launch, you’re a piece of it, just like you would say, historically, a piece of it might go to YouTube or Instagram or a piece of it €“ because we’re really just a new, better in my opinion, social channel that is kind of mitigating what’s not working in a lot of traditional digital channels today.
And so, we’re just becoming a natural piece of the pie. And then, what does happen over time is they say I want more, I don’t want us to media buy, I want an experience as well. And once you package the experience and the media, and in some cases, like what you guys know so well, that we did for Samsung with the broadcast of the virtual Charli XCX concert last year, if they want a broadcast or content component too, that’s when they start to become $600,000, $800,000, $1.2 million programs because it’s really, again, packaging all the aspects of what we can do holistically as a company for these really exciting campaigns that are just like temporal ad campaigns because they’re kind of like product placement on steroids meets smarter kind of digital marketing, so to speak.
And so, your second question was about this year’s pipeline and about serving 100 brands. And it’s a good question because it’s a struggle, in a good way. If you think about it, with the trend lines of us doing €“ the fact that two-thirds of our pipeline are six figure deals and we’ve got seven plus deals that are north of a million, to deliver a $20 million a year, we don’t have to serve 100 brands. But we want to, right? Because we want to serve 200 brands, 500 brands. And when you look at the fact that we’re now working multiple ways across fashion, cosmetics, food categories, fashion, automotive, you name it, we’re so diversified there, we don’t want to say no to any advertiser because there’s just so much in front of us, they’re just starting to understand this marketing channel that we offer for them.
But what should give investors a lot of confidence is you don’t have to deliver against 100 customers or 100 unique brands and deliver a $30 million, $40 million revenue this year, when your deal sizes are inevitably getting bigger and you continue to have 70% repeat. I guess if I were in the investors’ shoes, what would give me comfort is to say, gosh, if they built the operational capacity to service 100 brands and they can with bigger programs deliver a huge step change in revenue growth by only servicing 25 or 50, then now I can see whatever I thought the ceiling for this company had just lifted €“ it just lifted as far as capacity goes. And so, we don’t want to say no to anybody yet. We’re not in that position. We very humbly are grateful for every exciting new brand and advertiser who wants to come and work with us.
I have investors introducing me to big global CMOs every week because they understand now our product and they want to let other brands they know know about them. So, we’re not in a position yet to say no. But there is probably going to become a point increasingly where we’re going to have to prioritize bigger programs or make a decision about getting that right balance right about capacity. And look, I think with confidence, we can also start to walk customers up and say, look, we know you want to put $25,000 to work for us. Here’s $100,000 media buy, this is what we think you need to do. And with a lot of confidence, we can move them into that higher territory.
Jack Vander Aarde: Well, sounds like there’s no shortage of growth levers for you guys to pull. So I appreciate the update. That’s it for me.
Ann Hand: One more thing I just want to mention because I saw a couple comments come in through chat about Mobcrush. And so, I think it’s important that we comment on that. We have the Mobcrush broadcasting tech. We had our own broadcasting tech, you’ve heard us talk historically about something that we call Virtualis that is now called Super View. So, we have our Super Studios team that’s powered by Super View, which again is a very exciting, proprietary virtual remote production capability and monitoring capability that we’ve built inhouse. We use it for our brand partners, we use it for ourselves. It’s smart, it’s extremely high quality, it’s very affordable. And that’s exactly the type of capability that’s allowed us to deliver some of those great broadcasts that I mentioned earlier.
It’s also the talent that’s behind the work that I talked about earlier that we’re doing for Marvel’s NewVerse as well. We’ve integrated the best pieces of the Mobcrush tech into that and really turned it into one stack of broadcasting tech. Secondly, may not have been completely obvious to everyone, but at the heart of what Mobcrush was when we acquired them was they really understood gaming centric influencers. And most of their revenues were coming through creator influencer marketing, so to speak. And so, when I talk about us being an end-to-end solution for brands, and we’ll just use the Barbie example, it’s easy, we’ve built a virtual pop up Barbie Dreamhouse experience. They also paid us for media products that we dropped in other games that really targeted that Barbie Girl consumer to drive visitation to the Barbie experience.
But we also packaged it with Barbie influencers because it’s one thing to get all the reach you can get inside a platform like Roblox and Minecraft, but you also want to amplify it out into the universe, right. And so, you want to work with the best influencers who have big followings on YouTube and other platforms to drive additional traffic in and really to give you that 360 solution. And influencer marketing was a good chunk, about $5 million of our revenue last year, it’s still core, it’s a core piece. So now when we say we’re doing six, seven figure deals, it’s got all the elements I laid out, experiential media €“ there’s always some kind of influence or piece to it. And it’s that capability and talent that we bought through Mobcrush that has really brought that inhouse.
And then we’ve taken that great talent and we’ve turned them into people who can also sell the experience in the end game media products too. So now they can sell that holistic solution.
