Skillz Inc. (NYSE: SKLZ) (“Skillz” or the “Company”), the
leading mobile games platform bringing fair competition to players
worldwide, today reported financial results for the fourth quarter
and fiscal year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights:
- Revenue of $29.1 million
- Gross profit of $25.7 million
- Net loss of $20.8 million
- Adjusted EBITDA1 of $(12.3) million
- Paying monthly active users (PMAU)2 of 137,000
- Average Revenue Per Paying Monthly Active User (ARPPU)3 of
$70.3
- Total operating expenses of $48.3 million
Full Year 2023 Financial Highlights:
- Revenue of $150.1 million
- Gross profit of $134.7 million
- Net loss of $106.7 million
- Adjusted EBITDA1 of $(70.1) million
- Paying monthly active users (PMAU)2 of 179,000
- Average Revenue Per Paying Monthly Active User (ARPPU)3 of
$70.0
- Total operating expenses of $250.7 million
- Cash, cash equivalents, and marketable securities of $302.0
million as of December 31, 2023
- Total outstanding debt of $123.9 million as of December 31,
2023
“We made steady progress throughout 2023 with our strategic
initiatives to position Skillz to deliver consistent top-line
growth and positive Adjusted EBITDA,” said Andrew Paradise, Skillz’
CEO. “This progress includes improving user economics, which have
benefitted from the introduction of new features that increase
player engagement and monetization. In addition, the payback period
on our customer acquisition costs exiting the year was
significantly shorter than it was entering 2023 and it has
continued to improve to-date in 2024. Importantly, after declines
in our paying audience throughout 2023, we significantly slowed the
decline in the beginning of 2024, and are tracking to a more stable
audience. We are now beginning to transition our efforts toward
scaling the business to generate future profitable growth. Our
continued execution on our strategic initiatives puts Skillz on
track to achieve our goal of generating positive Adjusted EBITDA on
a run-rate basis by the fourth quarter of this year.”
Gaetano Franceschi, Skillz’ CFO, added, “We continue to
demonstrate prudent management of the business as reflected in the
quarterly sequential improvements in our Adjusted EBITDA loss for
every quarter of 2023, with the fourth quarter loss being 41% less
than in the first quarter. Our focus on managing operating expenses
is similarly driving improvement in our quarterly operating cash
burn and, combined with our strong cash position of more than $300
million at 2023 year-end, provides us with the flexibility to
invest in our key initiatives such as new product features that
provide our players with a better experience which in turn will
create value for our shareholders.”
1. Adjusted EBITDA is a non-GAAP metric;
for a reconciliation of each measure against its most comparable
GAAP metric, please see the section titled “Use of Non-GAAP
Financial Measures” in this press release.
2. “Paying Monthly Active Users” or
“PMAUs” means the number of end-users who entered into a paid
contest hosted on Skillz’s platform at least once in a month,
averaged over each month in the period.
3. “Average Revenue Per Paying Monthly
Active User” or “ARPPU” means the average revenue in a given month
divided by Paying MAUs in that month, averaged over the period and
does not include a deduction for end-user incentives that are
included in sales and marketing expense.
Investor Conference Call
Skillz will host a live conference call at 4:30 p.m. ET today.
To access the call, please register using the following link:
https://www.netroadshow.com/events/login?show=81fbf945&confId=61498.
After registering, an email will be sent, including dial-in details
and a unique conference call access code and PIN required to join
the live call. Access to the live audio webcast of the discussion
in listen-only mode will also be available at
investors.skillz.com.
A replay of the webcast will be archived on the Company’s
investor relations website. An audio replay of the conference call
will be available through Thursday, March 21, 2024, and can be
accessed by dialing (866) 813-9403 (US) or (929) 458-6194
(international) and entering the passcode 189136.
About Skillz Inc.
Skillz is the leading mobile games platform dedicated to
bringing out the best in everyone through competition. The Skillz
platform helps developers create multi-million dollar franchises by
enabling social competition in their games. Leveraging its patented
technology, Skillz hosts billions of casual eSports tournaments for
millions of mobile players worldwide, with the goal of building the
home of competition for all. Skillz has earned recognition as one
of Fast Company’s Best Workplaces for Innovators, CNBC’s Disruptor
50, Forbes’ Next Billion-Dollar Startups, Fast Company’s Most
Innovative Companies, and the number-one fastest-growing company in
America on the Inc. 5000. www.skillz.com
Use of Non-GAAP Financial Measures
In this press release, the Company includes Adjusted EBITDA,
which is a non-GAAP performance measure that the Company uses to
supplement its results presented in accordance with U.S. GAAP. The
Company’s management believes Adjusted EBITDA is useful in
evaluating its operating performance and is a similar measure
reported by publicly-listed U.S. competitors, and regularly used by
securities analysts, institutional investors, and other interested
parties in analyzing operating performance and prospects. By
providing this non-GAAP measure, the Company’s management intends
to provide investors with a meaningful, consistent comparison of
the Company’s profitability for the periods presented. Non-GAAP
operating expense is also included in this press release, which is
a non-GAAP financial measure. The Company’s management believes
non-GAAP operating expense is useful to investors and analysts as a
supplement to its financial information prepared in accordance with
GAAP for analyzing operating performance and identifying operating
trends in its business. The Company uses non-GAAP operating expense
internally to facilitate period-to-period comparisons and analysis
in order to make operating decisions. As required by the rules of
the SEC, the Company has provided herein a reconciliation of
Adjusted EBITDA and non-GAAP operating expense to the most directly
comparable measures under GAAP. Adjusted EBITDA and non-GAAP
operating expense are not intended to be substitutes for any U.S.
GAAP financial measures and, as calculated, may not be comparable
to other similarly titled financial measures of other companies in
other industries or within the same industry.
The Company defines and calculates Adjusted EBITDA as net loss
before interest expense, net; (benefit) or provision for income
taxes; depreciation and amortization, and other income or expense,
net; as further adjusted for stock-based compensation and other
special items determined by management, including, but not limited
to, change in fair value of common stock warrant liabilities,
acquisition-related expenses, impairment charges, loss contingency
accruals, restructuring charges and one-time nonrecurring expenses.
The Company defines and calculates non-GAAP operating expense as
GAAP operating expense adjusted for stock-based compensation,
one-time transaction expenses and other special items determined by
management, including, but not limited to acquisition-related
expenses for transaction costs, certain loss contingency accruals
and restructuring charges, as they are not indicative of business
operations.
The Company does not provide a reconciliation for non-GAAP
estimates on a forward-looking basis as it is unable to provide a
meaningful calculation or estimation of reconciling items and the
information is not available without unreasonable effort. This is
due to the inherent difficulty of forecasting the timing or amount
of various items that would impact the most directly comparable
forward-looking U.S. GAAP financial measures that have not yet
occurred, are out of the Company’s control and/or cannot be
reasonably predicted. Forward-looking non-GAAP financial measures
provided without the most directly comparable U.S. GAAP financial
measures may vary materially from the corresponding U.S. GAAP
financial measures.
Preliminary Results and 10-K Extension
The Company is in the process of completing its financial
statements and other disclosures for the fiscal year ended December
31, 2023. As a result, the Company will file an extension for the
filing of our Annual Report on Form 10-K for the year ended
December 31, 2023. Accordingly, we are announcing preliminary
results for the year, which are based on currently available
information and are subject to revision as management completes its
internal review. Our independent registered public accounting firm
has not finalized its review of these preliminary financial results
or its audit of the financial statements for the year ended
December 31, 2023. Actual results may differ from these preliminary
financial results and other financial information due to the
completion of our internal procedures, the audit of our financial
statements, final adjustments and other developments that may arise
between now and the time the results are finalized. Further
disclosure is included in the Form 12b-25 filed with the Securities
and Exchange Commission. We expect to file our Annual Report on
Form 10-K for the year ended December 31, 2023 by March 29,
2024.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995. The Company’s
actual results may differ from its expectations, estimates, and
projections and, consequently, you should not rely on these
forward-looking statements as predictions of future events. Words
such as “expect,” “estimate,” “project,” “budget,” “forecast,”
“anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,”
“believes,” “predicts,” “potential,” “continue,” and similar
expressions (or the negative versions of such words or expressions)
are intended to identify such forward-looking statements.
These forward-looking statements involve significant risks and
uncertainties that could cause the Company’s actual results to
differ materially from those discussed in the forward-looking
statements. Most of these factors are outside of the Company’s
control and are difficult to predict. Factors that may cause such
differences include, but are not limited to, the ability of Skillz
to: effectively compete in the global entertainment and gaming
industries; attract and retain successful relationships with the
third party developers who develop and update the games hosted on
Skillz’ platform; drive brand awareness with end users; invest in
growth and development of employees; comply with laws, regulations
and expectations applicable to its business, including with respect
to cybersecurity and corporate governance matters; mitigate the
commercial, reputational and regulatory risks to our business;
remediate during fiscal year 2024 certain non- fully remediated
material weaknesses in our internal controls over financial
reporting. Additional factors that may cause such differences
include other risks and uncertainties indicated from time to time
in the Company’s SEC filings, including those under “Risk Factors”
therein, which are available on the SEC’s website at www.sec.gov.
Additional information will be made available in other filings that
the Company makes from time to time with the SEC. In addition, any
forward-looking statements contained in this press release are
based on assumptions that the Company believes to be reasonable as
of this date. The Company undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after
the date of this press release or to reflect new information or the
occurrence of unanticipated events, except as required by law.
Skillz Inc.
Consolidated Statements of
Operations and Comprehensive Loss
(Unaudited)
(in thousands, except for number
of shares and per share amounts)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Revenue
$
29,138
$
46,872
$
150,113
$
269,709
Costs and expenses:
Cost of revenue
3,455
4,916
15,379
30,718
Research and development
3,391
7,425
28,148
52,265
Sales and marketing
23,051
34,458
122,560
277,014
General and administrative
21,898
22,478
99,977
163,018
Impairment of goodwill and long-lived
assets
2,880
116,821
3,335
168,051
Total costs and expenses
54,675
186,098
269,399
691,066
Loss from operations
(25,537
)
(139,226
)
(119,286
)
(421,357
)
Gain on extinguishment of debt
—
—
15,205
2,553
Interest income (expense), net
4,315
(4,432
)
(3,171
)
(26,545
)
Change in fair value of common stock
warrant liabilities
—
599
278
6,004
Other income (expense), net
411
(273
)
508
125
Loss before income taxes
(20,811
)
(143,332
)
(106,466
)
(439,220
)
Provision (benefit) for income taxes
35
143
228
(345
)
Net loss
$
(20,846
)
$
(143,475
)
$
(106,694
)
$
(438,875
)
Net loss per share attributable to common
stockholders:
Basic and diluted
$
(1.04
)
$
(6.90
)
$
(5.11
)
$
(21.41
)
Weighted average common shares
outstanding:
Basic and diluted
20,054,167
20,801,624
20,893,085
20,498,477
Other comprehensive income (loss):
Change in unrealized gain (loss) on
available-for-sale investments, net of tax
30
1,169
1,556
(1,315
)
Total other comprehensive income
(loss)
30
1,169
1,556
(1,315
)
Total comprehensive loss
$
(20,816
)
$
(142,306
)
$
(105,138
)
$
(440,190
)
Skillz Inc.
Consolidated Balance
Sheets
(Unaudited)
(in thousands, except for number
of shares and par value per share amounts)
December 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
302,027
$
362,516
Restricted cash
10,000
—
Marketable securities, current
—
127,268
Accounts receivable, net
5,942
7,177
Prepaid expenses and other current
assets
6,401
4,722
Total current assets
324,370
501,683
Property and equipment, net
14,549
2,991
Operating lease right-of-use assets,
net
—
472
Marketable securities, non-current
1,125
56,728
Non-marketable equity securities
52,768
55,649
Other long-term assets
2,692
3,772
Total assets
$
395,504
$
621,295
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
1,712
$
1,696
Operating lease liabilities, current
1,364
2,133
Other current liabilities
51,769
45,666
Total current liabilities
54,845
49,495
Operating lease liabilities,
non-current
10,573
11,942
Common stock warrant liabilities,
non-current
11
289
Long-term debt, non-current
123,935
272,781
Other long-term liabilities
985
8,387
Total liabilities
190,349
342,894
Commitments and contingencies
Stockholders’ equity:
Preferred stock $0.0001 par value; 10
million shares authorized — 0 issued and outstanding as of December
31, 2023 and 2022
—
—
Common stock $0.0001 par value; 31 million
shares authorized; Class A common stock – 25 million shares
authorized; 16 million and 18 million shares issued and outstanding
as of December 31, 2023 and 2022, respectively; Class B common
stock – 6 million shares authorized; 3 million shares issued and
outstanding as of December 31, 2023 and 2022, respectively
41
41
Treasury stock, at cost, 2 million shares
at December 31, 2023
(13,000
)
—
Additional paid-in capital
1,197,923
1,153,031
Accumulated other comprehensive loss
(7
)
(1,563
)
Accumulated deficit
(979,802
)
(873,108
)
Total stockholders’ equity
205,155
278,401
Total liabilities and stockholders’
equity
$
395,504
$
621,295
Skillz Inc.
Consolidated Statement of Cash
Flows
(Unaudited)
(in thousands)
Twelve Months Ended December
31,
2023
2022
Operating Activities
Net loss
$
(106,694
)
$
(438,875
)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,961
17,871
Stock-based compensation
43,692
108,202
Gain on extinguishment of debt
(15,205
)
(2,553
)
Accretion of unamortized debt discount and
amortization of debt issuance costs
2,214
3,743
Amortization of premium for marketable
securities
890
3,095
Impairment charges
3,336
168,051
Deferred income taxes
—
(698
)
Change in fair value of common stock
warrant liabilities
(278
)
(6,004
)
Other, net
17
—
Changes in operating assets and
liabilities:
Accounts receivable, net
1,235
5,592
Prepaid expenses and other assets
(1,519
)
11,602
Accounts payable
16
(17,222
)
Loss contingency accrual
—
(4,449
)
Operating lease right-of-use assets
—
1,605
Operating lease liabilities
(2,138
)
(1,602
)
Other accruals and liabilities
711
(27,955
)
Net cash used in operating
activities
(71,762
)
(179,597
)
Investing Activities
Purchases of property and equipment,
including internal-use software
(13,233
)
(1,892
)
Investment in loan receivable
(2,000
)
—
Purchases of marketable securities
—
(454,091
)
Proceeds from sales of marketable
securities
57,553
167,847
Proceeds from maturities of marketable
securities
125,984
599,522
Net cash provided by investing
activities
168,304
311,386
Financing Activities
Principal payments on finance leases
obligations
(1,096
)
(2,612
)
Payments for extinguishment of debt
(135,855
)
(7,298
)
Repurchase of common stock
(13,000
)
—
Payments for debt issuance costs
—
(2,005
)
Net proceeds from exercise of stock
options and issuance of common stock
—
1,310
Net cash used in financing
activities
$
(149,951
)
$
(10,605
)
Net change in cash, cash equivalents and
restricted cash
(53,409
)
121,184
Cash, cash equivalents and restricted
cash – beginning of year
365,436
244,252
Cash, cash equivalents and restricted
cash – end of year
$
312,027
$
365,436
Skillz Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(Unaudited)
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Net loss
$
(20,846
)
$
(143,475
)
$
(106,694
)
$
(438,875
)
Interest income (expense), net
(4,315
)
4,432
3,171
26,545
Stock-based compensation(1)
10,254
10,834
43,864
108,202
Change in fair value of common stock
warrant liabilities
—
(599
)
(278
)
(6,004
)
Provision (benefit) for income taxes
35
143
228
(345
)
Depreciation and amortization
104
2,105
1,961
17,871
Gain on extinguishment of debt
—
—
(15,205
)
(2,553
)
Other (income) expense, net
(411
)
273
(508
)
(125
)
Impairment charges(2)(5)
2,880
116,821
3,335
168,051
Restructuring charges(3)
—
—
—
4,830
One-time nonrecurring expenses(4)
—
—
—
26
Adjusted EBITDA
$
(12,299
)
$
(9,466
)
$
(70,126
)
$
(122,377
)
(1) For the twelve months ended December
31, 2022, amount includes stock-based compensation recognized for
the cancellation of the Chief Executive Officer’s award of 805,977
performance share units granted on September 14, 2021 (the “CEO
Performance Stock Units”).
(2) For the three and twelve months ended
December 31, 2022, amount includes impairment of intangible assets
related to the developed technology and customer relationships for
our Aarki acquisition, goodwill, as well as impairment of lease
right-of-use assets and other long-lived assets.
(3) For the twelve months ended December
31, 2022, amount includes employee termination benefits.
(4) For the twelve months ended December
31, 2022, amounts represent IPO bonuses for certain employees, net
of amounts forfeited by terminated employees.
(5) For the three and twelve months ended
December 31, 2023, amount includes impairment of one of our
non-marketable investments.
Skillz Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(Unaudited)
(in thousands)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Research and development
$
3,391
$
7,425
$
28,148
$
52,265
Less: stock-based compensation
(428
)
(1,600
)
(4,010
)
(4,662
)
Less: restructuring charges(1)
—
—
—
(2,052
)
Non-GAAP research and development
$
2,963
$
5,825
$
24,138
$
45,551
Sales and marketing
$
23,051
$
34,458
$
122,560
$
277,014
Less: stock-based compensation
(2,004
)
(2,036
)
(8,481
)
(8,615
)
Less: restructuring charges(1)
—
—
—
(1,066
)
Non-GAAP sales and marketing
$
21,047
$
32,422
$
114,079
$
267,333
General and administrative
$
21,898
$
22,478
$
99,977
$
163,018
Less: stock-based compensation(2)
(7,821
)
(7,198
)
(31,367
)
(94,925
)
Less: one-time nonrecurring
expenses(3)
—
—
—
(26
)
Less: restructuring charges(1)
—
—
—
(1,712
)
Non-GAAP general and administrative
$
14,077
$
15,280
$
68,610
$
66,355
(1) For the year ended December 31, 2022,
amount includes employee termination benefits.
(2) For the year ended December 31, 2022,
amount includes stock-based compensation recognized for the
cancellation of the Chief Executive Officer’s award of 805,977
performance share units granted on September 14, 2021 (the “CEO
Performance Stock Units”).
(3) For the year ended December 31, 2022,
amounts represent IPO bonuses for certain employees, net of amounts
forfeited by terminated employees.
Skillz Inc.
Supplemental Financial
Information
(Unaudited)
(in millions, except ARPU and
ARPPU)
Three Months Ended December
31,
Twelve Months Ended December
31,
2023
2022
2023
2022
Gross marketplace volume (“GMV”)
(000s)(1)
$
189,573
$
297,575
$
963,580
$
1,642,282
Paying monthly active users (“PMAUs”)
(000s)(2)
137
235
179
386
Monthly active users (“MAUs”)
(000s)(3)
896
1,290
1,045
2,105
Average GMV per paying monthly active
user(4)
460.0
423.0
448.8
354.4
Average GMV per monthly active user(5)
70.5
76.9
76.9
65.0
Average revenue per paying monthly active
user (“ARPPU”)(6)
70.3
66.6
70.0
59.7
Average revenue per monthly active user
(“ARPU”)(7)
10.8
12.1
11.9
11.0
Paying MAU to MAU ratio
15
%
18
%
17
%
18
%
Average end-user incentives, included as
sales and marketing expense, per paying active user(8)
31.51
27.97
30.09
25.33
Average end-user incentives, included as
sales and marketing expense, per playing active user(9)
4.83
5.08
5.15
4.65
(1) “GMV” or “Gross Marketplace Volume”
means the total entry fees paid by users for contests hosted on
Skillz’ platform. Total entry fees include entry fees paid by
end-users using cash deposits, prior winnings from end-users’
accounts that have not been withdrawn, and end-user incentives used
to enter paid entry fee contests.
(2) “Paying Monthly Active Users” or
“PMAUs” means the number of end-users who entered into a paid
contest hosted on Skillz’ platform at least once in a month,
averaged over each month in the period.
(3) “Monthly Active Users” or “MAUs” means
the number of playing end-users who entered into a paid or free
contest hosted on Skillz’ platform at least once in a month,
averaged over each month in the period.
(4) “Average GMV Per Paying Monthly Active
User” means the average GMV in a given month divided by Paying MAUs
in that month, averaged over the period.
(5) “Average GMV Per Monthly Active User”
means the average GMV in a given month divided by MAUs in that
month, averaged over the period.
(6) “Average Revenue Per Paying Monthly
Active User” or “ARPPU” means the average revenue in a given month
divided by Paying MAUs in that month, averaged over the period and
does not include a deduction for end-user incentives that are
included in sales and marketing expense.
(7) “Average Revenue Per Monthly Active
User” or “ARPU” means the average revenue in a given month divided
by MAUs in that month, averaged over the period and does not
include a deduction for end-user incentives that are included in
sales and marketing expense.
(8) Amount reflects the average end-user
incentives included in sales and marketing expense in a given month
divided by PMAUs in that month, averaged over the period.
(9) Amount reflects the average end-user
incentives included in sales and marketing expense in a given month
divided by MAUs in that month, averaged over the period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240314813395/en/
Investors: ir@skillz.com or James Leahy, Richard Land JCIR (212)
835-8500 or sklz@jcir.com
Media: press@skillz.com
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