Skillz Inc. (NYSE: SKLZ) (“Skillz” or the “Company”), the
leading mobile games platform bringing fair competition to players
worldwide, today reported unaudited financial results for the third
quarter ended September 30, 2024.
Third Quarter Financial Update (Unaudited):
- Revenue of $24.6 million.
- Net loss of $21.1 million.
- Adjusted EBITDA1 of $(13.9) million.
- Paying monthly active users (PMAU)2 of 121,000.
- Average Revenue Per Paying Monthly Active User (ARPPU)3 of
$67.6.
- Total operating expenses excluding cost of revenue of $42.2
million.
“Our third quarter operating performance was marked by continued
execution on our strategic operating priorities as we further
position Skillz to generate sustainable top-line growth and
positive cash flow,” said Andrew Paradise, Skillz’ CEO. “Paying
Monthly Average Users (pMAU) in the quarter was stable on a
quarterly sequential basis. By focusing our customer acquisition
spend on targeted channels we again achieved system-wide payback
approaching six months. We are optimistic that continued execution
on our strategic initiatives will position Skillz to generate
positive Adjusted EBITDA on a run-rate basis in 2025.”
Gaetano Franceschi, Skillz’ CFO, added, “Our focus on
disciplined operating expense management, including on user
acquisition spend to ensure we achieve expected system-wide
payback, continues to drive year over year improvements in our
Adjusted EBITDA loss and our quarterly cash burn. Our strong
balance sheet, including more than $300 million in cash and
restricted cash as of September 30, 2024, provides us with the
flexibility to deploy capital on our turnaround initiatives such as
the development and introduction of new product features, as well
as to begin to transition toward increasing our user acquisition
spend to generate profitable growth.”
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=4fd50b1c&confId=71853.
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, November 14, 2024, and can be
accessed by dialing (866) 813-9403 (US) or (929) 458-6194
(international) and entering the passcode 413242.
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
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.
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 expenses are also included in this press release, which
are a non-GAAP financial measures. The Company’s management
believes non-GAAP operating expenses are 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 expenses 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 expenses 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 income (expense), net; provision for income taxes;
depreciation and amortization, and other income, 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, impairment charges,
loss contingency accruals, 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 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.
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; and effectively resolve uncertainties associated with
the resolution of our ongoing litigation with Voodoo SAS, Papaya
Gaming, and other litigation matters. 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
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Revenue
$
24,564
$
36,427
$
75,094
$
120,975
Costs and expenses:
Cost of revenue
3,373
3,693
10,171
11,923
Research and development
4,742
7,852
13,638
24,757
Sales and marketing
19,294
31,925
61,138
99,510
General and administrative
18,147
24,389
58,419
78,080
Gain from litigation settlement
—
—
(46,000
)
—
Impairment of intangible assets and other
charges
—
—
—
455
Total costs and expenses
45,556
67,859
97,366
214,725
Loss from operations
(20,992
)
(31,432
)
(22,272
)
(93,750
)
Gain from extinguishment of debt
—
—
—
15,205
Interest income (expense), net
242
(2,279
)
688
(7,486
)
Change in fair value of common stock
warrant liabilities
—
127
11
278
Other income (expense), net
(333
)
48
(78
)
98
Loss before income taxes
(21,083
)
(33,536
)
(21,651
)
(85,655
)
Provision for income taxes
32
9
142
193
Net loss
$
(21,115
)
$
(33,545
)
$
(21,793
)
$
(85,848
)
Earnings (loss) per share:
Basic and diluted
$
(1.20
)
$
(1.57
)
$
(1.22
)
$
(4.05
)
Weighted average shares outstanding:
Basic and diluted
17,531,790
21,305,470
17,928,062
21,175,797
Other comprehensive income:
Change in unrealized gain on
available-for-sale investments, net of tax
1
135
7
1,526
Total other comprehensive income
1
135
7
1,526
Total comprehensive loss
$
(21,114
)
$
(33,410
)
$
(21,786
)
$
(84,322
)
Skillz Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except for number
of shares and par value per share amounts)
September 30,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents
$
301,443
$
302,028
Restricted cash
10,000
10,000
Accounts receivable, net of allowance for
credit losses of $62 and $49 as of September 30, 2024 and December
31, 2023, respectively
5,272
5,942
Prepaid expenses and other current
assets
5,103
6,721
Total current assets
321,818
324,691
Property and equipment, net
14,877
14,549
Marketable securities, non-current
—
1,125
Non-marketable equity securities
52,768
52,768
Other non-current assets
723
2,693
Total assets
$
390,186
$
395,826
Liabilities and stockholders’
equity
Current liabilities:
Accounts payable
$
8,666
$
1,712
Operating lease liabilities, current
1,311
1,364
Other current liabilities
45,556
46,782
Total current liabilities
55,533
49,858
Operating lease liabilities,
non-current
9,564
10,573
Common stock warrant liabilities,
non-current
—
11
Long-term debt, net of current portion
125,204
123,935
Other non-current liabilities
422
960
Total liabilities
190,723
185,337
Commitments and contingencies
Stockholders’ equity:
Common stock $0.0001 par value; 31.3
million shares authorized; Class A common stock – 25.0 million
shares authorized; 18.6 million and 18.1 million shares issued;
14.4 million and 15.8 million outstanding as of September 30, 2024
and December 31, 2023, respectively; Class B common stock – 6.3
million shares authorized; 3.4 million shares issued and
outstanding as of September 30, 2024 and December 31, 2023
1
1
Treasury stock at cost, 4.1 million and
2.3 million as of September 30, 2024 and December 31, 2023,
respectively
(23,905
)
(13,000
)
Additional paid-in capital
1,219,628
1,197,963
Accumulated other comprehensive loss
—
(7
)
Accumulated deficit
(996,261
)
(974,468
)
Total stockholders’ equity
199,463
210,489
Total liabilities and stockholders’
equity
$
390,186
$
395,826
Skillz Inc.
Consolidated Statement of Cash
Flows (Unaudited)
(in thousands)
Nine Months Ended
September 30,
2024
2023
Operating Activities
Net loss
$
(21,793
)
$
(85,848
)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,188
1,858
Stock-based compensation
22,894
33,610
Gain on extinguishment of debt
—
(15,205
)
Accretion of unamortized debt discount and
amortization of debt issuance costs
1,269
1,815
Amortization of premium for marketable
securities
—
839
Impairment charges
—
455
Change in fair value of common stock
warrant liabilities
(11
)
(278
)
Noncash operating lease costs
—
17
Changes in operating assets and
liabilities:
Accounts receivable, net
670
(2,088
)
Prepaid expenses and other assets
3,588
(1,883
)
Accounts payable
6,954
699
Operating lease liabilities
(1,062
)
(1,732
)
Other accruals and liabilities
(1,274
)
8,255
Net cash provided by (used in)
operating activities
12,423
(59,486
)
Investing Activities
Purchases of property and equipment,
including internal-use software
(1,317
)
(12,081
)
Settlement of loan receivable
—
(2,000
)
Purchases of marketable securities
(5
)
—
Proceeds from sales of marketable
securities
1,137
56,599
Proceeds from maturities of marketable
securities
—
121,226
Net cash provided by (used in)
investing activities
(185
)
163,744
Financing Activities
Principal payments on finance leases
obligations
(682
)
(807
)
Payments for extinguishment of debt
—
(135,855
)
Repurchase of common stock
(10,905
)
—
Payments to cover taxes upon exercise of
stock options and issuance of common stock
(1,236
)
—
Proceeds from exercise of common stock
warrants, net of redemptions
—
46
Net cash used in financing
activities
(12,823
)
(136,616
)
Net change in cash, cash equivalents and
restricted cash
(585
)
(32,358
)
Cash, cash equivalents and restricted
cash – beginning of year
312,028
365,436
Cash, cash equivalents and restricted
cash – end of period
$
311,443
$
333,078
Supplemental cash flow data:
Cash paid during the period for:
Interest
$
6,726
$
12,261
Taxes
$
183
$
200
Skillz Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA (Unaudited)
(in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net loss
$
(21,115
)
$
(33,545
)
$
(21,793
)
$
(85,848
)
Interest income (expense), net
(242
)
2,279
(688
)
7,486
Stock-based compensation
6,721
12,440
22,894
33,610
Change in fair value of warrant
liability
—
(127
)
(11
)
(278
)
Provision for income taxes
32
9
142
193
Depreciation and amortization
389
486
1,188
1,858
Gain on extinguishment of debt
—
—
—
(15,205
)
Gain from litigation settlement(1)
—
—
(46,000
)
—
Other income (expense), net
333
(48
)
78
(98
)
Impairment charges
—
—
—
455
Adjusted EBITDA
$
(13,882
)
$
(18,506
)
$
(44,190
)
$
(58,282
)
1) For the nine months ended September 30,
2024, amount represents certain funds received as part of the
settlement with AviaGames.
Skillz Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Research and development
$
4,742
$
7,852
$
13,638
$
24,757
Less: stock-based compensation
(322
)
(1,415
)
(651
)
(3,581
)
Non-GAAP research and development
$
4,420
$
6,437
$
12,987
$
21,176
Sales and marketing
$
19,294
$
31,925
$
61,138
$
99,510
Less: stock-based compensation
(1,086
)
(2,482
)
(4,885
)
(6,478
)
Non-GAAP sales and marketing
$
18,208
$
29,443
$
56,253
$
93,032
General and administrative
$
18,147
$
24,389
$
58,419
$
78,080
Less: stock-based compensation
(5,309
)
(8,543
)
(17,351
)
(23,551
)
Non-GAAP general and administrative
$
12,838
$
15,846
$
41,068
$
54,529
Skillz Inc.
Supplemental Financial
Information
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Gross marketplace volume (“GMV”)
(000s)(1)
$
158,238
$
241,146
$
481,169
$
774,007
Paying monthly active users (“PMAUs”)
(000s)(2)
121
168
121
193
Monthly active users (“MAUs”)
(000s)(3)
845
1,038
837
1,094
Average GMV per paying monthly active
user(4)
$
435.9
$
478.8
$
441.8
$
446.2
Average GMV per monthly active user(5)
$
62.4
$
77.5
$
63.9
$
78.6
Average revenue per paying monthly active
user (“ARPPU”)(6)
$
67.6
$
72.3
$
68.9
$
69.9
Average revenue per monthly active user
(“ARPU”)(7)
$
9.7
$
11.7
$
10.0
$
12.3
Paying MAU to MAU ratio
14
%
16
%
14
%
18
%
Average end-user incentives, included as
sales and marketing expense, per paying active user(8)
$
28.0
$
33.6
$
27.1
$
29.8
Average end-user incentives, included as
sales and marketing expense, per playing active user(9)
$
4.0
$
5.4
$
3.9
$
5.2
(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/20241107136187/en/
Investors: ir@skillz.com or James Leahy, Richard Land JCIR (212)
835-8500 or sklz@jcir.com
Media: press@skillz.com
Grafico Azioni Skillz (NYSE:SKLZ)
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