Skillz Inc. (NYSE: SKLZ) (“Skillz” or the “Company”), the
leading mobile games platform bringing fair competition to players
worldwide, today announced results for the first quarter ending
March 31, 2023.
First Quarter Financial Update:
- Revenue of $44.4 million.
- Gross profit of $39.8 million.
- Net loss of $35.6 million.
- Adjusted EBITDA1 of $(20.9) million.
- Paying monthly active users (PMAU)2 of 214 thousand.
- Average Revenue Per Paying Monthly Active User (ARPPU)3 of
$69.1.
- Research and Development was $8.9 million.
- Sales and Marketing was $34.9 million.
- General and Administrative was $28.1 million.
- Cash, cash equivalents, and marketable securities as of March
31, 2023 of $520.9 million.
- Debt outstanding as of March 31, 2023 of $273.6 million.
“In the first quarter, we continued to make progress on our four
pillars to bring the company to profitability that we laid out last
year,” said Andrew Paradise, Skillz’ CEO. “Although we are very
much in the middle of a turnaround, we are cautiously optimistic
about our progress.”
Restatement of Previously Issued Financial Statements
As disclosed, we restated the consolidated financial statements
and amended certain information for the years ended December 31,
2021 and 2020 presented in its Annual Report on Form 10-K for the
year ended December 31, 2022, necessary to correct for the
following errors: (i) an understatement of end-user liability, (ii)
an understatement of reserves for potential indirect tax
liabilities, (iii) an understatement of impairment of long-lived
assets, (iv) other adjustments and (v) income tax adjustments due
to the aforementioned errors. In addition, we restated our
unaudited quarterly financial data for the periods ended September
30, 2022, 2021 and 2020, June 30, 2022, 2021 and 2020, and March
31, 2022, 2021 and 2020. Such restated and unaudited quarterly
financial data and related impacted amounts were presented in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2022.
Investor Conference Call
Skillz will host a live conference call at 4:30 p.m. Eastern
Time today. Access to a live audio-webcast of the discussion in
listen-only mode, as well as an archived replay of the webcast
afterward, will be available through links posted in the events
section of our investor relations website at
https://investors.skillz.com/events-and-presentations. An audio
replay of the Q&A conference call will be available through
Tuesday, May 9, 2023 and can be accessed by dialing 1 (866)
813-9403 (US) or +44 204 525 0658 (international) and entering the
passcode 283016.
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’ 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
security 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, 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 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; comply with laws and regulations applicable to its
business; the commercial, reputational and regulatory risks to our
business that may arise as a consequence of our need to restate our
financial statements; any disruption to our business that may occur
on a longer-term basis should we be unable to remediate during
fiscal year 2023 certain material weaknesses in our internal
controls over financial reporting; as well as 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.
Source: Skillz Inc.
Skillz Inc.
Consolidated Statements of
Operations and Comprehensive Loss
(in thousands, except for number
of shares and per share amounts)
Three Months Ended March
31,
2023
2022
Revenue
$
44,383
$
91,864
Costs and expenses:
Cost of revenue
4,582
9,200
Research and development
8,881
18,650
Sales and marketing
34,918
117,345
General and administrative
28,070
92,723
Total costs and expenses
76,451
237,918
Loss from operations
(32,068
)
(146,054
)
Interest expense, net
(3,494
)
(8,157
)
Change in fair value of common stock
warrant liabilities
(1
)
4,462
Other income (expense), net
39
(28
)
Loss before income taxes
(35,524
)
(149,777
)
Provision (benefit) from income taxes
69
(213
)
Net loss
$
(35,593
)
$
(149,564
)
Net loss per share attributable to common
stockholders – basic and diluted
$
(0.09
)
$
(0.37
)
Weighted average common shares
outstanding – basic and diluted
417,665,863
401,653,954
Other comprehensive income (loss):
Change in unrealized gain (loss) on
available-for-sale investments, net of tax
997
(2,046
)
Total other comprehensive income
(loss)
997
(2,046
)
Total comprehensive loss
$
(34,596
)
$
(151,610
)
Skillz Inc.
Consolidated Balance
Sheets
(in thousands, except for number
of shares and par value per share amounts)
March 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
415,329
$
362,516
Marketable securities, current
88,779
127,268
Accounts receivable, net
9,544
7,177
Prepaid expenses and other current
assets
7,920
4,722
Total current assets
521,572
501,683
Property and equipment, net
13,981
2,991
Operating lease right-of-use assets,
net
321
472
Marketable securities, non-current
16,790
56,728
Non-marketable equity securities
55,649
55,649
Other long-term assets
3,849
3,772
Total assets
$
612,162
$
621,295
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
4,682
$
1,696
Operating lease liabilities, current
2,018
2,133
Other current liabilities
64,579
45,666
Total current liabilities
71,279
49,495
Operating lease liabilities,
non-current
11,512
11,942
Common stock warrant liabilities,
non-current
290
289
Long-term debt, non-current
273,617
272,781
Other long-term liabilities
1,078
8,387
Total liabilities
357,776
342,894
Commitments and contingencies
Stockholders’ equity:
Preferred stock $0.0001 par value; 10
million shares authorized — 0 issued and outstanding as of March
31, 2023 and December 31, 2022
—
—
Common stock $0.0001 par value; 625
million shares authorized; Class A common stock – 500 million
shares authorized; 354 million and 353 million shares issued and
outstanding as of March 31, 2023 and December 31, 2022,
respectively; Class B common stock – 125 million shares authorized;
69 million shares issued and outstanding as of March 31, 2023 and
December 31, 2022
41
41
Additional paid-in capital
1,163,612
1,153,031
Accumulated other comprehensive loss
(566
)
(1,563
)
Accumulated deficit
(908,701
)
(873,108
)
Total stockholders’ equity
254,386
278,401
Total liabilities and stockholders'
equity
$
612,162
$
621,295
Skillz Inc.
Consolidated Statement of Cash
Flows
(in thousands)
Three Months Ended March
31,
2023
2022
Operating Activities
Net loss
$
(35,593
)
$
(149,564
)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
626
5,539
Stock-based compensation
10,548
77,879
Accretion of unamortized debt discount and
amortization of debt issuance costs
837
824
Amortization of premium (accretion of
discount) for marketable securities
53
984
Deferred income taxes
—
(318
)
Change in fair value of common stock
warrant liabilities
1
(4,462
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(2,367
)
(158
)
Prepaid expenses and other assets
(3,276
)
(5,676
)
Operating lease right-of-use assets
151
534
Accounts payable
2,986
(5,613
)
Operating lease liabilities
(545
)
(473
)
Other accruals and liabilities
11,880
(2,946
)
Net cash used in operating
activities
(14,699
)
(83,450
)
Investing Activities
Purchases of property and equipment,
including internal-use software
(11,608
)
(107
)
Purchases of marketable securities
—
(149,495
)
Proceeds from maturities of marketable
securities
37,640
25,593
Proceeds from sales of marketable
securities
41,729
83,265
Net cash provided by (used in)
investing activities
67,761
(40,744
)
Financing Activities
Principal payments on finance leases
obligations
(282
)
(840
)
Payments for debt issuance costs
—
(1,976
)
Net proceeds from exercise of stock
options and issuance of common stock
33
236
Net cash provided by (used in)
financing activities
(249
)
(2,580
)
Net change in cash, cash equivalents and
restricted cash
52,813
(126,774
)
Cash, cash equivalents and restricted
cash – beginning of year
365,436
244,252
Cash, cash equivalents and restricted
cash – end of period
$
418,249
$
117,478
Skillz Inc.
Reconciliation of GAAP Net
Loss to Adjusted EBITDA
(in thousands)
Three Months Ended March
31,
2023
2022
Net loss
$
(35,593
)
$
(149,564
)
Interest expense, net
3,494
8,157
Stock-based compensation(2)
10,548
77,879
Change in fair value of common stock
warrant liabilities
1
(4,462
)
(Benefit) provision for income taxes
69
(213
)
Depreciation and amortization
627
5,539
Other (income) expense, net
(39
)
28
One-time nonrecurring expenses(1)
—
119
Adjusted EBITDA
$
(20,893
)
$
(62,517
)
(1) For the three months ended March 31,
2022, amounts represent one-time nonrecurring expenses related to
IPO bonuses for certain employees, net of amounts forfeited by
terminated employees.
(2) For the three months ended March 31,
2022, amount includes stock-based compensation recognized for the
cancellation of the Chief Executive Officers’ award of 16,119,540
performance share units granted on September 14, 2021 (the “CEO
Performance Stock Units”).
Skillz Inc.
Reconciliation of GAAP to
Non-GAAP Operating Expenses
(in thousands)
Three Months Ended March
31,
2023
2022
Research and development (3) (As
Restated)
$
8,881
$
18,650
Less: stock-based compensation
(1,206
)
(2,288
)
Non-GAAP research and development
$
7,675
$
16,362
Sales and marketing (4) (As Restated)
$
34,918
$
117,345
Less: stock-based compensation
(1,904
)
(2,893
)
Non-GAAP sales and marketing
$
33,014
$
114,452
General and administrative (5) (As
Restated)
$
28,070
$
92,723
Less: stock-based compensation(2)
(7,438
)
(72,698
)
Less: one-time nonrecurring
expenses(1)
—
(119
)
Non-GAAP general and administrative
$
20,632
$
19,906
(1) For the three months ended March 31,
2022, amounts represent one-time nonrecurring expenses related to
IPO bonuses for certain employees, net of amounts forfeited by
terminated employees.
(2) For the three months ended March 31,
2022, amount includes stock-based compensation recognized for the
cancellation of the Chief Executive Officers’ award of 16,119,540
performance share units granted on September 14, 2021 (the “CEO
Performance Stock Units”).
(3) Research and development expenses for
the three months ended March 31, 2022 are different from previously
reported amounts as they have been adjusted to reflect an increase
of $0.3 million associated with corrections to previously reported
amounts.
(4) Sales and marketing expenses for the
three months ended March 31, 2022 are different from previously
reported amounts as they have been adjusted to reflect an increase
of $13 thousand associated with corrections to previously reported
amounts.
(5) General and administrative expenses
for the three months ended March 31, 2022 are different from
previously reported amounts as they have been adjusted to reflect
an increase of $0.1 million associated with corrections to
previously reported amounts.
Skillz Inc.
Supplemental Financial
Information
(in millions, except ARPU and
ARPPU)
Three Months Ended March
31,
2023
2022
Gross marketplace volume (“GMV”)
(000s)(1)
$
277,632
$
552,134
Paying monthly active users (“PMAUs”)
(000s)(2)
214
569
Monthly active users (“MAUs”)
(000s)(3)
1,176
3,229
Average GMV per paying monthly active
user(4)
$
432.4
$
323.4
Average GMV per monthly active user(5)
$
78.7
$
57.0
Average revenue per paying monthly active
user (“ARPPU”)(6)
$
69.1
$
53.8
Average revenue per monthly active user
(“ARPU”)(7)
$
12.6
$
9.5
Paying MAU to MAU ratio
18
%
18
%
Average end-user incentives, included as
sales and marketing expense, per paying active user(8)
$
27.40
$
24.97
Average end-user incentives, included as
sales and marketing expense, per playing active user(9)
$
4.98
$
4.40
(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/20230509005201/en/
Investors: ir@skillz.com
Media: press@skillz.com
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