Skillz Announces Second Quarter 2024 Results
Second Quarter Financial Update (Unaudited):
-
Revenue of
$25.3 million . -
Gross profit of
$21.9 million . -
Net income of
$26.0 million . -
Adjusted EBITDA1 of
$(12.6) million . - Paying monthly active users (PMAU)2 of 122,000.
-
Average Revenue Per Paying Monthly Active User (ARPPU)3 of
$69.4 . -
Total operating expenses excluding cost of revenue of
$3.6 million .
“Skillz’ second quarter results mark continued progress against our strategic initiatives to position the Company to deliver consistent revenue growth and positive cash flow,” said
Investor Conference Call
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
About
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
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
Preliminary Results, Delayed 10-K and 10-Q Extension
The Company is in the process of completing its unaudited interim financial statements and other disclosures for the fiscal quarter ended
In addition, the Company is still in the process of completing its financial statements and other disclosures for the fiscal year ended
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
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) (in thousands, except for number of shares and per share amounts) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue |
$ |
25,295 |
|
|
$ |
40,166 |
|
|
$ |
50,530 |
|
|
$ |
84,549 |
|
Costs and expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenue |
|
3,346 |
|
|
|
3,650 |
|
|
|
6,798 |
|
|
|
8,232 |
|
Research and development |
|
4,272 |
|
|
|
8,025 |
|
|
|
8,896 |
|
|
|
16,906 |
|
Sales and marketing |
|
20,849 |
|
|
|
32,669 |
|
|
|
41,842 |
|
|
|
67,587 |
|
General and administrative |
|
17,236 |
|
|
|
26,074 |
|
|
|
40,273 |
|
|
|
54,144 |
|
Gain from litigation settlement |
|
(46,000 |
) |
|
|
— |
|
|
|
(46,000 |
) |
|
|
— |
|
Total costs and expenses |
|
(297 |
) |
|
|
70,418 |
|
|
|
51,809 |
|
|
|
146,869 |
|
Income (loss) from operations |
|
25,592 |
|
|
|
(30,252 |
) |
|
|
(1,279 |
) |
|
|
(62,320 |
) |
Gain from extinguishment of debt |
|
— |
|
|
|
15,205 |
|
|
|
— |
|
|
|
15,205 |
|
Interest income (expense), net |
|
334 |
|
|
|
(1,712 |
) |
|
|
447 |
|
|
|
(5,207 |
) |
Change in fair value of common stock warrant liabilities |
|
2 |
|
|
|
152 |
|
|
|
11 |
|
|
|
151 |
|
Other income, net |
|
190 |
|
|
|
11 |
|
|
|
254 |
|
|
|
50 |
|
Income (loss) before income taxes |
|
26,118 |
|
|
|
(16,596 |
) |
|
|
(567 |
) |
|
|
(52,121 |
) |
Provision for income taxes |
|
73 |
|
|
|
114 |
|
|
|
111 |
|
|
|
183 |
|
Net income (loss) |
$ |
26,045 |
|
|
$ |
(16,710 |
) |
|
$ |
(678 |
) |
|
$ |
(52,304 |
) |
Earnings (loss) per share: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.47 |
|
|
$ |
(0.79 |
) |
|
$ |
(0.04 |
) |
|
$ |
(2.48 |
) |
Diluted |
$ |
1.44 |
|
|
$ |
(0.79 |
) |
|
$ |
(0.04 |
) |
|
$ |
(2.48 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
17,776,904 |
|
|
|
21,143,257 |
|
|
|
18,119,062 |
|
|
|
21,109,886 |
|
Diluted |
|
18,079,310 |
|
|
|
21,143,257 |
|
|
|
18,119,062 |
|
|
|
21,109,886 |
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income: |
|
|
|
|
|
|
|
||||||||
Change in unrealized gain on available-for-sale investments, net of tax |
|
1 |
|
|
|
394 |
|
|
|
7 |
|
|
|
1,391 |
|
Total other comprehensive income |
|
1 |
|
|
|
394 |
|
|
|
7 |
|
|
|
1,391 |
|
Total comprehensive income (loss) |
$ |
26,046 |
|
|
$ |
(16,316 |
) |
|
$ |
(671 |
) |
|
$ |
(50,913 |
) |
Consolidated Balance Sheets (Unaudited) (in thousands, except for number of shares and par value per share amounts) |
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
316,419 |
|
|
$ |
302,028 |
|
Restricted cash |
|
10,000 |
|
|
|
10,000 |
|
Accounts receivable, net of allowance for credit losses of |
|
4,223 |
|
|
|
5,942 |
|
Prepaid expenses and other current assets |
|
4,127 |
|
|
|
6,721 |
|
Total current assets |
|
334,769 |
|
|
|
324,691 |
|
Property and equipment, net |
|
14,616 |
|
|
|
14,549 |
|
Marketable securities, non-current |
|
— |
|
|
|
1,125 |
|
Non-marketable equity securities |
|
52,768 |
|
|
|
52,768 |
|
Other non-current assets |
|
707 |
|
|
|
2,693 |
|
Total assets |
$ |
402,860 |
|
|
$ |
395,826 |
|
Liabilities and stockholders’ equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
6,348 |
|
|
$ |
1,712 |
|
Operating lease liabilities, current |
|
1,256 |
|
|
|
1,364 |
|
Other current liabilities |
|
44,835 |
|
|
|
46,782 |
|
Total current liabilities |
|
52,439 |
|
|
|
49,858 |
|
Operating lease liabilities, non-current |
|
9,912 |
|
|
|
10,573 |
|
Common stock warrant liabilities, non-current |
|
— |
|
|
|
11 |
|
Long-term debt, net of current portion |
|
124,769 |
|
|
|
123,935 |
|
Other non-current liabilities |
|
512 |
|
|
|
960 |
|
Total liabilities |
|
187,632 |
|
|
|
185,337 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Common stock |
|
1 |
|
|
|
1 |
|
|
|
(23,770 |
) |
|
|
(13,000 |
) |
Additional paid-in capital |
|
1,214,143 |
|
|
|
1,197,963 |
|
Accumulated other comprehensive loss |
|
— |
|
|
|
(7 |
) |
Accumulated deficit |
|
(975,146 |
) |
|
|
(974,468 |
) |
Total stockholders’ equity |
|
215,228 |
|
|
|
210,489 |
|
Total liabilities and stockholders’ equity |
$ |
402,860 |
|
|
$ |
395,826 |
|
Consolidated Statement of Cash Flows (Unaudited) (in thousands) |
|||||||
|
Six Months Ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Operating Activities |
|
|
|
||||
Net loss |
$ |
(678 |
) |
|
$ |
(52,304 |
) |
Adjustment to reconcile net loss to net cash used in operating activities: |
|
|
|
||||
Depreciation and amortization |
|
798 |
|
|
|
1,372 |
|
Stock-based compensation |
|
16,173 |
|
|
|
21,170 |
|
Gain on extinguishment of debt |
|
— |
|
|
|
(15,205 |
) |
Accretion of unamortized debt discount and amortization of debt issuance costs |
|
834 |
|
|
|
1,428 |
|
Amortization of premium for marketable securities |
|
— |
|
|
|
591 |
|
Impairment charges |
|
— |
|
|
|
455 |
|
Change in fair value of common stock warrant liabilities |
|
(11 |
) |
|
|
(151 |
) |
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable, net |
|
1,719 |
|
|
|
(2,481 |
) |
Prepaid expenses and other assets |
|
2,580 |
|
|
|
(1,746 |
) |
Accounts payable |
|
4,636 |
|
|
|
2,499 |
|
Operating lease right-of-use assets |
|
— |
|
|
|
308 |
|
Operating lease liabilities |
|
(769 |
) |
|
|
(1,115 |
) |
Other accruals and liabilities |
|
(1,876 |
) |
|
|
4,119 |
|
Net cash provided by (used in) operating activities |
|
23,406 |
|
|
|
(41,060 |
) |
Investing Activities |
|
|
|
||||
Purchases of property and equipment, including internal-use software |
|
(922 |
) |
|
|
(11,622 |
) |
Settlement of loan receivable |
|
2,000 |
|
|
|
— |
|
Purchases of marketable securities |
|
(5 |
) |
|
|
— |
|
Proceeds from sales of marketable securities |
|
1,137 |
|
|
|
52,477 |
|
Proceeds from maturities of marketable securities |
|
— |
|
|
|
98,903 |
|
Net cash provided by investing activities |
|
2,210 |
|
|
|
139,758 |
|
Financing Activities |
|
|
|
||||
Principal payments on finance leases obligations |
|
(455 |
) |
|
|
(394 |
) |
Payments for extinguishment of debt |
|
— |
|
|
|
(135,855 |
) |
Repurchase of common stock |
|
(10,770 |
) |
|
|
— |
|
Net proceeds from exercise of stock options and issuance of common stock |
|
— |
|
|
|
70 |
|
Net cash used in financing activities |
|
(11,225 |
) |
|
|
(136,179 |
) |
Net change in cash, cash equivalents and restricted cash |
|
14,391 |
|
|
|
(37,481 |
) |
Cash, cash equivalents and restricted cash – beginning of year |
|
312,028 |
|
|
|
365,436 |
|
Cash, cash equivalents and restricted cash – end of period |
$ |
326,419 |
|
|
$ |
327,955 |
|
Supplemental cash flow data: |
|
|
|
||||
Cash paid during the period for: |
|
|
|
||||
Interest |
$ |
6,813 |
|
|
$ |
12,211 |
|
Taxes |
$ |
135 |
|
|
$ |
160 |
|
Reconciliation of GAAP Net Loss to Adjusted EBITDA (Unaudited) (in thousands) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net income (loss) |
$ |
26,045 |
|
|
$ |
(16,710 |
) |
|
$ |
(678 |
) |
|
$ |
(52,304 |
) |
Interest income (expense), net |
|
(334 |
) |
|
|
1,712 |
|
|
|
(447 |
) |
|
|
5,207 |
|
Stock-based compensation |
|
7,433 |
|
|
|
10,622 |
|
|
|
16,173 |
|
|
|
21,170 |
|
Change in fair value of warrant liability |
|
(2 |
) |
|
|
(152 |
) |
|
|
(11 |
) |
|
|
(151 |
) |
Provision for income taxes |
|
73 |
|
|
|
114 |
|
|
|
111 |
|
|
|
183 |
|
Depreciation and amortization |
|
403 |
|
|
|
745 |
|
|
|
798 |
|
|
|
1,372 |
|
Gain on extinguishment of debt |
|
— |
|
|
|
(15,205 |
) |
|
|
— |
|
|
|
(15,205 |
) |
Gain from litigation settlement(1) |
|
(46,000 |
) |
|
|
— |
|
|
|
(46,000 |
) |
|
|
— |
|
Other income, net |
|
(190 |
) |
|
|
(11 |
) |
|
|
(254 |
) |
|
|
(50 |
) |
Adjusted EBITDA |
$ |
(12,572 |
) |
|
$ |
(18,885 |
) |
|
$ |
(30,308 |
) |
|
$ |
(39,778 |
) |
1) For the three and six months ended |
Reconciliation of GAAP to Non-GAAP Operating Expenses (in thousands) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Research and development |
$ |
4,272 |
|
|
$ |
8,025 |
|
|
|
8,896 |
|
|
|
16,906 |
|
Less: stock-based compensation |
|
(182 |
) |
|
|
(961 |
) |
|
|
(329 |
) |
|
|
(2,167 |
) |
Non-GAAP research and development |
$ |
4,090 |
|
|
$ |
7,064 |
|
|
$ |
8,567 |
|
|
$ |
14,739 |
|
|
|
|
|
|
|
|
|
||||||||
Sales and marketing |
$ |
20,849 |
|
|
$ |
32,669 |
|
|
$ |
41,842 |
|
|
$ |
67,587 |
|
Less: stock-based compensation |
|
(1,787 |
) |
|
|
(2,091 |
) |
|
|
(3,798 |
) |
|
|
(3,995 |
) |
Non-GAAP sales and marketing |
$ |
19,062 |
|
|
$ |
30,578 |
|
|
$ |
38,044 |
|
|
$ |
63,592 |
|
|
|
|
|
|
|
|
|
||||||||
General and administrative |
$ |
17,236 |
|
|
$ |
26,074 |
|
|
$ |
40,273 |
|
|
$ |
54,144 |
|
Less: stock-based compensation |
|
(5,462 |
) |
|
|
(7,570 |
) |
|
|
(12,043 |
) |
|
|
(15,008 |
) |
Non-GAAP general and administrative |
$ |
11,774 |
|
|
$ |
18,504 |
|
|
$ |
28,230 |
|
|
$ |
39,136 |
|
Supplemental Financial Information (in millions, except ARPU and ARPPU) |
|||||||||||||||
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Gross marketplace volume (“GMV”) (000s)(1) |
$ |
161,663 |
|
|
$ |
255,229 |
|
|
$ |
322,931 |
|
|
$ |
532,861 |
|
Paying monthly active users (“PMAUs”) (000s)(2) |
|
122 |
|
|
|
196 |
|
|
|
121 |
|
|
|
205 |
|
Monthly active users (“MAUs”) (000s)(3) |
|
807 |
|
|
|
1,068 |
|
|
|
833 |
|
|
|
1,122 |
|
Average GMV per paying monthly active user(4) |
$ |
441.7 |
|
|
$ |
433.3 |
|
|
$ |
444.8 |
|
|
$ |
433.2 |
|
Average GMV per monthly active user(5) |
$ |
66.8 |
|
|
$ |
79.7 |
|
|
$ |
129.2 |
|
|
$ |
79.2 |
|
Average revenue per paying monthly active user (“ARPPU”)(6) |
$ |
69.4 |
|
|
$ |
68.2 |
|
|
$ |
69.6 |
|
|
$ |
68.7 |
|
Average revenue per monthly active user (“ARPU”)(7) |
$ |
10.4 |
|
|
$ |
12.5 |
|
|
$ |
10.1 |
|
|
$ |
12.6 |
|
Paying MAU to MAU ratio |
|
15 |
% |
|
|
18 |
% |
|
|
15 |
% |
|
|
18 |
% |
Average end-user incentives, included as sales and marketing expense, per paying active user(8) |
$ |
28.9 |
|
|
$ |
29.1 |
|
|
$ |
26.6 |
|
|
$ |
28.2 |
|
Average end-user incentives, included as sales and marketing expense, per playing active user(9) |
$ |
4.4 |
|
|
$ |
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. |
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(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. |
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(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. |
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