Skillz Inc. (NYSE:SKLZ) Q3 2021 Earnings Conference Call November 3, 2021 5:30 PM ET Company Participants Stefan Gerhard - Vice President, Finance Andrew Paradise - Chief Executive Officer Casey Chafkin - Chief Revenue Officer Ian Lee - Chief Financial Officer Conference Call Participants Michael Graham - Canaccord Clark Lampen - BTIG Dan Parr - RBC Capital Markets Brian Fitzgerald - Wells Fargo Operator Good afternoon. Thank you for attending today's Skillz Third Quarter 2021 Earnings Conference Call. My ...

Skillz, Inc. (NYSE:SKLZ) Citi 2021 Global Technology Virtual Conference Call September 13, 2021 1:00 PM ET Company Participants Andrew Paradise - Co-Founder, CEO, President & Chairman Conference Call Participants Jason Bazinet - Citi, Internet and Media Analyst Jason Bazinet All right. Well, good afternoon, everyone. My name is Jason Bazinet. I'm Citi's Internet and Media Analyst. We're very fortunate to have Andrew Paradise, CEO of Skillz with us today. Hello, Andrew. Andrew Paradise Pleasure to be here. J ...

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ For the transition period from ______to______ Commission file number: 001-39243 SKILLZ INC. (Exact name of registrant as specified in its charter) Delaware 46-2682070 (Stat ...

Financial Data and Key Metrics Changes - The company made important investments to accelerate user growth, content increase, and platform technology advancements, setting the stage for long-term growth [8] - The company expects Aarki to contribute $13 million in revenue for the remainder of 2021 before synergies [15][29] Business Line Data and Key Metrics Changes - The conversion rate from playing to paying users is expected to increase to 40% or higher over the long term [14] - The company is focusing on optimizing the value chain from impression level down to end-user lifetime value (LTV) [37] Market Data and Key Metrics Changes - The company is experiencing elevated customer acquisition costs (CPIs) and is making investments to mitigate these high CPIs [36] - In July, the pace of industry pricing increases began to stabilize, with expectations for pricing to flatten before decreasing later in the year [42] Company Strategy and Development Direction - The company is focusing on expanding into genres such as racing, fighting, and first-person shooter games through its investment in Exit [18] - The long-term vision includes centralizing competition on the Internet and expanding beyond mobile to non-gaming applications like fitness [39] Management Comments on Operating Environment and Future Outlook - Management noted that Q2 revenue growth was in line with expectations despite tough comparisons due to COVID-19 impacts last year [36] - The company is optimistic about the integration of Aarki and its potential to improve targeting and efficiency in user acquisition [31] Other Important Information - The company is working on new content and international opportunities as potential growth drivers for the second half of the year [35] - The NFL competitors challenge has generated significant interest, with hundreds of game proposals submitted, and 14 semifinalists are currently in the development phase [54] Q&A Session Summary Question: Conversion to paying players and Exit games investment - Management believes there is significant upside in increasing the conversion rate to paying users and expects the Exit investment to accelerate expansion into new game genres [14][18] Question: Average LTV for CAC and Aarki's impact - LTV remains strong, and the company is working on initiatives to lower customer acquisition costs, with Aarki expected to enhance performance through better targeting [27][31] Question: Growth drivers for the second half of the year - Key growth drivers include new games, international opportunities, and optimizing the value chain for better predictive LTV [35][37] Question: User acquisition versus engagement marketing - Engagement marketing focuses on retention and monetization of existing users, while user acquisition is preferred for long-term growth [48] Question: Take rate and IDFA impact - The take rate is influenced by various factors, and management expects the impact of IDFA to be neutral, with potential decreases in cost per install [56][59]

TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☐ For the transition period from ______to______ Commission file number: 001-39243 SKILLZ INC. (Exact name of registrant as specified in its charter) Delaware 46-2682070 (Sta ...

Skillz Q1 2021 Financial Results May 4, 2021 1 Disclaimer Use of Non-GAAP Financial Measures In this earnings presentation, 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. As required by the rules of the Securities and Exchange Commission ("SEC"), the Company has provided herein a reconciliation of the non-GAAP financial measure contained in this press release to the most directly comparable ...

Skillz Inc. (NYSE:SKLZ) CEO Q1 2021 Earnings Conference Call May 4, 2021 5:00 PM ET Company Participants Stefan Gerhard - VP of Finance Andrew Paradise - CEO Casey Chafkin - Chief Revenue Officer Scott Henry - CFO Conference Call Participants Jason Bazinet - Citi Brian Fitzgerald - Wells Fargo Michael Graham - Canaccord Drew Crum - Stifel Stefan Gerhard Welcome to Skillz First Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will fo ...

Skillz Q4 2020 Financial Results March 10, 2021 1 Disclaimer Use of Non-GAAP Financial Measures In this earnings presentation, the Company includes Adjusted EBITDA which is a non-GAAP performance measures that the Company uses to supplement its results presented in accordance with U.S. GAAP. As required by the rules of the Securities and Exchange Commission ("SEC"), the Company has provided herein a reconciliation of the non-GAAP financial measures contained in this press release to the most directly compar ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Skillz operates a proprietary platform for competitive mobile gaming, monetizing through entry fees and fostering fair competition - Skillz's mission is to build the competition layer of the internet, revolutionizing mobile gaming by aligning developer and gamer interests through a **prize-based monetization model**[21](index=21&type=chunk)[24](index=24&type=chunk) - The platform provides developers with an **SDK, LiveOps system, payment infrastructure, and data science tools**, while players benefit from **fair competition and a loyalty program**[25](index=25&type=chunk)[28](index=28&type=chunk)[36](index=36&type=chunk) - As of December 31, 2020, Skillz had over **9,000 registered game developers**, though a small number of games historically accounted for a **substantial portion of revenue**[37](index=37&type=chunk) - The company operates in **41 U.S. states and the District of Columbia**, where skill-based gaming for cash prizes is permitted[58](index=58&type=chunk) - Skillz became a public company in **December 2020** through a business combination with Flying Eagle Acquisition Corporation (FEAC)[62](index=62&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from intense competition, reliance on third-party developers, evolving regulations, and a history of net losses - The business is highly dependent on a few key games, with **Solitaire Cube, 21 Blitz, and Blackout Bingo accounting for 79% of 2020 revenue**[80](index=80&type=chunk) - The company relies heavily on **third-party services like AWS and the Apple App Store**, making it vulnerable to disruptions or policy changes[92](index=92&type=chunk)[103](index=103&type=chunk) - The legality of skill-based gaming is subject to **evolving laws**, and the company is also subject to **stringent data privacy regulations** like GDPR and CCPA[112](index=112&type=chunk)[114](index=114&type=chunk)[144](index=144&type=chunk) - Skillz has a history of **net losses**, with an accumulated deficit of **$215.3 million as of December 31, 2020**[159](index=159&type=chunk) - The company is a **"controlled company"** as CEO Andrew Paradise holds **84% of the voting power**, limiting other stockholders' influence[197](index=197&type=chunk)[200](index=200&type=chunk) [Unresolved Staff Comments](index=38&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - Not applicable[208](index=208&type=chunk) [Properties](index=38&type=section&id=Item%202.%20Properties) The company leases office facilities in San Francisco, Portland, and Las Vegas for its operations and support functions - Skillz leases office facilities in **San Francisco, CA; Portland, OR; and Las Vegas, NV**[209](index=209&type=chunk) [Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, with no anticipated material adverse financial impact - The company is engaged in ordinary course legal proceedings but does not anticipate any **material adverse impact** from their resolution[210](index=210&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[211](index=211&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Skillz Class A common stock began trading on NYSE in December 2020, with no public market for Class B, and no cash dividends are planned - Class A common stock is listed on the NYSE under the symbol **"SKLZ" since December 17, 2020**[214](index=214&type=chunk) - The company has not paid and does not foresee paying any **cash dividends** on its common stock[216](index=216&type=chunk) [Selected Financial Data](index=40&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable - None[224](index=224&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew 92% to **$230.1 million** in 2020, but net loss widened to **$122.5 million** due to increased sales and marketing expenses [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Revenue increased **92% to $230.1 million** in 2020, but a **128% rise in expenses** led to a **net loss of $122.5 million** Consolidated Results of Operations (2018-2020) | | Year Ended December 31, | | | |---|---:|---:|---:| | (in thousands) | **2020** | **2019** | **2018** | | **Revenue** | **$230,115** | **$119,872** | **$50,778** | | Cost of revenue | 12,281 | 5,713 | 2,112 | | Research and development | 23,225 | 11,241 | 7,547 | | Sales and marketing | 251,941 | 111,370 | 51,689 | | General and administrative | 42,289 | 16,376 | 14,975 | | **Total costs and expenses** | **329,736** | **144,700** | **76,323** | | **Loss from operations** | **(99,621)** | **(24,828)** | **(25,545)** | | **Net loss** | **(122,461)** | **(23,605)** | **(27,780)** | - Revenue grew **92% in 2020** and **136% in 2019**, primarily driven by increased investment in sales and marketing[253](index=253&type=chunk)[254](index=254&type=chunk) - Sales and marketing expenses increased **126% in 2020 to $251.9 million**, driven by a **160% increase in user acquisition spending** and a **97% increase in engagement marketing**[262](index=262&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2020, Skillz had **$262.7 million in cash**, with **$56.2 million used in operations** and **$296.6 million provided by financing activities** - The company's principal source of liquidity as of December 31, 2020, was **$262.7 million in cash and cash equivalents**[282](index=282&type=chunk) Summary of Cash Flow Data (2018-2020) | | Year Ended December 31, | | | |---|---:|---:|---:| | (in thousands) | **2020** | **2019** | **2018** | | Net cash used in operating activities | $(56,232) | $(21,937) | $(16,948) | | Net cash used in investing activities | (3,246) | (3,223) | (867) | | Net cash provided by financing activities | 296,578 | 31,168 | 33,330 | - Net cash from financing activities in 2020 was **$296.6 million**, primarily from **$246.5 million in Business Combination proceeds** and **$76.6 million from Series E preferred stock issuance**[291](index=291&type=chunk) [Critical Accounting Policies and Estimates](index=50&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies include revenue recognition upon game completion, classification of end-user incentives, and stock-based compensation valuation - Revenue is recognized when the performance obligation is satisfied, which occurs upon the **completion of a game**[304](index=304&type=chunk) - End-user incentives like **Ticketz and initial deposit bonuses are a reduction of revenue ($51.3 million in 2020)**, while other promotions are **sales and marketing expenses ($91.5 million in 2020)**[308](index=308&type=chunk)[310](index=310&type=chunk)[368](index=368&type=chunk)[371](index=371&type=chunk) - Stock-based compensation is valued using the **Black-Scholes model** for service-based options and a **Monte Carlo simulation** for awards with market conditions[311](index=311&type=chunk)[313](index=313&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is **interest rate risk on its $262.7 million cash and equivalents**, with foreign currency risk deemed immaterial - The company's primary market risk is **interest rate risk on its $262.7 million in cash and cash equivalents**, though the potential impact is considered immaterial[318](index=318&type=chunk) - Foreign currency risk was **not material** for fiscal years 2020 and 2019[320](index=320&type=chunk) [Financial Statements and Supplementary Data](index=55&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements for Skillz Inc., reflecting the reverse recapitalization and key financial positions Consolidated Balance Sheet Data (as of Dec 31) | | 2020 | 2019 | |---|---:|---:| | (in thousands) | | | | **Total current assets** | **$273,219** | **$35,092** | | Total assets | $282,421 | $38,856 | | **Total current liabilities** | **$47,356** | **$10,481** | | Total liabilities | $47,402 | $20,191 | | **Total stockholders' equity** | **$235,019** | **$18,665** | Consolidated Statement of Operations Data (Year Ended Dec 31) | | 2020 | 2019 | 2018 | |---|---:|---:|---:| | (in thousands) | | | | | **Revenue** | **$230,115** | **$119,872** | **$50,778** | | Loss from operations | $(99,621) | $(24,828) | $(25,545) | | **Net loss** | **$(122,461)** | **$(23,605)** | **$(27,780)** | - The financial statements have been retroactively restated to reflect the **reverse recapitalization** from the Business Combination, with Old Skillz as the accounting acquirer[353](index=353&type=chunk)[356](index=356&type=chunk) - Games from **two developer partners accounted for 59% and 28% of the company's revenue in 2020**[366](index=366&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=91&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[530](index=530&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=91&type=section&id=Item%209A.%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of December 31, 2020, with no material changes identified - Disclosure controls and procedures were deemed **effective** as of the end of the fiscal year[531](index=531&type=chunk) - The report does not include a management assessment or auditor attestation on internal control over financial reporting, as permitted for **newly public companies**[532](index=532&type=chunk) [Other Information](index=91&type=section&id=Item%209B.%20Other%20Information) There is no other information to report - None[535](index=535&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) This section details Skillz's directors and executive officers, noting its status as a **"controlled company"** due to CEO Andrew Paradise's majority voting power - The board includes experienced leaders from technology, media, and finance, such as **Andrew Paradise (CEO), Casey Chafkin (CRO), Harry E. Sloan, and Jerry Bruckheimer**[539](index=539&type=chunk)[540](index=540&type=chunk)[542](index=542&type=chunk)[544](index=544&type=chunk) - Skillz qualifies as a **"controlled company"** because CEO Andrew Paradise holds **over 50% of the voting power**, exempting it from certain NYSE governance standards[549](index=549&type=chunk) - The board has established an **Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee**[550](index=550&type=chunk) [Executive Compensation](index=97&type=section&id=Item%2011.%20Executive%20Compensation) Executive compensation in 2020 was heavily weighted towards **equity awards and business combination bonuses**, with CEO Andrew Paradise receiving over **$103 million** 2020 Summary Compensation for Named Executive Officers (NEOs) | Name | Position | Salary ($) | Bonus ($) | Option Awards ($) | Total ($) | |---|---|---:|---:|---:|---:| | Andrew Paradise | CEO | 400,000 | 3,935,000 | 98,986,052 | 103,321,052 | | Casey Chafkin | CRO | 300,000 | 487,500 | 21,408,998 | 22,197,907 | | Scott Henry | CFO | 219,847 | 200,000 | 23,450,208 | 23,870,055 | - NEOs received **significant transaction bonuses** in connection with the Business Combination, with payments staggered and contingent on continued employment[568](index=568&type=chunk) - The company adopted an **Executive Severance and Change in Control Plan** providing cash severance and accelerated equity vesting upon certain termination events[576](index=576&type=chunk) - For 2021, the compensation committee approved **increased base salaries and target bonuses** for all NEOs[580](index=580&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=103&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of March 5, 2021, CEO Andrew Paradise held **84.3% of total voting power**, with all directors and executive officers holding **86.2% collectively** Beneficial Ownership as of March 5, 2021 | Beneficial Owner | Class A Shares (%) | Class B Shares (%) | % of Total Voting Power | |---|---|---|---:| | Andrew Paradise (CEO) | — | 98.7% | 84.3% | | All Directors & Executive Officers (9 individuals) | 9.6% | 98.7% | 86.2% | | Atlas Venture Fund, IX L.P. | 6.4% | — | 1.3% | | Entities Affiliated with WestCap Management LLC | 6.0% | — | 1.2% | | Bonderman Family Limited Partnership | 5.9% | — | 1.2% | | Morgan Stanley Investment Management Inc. | 5.5% | — | 1.1% | [Certain Relationships and Related Transactions, and Director Independence](index=105&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company disclosed related party transactions, including **Series E financing participation** and **repaid promissory notes**, with **four of seven directors deemed independent** - In 2020, several related parties, including **CEO Andrew Paradise and entities like WestCap**, participated in the Series E Preferred Stock financing[605](index=605&type=chunk) - Promissory notes from **CEO Andrew Paradise (over $15.2 million)** and **CRO Casey Chafkin ($3.2 million)** for option exercises were cancelled via share surrender prior to the Business Combination[606](index=606&type=chunk)[608](index=608&type=chunk)[609](index=609&type=chunk)[610](index=610&type=chunk) - The Board of Directors has determined that **four of its seven members are independent** under NYSE rules[613](index=613&type=chunk) [Principal Accountant Fees and Services](index=107&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The company paid **Ernst & Young LLP $2.675 million in fees for 2020**, a significant increase primarily for **audit services related to the business combination** Accountant Fees (2019-2020) | Fee Type | 2020 | 2019 | |---|---:|---:| | (in thousands) | | | | Audit Fees | $2,675 | $40 | | Audit-Related Fees | — | — | | Tax Fees | — | — | | All Other Fees | — | — | | **Total** | **$2,675** | **$40** | - The significant increase in audit fees in 2020 was primarily for professional services rendered in connection with the **Business Combination**[615](index=615&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=109&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists all exhibits filed with the Annual Report on Form 10-K, including financial statements and key agreements - This section provides an index of all exhibits filed with the Form 10-K, including key agreements related to the **business combination, corporate governance, and executive compensation**[618](index=618&type=chunk)[619](index=619&type=chunk) [Form 10-K Summary](index=110&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable - None[623](index=623&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q4 2020 was $67.7 million, representing a 95% increase year-over-year, while total revenue for 2020 reached $230.1 million, up 92% from the previous year [40][41] - The company achieved a gross margin of 95% for the quarter, with adjusted EBITDA for Q4 at a negative $23.8 million, compared to a negative $7.8 million in the prior year [41][42] - Adjusted EBITDA before user acquisition increased by 98% year-over-year, maintaining 25% as a percentage of revenue [43] Business Line Data and Key Metrics Changes - The platform powered over 2 billion tournaments in 2020, generating $1.6 billion in gross marketplace volume [14] - Monthly active users (MAU) reached 2.6 million, a 63% increase from 2019, with 13% of users engaging in prize competitions [15][16] Market Data and Key Metrics Changes - The mobile gaming market is projected to grow to $161 billion by 2025, driven by the proliferation of mobile devices [14] - The U.S. mobile gaming market has approximately 210 million gamers growing at 6% per year, while India's market is expected to grow at 26% per year with 137 million gamers [32] Company Strategy and Development Direction - The company aims to expand its platform capabilities by investing in synchronous gameplay and scalable technology infrastructure [17][19] - Strategic partnerships, such as the multiyear agreement with the NFL, are expected to enhance distribution and brand integration [29][33] - The company plans to focus on international expansion, starting with India, to tap into a larger market [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, emphasizing the importance of investing in user acquisition and engagement to capture market share [63][67] - The company does not foresee significant negative impacts from IDFA changes, viewing it as an opportunity to enhance monetization [72] Other Important Information - The company ended the year with $262.7 million in cash and no debt, with plans to exercise a redemption right on public warrants to generate an additional $198.4 million [50][51] - The company is focused on building a long-term independent business with a vision for eSports for everyone [35] Q&A Session Summary Question: Game concentration and revenue concentration - Management acknowledged revenue concentration around a few games but noted that this is typical in media businesses, with shifts in popularity over time [58] Question: Update on Android growth and implications of Google Play changes - Management indicated that the changes in Google Play terms are indicative of a positive trend for emerging content categories, with Android revenue growing at twice the rate of iOS [62] Question: Sales and marketing spend dynamics - Management clarified that the focus is on growing paying users rather than total users, with a significant increase in paying users year-over-year [68] Question: Channels for customer acquisition cost (CAC) and IDFA impact - Management does not expect material negative impacts from IDFA changes, viewing it as potentially beneficial for their business model [72] Question: Ability to scale players and match skill sets - Management emphasized that the platform is designed to ensure fair and efficient matching as the user base scales, supported by significant investments in data science [76]