TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 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 84-4478274 (State or ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for the quarter ended September 30, 2022, detailing financial position, operations, cash flows, and related accounting notes Balance Sheet Highlights | Financial Statement | Key Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | :--- | | **Balance Sheet** | Total Assets | $772.4 million | $1,022.8 million | | | Total Liabilities | $340.1 million | $399.1 million | | | Total Stockholders' Equity | $432.3 million | $623.7 million | Income Statement Highlights (Q3) | Income Statement (Q3) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | | | Revenue | $60.3 million | $102.1 million | | | Loss from Operations | $(75.3) million | $(81.6) million | | | Net (Loss) / Income | $(78.5) million | $50.8 million | | | Diluted EPS | $(0.19) | $(0.16) | Cash Flow Statement Highlights | Cash Flow Statement | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | | | Net cash used in operating activities | $(166.8) million | $(103.3) million | | | Net cash provided by (used in) investing activities | $176.0 million | $(140.8) million | | | Net cash (used in) / provided by financing activities | $(10.7) million | $521.7 million | - In Q3 2022, the company recorded a non-cash intangible asset impairment charge of **$47.6 million**, primarily related to developed technology and customer relationships from the Aarki acquisition[96](index=96&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies and significant financial events, including revenue concentration, intangible asset impairment, restructuring charges, and accelerated stock-based compensation - Revenue is **highly concentrated**, with games from two developer partners each accounting for **40%** of the Company's revenue from Monetization Services in Q3 2022[41](index=41&type=chunk) - The company recorded restructuring charges of **$1.9 million** in Q3 2022 and **$4.5 million** for the nine months ended September 30, 2022, primarily for severance and benefits related to workforce reductions[99](index=99&type=chunk) - On September 1, 2022, the Company redeemed **$10.5 million** of its senior secured notes, resulting in a gain on extinguishment of debt of **$2.6 million**[120](index=120&type=chunk) - On March 14, 2022, the CEO Performance Award was canceled, resulting in the recognition of the remaining unrecognized compensation cost of **$65.1 million** during the first quarter of 2022[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a strategic shift towards profitable growth, resulting in a 41% Q3 2022 revenue decline, a $47.6 million impairment, and improved Adjusted EBITDA, with sufficient liquidity for the next year - The company is **shifting its focus from top-line growth to driving higher efficiency** from marketing investments and **achieving profitability**[182](index=182&type=chunk)[206](index=206&type=chunk) Key Operating Metrics | Key Operating Metric | Q3 2022 | Q3 2021 | YoY Change | | :--- | :--- | :--- | :--- | | Gross Marketplace Volume (GMV) | $360.4 million | $610.9 million | -41% | | Paying Monthly Active Users (PMAUs) | 320 thousand | 509 thousand | -37% | | Monthly Active Users (MAUs) | 1,665 thousand | 2,985 thousand | -44% | - In Q3 2022, the company recorded a non-cash intangible asset impairment charge of **$47.6 million** related to the Aarki acquisition, due to a revised financial outlook and slower-than-expected realization of cost-saving synergies[184](index=184&type=chunk)[201](index=201&type=chunk) Adjusted EBITDA Reconciliation | Reconciliation to Adjusted EBITDA (in thousands) | Q3 2022 | Q3 2021 | | :--- | :--- | :--- | | Net (loss) / income | $(78,547) | $50,781 | | Adjustments (Stock-based comp, D&A, Impairment, etc.) | $63,146 | $(92,522) | | **Adjusted EBITDA** | **$(15,401)** | **$(41,741)** | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q3 2022 revenue declined 41% to $60.3 million due to reduced marketing spend, while operating expenses decreased across R&D, Sales & Marketing, and G&A, alongside a $47.6 million impairment charge - Q3 2022 revenue decreased by **$41.8 million (41%)** YoY, attributed to lower user retention and significant decreases in user acquisition spend (down **$36.6 million**) and engagement marketing spend (down **$26.2 million**)[205](index=205&type=chunk) - Sales and marketing costs for Q3 2022 decreased by **55%** YoY to **$51.8 million**, driven by a **66%** decrease in User Acquisition (UA) marketing and a **52%** decrease in engagement marketing[216](index=216&type=chunk) - General and administrative costs for the nine months ended Sep 30, 2022 increased **38%** YoY, primarily due to a **$56.1 million** increase in stock-based compensation, which includes a **$65.1 million** charge from the cancellation of the CEO's performance stock units[221](index=221&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, liquidity included $239.9 million in cash and $318.4 million in marketable securities, with $166.8 million net cash used in operations, deemed sufficient for the next twelve months - As of September 30, 2022, principal sources of liquidity were **$239.9 million** in cash and cash equivalents and **$318.4 million** in marketable securities[247](index=247&type=chunk) - Net cash used in operating activities was **$166.8 million** for the nine months ended September 30, 2022, an increase from **$103.3 million** in the prior year period[253](index=253&type=chunk)[255](index=255&type=chunk) - The company may continue to retire or purchase its outstanding debt, having redeemed **$10.5 million** of its 2021 senior secured notes on September 1, 2022[250](index=250&type=chunk)[251](index=251&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure on its cash and marketable securities, though a 10% rate change is not expected to be material, and foreign currency risk is immaterial - The company is exposed to interest rate risk on its cash, cash equivalents (**$239.9 million**), and marketable securities (**$318.4 million**)[273](index=273&type=chunk) - Management believes an immediate **10%** change in interest rates would not materially affect the fair market value of its investments due to their low-risk profile[273](index=273&type=chunk) - Foreign currency risk was **not material** for the nine months ended September 30, 2022 and 2021[274](index=274&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to material weaknesses in IT general controls and management review controls, with ongoing remediation efforts - Management concluded that disclosure controls and procedures were **not effective** as of September 30, 2022[276](index=276&type=chunk) - **Material weaknesses persist** in two areas: (1) Information technology general controls (ITGCs) over access and program changes, and (2) Controls designed to properly evaluate certain accounting processes involving management review[279](index=279&type=chunk) - **Remediation efforts are ongoing**, including designing and implementing improved processes for user access, program changes, and reinforcing management review control training[280](index=280&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11, detailing a legal proceeding where a jury verdict of $11.6 million was reduced to $4.35 million, with both parties appealing - For information on legal proceedings, the report refers to Note 11, "Contingencies and Commitments"[287](index=287&type=chunk) [Item 1A. Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There have been **no material changes** from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021[288](index=288&type=chunk) [Other Part II Items (Items 2, 3, 4, 5, 6)](index=51&type=section&id=Other%20Part%20II%20Items%20(Items%202%2C%203%2C%204%2C%205%2C%206)) This section confirms no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and lists exhibits filed with the report - Item 2: **No unregistered sales of equity securities** and use of proceeds[289](index=289&type=chunk) - Item 3: **No defaults upon senior securities**[290](index=290&type=chunk) - Item 6: **A list of exhibits filed with the report is provided**[293](index=293&type=chunk)

Skillz Inc. (NYSE:SKLZ) Q3 2022 Earnings Conference Call November 2, 2022 5:30 PM ET Company Participants Andrew Paradise – Chief Executive Officer Casey Chafkin – Chief Revenue Officer Jason Roswig – President and Chief Financial Officer Conference Call Participants Jason Tilchen – Canaccord Genuity Clark Lampen – BTIG Operator Thank you for joining us today for Skillz Third Quarter 2022 Earnings Call. I will now turn the call over to [indiscernible] to cover the safe harbor. Taylor? Unidentified Company ...

Skillz, Inc. (NYSE:SKLZ) Q2 2022 Earnings Conference Call August 3, 2022 5:00 PM ET Company Participants Charlotte Edelman - General Counsel & Corporate Secretary Andrew Paradise - Co-Founder, CEO, President & Chairman Casey Chafkin - Co-founder, Chief Revenue Officer, Treasurer & Director Ian Lee - CFO Conference Call Participants Jason Bazinet - Citigroup Andrew Crum - Stifel, Nicolaus & Company Bradley Erickson - RBC Capital Markets Jason Tilchen - Canaccord Genuity William Lampen - BTIG Edward Alter - 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, 2022 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) (State or other jurisdict ...

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited Q1 2022 financials show 12% revenue growth, but a net loss widened to $148.1 million from increased expenses and stock-based compensation Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $114,558 | $241,332 | | Marketable securities (current & non-current) | $539,291 | $501,684 | | Total assets | $932,536 | $1,022,825 | | Total liabilities | $380,898 | $399,125 | | Total stockholders' equity | $551,638 | $623,700 | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Revenue | $93,438 | $83,677 | | Total costs and expenses | $238,042 | $135,145 | | Loss from operations | $(144,604) | $(51,468) | | Net loss | $(148,113) | $(53,592) | | Net loss per share, basic & diluted | $(0.37) | $(0.15) / $(0.16) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(83,450) | $(39,153) | | Net cash used in investing activities | $(40,744) | $(659) | | Net cash (used in) provided by financing activities | $(2,580) | $389,662 | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, business combinations, and financial instruments, highlighting high revenue concentration, Aarki acquisition, $300 million debt, legal contingency, and substantial stock-based compensation - The company's business model is a mobile eSports platform that enables game developers to host tournaments and monetize their content through a revenue-sharing agreement[32](index=32&type=chunk)[36](index=36&type=chunk) - Revenue concentration remains high, with two developer partners accounting for a combined **79% of revenue in Q1 2022** (41% and 38% respectively), compared to 83% in Q1 2021[43](index=43&type=chunk) - The acquisition of Aarki, Inc. was completed in July 2021 for **$162.3 million**, resulting in **$86.8 million of identifiable intangible assets** and **$86.4 million of goodwill** as of March 31, 2022[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - In December 2021, the company issued **$300 million in 10.25% senior secured notes** due 2026[107](index=107&type=chunk) - A lawsuit from a former employee resulted in a jury verdict of **$11.6 million**. In April 2022, a judge ordered a new trial on damages or allowed the plaintiff to accept a reduced verdict of **$4.35 million**[115](index=115&type=chunk) - Total stock-based compensation expense was **$77.9 million in Q1 2022**, a sharp increase from **$10.9 million in Q1 2021**. This was primarily driven by the cancellation of the CEO Performance Award, which resulted in an accelerated expense recognition of **$65.1 million**[127](index=127&type=chunk)[139](index=139&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2022 performance, noting 12% revenue growth to $93.4 million, but a significant increase in operating losses to $144.6 million due to higher costs, especially a 240% rise in G&A from a large stock-based compensation charge [Overview](index=31&type=section&id=Overview) Skillz operates a mobile eSports marketplace with 3.2 million MAUs in Q1 2022, heavily relying on its top three games which accounted for 71% of revenue Key Operating Metrics | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Monthly Active Users (MAUs) | 3.2 million | 2.7 million | | Paying MAUs | 0.6 million | 0.5 million | | Paying MAU to MAU Ratio | 18% | 17% | | Average Revenue Per User (ARPU) | $9.65 | $10.35 | - Revenue concentration from top titles remains significant, with three games from two developers (Tether Studios and Big Run Studios) accounting for **71% of revenue in Q1 2022**[155](index=155&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Q1 2022 revenue increased 12% YoY to $93.4 million, but total costs surged 76% to $238.0 million, driven by a 240% rise in G&A expenses due to a $65.1 million stock-based compensation charge, leading to a $144.6 million operating loss Comparison of Operating Expenses (in thousands) | Expense Category | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Cost of Revenue | $9,265 | $4,256 | 118% | | Research and Development | $18,653 | $7,282 | 156% | | Sales and Marketing | $117,332 | $96,323 | 22% | | General and Administrative | $92,792 | $27,284 | 240% | - The **240% increase in General and Administrative costs** was primarily driven by a **$65.5 million increase in stock-based compensation**, which included a one-time **$65.1 million charge** related to the cancellation of the CEO's performance stock units[178](index=178&type=chunk) - Sales and marketing costs increased by **22%**, driven by a **10% rise in user acquisition spending ($59.7 million)** and a **17% increase in engagement marketing ($42.1 million)**[177](index=177&type=chunk) [Non-GAAP Financial Measures](index=38&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA, a non-GAAP measure, showed a nearly doubled loss of $61.0 million in Q1 2022, primarily adjusted for stock-based compensation, depreciation, amortization, and warrant liabilities Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Line Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net loss | $(148,113) | $(53,592) | | Stock-based compensation | $77,925 | $10,945 | | Depreciation and amortization | $5,539 | $555 | | Change in fair value of common stock warrant liabilities | $(4,462) | $2,108 | | Other adjustments | $8,105 | $8,855 | | **Adjusted EBITDA** | **$(61,021)** | **$(31,129)** | [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, Skillz had strong liquidity with $114.6 million in cash and $539.3 million in marketable securities, despite operating cash burn doubling to $83.5 million, with management asserting sufficient resources for the next year - The company's principal sources of liquidity as of March 31, 2022, were **$114.6 million in cash and cash equivalents** and **$539.3 million in marketable securities**[188](index=188&type=chunk) - Net cash used in operating activities more than doubled to **$83.5 million in Q1 2022** from **$39.2 million in Q1 2021**, driven by a larger net loss[192](index=192&type=chunk)[194](index=194&type=chunk) - In December 2021, the company raised **$300 million** through the private placement of senior secured notes due 2026 with a **10.25% interest rate**[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risk is interest rate fluctuations on cash and marketable securities, but management believes a 10% rate change would not materially impact due to low-risk investments, and foreign currency risk is immaterial - The company's main market risk is interest rate risk on its cash, cash equivalents, and marketable securities portfolio[203](index=203&type=chunk)[204](index=204&type=chunk) [Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective as of March 31, 2022, due to material weaknesses in IT general controls and management review controls, with remediation efforts underway - Management concluded that disclosure controls and procedures were **not effective** as of the end of the period due to existing material weaknesses[206](index=206&type=chunk) - The material weaknesses relate to: 1) IT general controls over user access and program changes, and 2) insufficient documentation of management review controls[209](index=209&type=chunk) - Remediation efforts are underway, including designing and implementing improved processes and controls for IT systems and reinforcing training for management review controls[210](index=210&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 9 for legal matters, detailing a former employee lawsuit where a judge offered to reduce an $11.6 million jury verdict to $4.35 million or order a new trial - The company is involved in a legal proceeding with a former employee. A judge has ordered a new trial on damages or alternatively permitted the plaintiff to accept a reduced verdict of **$4.35 million**, down from an initial **$11.6 million jury award**[115](index=115&type=chunk)[216](index=216&type=chunk) [Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the 2021 Annual Report on Form 10-K - There have been **no material changes** to the company's risk factors since its 2021 Annual Report on Form 10-K[217](index=217&type=chunk)

Financial Data and Key Metrics Changes - Revenue increased by 12% year-over-year to $93 million [11] - Paying monthly active users rose by 22% year-over-year to 569,000 users [11] - Revenue after engagement marketing grew by 8% year-over-year to $51 million [11] - Adjusted EBITDA improved by $17 million compared to Q4 2021 [11] Business Line Data and Key Metrics Changes - The company focused on improving marketing efficiency, resulting in reduced spending while maintaining revenue after engagement marketing [12] - Product innovations were unveiled, including a private beta of a hot gaming product and a system-wide chat feature to enhance user engagement [13] Market Data and Key Metrics Changes - The U.S. market remains the core focus, with over 95% of paying users based in the U.S. [23] - Approximately 60% of smartphones in the U.S. are Android, presenting a significant opportunity for user growth [23][24] Company Strategy and Development Direction - The company aims to transition to profitable growth, targeting a year-over-year revenue growth rate above 30% and an adjusted EBITDA margin better than negative 30% by the end of 2022 [10] - Continued investment in developers and content diversification is a priority, with partnerships established with UFC and NFL to create branded mobile games [14][43] Management's Comments on Operating Environment and Future Outlook - Management expressed a commitment to building revenue and increasing profitable growth through improved marketing efficiency and enhanced user engagement [15] - The future of interactive entertainment is viewed as a massive and fast-growing opportunity, with plans to pursue profitable growth while investing in exciting technologies [16] Other Important Information - The company is exploring the potential of cloud-based gaming, which could enhance user engagement and lower user acquisition costs [22] - Management is cautious about the impact of marketing spend reductions on paying users and average revenue per user (ARPU), noting that the product remains sticky [29][30] Q&A Session Summary Question: Engagement from users on Android versus iOS during cloud gaming testing - Management indicated that data collection is still in early stages, but they believe cloud gaming can increase lifetime value and lower user acquisition costs [22] Question: Impact of efficient marketing spend on paying users and ARPU - Initial reductions in marketing spend led to a slight decrease in paying monthly active users, but the product's stickiness helped maintain user numbers [29] Question: Timing for launches of new games with UFC and NFL - Developers gain access to IP without upfront payments, fostering innovation and interest in building content [50] - The timeline for NFL game launches is aligned with the kickoff for the next season [52] Question: Stock-based compensation figures for Q2 onward - A significant portion of Q1's stock-based compensation was a one-time expense, suggesting a lower run rate moving forward [54] Question: Efforts to optimize supply paths and improve DSP value - Management noted that buyers are focused on efficiency and return on ad spend, but no significant trend towards narrowing DSPs was observed [62] Question: Future features and partnerships to generate revenue - The company is focused on enhancing social features, competition formats, and reducing friction for developers to bring new games to market [92][94]

[PART I](index=4&type=section&id=PART%20I) [Business Overview](index=4&type=section&id=Item%201.%20Business) Skillz Inc. operates a proprietary platform for competitive mobile gaming, monetizing through prizes and supporting developers - Skillz's platform monetizes user engagement primarily through prizes, creating a compelling alternative for developers and users compared to traditional in-game advertisements or purchases[22](index=22&type=chunk) - The company's SDK includes over 200 features in a less than 16-megabyte package, enabling seamless over-the-air updates and social features like in-game chat, friends, tournaments, and leagues[23](index=23&type=chunk)[25](index=25&type=chunk) - As of December 31, 2021, Skillz had over **10,000 registered game developers** who have launched game integrations on its system[35](index=35&type=chunk) - Skillz enables cash prizes in **41 U.S. states** and the District of Columbia, covering approximately **90% of the U.S. population**, by using proprietary algorithms to ensure games are skill-based and comply with applicable laws[56](index=56&type=chunk) - The company acquired Aarki in 2021, a technology-driven marketing platform, to enhance user acquisition efficiencies[48](index=48&type=chunk) [Overview](index=5&type=section&id=Overview) [Our Platform](index=5&type=section&id=Our%20Platform) [Our Developer Community](index=6&type=section&id=Our%20Developer%20Community) [Our Gamer Community](index=7&type=section&id=Our%20Gamer%20Community) [Gaming for Good](index=7&type=section&id=Gaming%20for%20Good) [Games on Our Platform](index=7&type=section&id=Games%20on%20Our%20Platform) [Our Distribution](index=8&type=section&id=Our%20Distribution) [Our Marketing](index=8&type=section&id=Our%20Marketing) [Our Customer Advocacy](index=9&type=section&id=Our%20Customer%20Advocacy) [Our People](index=9&type=section&id=Our%20People) [Our Competition](index=10&type=section&id=Our%20Competition) [Our Intellectual Property](index=10&type=section&id=Our%20Intellectual%20Property) [Government Regulation and Compliance](index=10&type=section&id=Government%20Regulation%20and%20Compliance) [Corporate Information](index=11&type=section&id=Corporate%20Information) [Available Information](index=11&type=section&id=Available%20Information) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) Skillz Inc. faces risks from growth sustainability, key game reliance, competition, operational vulnerabilities, evolving regulations, and financial challenges - A limited number of games (Solitaire Cube, 21 Blitz, Blackout Bingo) and their developers (Tether, Big Run) accounted for a substantial portion of revenue (**72% in 2021, 81% from Tether and Big Run combined**), posing a risk if these games become less popular or are removed[73](index=73&type=chunk) - The company has a history of net losses, with an accumulated deficit of **$419.7 million** as of December 31, 2021, and may not achieve profitability in the near future[144](index=144&type=chunk) - Skillz relies heavily on Amazon Web Services (AWS) for its technology infrastructure, making it vulnerable to failures or disruptions in AWS services[105](index=105&type=chunk)[106](index=106&type=chunk) - The company's business is subject to evolving U.S. and foreign laws regarding skill-based gaming, consumer protection, and data privacy (e.g., GDPR, CCPA), with potential for increased scrutiny, regulation, and operating costs[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - As of December 31, 2021, the aggregate indebtedness under senior secured notes was **$300 million**, which could adversely affect financial health and strategic execution[179](index=179&type=chunk) [SUMMARY RISK FACTORS](index=12&type=section&id=SUMMARY%20RISK%20FACTORS) [Risks Related to Our Business and Industry](index=13&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) [Risks Related to Ownership of Our Class A Common Stock](index=33&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Class%20A%20Common%20Stock) [Risks Related to Our Indebtedness](index=35&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) [Unresolved Staff Comments](index=37&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC [Properties](index=37&type=section&id=Item%202.%20Properties) Skillz's principal operations are in San Francisco with a remote workforce, supplemented by leased offices in Portland, Las Vegas, and global sites - Principal business operations are in San Francisco, California, with a primarily remote workforce since 2020 due to COVID-19[186](index=186&type=chunk) - Acquired leases for offices and data centers globally, including in the U.S. and Hong Kong, and a **4,850 sq ft Philippines office**, through the Aarki acquisition in 2021[186](index=186&type=chunk) [Legal Proceedings](index=37&type=section&id=Item%203.%20Legal%20Proceedings) Skillz faces ongoing legal proceedings, including a securities class action and a former employee lawsuit with an **$11.6 million** jury verdict - Securities class action lawsuits (Jedrzejczyk v. Skillz Inc., et al., and Shultz v. Skillz Inc., et al.) were filed in May and June 2021, alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5, and Sections 11, 12(a)(2), and 15 of the Securities Act[188](index=188&type=chunk) - A former employee's lawsuit for breach of contract, retaliation, and wrongful termination resulted in a jury verdict of **$11.6 million in compensatory damages** against the company in September 2021[489](index=489&type=chunk) [Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Skillz Inc [PART II](index=38&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=38&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Skillz Inc.'s Class A common stock is listed on NYSE, with no public market for Class B, no cash dividends, and details on unregistered equity sales - Class A common stock (SKLZ) listed on NYSE since December 17, 2020; no public market for Class B common stock[192](index=192&type=chunk) - As of February 24, 2022, there were **553 holders of record** for Class A common stock and one for Class B common stock[193](index=193&type=chunk) - The company has not paid and does not intend to pay cash dividends on common stock for the foreseeable future[194](index=194&type=chunk) - In connection with the Aarki acquisition on July 16, 2021, Skillz issued **4.4 million shares** of Class A common stock (valued at approximately **$67.1 million**) as part of the consideration[203](index=203&type=chunk) [Market Information for Common Stock](index=38&type=section&id=Market%20Information%20for%20Common%20Stock) [Holders of our Common Stock](index=38&type=section&id=Holders%20of%20our%20Common%20Stock) [Dividend Policy](index=38&type=section&id=Dividend%20Policy) [Securities Authorized for Issuance Under Equity Compensation Plans](index=38&type=section&id=Securities%20Authorized%20for%20Issuance%20Under%20Equity%20Compensation%20Plans) [Stock Performance Graph](index=38&type=section&id=Stock%20Performance%20Graph) [Unregistered Sales of Equity Securities](index=39&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) [Reserved](index=39&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Skillz Inc. reported **67% revenue growth** in 2021, but net loss widened due to increased operating expenses; the Aarki acquisition targets user acquisition efficiency Key Financial Highlights (2021 vs 2020) | Metric | 2021 (in thousands) | 2020 (in thousands) | Change (%) | | :--------------------------------- | :------------------ | :------------------ | :--------- | | Revenue | $384,089 | $230,115 | 67% | | Cost of Revenue | $24,711 | $12,281 | 101% | | Research and Development | $46,017 | $23,225 | 98% | | Sales and Marketing | $465,457 | $251,941 | 85% | | General and Administrative | $135,026 | $42,289 | 219% | | Net Loss | $(181,377) | $(145,510) | 25% | | Adjusted EBITDA | $(181,488) | $(66,113) | 174% | Key User Metrics (2021 vs 2020 vs 2019) | Metric | 2021 | 2020 | 2019 | | :--------------------------------- | :----- | :----- | :----- | | Average MAUs (millions) | 3 | 2.6 | 1.6 | | ARPU | $10.90 | $7.50 | $6.30 | | Paying MAU to MAU Ratio | 17% | 13% | 10% | | Paying MAU (millions) | 0.5 | 0.3 | 0.2 | | Monthly ARPPU | $62 | $59 | $62 | - The acquisition of Aarki, Inc. on July 16, 2021, for **$162.3 million** (comprised of **$95.3 million cash** and **$67.1 million in Class A common stock**), is expected to drive significant efficiencies in user acquisition costs[213](index=213&type=chunk) - Cash deposits represented approximately **10% of total entry fees** in 2021, while prior cash winnings not withdrawn accounted for approximately **81% of total entry fees**[215](index=215&type=chunk) - In December 2021, the company issued **$300 million in senior secured notes** due 2026 with an annual interest rate of **10.25%**, payable semi-annually[256](index=256&type=chunk) [Overview](index=40&type=section&id=Overview) [Our Financial Model](index=41&type=section&id=Our%20Financial%20Model) [Key Components of Results of Operations](index=42&type=section&id=Key%20Components%20of%20Results%20of%20Operations) [Changes from Prior Period Reports](index=43&type=section&id=Changes%20from%20Prior%20Period%20Reports) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) [Non-GAAP Financial Measures](index=47&type=section&id=Non-GAAP%20Financial%20Measures) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) [Contractual Obligations and Commitments](index=50&type=section&id=Contractual%20Obligations%20and%20Commitments) [Critical Accounting Estimates](index=50&type=section&id=Critical%20Accounting%20Estimates) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Skillz Inc. faces interest rate risk on its **$241.3 million cash** and **$501.7 million marketable securities**, with no material foreign currency risk identified - As of December 31, 2021, cash and cash equivalents totaled **$241.3 million**, and marketable securities totaled **$501.7 million**, primarily invested in money market funds, corporate debt, U.S. government securities, and commercial paper[287](index=287&type=chunk) - An immediate **10% change in interest rates** is not expected to have a material effect on the fair market value of cash, cash equivalents, and marketable securities due to the low-risk profile of investments[287](index=287&type=chunk) - No material foreign currency risk was identified for the years ended December 31, 2021 and 2020[288](index=288&type=chunk) [Interest Rate Risk](index=53&type=section&id=Interest%20Rate%20Risk) [Foreign Currency Risk](index=53&type=section&id=Foreign%20Currency%20Risk) [Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Skillz Inc.'s audited consolidated financial statements, with an unqualified opinion on financials but an adverse opinion on internal controls due to material weaknesses - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements but an adverse opinion on the effectiveness of internal control over financial reporting as of December 31, 2021, due to material weaknesses[295](index=295&type=chunk)[296](index=296&type=chunk)[306](index=306&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2021 | December 31, 2020 | | :-------------------------- | :------------------ | :------------------ | | Total Assets | $1,022,825 | $282,421 | | Total Liabilities | $399,125 | $225,634 | | Total Stockholders' Equity | $623,700 | $56,787 | Consolidated Statements of Operations and Comprehensive Loss Highlights (in thousands) | Metric | 2021 | 2020 | 2019 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Revenue | $384,089 | $230,115 | $119,872 | | Total Costs and Expenses | $671,211 | $329,736 | $144,700 | | Loss from Operations | $(287,122) | $(99,621) | $(24,828) | | Net Loss | $(181,377) | $(145,510) | $(23,605) | | Basic Net Loss per Share | $(0.47) | $(0.49) | $(0.09) | | Diluted Net Loss per Share | $(0.69) | $(0.49) | $(0.09) | Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | 2021 | 2020 | 2019 | | :-------------------------------- | :--------- | :--------- | :--------- | | Net cash used in operating activities | $(180,154) | $(56,232) | $(21,937) | | Net cash used in investing activities | $(643,924) | $(3,246) | $(3,223) | | Net cash provided by financing activities | $802,682 | $296,578 | $31,168 | [Reports of Independent Registered Public Accounting Firm](index=55&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Consolidated Financial Statements](index=60&type=section&id=Consolidated%20Financial%20Statements) [Notes to the Consolidated Financial Statements](index=63&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=102&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 disclosures [Evaluation of Disclosure Controls and Procedures](index=102&type=section&id=Item%209A.%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Skillz management concluded disclosure controls were ineffective as of December 31, 2021, due to material weaknesses in ITGCs and management review documentation; remediation efforts are underway - Disclosure controls and procedures were deemed not effective as of December 31, 2021, due to material weaknesses in internal control over financial reporting[544](index=544&type=chunk) - Identified material weaknesses include ineffective ITGCs (user access and program change management) and insufficient documentation for management review in certain accounting processes[551](index=551&type=chunk) - Remediation efforts are underway, focusing on improving ITGCs and enhancing management review control training and documentation[551](index=551&type=chunk) - The previously reported material weakness related to warrant accounting has been remediated as of December 31, 2021[552](index=552&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=102&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) [Management's Report on Internal Control Over Financial Reporting](index=102&type=section&id=Management's%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) [Material Weaknesses](index=103&type=section&id=Material%20Weaknesses) [Remediation of Material Weaknesses](index=103&type=section&id=Remediation%20of%20Material%20Weaknesses) [Changes in Internal Control over Financial Reporting](index=104&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) [Limitations on Effectiveness of Controls and Procedures](index=104&type=section&id=Limitations%20on%20Effectiveness%20of%20Controls%20and%20Procedures) [Other Information](index=104&type=section&id=Item%209B.%20Other%20Information) This item reports that there is no other information required to be disclosed [Disclosures Regarding Foreign Jurisdictions that Prevent Inspections](index=104&type=section&id=Item%209C.%20Disclosures%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item reports that there are no disclosures regarding foreign jurisdictions that prevent inspections [PART III](index=104&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=104&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This section incorporates by reference information on directors, executive officers, and corporate governance from the definitive Proxy Statement [Executive Compensation](index=105&type=section&id=Item%2011.%20Executive%20Compensation) This section incorporates by reference executive compensation details, including summary compensation and equity awards, from the definitive Proxy Statement [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=105&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates by reference information on security ownership of beneficial owners, management, and related stockholder matters from the definitive Proxy Statement [Certain Relationships and Related Transactions, and Director Independence](index=105&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) This section incorporates by reference information on certain relationships, related transactions, and director independence from the definitive Proxy Statement [Principal Accountant Fees and Services](index=105&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This section incorporates by reference information on principal accountant fees and services from the definitive Proxy Statement [PART IV](index=106&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=106&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules.) This section lists the financial statements and exhibits filed as part of the Annual Report on Form 10-K, including consolidated financial statements and a detailed table of exhibits [Financial Statements](index=106&type=section&id=Financial%20Statements) [Exhibits](index=106&type=section&id=Exhibits) [Form 10-K Summary](index=107&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided [Signatures](index=108&type=section&id=Signatures) This section contains the required signatures for the Annual Report on Form 10-K, affirming authorization and responsibility by key executives and directors - The report is signed by Andrew Paradise (CEO and Chairman), Ian Lee (CFO), Stanley Mbugua (Chief Accounting Officer), Casey Chafkin (Chief Revenue Officer and Director), and other directors[578](index=578&type=chunk)[582](index=582&type=chunk)

Skillz Inc. (NYSE:SKLZ) Q4 2021 Results Conference Call February 23, 2022 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 Drew Crum - Stifel Brad Erickson - RBC Operator Good evening. Thank you for attending today's Skillz Fourth Quarter 2021 Earnings Call. My name is Selena, and I will be your moderator. [Operator ...

Skillz Inc. (NYSE:SKLZ) Canaccord Genuity Digital Gaming Summit Conference Call November 30, 2021 1:30 PM ET Company Participants Andrew Paradise - Chief Executive Officer Conference Call Participants Michael Graham - Canaccord Genuity Michael Graham You're live. All right. Good afternoon everyone, Thank you for being a part of our Digital Gaming Summit; really pumped to have Skillz here this afternoon. We're joined by Andrew Paradise who's the Founder and CEO. Andrew, thank you so much for taking the time ...