(Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 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______ TABLE OF CONTENTS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Commission file number: 001-39243 SKILLZ INC. (Exact name of registrant as specified in its charter) (State or other juri ...

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 ...

Financial Data and Key Metrics Changes - Skillz operates a transaction-based revenue model with an average entry fee of $3 per player per tournament, generating approximately $0.90 of revenue per competition, equating to a 15% take rate [5] - The company reported a gross margin of 95%, indicating potential profitability if growth investments were slowed [17] - The adjusted EBITDA margin before user acquisition costs was 17% in Q2 of the current year, with a long-term target of 30% [17][18] Business Line Data and Key Metrics Changes - Skillz has seen a significant increase in the number of tournaments, powering over 2 billion tournaments annually, which is highly automated [4][5] - The company is focused on diversifying its revenue streams by increasing the number of games and genres available on its platform, moving from a concentration on a few titles to a broader range [20][22] Market Data and Key Metrics Changes - The mobile gaming market has grown significantly, with projections indicating there will be 10 billion smartphones and tablets by 2025, up from 5 billion [8] - Skillz's user acquisition costs have been impacted by changes in the advertising landscape, particularly due to IDFA changes and the pandemic, but are expected to stabilize [59] Company Strategy and Development Direction - Skillz aims to expand beyond mobile gaming into non-gaming applications for competition, such as fitness and education [12] - The recent acquisition of Aarki is intended to enhance data capture and improve user acquisition efficiency, allowing Skillz to participate in 5 trillion auctions monthly [12][46] - The company is investing in synchronous gaming technology through its partnership with Exit Games, which is expected to accelerate entry into more complex gaming genres [60] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges of hiring and retaining talent in a competitive market, which has affected user acquisition efforts [9] - The company is optimistic about its growth trajectory, targeting a significant increase in paying users and improved conversion rates over time [36] - Management believes that the long-term potential of the gaming market justifies current investments in user acquisition despite widening EBITDA losses [15] Other Important Information - Skillz has a strong retention rate among developers, with nearly 100% retention, indicating a successful revenue-sharing model [23] - The company is focused on optimizing its marketing spend, with a significant portion allocated to user acquisition and engagement marketing [29] Q&A Session Summary Question: What has improved and what has been more challenging since starting Skillz? - Management noted the growth of the mobile gaming market and the challenge of hiring talent as significant factors [9] Question: What are the main priorities for the next three to five years? - The focus is on optimizing the value chain, expanding content, and exploring non-gaming applications [12] Question: When do you expect adjusted EBITDA losses to peak? - Management emphasized a focus on profitable user acquisition and improving payback periods, indicating a disciplined approach to growth [16] Question: How do you measure virality in user acquisition? - Virality is measured through both attributed installs and organic growth, with various initiatives to encourage sharing and engagement [33] Question: Can you elaborate on the Trivia Crack partnership? - Management highlighted the significance of the partnership with Trivia Crack, noting its potential impact on revenue growth [26] Question: How do you view the impact of COVID on user acquisition? - Management indicated that while there was a temporary spike in engagement, the mobile gaming market has stabilized post-COVID [52] Question: What is the expected impact of the Aarki acquisition? - The acquisition is expected to lower user acquisition costs and improve conversion rates, with a multi-quarter integration timeline [46]

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]

[Note Regarding Forward-Looking Statements](index=3&type=section&id=Note%20Regarding%20Forward%20Looking%20Statements) [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This section warns readers that the report contains forward-looking statements subject to significant risks and uncertainties - The report contains forward-looking statements regarding future operations, financial condition, business strategy, user growth, and product initiatives, which are subject to substantial risks and uncertainties[10](index=10&type=chunk) - Readers should not rely on forward-looking statements as predictions of future events, as they are based on current expectations and projections and are subject to various risks and uncertainties detailed in the Annual Report on Form 10-K/A and other SEC filings[11](index=11&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - Key risk factors include sustainability of rapid growth, effective growth management, history of losses, reliance on third-party developers and service providers, brand and reputation maintenance, competitive entertainment industry, regulatory compliance, intellectual property protection, economic downturns, cybersecurity, and the impact of global pandemics like COVID-19[12](index=12&type=chunk)[16](index=16&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents Skillz Inc.'s unaudited condensed consolidated financial statements and explanatory notes for Q1 2021 and FY 2020 [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheet shows a significant increase in total assets, primarily driven by a substantial rise in cash and cash equivalents and warrant exercise receivables Condensed Consolidated Balance Sheets (Unaudited, in thousands) | Metric | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $612,578 | $262,728 | | Warrant exercise receivable | $104,558 | — | | Total current assets | $732,117 | $273,219 | | Total assets | $741,423 | $282,421 | | Total current liabilities | $40,098 | $47,356 | | Common stock warrant liabilities | $112,378 | $178,232 | | Total liabilities | $152,512 | $225,634 | | Total stockholders' equity | $588,911 | $56,787 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The company experienced significant revenue growth year-over-year, but also a substantial increase in operating expenses, leading to a higher net loss for the three months ended March 31, 2021 Condensed Consolidated Statements of Operations (Unaudited, in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $83,677 | $43,559 | | Cost of revenue | $4,256 | $2,767 | | Research and development | $7,282 | $4,366 | | Sales and marketing | $96,323 | $46,825 | | General and administrative | $27,284 | $4,833 | | Total costs and expenses | $135,145 | $58,791 | | Loss from operations | $(51,468) | $(15,232) | | Net loss | $(53,592) | $(15,522) | | Net loss per share – basic | $(0.15) | $(0.06) | | Net loss per share – diluted | $(0.16) | $(0.06) | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(DEFICIT)) Stockholders' equity significantly increased from December 31, 2020, to March 31, 2021, primarily due to substantial increases in additional paid-in capital from common stock issuances Condensed Consolidated Statements of Stockholders' Equity (Unaudited, in thousands) | Metric | Balance at December 31, 2020 | Balance at March 31, 2021 | | :-------------------------- | :--------------------------- | :------------------------ | | Common stock | $37 | $39 | | Additional paid-in capital | $295,065 | $880,779 | | Accumulated deficit | $(238,315) | $(291,907) | | Total stockholders' equity | $56,787 | $588,911 | - Issuance of common stock upon exercise of warrants and other, net, contributed **$172.5 million** to additional paid-in capital[26](index=26&type=chunk) - Net cash contributions from a follow-on offering added **$402.2 million** to additional paid-in capital[26](index=26&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The company experienced a significant net change in cash, cash equivalents, and restricted cash, primarily driven by substantial cash provided by financing activities Condensed Consolidated Statements of Cash Flows (Unaudited, in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(39,153) | $(9,109) | | Net cash used in investing activities | $(659) | $(860) | | Net cash provided by financing activities | $389,662 | $146 | | Net change in cash, cash equivalents and restricted cash | $349,850 | $(9,823) | | Cash, cash equivalents and restricted cash – end of year | $615,498 | $18,725 | - Financing activities were significantly boosted by **$402.8 million** in proceeds from a follow-on offering, net of underwriting commissions and offering costs[31](index=31&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20THE%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes detail the company's business, accounting policies, financial components, and significant events, providing a comprehensive understanding of the financial statements [1. Description of the Business and Basis of Presentation](index=9&type=section&id=1.%20Description%20of%20the%20Business%20and%20Basis%20of%20Presentation) Skillz Inc. operates a mobile eSports platform enabling game developers to host competitive gaming activities, with its financial statements prepared under U.S. GAAP - Skillz is a mobile eSports platform that provides a proprietary online-hosted technology platform for independent game developers to host tournaments and competitive gaming activities for end-users worldwide[34](index=34&type=chunk) - The business combination on December 16, 2020, between Flying Eagle Acquisition Corp (FEAC) and Old Skillz was accounted for as a reverse recapitalization, with Old Skillz treated as the accounting acquirer for financial reporting purposes[35](index=35&type=chunk)[38](index=38&type=chunk)[40](index=40&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the company's significant accounting policies, including the use of estimates, revenue recognition, cash definitions, fair value measurement, advertising, and accounting for warrants - Revenue is primarily generated by providing monetization services to game developers through the Skillz SDK, enabling competitive gaming and increasing end-user retention[46](index=46&type=chunk)[48](index=48&type=chunk)[50](index=50&type=chunk) - End-user incentives are categorized: **$17.6 million** (2021) and **$10.0 million** (2020) were recognized as a reduction of revenue, while **$33.3 million** (2021) and **$15.6 million** (2020) were recognized as sales and marketing expense[55](index=55&type=chunk)[58](index=58&type=chunk) - Public Common Stock Warrants are classified as Level 1 fair value measurements, while Private Common Stock Warrants are classified as Level 3, valued using the Black-Scholes-Merton Option pricing model due to unobservable inputs[74](index=74&type=chunk)[75](index=75&type=chunk)[105](index=105&type=chunk) - The company has elected to use the extended transition period for complying with new or revised financial accounting standards as an emerging growth company (EGC)[84](index=84&type=chunk) [3. Business Combination](index=17&type=section&id=3.%20Business%20Combination) This note details the December 16, 2020, merger between FEAC and Old Skillz, accounted for as a reverse recapitalization, specifying share exchange, cash consideration, earnout release, and a private placement - The merger involved an exchange ratio of **0.7471 shares** of common stock for each Old Skillz common stock[92](index=92&type=chunk) - Holders of Old Skillz received **191,932,860 shares** of Class A common stock and **76,663,551 shares** of Class B common stock, and **$566.2 million** in cash consideration[93](index=93&type=chunk) - Earnout conditions were fully satisfied in March 2021, releasing **10 million shares** (5 million to Sponsor, 5 million to Old Skillz stockholders) as Class A or Class B common stock[94](index=94&type=chunk) - A private placement of **15,853,052 shares** of Class A common stock generated an aggregate purchase price of **$158.5 million**[95](index=95&type=chunk) [4. Balance Sheet Components](index=18&type=section&id=4.%20Balance%20Sheet%20Components) This note breaks down specific balance sheet items, including prepaid expenses, property and equipment, and other current liabilities, showing changes between December 2020 and March 2021 Prepaid Expenses and Other Current Assets (in thousands) | Item | March 31, 2021 | December 31, 2020 | | :------------------------------ | :------------- | :---------------- | | Credit card processing reserve | $6,861 | $5,854 | | Prepaid expenses | $6,740 | $3,772 | | Other current assets | $1,380 | $865 | | Total | $14,981 | $10,491 | Property and Equipment, Net (in thousands) | Item | March 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------- | :---------------- | | Capitalized internal-use software | $6,568 | $6,167 | | Total property and equipment | $8,792 | $8,133 | | Accumulated depreciation and amortization | $(3,394) | $(2,841) | | Property and equipment, net | $5,398 | $5,292 | Other Current Liabilities (in thousands) | Item | March 31, 2021 | December 31, 2020 | | :------------------------------ | :------------- | :---------------- | | Accrued sales and marketing expenses | $13,340 | $7,204 | | Accrued compensation | $6,330 | $3,825 | | End-user liability, net | $4,479 | $2,789 | | Other current liabilities | $29,860 | $19,618 | [5. Fair Value Measurements](index=19&type=section&id=5.%20Fair%20Value%20Measurements) This note details fair value measurements of financial instruments, classifying Public Common Stock Warrants as Level 1 and Private Common Stock Warrants as Level 3, reporting their fair values - Cash and cash equivalents of **$612.6 million** (March 31, 2021) and **$262.7 million** (December 31, 2020) are classified within Level 1 of the fair value hierarchy[104](index=104&type=chunk) Fair Value of Public and Private Common Stock Warrants (in thousands) | Liability | March 31, 2021 (Level 1) | March 31, 2021 (Level 3) | March 31, 2021 (Total) | December 31, 2020 (Level 1) | December 31, 2020 (Level 3) | December 31, 2020 (Total) | | :-------------------------- | :----------------------- | :----------------------- | :--------------------- | :-------------------------- | :-------------------------- | :------------------------ | | Public Common Stock Warrants | $62,490 | — | $62,490 | $124,545 | — | $124,545 | | Private Common Stock Warrants | — | $49,888 | $49,888 | — | $53,687 | $53,687 | | Total fair value | $62,490 | $49,888 | $112,378 | $124,545 | $53,687 | $178,232 | - The fair value of Private Warrants liability decreased by **$3.8 million** during the three months ended March 31, 2021[105](index=105&type=chunk) [6. Commitments and Contingencies](index=19&type=section&id=6.%20Commitments%20and%20Contingencies) The company is involved in various legal claims, but management believes their resolution will not materially impact its financial position, operations, or cash flows - The company records a liability when a loss from legal matters is probable and estimable; otherwise, it discloses a reasonably possible loss[106](index=106&type=chunk) - Management does not expect pending legal matters to have a material adverse impact on the company's financial condition, results of operations, or cash flows as of March 31, 2021[106](index=106&type=chunk) [7. Common Stock Warrants](index=20&type=section&id=7.%20Common%20Stock%20Warrants) This note details outstanding Public and Private Warrants, their exercise price, expiration, and redemption conditions, also reporting Public Warrant exercises during Q1 2021 - As of March 31, 2021, there were **8.2 million** Public Warrants and **5.0 million** Private Warrants outstanding, each exercisable at **$11.50** per share[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) - During the three months ended March 31, 2021, **9.1 million** Public Warrants were exercised, generating **$104.6 million** in proceeds, recorded as a warrant exercise receivable[108](index=108&type=chunk) - Public Warrants expire on December 16, 2025, and may be redeemed by the company if the Class A common stock price equals or exceeds **$18.00** for 20 trading days within a 30-trading day period[109](index=109&type=chunk) [8. Stockholders' Equity](index=20&type=section&id=8.%20Stockholders'%20Equity) This note describes the company's authorized capital stock, including Class A and Class B common stock with differing voting rights, and details the March 2021 public offering - The company is authorized to issue **635 million shares**, comprising **500 million** Class A common stock (one vote per share), **125 million** Class B common stock (20 votes per share), and **10 million** preferred stock[112](index=112&type=chunk)[113](index=113&type=chunk) - In March 2021, the company completed a public offering, issuing **17,000,000 shares** of Class A common stock for **$408.0 million** (before **$5.9 million** issuance costs)[114](index=114&type=chunk) - Certain stockholders also sold **19.8 million shares** in the public offering, incurring **$6.8 million** in transaction costs for the company[114](index=114&type=chunk)[116](index=116&type=chunk) [9. Stock-Based Compensation](index=21&type=section&id=9.%20Stock-Based%20Compensation) This note summarizes stock-based compensation expense for Q1 2021 and 2020, details the 2020 Omnibus Incentive Plan, and provides activity for stock options and restricted stock units Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $1,207 | $205 | | Sales and marketing | $1,838 | $116 | | General and administrative | $7,900 | $36 | | Total | $10,945 | $357 | - The 2020 Omnibus Incentive Plan, effective December 2020, permits granting stock-based awards, including options and RSUs, with up to **47.8 million shares** reserved, subject to annual increases[118](index=118&type=chunk)[119](index=119&type=chunk) - As of March 31, 2021, unrecognized stock-based compensation expense was **$180.4 million**, to be recognized over a weighted-average period of **3.42 years**[125](index=125&type=chunk) [10. Income Taxes](index=23&type=section&id=10.%20Income%20Taxes) This note reports the income tax provision and effective tax rates for Q1 2021 and 2020, noting the company's historical loss position and full valuation allowance Income Tax Provision (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :---------------------- | :-------------------------------- | :-------------------------------- | | Income tax provision | $42 | $25 | | Effective tax rate | -0.082% | -0.162% | - The company maintains a full valuation allowance for all its deferred tax assets due to its historical overall loss position[127](index=127&type=chunk) [11. Related-Party Transactions](index=23&type=section&id=11.%20Related-Party%20Transactions) This note states no significant related-party transactions occurred in Q1 2021 or 2020, other than executive stock option grants and a secondary sale - No significant related-party transactions occurred, except for stock option grants to executives and a secondary sale as part of the follow-on offering[128](index=128&type=chunk) [12. Net Loss Per Share](index=23&type=section&id=12.%20Net%20Loss%20Per%20Share) This note details the computation of basic and diluted net loss per share for Class A and Class B common stock, adjusted for reverse recapitalization, and lists antidilutive equivalents Net Loss Per Share Computation (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss – Basic | $(53,592) | $(15,522) | | Weighted average common shares outstanding – basic | 356,818,954 | 278,348,903 | | Net loss per share attributable to common stockholders – basic | $(0.15) | $(0.06) | | Net loss – Diluted | $(57,391) | $(15,522) | | Weighted average common shares outstanding – diluted | 359,827,649 | 278,348,903 | | Net loss per share attributable to common stockholders – diluted | $(0.16) | $(0.06) | - Common and preferred stock warrants, common stock options, and restricted stock units totaling **60.8 million** (2021) and **44.0 million** (2020) were considered antidilutive and excluded from diluted EPS[133](index=133&type=chunk) [13. Subsequent Events](index=24&type=section&id=13.%20Subsequent%20Events) This note discloses events after the reporting period, including Public Warrant exercises and the Chief Financial Officer's retirement - In April and May 2021, **426,168** Public Warrants were exercised at **$11.50** per share[134](index=134&type=chunk) - The CFO, Mr Henry, will retire effective June 20, 2021, with an estimated **$7.0 million** in stock-based compensation expense related to his stock options vesting through the separation date[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition, operations, business model, and key metrics, analyzing revenue and expense trends for Q1 2021 versus the prior year [Overview](index=25&type=section&id=Overview) Skillz operates a mobile eSports marketplace connecting developers and users, benefiting from network effects, with growth in MAUs, paying MAUs, and ARPU - Skillz operates a marketplace connecting developers and users through competitive gaming, fostering trust and benefiting from a network effect where compelling content attracts users, and a growing audience attracts more developers[137](index=137&type=chunk) Key User Metrics (Three Months Ended March 31) | Metric | 2021 | 2020 | | :-------------------------------- | :--- | :--- | | Monthly Active Users (MAUs) | 2.7 million | 2.6 million | | Monthly Average Revenue Per User (ARPU) | $10.35 | $5.57 | | Paying MAU to MAU ratio | 17% | 10% | | Paying MAU | 0.5 million | 0.3 million | | Monthly Average Revenue Per Paying User (ARPPU) | $60 | $56 | - Top games (Solitaire Cube, 21 Blitz, Blackout Bingo) accounted for **76% of revenue** in Q1 2021, with Tether and Big Run being the primary developer partners[138](index=138&type=chunk) - The number of games generating over **$1 million** in annualized Gross Merchandise Volume (GMV) increased **54% to 40** in Q1 2021 from 26 in Q1 2020[138](index=138&type=chunk) [Our Financial Model](index=25&type=section&id=Our%20Financial%20Model) Skillz's financial model monetizes competitive gaming through a Take Rate from player entry fees, supported by strong unit economics, user engagement, and predictable long-term revenue - Revenue is generated by receiving a percentage of player entry fees in paid contests, after deducting end-user prize money, end-user incentives (revenue reduction), and developer profit share (the 'Take Rate')[143](index=143&type=chunk)[144](index=144&type=chunk) - GMV (Gross Merchandise Volume) is composed of approximately **11% cash deposits**, **82% prior cash winnings**, and **7% end-user incentives** for the three months ended March 31, 2021 and 2020[144](index=144&type=chunk) - The company expects the average Three-Year Lifetime Value (LTV) of its 2018, 2019, and 2020 cohorts to be **3.8x total user acquisition costs** (**2.5x** after accounting for sales and marketing end-user incentives)[146](index=146&type=chunk) - Paying users spent an average of **62 minutes per day** in game play on the platform in Q1 2021, demonstrating strong engagement[147](index=147&type=chunk) [Key Components of Results of Operations](index=27&type=section&id=Key%20Components%20of%20Results%20of%20Operations) This section defines key operational components: Revenue, Cost of Revenue, Research and Development, Sales and Marketing, and General and Administrative expenses, explaining their composition and expected fluctuations - Revenue is derived from monetization services provided to game developers, including end-user registration, player matching, fraud monitoring, and billing/settlement services, with Skillz typically withholding **16% to 20%** of total entry fees as commission[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk) - Cost of revenue primarily includes payment processing fees, customer support costs, direct software costs, amortization of internal use software, and server costs[152](index=152&type=chunk) - Sales and marketing expenses consist mainly of direct advertising costs and end-user incentives not recorded as a revenue reduction, expected to fluctuate in absolute dollars and as a percentage of revenue[155](index=155&type=chunk) - General and administrative expenses are expected to increase due to scaling headcount and costs associated with operating as a public company[157](index=157&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) For Q1 2021, revenue increased by 92% to $83.7 million, but total costs surged by 130%, leading to a net loss of $53.6 million, up from $15.5 million in the prior year Summary of Results of Operations (in thousands, except percentages) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | % Change | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Revenue | $83,677 | $43,559 | 92% | | Cost of revenue | $4,256 | $2,767 | 54% | | Research and development | $7,282 | $4,366 | 67% | | Sales and marketing | $96,323 | $46,825 | 106% | | General and administrative | $27,284 | $4,833 | 465% | | Total costs and expenses | $135,145 | $58,791 | 130% | | Loss from operations | $(51,468) | $(15,232) | 238% | | Net loss | $(53,592) | $(15,522) | 245% | - The increase in sales and marketing costs was primarily due to a **101% increase** in user acquisition spend (**$54.2 million** in 2021 vs **$27.0 million** in 2020) and a **111% increase** in engagement marketing spend (**$36.0 million** in 2021 vs **$17.1 million** in 2020)[165](index=165&type=chunk) - General and administrative costs surged due to a **$10.8 million** increase in headcount costs (including **$8.2 million** stock-based compensation), **$9.0 million** in professional expenses for the follow-on offering, and **$2.4 million** in public company-related insurance costs[166](index=166&type=chunk) [Non-GAAP Financial Measures](index=31&type=section&id=Non-GAAP%20Financial%20Measures) This section introduces Adjusted EBITDA as a non-GAAP measure for operational performance, providing a reconciliation from net loss by excluding non-cash and non-recurring items - Adjusted EBITDA is defined as net income (loss) excluding interest income (expense), change in fair value of common stock warrant liabilities, other income (expense), income tax provision, depreciation and amortization, stock-based compensation, and certain other non-cash or non-recurring items[173](index=173&type=chunk) Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(53,592) | $(15,522) | | Interest expense, net | $24 | $316 | | Stock-based compensation | $10,945 | $357 | | Change in fair value of common stock warrant liabilities | $2,108 | — | | Provision for income taxes | $42 | $25 | | Depreciation and amortization | $555 | $308 | | Other non-operating costs (income) | $(50) | $(51) | | Transaction related expenses | $8,839 | — | | Adjusted EBITDA | $(31,129) | $(14,567) | [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is strong, with cash and cash equivalents significantly increasing due to financing activities, including a follow-on offering and warrant exercises - As of March 31, 2021, principal liquidity sources were **$612.6 million** in cash and cash equivalents, primarily invested in money market funds[176](index=176&type=chunk) - Net cash provided by financing activities was **$389.7 million** for Q1 2021, mainly from **$402.8 million** in net proceeds from a follow-on offering[179](index=179&type=chunk)[184](index=184&type=chunk) - Net cash used in operating activities was **$39.2 million** for Q1 2021, primarily due to a net loss of **$53.6 million**, partially offset by non-cash expenses and changes in operating assets and liabilities[179](index=179&type=chunk)[181](index=181&type=chunk) - The company's existing cash resources are sufficient to cover operating activities for at least one year past the financial statements' issuance date[178](index=178&type=chunk) [Contractual Obligations and Commitments](index=33&type=section&id=Contractual%20Obligations%20and%20Commitments) This section summarizes the company's contractual obligations as of March 31, 2021, primarily consisting of operating lease obligations Contractual Obligations and Other Commitments (in thousands) | Obligation | Total | Less than 1 Year | 1 – 3 Years | 3 – 5 Years | More than 5 Years | | :------------------------ | :---- | :--------------- | :---------- | :---------- | :---------------- | | Operating lease obligations | $23,487 | $1,874 | $4,867 | $4,952 | $11,794 | [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) The company confirms no off-balance sheet financing arrangements or relationships with unconsolidated entities during the periods presented - The company did not have any off-balance sheet financing arrangements or relationships with unconsolidated entities during the periods presented[187](index=187&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section refers to the Annual Report on Form 10-K/A for critical accounting policies and estimates, noting no material changes - There have been no material changes to the critical accounting policies and estimates as previously disclosed in the Annual Report on Form 10-K/A filed May 13, 2021[188](index=188&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) This section directs readers to Note 2 of the consolidated financial statements for information on recent accounting pronouncements - For information about recent accounting pronouncements, their adoption timing, and potential impact, refer to Note 2 to the consolidated financial statements[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, specifically interest rate risk and foreign currency risk, concluding that neither poses a material threat - The company is exposed to market risks, including changes in interest rates and inflation, but an immediate **10% change** in interest rates would not materially affect the fair value of its cash and cash equivalents due to their low-risk profile[190](index=190&type=chunk)[191](index=191&type=chunk) - There was no material foreign currency risk for the three months ended March 31, 2021 and 2020[192](index=192&type=chunk) [Item 4. Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls were ineffective as of March 31, 2021, due to a material weakness in warrant accounting, with remediation efforts underway - As of March 31, 2021, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting[194](index=194&type=chunk) - The material weakness is related to the classification and accounting for warrants issued by Special Purpose Acquisition Companies (SPACs), specifically the application of ASC 815, as clarified by the SEC Staff Statement of April 12, 2021[195](index=195&type=chunk) - Remediation efforts include clarifying the accounting of contracts settled in the company's own stock and implementing additional review procedures and enhanced accounting policies[196](index=196&type=chunk) [PART II - OTHER INFORMATION](index=35&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in legal claims, but management believes their resolution will not materially affect its financial condition or results of operations - The company is a party to certain claims, suits, and proceedings arising in the ordinary course of business[199](index=199&type=chunk) - Management believes that the resolution of pending legal matters is not expected to have a material adverse impact on the company's financial condition or results of operations as of March 31, 2021[199](index=199&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K/A - There have been no material changes from the risk factors previously disclosed in Amendment No 1 on Form 10-K/A to the Annual Report on Form 10-K for the year ended December 31, 2020[200](index=200&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section indicates no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[202](index=202&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities during the period - No defaults upon senior securities to report[203](index=203&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[204](index=204&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) This section indicates no other information to report - No other information to report[205](index=205&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications and XBRL documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer (Sections 302 and 906 of Sarbanes-Oxley Act) and Inline XBRL documents[206](index=206&type=chunk) [Signatures](index=38&type=section&id=Signatures) [Report Signatures](index=38&type=section&id=Report%20Signatures) This section contains the official signatures for the Quarterly Report on Form 10-Q, confirming its submission by the registrant - The report was duly signed on behalf of Skillz Inc by Andrew Paradise, Chief Executive Officer and Chairman, on May 14, 2021[208](index=208&type=chunk)[209](index=209&type=chunk)

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)