skillz(US:SKLZ)2024-11-08 21:25User Engagement and Activity - For the nine months ended September 30, 2024, Skillz had over 0.8 million monthly active users (MAUs) and hosted an average of over 1.1 million daily tournaments, offering over $43.5 million in prizes each month[156]. - The number of paying monthly active users (PMAUs) for the three months ended September 30, 2024, was 121,000, down from 168,000 in the same period of 2023, a decrease of approximately 28%[161]. - The average GMV per paying monthly active user for the three months ended September 30, 2024, was $435.9, compared to $478.8 in the same period of 2023, a decline of approximately 8%[161]. - The average revenue per paying monthly active user (ARPPU) for the three months ended September 30, 2024, was $67.6, down from $72.3 in the same period of 2023, a decrease of approximately 10%[161]. - The average revenue per monthly active user (ARPU) for the three months ended September 30, 2024, was $9.7, compared to $11.7 in the same period of 2023, a decline of approximately 17%[161]. Financial Performance - Revenue decreased by $11.9 million, or 33%, to $24.6 million for the three months ended September 30, 2024, compared to $36.4 million for the same period in 2023, primarily due to a 19% decrease in monthly active users[182]. - Revenue decreased by $45.9 million, or 38%, to $75.1 million for the nine months ended September 30, 2024, primarily due to a 23% decrease in monthly active users[191]. - Skillz segment revenue decreased by $12.0 million, or 35.8%, to $21.5 million for the three months ended September 30, 2024, primarily due to a decrease in player base[211]. - Skillz Segment Revenue for the nine months ended September 30, 2024, was $66.6 million, a decrease of $43.2 million (39.3%) from $109.8 million in the same period of 2023, primarily due to a 23% decrease in monthly active users[218]. - Consolidated Revenue for the nine months ended September 30, 2024, was $75.1 million, a decrease of $45.9 million (37.9%) from $121.0 million in the same period of 2023[217]. Cost Management - Cost of revenue decreased by $0.3 million, or 9%, to $3.4 million for the three months ended September 30, 2024, driven by reductions in payment processing and customer support personnel costs[183]. - Research and development costs decreased by $3.1 million, or 40%, to $4.7 million for the three months ended September 30, 2024, primarily due to a $2.3 million reduction in employee-related costs[184]. - Sales and marketing costs decreased by $12.6 million, or 40%, to $19.3 million for the three months ended September 30, 2024, driven by decreases in UA and engagement marketing spend[186]. - General and administrative costs decreased by $6.2 million, or 26%, to $18.1 million for the three months ended September 30, 2024, primarily due to a $3.5 million decrease in legal fees[187]. - Research and development costs decreased by $11.1 million, or 45%, to $13.6 million, mainly due to an $8.9 million reduction in employee-related costs[193]. - Sales and marketing costs decreased by $38.4 million, or 39%, to $61.1 million, reflecting a strategic decision to prioritize profitability over revenue growth[194]. - General and administrative costs decreased by $19.7 million, or 25%, to $58.4 million, primarily due to a decrease in legal fees and reliance on contractors[195]. Loss and Improvement - The loss from operations improved by $10.4 million, or 33%, to $(20.99) million for the three months ended September 30, 2024, compared to $(31.43) million for the same period in 2023[181]. - Net loss decreased by $12.4 million, or 37%, to $(21.12) million for the three months ended September 30, 2024, from $(33.55) million in the same period in 2023[181]. - Net loss for the nine months ended September 30, 2024, was $21.8 million, a decrease of $64.1 million or 75% compared to the net loss of $85.8 million in 2023[190]. - Total segment adjusted EBITDA loss improved by $4.6 million, or 25.0%, to $(13.9) million for the three months ended September 30, 2024[211]. - Total Segment Adjusted EBITDA loss for the nine months ended September 30, 2024, was $44.2 million, an improvement of $13.6 million (23.6%) from a loss of $57.8 million in the same period of 2023[217]. Cash and Debt Management - As of September 30, 2024, the company had cash and cash equivalents of $301.4 million, primarily invested in money market funds and marketable securities[221]. - The company has long-term debt of $129.7 million from senior secured notes due December 15, 2026, with compliance to all covenants as of September 30, 2024[223]. - Interest income was $0.2 million for the three months ended September 30, 2024, compared to interest expense of $2.3 million for the same period in 2023, reflecting a decrease of $2.5 million in interest expense due to debt repurchase[188]. - Interest income was $0.7 million for the nine months ended September 30, 2024, compared to interest expense of $7.5 million in the same period of 2023[198]. - The company reported a net cash used in financing activities of $12.8 million for the nine months ended September 30, 2024, primarily due to common stock repurchases[229]. Strategic Focus - Engagement marketing expenses decreased, which may lead to lower revenue as paying users may not receive end-user incentives[162]. - Skillz's financial model aims to drive higher player engagement and retention, monetizing users at higher rates than traditional models[165]. - The company is focusing on optimizing user acquisition marketing spend to improve efficiency and drive organic traffic[164]. - User acquisition (UA) marketing spend decreased by 43%, and engagement marketing spend decreased by 40%, reflecting a strategic shift to prioritize profitability over revenue growth[182]. - The company plans to continue investing in personnel and external consultants to address identified material weaknesses in internal controls over financial reporting[245]. - The company may use proceeds from its senior secured notes for potential acquisitions of other companies, products, or technologies in the future[223]. - The gain from litigation settlement was $46.0 million, related to the settlement with AviaGames[196].