(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
(d) | Exhibits. |
Exhibit Number | Description | |||||||
SKILLZ INC. | ||||||||
By: | /s/ Ian Lee | |||||||
Name: | Ian Lee | |||||||
Title: | Chief Financial Officer | |||||||
Date: May 4, 2022 |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | 93,438 | $ | 83,677 | |||||||
Costs and expenses: | |||||||||||
Cost of revenue | 9,265 | 4,256 | |||||||||
Research and development | 18,653 | 7,282 | |||||||||
Sales and marketing | 117,332 | 96,323 | |||||||||
General and administrative | 92,792 | 27,284 | |||||||||
Total costs and expenses | 238,042 | 135,145 | |||||||||
Loss from operations | (144,604) | (51,468) | |||||||||
Interest expense, net | (8,157) | (24) | |||||||||
Change in fair value of common stock warrant liabilities | 4,462 | (2,108) | |||||||||
Other (expense) income, net | (27) | 50 | |||||||||
Loss before income taxes | (148,326) | (53,550) | |||||||||
(Benefit from) provision for income taxes | (213) | 42 | |||||||||
Net loss | $ | (148,113) | $ | (53,592) | |||||||
Net loss per share attributable to common stockholders – basic | $ | (0.37) | $ | (0.15) | |||||||
Weighted average common shares outstanding – basic | 401,653,954 | 356,818,954 | |||||||||
Net loss attributable to common stockholders – diluted | $ | (148,113) | $ | (57,391) | |||||||
Net loss per share attributable to common stockholders – diluted | $ | (0.37) | $ | (0.16) | |||||||
Weighted average common shares outstanding – diluted | 401,653,954 | 359,827,649 | |||||||||
Other comprehensive loss: | |||||||||||
Change in unrealized loss on available-for-sale investments, net of tax | (2,046) | — | |||||||||
Total other comprehensive loss: | (2,046) | — | |||||||||
Comprehensive loss | $ | (150,159) | $ | (53,592) |
March 31, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 114,558 | $ | 241,332 | |||||||
Marketable securities, current | 369,566 | 319,055 | |||||||||
Accounts receivable, net | 13,230 | 13,497 | |||||||||
Prepaid expenses and other current assets | 21,967 | 16,704 | |||||||||
Total current assets | 519,321 | 590,588 | |||||||||
Property and equipment, net | 8,629 | 9,988 | |||||||||
Operating lease right-of-use assets, net | 13,977 | 14,511 | |||||||||
Marketable securities, non-current | 169,725 | 182,629 | |||||||||
Non-marketable equity securities | 55,649 | 55,649 | |||||||||
Intangible assets, net | 75,066 | 79,137 | |||||||||
Goodwill | 86,436 | 86,845 | |||||||||
Other long-term assets | 3,733 | 3,478 | |||||||||
Total assets | $ | 932,536 | $ | 1,022,825 | |||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 13,305 | $ | 19,753 | |||||||
Operating lease liabilities, current | 2,005 | 2,110 | |||||||||
Other current liabilities | 57,607 | 64,969 | |||||||||
Total current liabilities | 72,917 | 86,832 | |||||||||
Operating lease liabilities, non-current | 13,199 | 13,567 | |||||||||
Common stock warrant liabilities, non-current | 1,831 | 6,293 | |||||||||
Long-term debt, non-current | 279,713 | 278,889 | |||||||||
Other long-term liabilities | 13,238 | 13,544 | |||||||||
Total liabilities | 380,898 | 399,125 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock $0.0001 par value; 10 million shares authorized — 0 issued and outstanding as of March 31, 2022 and December 31, 2021 | — | — | |||||||||
Common stock $0.0001 par value; 625 million shares authorized; Class A common stock – 500 million shares authorized; 341 million and 340 million shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; Class B common stock – 125 million shares authorized; 69 million shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 40 | 40 | |||||||||
Additional paid-in capital | 1,121,697 | 1,043,600 | |||||||||
Accumulated other comprehensive loss | (2,294) | (248) | |||||||||
Accumulated deficit | (567,805) | (419,692) | |||||||||
Total stockholders’ equity | 551,638 | 623,700 | |||||||||
Total liabilities and stockholders’ equity | $ | 932,536 | $ | 1,022,825 |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Operating Activities | |||||||||||
Net loss | $ | (148,113) | $ | (53,592) | |||||||
Adjustment to reconcile net loss to net cash used in operating activities: | |||||||||||
Depreciation and amortization | 5,539 | 555 | |||||||||
Stock-based compensation | 77,925 | 10,945 | |||||||||
Accretion of unamortized debt discount and amortization of debt issuance costs | 824 | 9 | |||||||||
Amortization of premium (accretion of discount) for marketable securities | 984 | — | |||||||||
Deferred income taxes | (318) | — | |||||||||
Change in fair value of common stock warrant liabilities | (4,462) | 2,108 | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable, net | 267 | — | |||||||||
Prepaid expenses and other assets | (5,676) | (4,499) | |||||||||
Operating lease right-of-use assets | 534 | (13,453) | |||||||||
Accounts payable | (5,613) | (4,060) | |||||||||
Operating lease liabilities | (473) | 14,386 | |||||||||
Other accruals and liabilities | (4,868) | 8,448 | |||||||||
Net cash used in operating activities | (83,450) | (39,153) | |||||||||
Investing Activities | |||||||||||
Purchases of property and equipment, including internal-use software | (107) | (659) | |||||||||
Purchases of marketable securities | (149,495) | — | |||||||||
Proceeds from sales of marketable securities | 25,593 | — | |||||||||
Proceeds from maturities of marketable securities | 83,265 | — | |||||||||
Net cash used in investing activities | (40,744) | (659) | |||||||||
Financing Activities | |||||||||||
Principal payments on finance leases obligations | (840) | — | |||||||||
Payments for debt issuance costs | (1,976) | — | |||||||||
Proceeds from issuance of common stock in follow-on offering, net of underwriting commissions, and offering costs | — | 402,817 | |||||||||
Payments made towards deferred offering costs | — | (13,167) | |||||||||
Net proceeds from exercise of stock options and issuance of common stock | 236 | 12 | |||||||||
Net cash (used in) provided by financing activities | (2,580) | 389,662 | |||||||||
Net change in cash, cash equivalents and restricted cash | (126,774) | 349,850 | |||||||||
Cash, cash equivalents and restricted cash – beginning of year | 244,252 | 265,648 | |||||||||
Cash, cash equivalents and restricted cash – end of period | $ | 117,478 | $ | 615,498 |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Net loss | $ | (148,113) | $ | (53,592) | |||||||
Interest expense, net | 8,157 | 24 | |||||||||
Stock-based compensation (3) | 77,925 | 10,945 | |||||||||
Change in fair value of common stock warrant liabilities | (4,462) | 2,108 | |||||||||
(Benefit from) provision for income taxes | (213) | 42 | |||||||||
Depreciation and amortization | 5,539 | 555 | |||||||||
Other expense (income), net | 27 | (50) | |||||||||
One-time nonrecurring expenses(1) (2) | 119 | 8,839 | |||||||||
Adjusted EBITDA | $ | (61,021) | $ | (31,129) |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Research and development | $ | 18,653 | $ | 7,282 | |||||||
Less: stock-based compensation | (2,354) | (1,207) | |||||||||
Less: one-time nonrecurring expenses | — | (139) | |||||||||
Non-GAAP research and development | $ | 16,299 | $ | 5,936 | |||||||
Sales and marketing | $ | 117,332 | $ | 96,323 | |||||||
Less: stock-based compensation | (2,879) | (1,838) | |||||||||
Less: one-time nonrecurring expenses | — | (131) | |||||||||
Non-GAAP sales and marketing | $ | 114,453 | $ | 94,354 | |||||||
General and administrative | $ | 92,792 | $ | 27,284 | |||||||
Less: stock-based compensation(1) | (72,692) | (7,900) | |||||||||
Less: one-time nonrecurring expenses(2) (3) | (119) | (8,569) | |||||||||
Non-GAAP general and administrative | $ | 19,981 | $ | 10,815 | |||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | 93,438 | $ | 83,677 | |||||||
Less: Sales and marketing - engagement marketing | 42,096 | 35,986 | |||||||||
Revenue after engagement marketing(1) | $ | 51,342 | $ | 47,691 | |||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Monthly active users (“MAUs”)(1) | 3.2 | 2.7 | |||||||||
Average revenue per user (“ARPU”)(2) | $ | 9.65 | $ | 10.35 | |||||||
Paying monthly active users (“PMAUs”)(3) | 0.57 | 0.47 | |||||||||
Average revenue per paying user (“ARPPU”)(4) | $ | 54.7 | $ | 59.8 | |||||||
Gross marketplace volume (“GMV”)(5) | $ | 552 | $ | 567 | |||||||
Revenue after engagement marketing (“RAEM”)(6) | $ | 51 | $ | 48 |
In Q1, the company invested in product innovation to build a more balanced growth profile. We reached milestones for several key products and announced we are entering cloud-based gaming. As you may know from experience, consumers clicking on an ad for a mobile game, on average, delete the game before even opening it almost 20% of the time. Perhaps that is not surprising when you think about the level of friction in the current game discovery and install experience, which involves multiple steps and can take up to several minutes. Our cloud gaming technology, embedded in a playable ad, has the potential to break all those barriers and reach gamers regardless of platform around the world. It will dramatically reduce the friction during the onboarding experience, thus improving game discovery and sharing. This quarter, we began private beta-testing cloud gaming with three games. While it is still early, we are starting to collect data on user behavior with this product, and believe this could both increase lifetime value (LTV) and lower user acquisition costs (UAC) for our business. |
Skillz is committed to connecting the world through competition. Competition and socialization not only bring the world together, but they also create stickier communities. Coming back to the game every day to spend time with friends is one of the strongest ways we can build retention. In Q1, Skillz rolled out chat system-wide to drive deeper user engagement and the results so far have been better than expected. We plan to continue to build on our chat service capabilities to enable new and meaningful ways for players to connect with each other and our content. Being able to play private tournaments in real time with friends is just one example of how we plan to empower players to bring others onto the platform for fun, fair, and meaningful competitive experiences. |
One of our most notable new partnerships is the multi-year licensing agreement with UFC®, the world’s premier mixed martial arts organization, with more than 625 million fans and 188 million media followers. This partnership will enable selected game creators from the Skillz developer community to utilize certain UFC and UFC athlete intellectual property for mobile game creation and marketing, and will be co-marketed by both UFC and Skillz. The new UFC-branded mobile games are slated to launch in 2023. |
This quarter, we also announced the selection of the NFL & Skillz Game Developer Challenge finalists. Four developers (Brainstorm Games, iGamebank, Play Mechanix, and Session Games), whose NFL-inspired game creations earned them the rights to brand their games with the NFL and club logos, moved on to the soft launch phase. The final winning games will launch for play on iOS and Android prior to the 2022 NFL season. |
We also partner closely with our developers to optimize the performance of their games. For example, in Q1, Play Mechanix continued to iterate upon their competitive mobile title, Big Buck Hunter: Marksman. They introduced multiple new game modes to better attach their core demographic to our platform. One of these updates included the release of a PvP game mode (seen on the right), which enables two players to compete in real-time. These enhancements drove improvement in the game’s performance, increasing retention and engagement metrics. We are working to prioritize our game developers’ needs, wants, and desires in terms of building a successful game, and their business. |
Broadly investing in products and programs to strengthen our global developer ecosystem is one of our top initiatives for this year. In Q1, Skillz exhibited at the 2022 Game Developers Conference in San Francisco, the premier industry trade show attracting over 17,000 developers around the world. We generated record-level interest and new developer leads, despite overall in-person conference attendance being almost 60% lower than in 2019. |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | 93,438 | $ | 83,677 | |||||||
Costs and expenses: | |||||||||||
Cost of revenue | 9,265 | 4,256 | |||||||||
Research and development | 18,653 | 7,282 | |||||||||
Sales and marketing | 117,332 | 96,323 | |||||||||
General and administrative | 92,792 | 27,284 | |||||||||
Total costs and expenses | 238,042 | 135,145 | |||||||||
Loss from operations | (144,604) | (51,468) | |||||||||
Interest expense, net | (8,157) | (24) | |||||||||
Change in fair value of common stock warrant liabilities | 4,462 | (2,108) | |||||||||
Other (expense) income, net | (27) | 50 | |||||||||
Loss before income taxes | (148,326) | (53,550) | |||||||||
(Benefit from) provision for income taxes | (213) | 42 | |||||||||
Net loss | $ | (148,113) | $ | (53,592) | |||||||
Net loss per share attributable to common stockholders – basic | $ | (0.37) | $ | (0.15) | |||||||
Weighted average common shares outstanding – basic | 401,653,954 | 356,818,954 | |||||||||
Net loss attributable to common stockholders – diluted | $ | (148,113) | $ | (57,391) | |||||||
Net loss per share attributable to common stockholders – diluted | $ | (0.37) | $ | (0.16) | |||||||
Weighted average common shares outstanding – diluted | 401,653,954 | 359,827,649 | |||||||||
Other comprehensive loss: | |||||||||||
Change in unrealized loss on available-for-sale investments, net of tax | (2,046) | — | |||||||||
Total other comprehensive loss: | (2,046) | — | |||||||||
Comprehensive loss | $ | (150,159) | $ | (53,592) |
March 31, | December 31, | ||||||||||
2022 | 2021 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 114,558 | $ | 241,332 | |||||||
Marketable securities, current | 369,566 | 319,055 | |||||||||
Accounts receivable, net | 13,230 | 13,497 | |||||||||
Prepaid expenses and other current assets | 21,967 | 16,704 | |||||||||
Total current assets | 519,321 | 590,588 | |||||||||
Property and equipment, net | 8,629 | 9,988 | |||||||||
Operating lease right-of-use assets, net | 13,977 | 14,511 | |||||||||
Marketable securities, non-current | 169,725 | 182,629 | |||||||||
Non-marketable equity securities | 55,649 | 55,649 | |||||||||
Intangible assets, net | 75,066 | 79,137 | |||||||||
Goodwill | 86,436 | 86,845 | |||||||||
Other long-term assets | 3,733 | 3,478 | |||||||||
Total assets | $ | 932,536 | $ | 1,022,825 | |||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 13,305 | $ | 19,753 | |||||||
Operating lease liabilities, current | 2,005 | 2,110 | |||||||||
Other current liabilities | 57,607 | 64,969 | |||||||||
Total current liabilities | 72,917 | 86,832 | |||||||||
Operating lease liabilities, non-current | 13,199 | 13,567 | |||||||||
Common stock warrant liabilities, non-current | 1,831 | 6,293 | |||||||||
Long-term debt, non-current | 279,713 | 278,889 | |||||||||
Other long-term liabilities | 13,238 | 13,544 | |||||||||
Total liabilities | 380,898 | 399,125 | |||||||||
Commitments and contingencies | |||||||||||
Stockholders’ equity: | |||||||||||
Preferred stock $0.0001 par value; 10 million shares authorized — 0 issued and outstanding as of March 31, 2022 and December 31, 2021 | — | — | |||||||||
Common stock $0.0001 par value; 625 million shares authorized; Class A common stock – 500 million shares authorized; 341 million and 340 million shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; Class B common stock – 125 million shares authorized; 69 million shares issued and outstanding as of March 31, 2022 and December 31, 2021 | 40 | 40 | |||||||||
Additional paid-in capital | 1,121,697 | 1,043,600 | |||||||||
Accumulated other comprehensive loss | (2,294) | (248) | |||||||||
Accumulated deficit | (567,805) | (419,692) | |||||||||
Total stockholders’ equity | 551,638 | 623,700 | |||||||||
Total liabilities and stockholders’ equity | $ | 932,536 | $ | 1,022,825 |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Net loss | $ | (148,113) | $ | (53,592) | |||||||
Interest expense, net | 8,157 | 24 | |||||||||
Stock-based compensation (3) | 77,925 | 10,945 | |||||||||
Change in fair value of common stock warrant liabilities | (4,462) | 2,108 | |||||||||
(Benefit from) provision for income taxes | (213) | 42 | |||||||||
Depreciation and amortization | 5,539 | 555 | |||||||||
Other expense (income), net | 27 | (50) | |||||||||
One-time nonrecurring expenses(1) (2) | 119 | 8,839 | |||||||||
Adjusted EBITDA | $ | (61,021) | $ | (31,129) |
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Research and development | $ | 18,653 | $ | 7,282 | |||||||
Less: stock-based compensation | (2,354) | (1,207) | |||||||||
Less: one-time nonrecurring expenses | — | (139) | |||||||||
Non-GAAP research and development | $ | 16,299 | $ | 5,936 | |||||||
Sales and marketing | $ | 117,332 | $ | 96,323 | |||||||
Less: stock-based compensation | (2,879) | (1,838) | |||||||||
Less: one-time nonrecurring expenses | — | (131) | |||||||||
Non-GAAP sales and marketing | $ | 114,453 | $ | 94,354 | |||||||
General and administrative | $ | 92,792 | $ | 27,284 | |||||||
Less: stock-based compensation(1) | (72,692) | (7,900) | |||||||||
Less: one-time nonrecurring expenses(2) (3) | (119) | (8,569) | |||||||||
Non-GAAP general and administrative | $ | 19,981 | $ | 10,815 | |||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue | $ | 93,438 | $ | 83,677 | |||||||
Less: Sales and marketing - engagement marketing | 42,096 | 35,986 | |||||||||
Revenue after engagement marketing(1) | $ | 51,342 | $ | 47,691 | |||||||
Three Months Ended March 31, | |||||||||||
2022 | 2021 | ||||||||||
Monthly active users (“MAUs”)(1) | 3.2 | 2.7 | |||||||||
Average revenue per user (“ARPU”)(2) | $ | 9.65 | $ | 10.35 | |||||||
Paying monthly active users (“PMAUs”)(3) | 0.57 | 0.47 | |||||||||
Average revenue per paying user (“ARPPU”)(4) | $ | 54.70 | $ | 59.8 | |||||||
Gross marketplace volume (“GMV”)(5) | $ | 552 | $ | 567 | |||||||
Revenue after engagement marketing (“RAEM”)(6) | $ | 51 | $ | 48 |
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