Earnings call transcript Q4 2022

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Operator

Good afternoon. Thank you for attending today's Skillz Fourth Quarter 2022 Earnings Call. My name is Francis, and I'll be your moderator today. [Operator Instructions]

I would now like to pass the conference over to our host, Taylor Giles.

Unidentified Company Representative

to conference fourth call. welcome year and and earnings XXXX afternoon, the quarter Skillz fiscal Good Lobo, With CEO; Jason Alvin Casey today Chafkin, me are CRO; Roswig, Andrew President; Paradise, Skillz' CFO. and were published our on Investor website. Relations financial Note, earlier our full and are today available results

the to the of Before management's laws. note of Andrew, federal that meaning I turn today within will the please some comments include call over forward-looking statements securities

or expect. are usually to of that that as identified by similar could of Therefore, relying to use subject such you the should, and results could company's to uncertainties and interpreting which impact the future SEC will, the risks operating differ a caution condition. you what words numerous discussion should results expect, filings materially statements, other in actual and are phrases, detailed refer on from Forward-looking them. risks financial We we for exercise cause more

believe our earnings discuss not to most During useful be the should a will and comparable isolation financial The measures the management with considered measures accordance in fourth substitute call, GAAP our available which release. in XXXX the non-GAAP is or can operating These evaluating as be company's performance. for we figures, in fiscal directly these of year results quarter in reconciliation prepared measures GAAP.

some remarks before opening brief opening I'll that, for Andrew? over the turn questions. Andrew With to call for

Andrew Paradise

joining. Good thank for afternoon, you and

an to profitability. and, update to last pillars you in the growth now to laid turn to quarter giving me Skillz Let out on we return four XXXX,

We're begin. and since focused grow customer to that the first retention. platform is on and helped Our enhancing strengths first pillar platform engagement us improve our the Skillz core developer

on made the fourth solid initiatives, consumers for our the including In and developers. we product quarter, features following progress

designed features player deposits. we and reduce For consumers, friction increase added to first,

in ARPPU efficiency. and third, players or released we increase a paying per player generate to features friction reduce UA revenue we SDK additional paying user. drive released an new And Second, to for average

to developers, waiting Skillz XX% we and Breaker in-Unity Brick how an for use the shipped spend new developers development reducing [builds]. our For SDK time simulator, first, Skillz of the to teach API

launched Second, Unity shorten developers. also Skillz iteration SIDEkick for time we to

which turn when Since organization. to we We're restructuring, our into finished organizational Let our staffing people right second fully significant we've progress pillar, the me with roles. is backgrounds the up-leveling staffed. now right August, the right not yet the in made

employees take to individuals However, middle continue We're forward hire restructuring. thankful we the their for and challenging last enthusiasm perseverance to conviction Skillz motivated for across have strong that to a company. in we'll and year of of the our talented company all our

gaming CFO as Alvin all the like CFO excited that forward. strategic well with myself, deep of I'd Score broad with experience of Media welcome last and in joined prior month. including, who recently, roles in comes Alvin with just through Having public companies, sale Penn that, to us and their Lobo, successful covered to a held as most Alvin space also Gaming drive welcome are be who is President, serving as Jason necessary the to We're Wynn move Boyd we him. very He now Roswig, with as will Resorts. the and senior Entertainment. roles company believe partnering to initiatives Skillz Gaming finance as with to

at executive Head was by Head new a infrastructure culture. Combined Filippov, to I our with where joined product a big has Skillz Brendan are told our Vanous, work in Brendan needs. are gaming us of our for development PlayFab, of of Success with made pipeline joined in Vassily CTO, Customer lockstep Microsoft, label in last the our continuing now short time. which has being summer January R&D our joined quarter, from Success, began work who Customer last provide the returning He's developer high-performance is direct of community with we Brendan efforts ensuring customers' the we as Moreover, customer a of to a team, the you product a-white impact Microsoft. to rest us feedback,

third pleased is payback which top improving improved Next on is of quarter's our pillar, that our quarter, this We're last go-to-market. improvement. compounding period, we our

We expect down to we're marketing to periods. if continue scale able payback drive to

the frequency, higher marketing marketing efficiency Additionally, through we're enhancing efforts. cost of engagement engagement lower our

We're through to All this SDK and need] our returns is developers. content attractive of product acquisition confidence acquisition these improving new that to further. we combined, wins [tons retention user expected reduce deliver giving can Our for us costs improvements. customer are

clear Our continue demonstrating we'll we the to to intend fourth about will progress of and as through here make XXXX, talk consider end XXXX. with our investment to goal more Jason of straightforward, let continue pillar but thoughtfully each I that we progress the share a is by adjusted and path profitability. EBITDA to every numbers, positive

through I have support want team through year mindful to numbers, year update that to the we acknowledge balance XXXX The work not turn. new meet In is as challenging a investment to progress quarters we Jason, was overpromise. we the and return to up to Jason? business incredibly we thoughtful to an call recognize strong scaled we'll expectations. investor we fully take meantime, sheet to expect We we will challenge, to six on as while to the to turn the growth. our demonstrate to I which the that achieved Before have move to four our milestones the as continue being

Jason Roswig

you, Thank Andrew.

is to ahead of Alvin will will while I'm us, We amount are we the I be know that stages the of in work this to joining early in a us. I'm opportunity team plan, of enormous turnaround huge there before pleased our able endeavor. be help market seize the and confident

progress. or are simple we While slow making steady quick, not and

over years, growth One coupled Before issue a we few issues. jurisdictions, have as indirect indirect two relates past company's increased drivers time to filings, our treatment in and restatement had I result dive into stemmed the The disclosed regulations a over have more primary the and to of together, financials, the more from into our taxes. taxes, which the of a exposure that, with tax laws evolving the is of restatement.

issue in error deficiency to the current liabilities balance, sheet. error a an reconciliation is other our for and of other end-user in on liability was end-user balance relates design This which included the The result a process liability balance. a

our reporting future We both are to and prevent of issues these evaluating overall addressing issues. process

that ranged errors from restatement the revenues adjustments than resulted material, deemed restatement less that the affected X%. than we our were Although by the the less X% period to note resulting in for to

that to the greater provide me on turn facts. With said, will let these detail XX-K numbers. Our

XX% fourth year-over-year $XX.X advertising and XXXX, was XX% sequentially. declines and in Full incentives. in as million, a Revenue the was quarter revenue MAU million, down down year pullbacks $XXX.X driven by from paying result XX% of in down planned

marketing XX% is and sequentially. decrease Fourth our in $X.X payer marketing for quarter rate, by million, Our UA XX% of Fourth was down year. UA was relative our down down XX% MAU decrease XX% previous Full quarter and marketing quarter year divided which the million, UA XX% and paying to the MAU, year-over-year conversion was sequentially. year-over-year a a $XXX.X $X.X XX% was XX% the million, year. of

$X.X year, million, quarter, year-over-year down for and million XX% was down development and year-over-year. XX% was in year. year-over-year for marketing and down Research million $XXX.X down engagement $XX.X XX% quarter-over-quarter the and XX% QX the the $XX.X hit million

the yearly quarter-over-quarter. non-GAAP This and $XXX sales XX% year-over-year down compensation]. a non-GAAP includes points and was On of and of year-over-year, of quarterly points XX a R&D basis, year. XX and was revenue basis, was for down million sales revenue, XX% marketing XX% million QX revenue. [stock-based $X XX% QX of down marketing $XX.X and percentage percentage million, On

was million, XX non-GAAP for expense XX% year-over-year, driven points the $XX.X general and This was down administrative the On year. restructuring. $X.X million QX compensation. year-over-year, million of basis, revenue, up organizational primarily and a in XX% percentage by QX includes stock-based $XXX G&A

percentage revenue. On a points G&A a was percentage up sequential of basis, as XX

XX% full quarter, XX% year, of sequentially revenue. million and $XXX.X the of of full increased increased million fourth million, or the an for year-over-year. $XX.X was loss million while was net was increase Net G&A $XX.X year-over-year which loss year For million $XXX $XXX.X

as as restructuring. points year-over-year. by million, year XX% Full percentage marketing well up increased EBITDA $XXX.X adjusted negative QX EBITDA XX% XX% sequentially. from basis, the year X spend EBITDA margin negative UA was of XX points. and QX up adjusted $X.X adjusted prior. million, This up sequential in EBITDA up margin the On primarily engagement percentage by was was adjusted XXXX a year-over-year XX% and was decreases negative driven

'XX EBITDA up Fiscal negative percentage X was year-over-year. XX% points adjusted of year margin

with prior. steps Because growth, the and million are raise do confident return $XXX discussed to additional market rebuild we are are and we the forecast. and our in we As steps a Andrew have I marketable the of outstanding taking and Again, of expect ended across the to will of as is We initiatives the and we the team, infrastructure said suspending financial but year to reach difficult strong we the $XXX cash quarter, not cash, we to guidance. term debt be taking uncertainty right breakeven. execute securities capital the to to short equivalents we liquidity million last continue to position,

Operator? With joining reiterate in and your the take Skillz Thank our that, platform me belief and employees. you for let questions. customers today, we'll

Operator

with first Canaccord Our from the Instructions] comes Tilchen Genuity. line of Jason [Operator question

Jason Tilchen

two. have I

spend? The improving that What are a at into second gaining will is terms you're was cloud-based marketing of that but analogy. year. any Investor periods And It's the gaming we'll just that first mentioned last scale initiative baseball is you could you'll opening marketing, increases in, on in the confidence payback seeing just of to you and one inning that on that so is, update sort highlighted away give the reduction. sort -- that that guess, are day, of feel Day you you force the like go we You then question get in you're process? I far do back the how

Andrew Paradise

is for Jason, Great. This the Andrew. Thanks, question.

Roswig Jason our Roswig, probably about to the to to person best would I investment is think financial talk answer? Jason like use you our acquisition.

Jason Roswig

the question, for you Jason. Thank Absolutely.

going year, was we I successful forward. user fourth reducing believe believe acquisition marketing for growth We think to we effort feel market your in that overall profitable us quarter very and will a that a level gradually last we the which spend, on stabilized answer a reached we've though that on had now we our are spend as we our acquisition where user point. to prepare believe question

will use to the year our the would percentage a cost in into three say lot approach investment, this trajectory first intend our such products to the a to engagement say, a user aviation year, believe LTV. a of we reduction targeting as or going marketing in expect percentage a a is programs. Now as similarly, I quarter deploying of that that years. throughout we effectively strategy go of we year. revenue on of little are our over engagement this marketing optimize time, of course Xx now we decline work this target We an continue of ROI ROI to would achieved I in lower-term of eliminating a by revenue and significant bit

Andrew Paradise

Great. Thank you, Jason Rowsig.

cloud-based an question Happy I about update there. think was second give the to gaming.

beta are We expected. in as

But products web-based on we your was it early And days. right around overall there We will built of games much take and the can primarily still for right and it's versus actually benefit web-based really think look we mobile. that -- in of how lower a advertising. like can't are that guidance buying now I P&L give that impact will the originally testing games as CPM what now, advertising handful running mobile that advantage games any built is were web-based

Operator

are this time. There questions waiting no at

the remarks. So I'll to now any pass for conference Andrew Paradise over back additional

Andrew Paradise

our Thank Thank us an to our forward today. the we results. report for look then, providing you on taking when continued progress to time you, have first everyone. great quarter a all We join update day. Till

Operator

participation. for That concludes the Skillz your Thank you Call. XXXX Earnings Fourth Quarter

You may your disconnect lines. now

Skillz (SKLZ) 30 Mar 232022 Q4 Earnings call transcript